Title 26 DCMR — INSURANCE, SECURITIES, AND BANKING

26-A INSURANCE

26-A1 LICENSURE AS INSURANCE PRODUCER

26-A DCMR § 100 GENERAL PROVISIONS

100.1 No person shall act as, or hold himself out as, an insurance producer unless the person has been issued a license in accordance with this chapter.

100.2 An applicant for a license as a producer may receive qualification in one or more of the following lines of insurance:

(a) Life;

(b) Accident and health or sickness;

(c) Property;

(d) Casualty;

(e) Variable life and variable annuity products;

(f) Bail bonds;

(g) Surplus lines; and

(h) One or more of the following limited lines of insurance:

(1) Credit;

(2) Car rental;

(3) Crop;

(4) Surety;

(5) Travel;

(6) A line of insurance the Commissioner recognizes as a limited line of insurance for the purposes of complying with Section 8(e) of the Producer Licensing Act of 2002, effective March 27, 2003 (D.C. Law 14-264; D.C. Official Code § 31-1131.08(e) (2001)).

100.3 (a) An applicant for a resident producer license shall:

Submit a properly completed application and pay the required fee as provided in Section 105 of this chapter;

Have passed the written examination required by D.C. Official Code § 31-1131.05 with a minimum score of 70, and within one (1) year of submitting an application; and

Comply with the procedures established by the service provider selected by the Commissioner to administer the examination and collect the non-refundable fee applicable thereto.

If an applicant fails to submit an application within one (1) year of passing the written examination as required by this subsection, the examination score shall be deemed invalid and the applicable fee shall be forfeited.

An applicant whose examination score is determined to be invalid under paragraph (b) of this subsection may reapply for the examination.

100.4 An applicant who is a non-resident of the District shall submit a properly completed application and shall hold a valid license, issued by the applicant’s home state, that authorizes the applicant to transact insurance business in the lines of insurance for which application is made.

100.5 A business entity applying for a producer license with major lines of authority shall:

(a) Have at least one individual affiliated with the business entity with the same lines of authority being requested in the application.

(b) Have an individual producer license for every officer, director, employee, and shareholder who personally engages in selling, soliciting or negotiating policies of insurance.

100.6 A business entity applying for a producer license with limited lines authority shall have at least one individual affiliated with the business entity with the same lines of authority being requested in the application.

100.7 An employee or representative of a limited lines business entity shall be authorized to offer, sell, or solicit limited lines insurance under the authority of the limited lines business entity's limited lines producer license if all of the following conditions have been satisfied:

(a) The employee or representative is 18 years of age or older; and

(b) The employee or representative has completed a training and education program.

100.8 A limited lines business entity is responsible for all actions of its employees and representatives relating to the offering, sale or solicitation of limited lines insurance. The conduct of an employee or a representative related to insurance shall be deemed to be the conduct of the business entity producer for purposes of this regulation.

100.9 Each limited lines Business Entity shall provide a training and education program for each employee or representative prior to allowing such person to offer, sell or solicit limited lines insurance which shall meet the following minimum standards:

(a) Include instruction about the kinds of insurance specified in the regulation that are offered for sale; and

(b) Provide training about the requirements and limitations imposed on limited lines producers and employees.

(c) Limited lines car rental training shall include specific instruction on the law which prohibits an employee from making any statement or engaging in any conduct, express or implied, that would lead a consumer to believe:

(1) That the purchase of rental car insurance is required in order for the renter to rent a motor vehicle;

(2) That the renter does not have insurance policies in place that already provide the coverage being offered by the rental car company; and

(3) That the employee/agent is qualified to evaluate the adequacy of the renter's existing coverage as it relates to rental.

100.10 A person shall not be issued a license in the bail bonds or surplus lines line of insurance unless the person holds, or is simultaneously issued, a license in the property or casualty line of insurance.

History

• SOURCE: Final Rulemaking published at 50 DCR 10371 (December 5, 2003); as amended by Final Rulemaking published at 56 DCR 61 (January 2, 2009); as amended by Final Rulemaking published at 60 DCR 13600 (October 4, 2013).

26-A DCMR § 102 TERM OF LICENSES; RENEWAL OF LICENSES

102.1 The terms of licenses and renewal of licenses shall be as follows:

(a) An initial license issued to an individual after the effective date of the Producer Licensing Amendment Act of 2008 (and the first renewal after the effective date of the Producer Licensing Amendment Act of 2008 of an individual insurance producer license initially issued before the effective date of the Producer Licensing Amendment Act of 2008) shall expire on the calendar day which both: (i) is the last day of the birth month of the producer; and (ii) falls not less than eighteen (18) months, and not more than twenty-nine (29) months, after the effective date of the initial license;

(b) An initial license issued to a business entity after the effective date of the Producer Licensing Amendment Act of 2008 (and the first renewal after the effective date of the Producer Licensing Amendment Act of 2008 of a business entity insurance producer license initially issued before the effective date of the Producer Licensing Amendment Act of 2008) shall expire on the May 31 which falls not less than eighteen (18) months, and not more than twenty-nine (29) months, after the effective date of the initial license.

(c) A renewal of an existing license shall expire two (2) years after the expiration date of the initial license; except, the first renewal after the effective date of the Producer Licensing Amendment Act of 2008 of a license initially issued before the effective date of the Producer Licensing Amendment Act of 2008 shall be governed by paragraphs (a) and (b) of this subsection".

102.2 An applicant for license renewal shall apply for renewal before the expiration date of the license and shall pay the required renewal fee as provided in section 105 of this chapter.

102.3 The license holder shall notify the Commissioner in writing of any change of home or business address within thirty (30) days of the change of address.

102.4 The failure of the license holder to receive the notice required under subsection 102.2 does not relieve the license holder of the responsibility for renewing the license.

102.5 A producer who fails to renew a license prior to the expiration date may renew the license within thirty (30) days after expiration upon paying the required late fee. Upon renewal, the producer shall be deemed to have possessed a valid license during the period between the expiration of the license and the renewal thereof.

102.6 If a producer fails to renew a license within thirty (30) days after expiration of the license, the license shall be considered to have lapsed on the date of expiration, and the license holder shall be required to apply for reinstatement pursuant to section 103 of this chapter.

History

• SOURCE: Final Rulemaking published at 50 DCR 10371 (December 5, 2003); as amended by Final Rulemaking published at 56 DCR 61 (January 2, 2009).

26-A DCMR § 103 REINSTATEMENT OF AN EXPIRED LICENSE

103.1 This section shall apply to an applicant for reinstatement of an expired license issued under this chapter.

103.2 An applicant for reinstatement under this section shall file an application with the Department on the prescribed form and shall pay the required reinstatement fee as provided in section 105 of this chapter.

103.3 An applicant for reinstatement under this section shall demonstrate fitness to resume practice by submitting evidence satisfactory to the Commissioner that the applicant has the competency and knowledge of District law necessary to resume transacting insurance business and that such resumption will not be detrimental to the public interest or the integrity of the insurance profession.

103.4 In making a determination pursuant to subsection 103.3, the Commissioner shall consider the following:

(a) The length of time that the applicant has transacted insurance business in the District or in another state or country;

(b) The length of time after expiration of the applicant's license that the applicant was not transacting insurance business either in the District or in another state or country;

(c) The violation of any laws by the applicant;

(d) The applicant's present character; and

(e) The applicant's present qualifications and competency to transact insurance business.

103.5 The Commissioner may require an applicant to complete certain educational or training requirements, in addition to any continuing education requirements, prior to or after reinstatement, to ensure that the applicant is competent to transact insurance business.

103.6 The Commissioner shall not reinstate the license of a producer who fails to apply for reinstatement of a license within one (1) year after the license expires. The person may become licensed by meeting the requirements then in existence for obtaining an initial license.

History

• SOURCE: Final Rulemaking published at 50 DCR 10371 (December 5, 2003); as amended by Final Rulemaking published at 56 DCR 61 (January 2, 2009).

26-A DCMR § 104 REINSTATEMENT AFTER SUSPENSION OR REVOCATION

104 REINSTATEMENT AFTER SUSPENSION OR REVOCATION

104.1 A person whose license to do business as a producer has been revoked, or whose application for reinstatement has been denied shall be ineligible to apply for reinstatement for a period of three (3) years from the date of the revocation or denial unless otherwise provided in the Commissioner's order of revocation or denial.

104.2 An applicant for reinstatement under this section shall file an application with the Department on the prescribed form and shall pay the required reinstatement fee.

104.3 An applicant for reinstatement shall demonstrate fitness to transact insurance business by submitting evidence satisfactory to the Commissioner that the applicant has the moral qualifications, competency, and knowledge of District law necessary to resume practice, and will not be detrimental to the public interest or the integrity of the insurance profession.

104.4 In making a determination pursuant to this section, the Commissioner may consider, among other factors, the following:

(a) The nature and circumstances of the conduct for which the applicant's license was suspended or revoked;

(b) The applicant's recognition of the seriousness of any misconduct;

(c) The applicant's conduct since the suspension or revocation, including steps taken by the applicant to remedy prior misconduct and prevent future misconduct;

(d) The applicant's present character;

(e) The applicant's present qualifications and competency to practice in the insurance profession; and

(f) Whether the applicant has paid all fines.

104.5 The Commissioner may require an applicant to complete specific educational or training requirements, in addition to any continuing education requirement, prior to or after reinstatement, to ensure that the applicant is competent to transact insurance business.

History

• SOURCE: Final Rulemaking published at 50 DCR 10371 (December 5, 2003); as amended by Final Rulemaking published at 56 DCR 61 (January 2, 2009).

26-A DCMR § 105 PRODUCER LICENSING FEES

105.1 The following fees shall apply to producer initial applications, renewal applications, and reinstatement applications:

(a) One hundred dollars ($ 100) for qualifications in one or more of the following lines of insurance (the "life and health group") as described in section 8(a) of the Producer Licensing Act of 2002, effective March 27, 2003 (D.C. Law 14-264; D.C. Official Code § 31-1131.08(a) (2001)):

(1) Life;

(2) Accident and health or sickness; and

(3) Variable life and variable annuity products;

(b) One hundred dollars ($ 100) for qualifications in one or more of the following lines of insurance (the "property and casualty group") as described in section 8(a) of the Producer Licensing Act of 2002, effective March 27, 2003 (D.C. Law 14-264; D.C. Official Code § 31-1131.08(a) (2001)):

(1) Property;

(2) Casualty;

(3) Personal lines; and

(4) Bail bonds;

(c) One hundred dollars ($ 100) for qualifications in one or more of the following limited lines of insurance:

(1) Credit;

(2) Car rental;

(3) Crop;

(4) Surety;

(5) Travel;

(6) A line of insurance the Commissioner recognizes as a limited line of insurance for the purposes of complying with section 8(e) of the Producer Licensing Act of 2002, effective March 27, 2003 (D.C. Law 14-264; D.C. Official Code § 31-1131.08(e) (2001)).

(d) Two hundred dollars ($ 200) for qualification as a surplus lines producer;

(e) The renewal fee is the same as the initial license fee and, if applicable, a late fee is double the initial fee;

(f) The reinstatement fee of each license is double the initial fee; and

(g) A processing fee of one hundred dollars ($ 100) shall be applied to each application filed in paper form.

History

• SOURCE: Final Rulemaking published at 50 DCR 10371 (December 5, 2003); as amended by Final Rulemaking published at 56 DCR 61 (January 2, 2009).

26-A DCMR § 106 CONTINUING EDUCATION

106.1 Except if a producer is licensed only as a limited lines producer and except as otherwise provided in this section, a producer seeking to renew a license shall certify to the Commissioner that he or she has successfully completed at least twenty-four (24) credit hours of approved continuing education, including at least three (3) credit hours of ethics, within the license period.

106.2 A producer seeking to renew a license in both the life and health and property and casualty groups of authority shall complete at least six (6) credit hours for each group.

106.3 A producer seeking to renew a license in the property and casualty group shall complete at least four (3) credit hours in flood insurance during the licensee’s first license renewal period after the effective date of this provision that includes at least 120 days.

106.4 A producer licensed only as a limited lines producer is not required to complete continuing education.

106.5 An applicant for the renewal of a license as a producer shall prove the completion of the required continuing education credits by submitting, on a form prescribed by the Commissioner, the following:

(a) The name and address of the sponsor of the program;

(b) The course title, and place where the course was taught;

(c) The name of the instructor;

(d) The dates on which the applicant attended the program;

(e) The hours of credit claimed; and

(f) Verification of completion by signature or stamp of the sponsor.

106.6 Courses necessary to obtain the following nationally recognized designations shall count as twenty-four (24) credit hours upon successful completion of the national examination for each part:

(a) Accredited Advisor in Insurance (AAI);

(b) Associate in Claims (AIC);

(c) Associate in Loss Control Management (ALCM);

(d) Associate in Risk Management (ARM);

(e) Associate in Underwriting (AU);

(f) Certified Employee Benefits Specialist (CEBS);

(g) Certified Insurance Counselor (CIC);

(h) Chartered Financial Consultant (ChFC);

(i) Chartered Life Underwriter (CLU);

(j) Chartered Property and Casualty Underwriter (CPCU)

(k) Fellow Life Management Institute (FLMI)

(l) General Insurance (INS);

(m) Life Underwriter Training Fellow, 26 weeks (LUTCF); and

(n) Other designations approved by the Commissioner.

106.7-106.9 Repealed.

106.11 Repealed.

106.12 A license holder shall attend a course in order to receive credit. A licensee shall receive credit for the number of hours approved for a course only upon the successful completion of an approved course.

106.13 Instructors shall earn one (1) hour of continuing education credit for each one (1) approved hour of instruction of an approved course.

106.14 Licensees and instructors shall not earn credit for attending or instructing a subsequent offering of the same course during the same license period.

106.15 Excess credit hours accumulated during a license period shall not be carried forward to the next license period.

106.16 Repealed.

106.17 Except as provided in subsection 106.18, course examinations are not required for continuing education credit, unless the sponsor requires an examination.

106.18 A program of independent study shall qualify for continuing education credit only if there is a sponsor supervised examination. Each program of independent study shall be assigned credit hours, which shall be awarded upon the passing of the supervised examination. The program of independent study, and the number of credit hours, shall be approved by the Commissioner.

106.19 A licensee shall not satisfy more than one half (1/2) of his or her continuing education requirement for a particular licensure period with a course or courses sponsored by an insurance company.

106.20 Repealed

106.21 An applicant for the renewal of a producer's license who fails to complete the continuing education requirements before the expiration date of the license may renew the license within thirty (30) days after expiration by submitting proof pursuant to either subsection 106.1 or subsection 106.2 and paying the required late fee.

106.22 Repealed

106.23 Upon submitting proof and paying the additional late fee, the applicant shall be deemed to have possessed a valid license during the period between the expiration of the license and the submission of the required documentation and payment of the late fee.

106.24 Textbooks are not required for continuing education credit. If textbooks are not provided, students shall be provided with a syllabus containing the following:

(a) Course title;

(b) Times and dates of the course offering;

(c) Names and addresses or telephone numbers of the course coordinator;

(d) A detailed outline of the subject matter being covered; and

(e) Any other information the sponsor feels may benefit the students.

106.25 Sponsors, course coordinators, and instructors shall ensure that textbooks and syllabi contain accurate and current information relating to the subject matter being taught.

106.26 The requirements of this section may be waived by the Commissioner for good cause shown. "Good cause" includes a long-term illness or incapacity, active duty in the armed services of the Untied States outside of the Washington Metropolitan Area, or any other emergency deemed sufficient by the Commissioner. Requests for a waiver shall be made in writing and shall be submitted to the Commissioner not later than ninety (90) days prior to the end of the license period. The Commissioner shall grant or deny a request for a waiver within thirty (30) days of the receipt of the request. A waiver granted pursuant to this subsection shall be effective only for that particular license period.

History

• SOURCE: Final Rulemaking published at 50 DCR 10371 (December 5, 2003); as amended by Final Rulemaking published at 56 DCR 61 (January 2, 2009).

26-A DCMR § 107 APPROVAL OF INSURANCE EDUCATION PROGRAMS AND PROVIDERS

107.1 Professional or proprietary schools, insurance companies and other organizations that establish programs for the teaching of insurance courses to satisfy the continuing education requirements under this chapter shall, prior to conducting such courses, obtain approval in accordance with this section.

107.2 Except as provided in subsection 107.4, an applicant for approval of an insurance education program shall, on a form prescribed by the Commissioner, furnish the following information:

(a) The name of the program and the address of the permanent program office;

(b) The name and address of the sponsoring organization if any;

(c) The name of the program director or directors, and all professional licenses held by each individual;

(d) Repealed;

(e) The address of any permanent classroom or classrooms to be used by the program; and

(f) Any other information that may be required by the Commissioner to determine whether the program meets the requirements for approval.

107.3 An applicant for approval of an insurance education program shall:

(a) Comply with all federal and District laws, including laws regarding discrimination based on sex, race, religion, age, physical disability, sexual orientation, or national origin; and

(b) Certify that each instructor:

(1) Is experienced and qualified for the course being taught; and

(2) Meets one of the following standards:

(A) The instructor has been engaged in the insurance business, or has served as an insurance education instructor, for at least three (3) years;

(B) The instructor is a member of the bar of any state or the District and is engaged in an area of the law related to insurance; or

(C) The instructor is a certified public accountant licensed in any state or the District and is engaged in a practice related to insurance.

107.4 An accredited institution of higher education such as a college, university, community or junior college, seeking initial approval or re-approval of insurance courses to satisfy the requirements for continuing education set forth in this chapter shall submit its application for approval on a form prescribed by the Commissioner. The institution shall provide the following information:

(a) Name of the department within the institution, that is offering the courses;

(b) Course numbers and titles;

(c) Method of instruction for each course;

(d) A detailed outline for each course, with the specific number of classroom hours allocated for each topic described in Appendices 1, 2, 3, and 4;

(e) A current class catalog for the institution; and

(f) Any other information that may be required by the Commissioner to determine whether the courses meet the requirements for approval.

107.5 An inspection of the program office and any permanent classroom facility, or an investigation of the program provider and its instructors, may be conducted, with or without advance notice, by the Commissioner or his or her representative. Such inspection or investigation shall be at the expense of the program provider, and may be based on any of the following:

(a) Information obtained from state, federal or international agencies, and other interested parties;

(b) Information obtained as the result of a public hearing held by the Commissioner;

(c) Information furnished by a producer or an applicant seeking licensure as a producer; or

(d) Any information the Commissioner deems relevant and sufficient to warrant such inspection or investigation.

107.6 If the application is in proper form and the applicable requirements of this section are met, the Commissioner shall issue a certificate of approval, which shall contain the effective date and expiration date of the approval.

107.7 The Commissioner shall issue a decision regarding the approval, or denial of approval, of an insurance education program within sixty (60) days of the receipt of a completed application. An approval granted pursuant to this section shall expire two (2) years from the date of issuance.

107.7a The Commissioner shall approve only courses that impart substantive and procedural knowledge relating to the insurance field. The following courses shall not be approved:

(a) A prelicensing education course;

(b) A course designed to prepare a person for a license examination;

(c) A course in mechanical, office or business skills, including typing, speed reading, or the use of calculators or other machines or equipment;

(d) A course in sales promotion;

(e) A course in motivation, salesmanship, stress management, time management, psychology, communication, or writing; or

(f) A course relating to office management, client relations, or improving the operation of the licensee’s business.

107.7b The Commissioner may grant approval for courses approved by the insurance regulatory agency in another state provided the course meets the requirement of subsection 107.7a, or the state accords reciprocity in accordance with the National Association of Insurance Commissioners Continuing Education Reciprocity process.

107.7c The Commissioner shall determine the number of credit hours to be assigned to each course. In general, one credit hour shall be assigned for each fifty (50) minutes of classroom instruction. The number of approved credit hours shall not include time spent on meals, breaks, or other unrelated activities.

107.8 Within ten (10) days of a change to an approved course, an insurance education provider shall notify the Commissioner of such change.

107.9 Each approved insurance education program shall use knowledgeable and competent instructors to teach all courses. An instructor shall not have had his or her District insurance license revoked and shall, in the opinion of the Commissioner, be otherwise of good character and reputation.

107.10 Repealed.

107.11 Each approved insurance education program shall maintain the following items for three (3) years:

(a) The records of each student, including the name (s) of the course or courses taken;

(b) Proof that the final examination for the course, if required, was passed; and

(c) Copies of all final examinations administered, and education certificates issued to students completing the program.

107.12 The sponsor or director of an approved education program shall provide the Commissioner with information regarding the date, time, and place of any scheduled continuing education course to permit class to be monitored by the Commissioner or his or her representative.

107.13 A sponsor or director shall not advertise a course as having been approved unless the Commissioner has approved the course in writing. A sponsor or director shall prominently display the number of hours for which a course has been approved on any advertisements for the course. If an advertisement is published before course approval, or the course being sponsored is not eligible for approval, a statement to that effect shall be included in the advertisement.

107.14 Advertising shall not be deceptive or misleading. Upon written request by a sponsor or director, the Commissioner shall grant permission to the sponsor or director to use the term "approval pending" if the:

(a) Term "approval pending" is clearly visible in any advertisement of the course; and

(b) Course has been submitted to the Commissioner for approval in accordance with section 107.

107.15 Sponsors and directors shall provide that fees for courses are reasonable and clearly identified in any advertisement for the course. If a course is cancelled for any reason, the sponsor or director shall refund all fees within thirty (30) days of the cancellation, or, at the request of the license holder, shall transfer the fee to another course offered by the sponsor or director. A sponsor or director shall have a refund policy that addresses a license holder's cancellation or failure to complete a course.

History

• SOURCE: Final Rulemaking published at 50 DCR 10371 (December 5, 2003); as amended by Final Rulemaking published at 56 DCR 61 (January 2, 2009).

26-A DCMR § 108 REVOCATION OR SUSPENSION OF APPROVAL OF AN INSURANCE EDUCATION PROGRAM

108.1 Any insurance education program or sponsor of a program may be denied approval for failure to meet the requirements in this section or section 107.

108.2 Any denial of program approval, or any proposal to revoke or suspend approval, shall be in writing, and shall advise the applicant of his or her right to a hearing. Nothing in this section shall prohibit the rejection and return of applications for correction of ministerial errors.

108.3 The Commissioner may suspend or revoke the approval of an insurance education program for any of the following reasons:

(a) The failure to maintain any requirement set forth in this section or section 107;

(b) The failure to advise the Department promptly of any change in information initially submitted in the application during the period of approval including, but not limited to, change of director, school address, place or time of scheduled classes and instructors;

(c) Obtaining an approval by fraud or misrepresentation;

(d) The failure to conduct any classes for a period of 12 months; or

(e) Failure to report to the Department the students' continuing education credits.

108.4 Any school whose approval has been suspended or revoked shall turn over its education certificates to the Commissioner within fourteen (14) days.

108.5 As an alternative to suspension or revocation of approval, the Commissioner may place any program on probation with appropriate conditions.

108.5a In addition to suspending or revoking approval, or placing a program on probation, the Commissioner may impose monetary penalties not to exceed $1,000 for the first violation and $2,000 for each succeeding violation.

108.6 No insurance education program or director whose approval has been revoked may reapply for approval for a period of five (5) years.

History

• SOURCE: Final Rulemaking published at 50 DCR 10371 (December 5, 2003); as amended by Final Rulemaking published at 56 DCR 61 (January 2, 2009).

26-A DCMR § 199 DEFINITIONS

For the purposes of this chapter, the following words and phrases shall have the meanings ascribed:

Birth month - The month of the calendar year in which an individual insurance producer, or an applicant for licensure as an individual insurance producer, was born.

Car rental limited line insurance - Insurance offered, sold, or solicited in connection with and incidental to the rental of rental cars for a period of up to sixty (60) days, whether at the rental office or by pre-selection of coverage in master, corporate, group, or individual agreements that:

(a) Is non-transferable;

(b) Applies only to the rental car that is the subject of the rental agreement; and

(c) Is limited to the following kinds of insurance:

(1) Personal accident insurance for renters and other rental car occupants, for accidental death or dismemberment, and for medical expenses resulting from an accident that occurs during the rental period;

(2) Liability insurance that provides protection to the renters and other authorized drivers of a rental car for liability arising from the operation or use of the rental car during the rental period;

(3) Personal effects insurance that provides coverage to renters and other vehicle occupants for loss of, or damage to, personal effects in the rental car during the rental period;

(4) Roadside assistance and emergency sickness protection insurance; or

(5) Any other coverage designated by the Commissioner.

Credit limited line insurance - Credit life, credit disability, credit property, credit unemployment, involuntary unemployment, mortgage life, mortgage guaranty, mortgage disability, guaranteed automobile protection insurance, or any other form of insurance offered in connection with an extension of credit that is limited to partially or wholly extinguishing that credit obligation and that is designated by the Commissioner as limited line credit insurance.

Crop limited line insurance - Insurance providing protection against damage to crops from unfavorable weather conditions, fire or lightning, flood, hail, insect infestation, disease or other yield-reducing conditions or perils provided by the private insurance market, or that is subsidized by the Federal Crop Insurance Corporation, including Multi-Peril Crop Insurance.

Home state - The District of Columbia or any state or territory of the United States in which an insurance producer: (1) Maintains his or her principal place of residence or principal place of business; and (2) Is licensed as a resident insurance producer.

License period - The period of time starting on, and including, the day on which an insurance producer license becomes effective and ending on, and including, the day on which the license expires absent renewal. For the purposes of this definition, a license that is renewed becomes effective on the date the renewal is effective.

Surety limited line insurance - Insurance or bond that covers obligations to pay the debts of, or answer for the default of another, including faithlessness in a position of public or private trust. For the purposes of limited line licensing, surety limited line insurance does not include surety bail bonds.

Travel limited line insurance - Insurance coverage for trip cancellation, trip interruption, baggage, life, sickness and accident, disability, and personal effects when limited to a specific trip and sold in connection with transportation provided by a common carrier.

History

• SOURCE: Final Rulemaking published at 56 DCR 61 (January 2, 2009). APPENDIX 1 - CASUALTY INSURANCE COURSE REQUIREMENTS SECTION A I. PRINCIPLES OF INSURANCE -- 2 Hours A. Nature of risk B. Risk management C. Insurable and noninsurable risk D. Pooling concept-- law of large numbers E. Government as insurer F. Forms of ownership G. Marketing systems H. Competition in the industry I. Functions of insurers J. Reinsurance II. General District of Columbia Laws -- 3 Hours A. Broad powers and duties of the Commissioner of Insurance B. Knowledge of administrative action process, including hearings and penalties C. Purpose of licensing, including procedures and who must be licensed D. Record keeping and changes in agent status, including change of address E. Agent license expiration, revocation, suspension, and limitation F. General regulations regarding misrepresentation, knowledge of acts of agent, rebating G. Regulation of specific insurance contract changes regarding cancellation, nonrenewal, notice of proof of loss, and payment of claims H. Unfair claims methods and practices--timely payment of claims I. Fair rating practices J. Home solicitation requirements K. Written disclosure of fees other than commissions III. Ethics -- 3 Hours A. Fiduciary duties, and responsibilities B. Conflict of interest C. Ethical marketing practices, including fair and ethical treatment of policyholders D. Appropriate claims practices E. Suitability of product client F. Social responsibility of an insurance agent G. Agent/company relationships H. Maintaining appropriate insurance expertise I. Education of policyholders J. Understanding of client needs SECTION B IV. Policies, Terms, and Concepts -- 6 Hours A. Types of policies, bonds, and related terms 1. General liability a. Owners, landlords, and tenants liability b. Manufacturers and contractors liability c. Products and completed operations liability d. Contractual liability e. Commercial general liability f. Premises/operations liability g. Owners and contractors protective liability 2. Automobile Insurance - personal & family auto and business & commercial auto a. Physical damage (collision and comprehensive) b. Uninsured motorists c. Underinsured motorists d. Named insureds e. Insureds f. Owned automobile g. Nonowned automobile h. Temporary substitute auto 3. Workers' compensation 4. Professional liability 5. Umbrella/excess liability B. Insurance terms and related concepts 1. Risks 2. Hazards 3. Indemnity 4. Insurable interest 5. Actual cash value 6. Negligence 7. Liability 8. Accident 9. Occurrence 10. Burglary 11. Robbery 12. Theft 13. Mysterious disappearance 14. Fidelity (employee dishonesty) 15. Warranties 16. Representations 17. Concealment 18. Bodily injury liability 19. Property damage liability 20. Personal injury liability 21. Limits of liability 22. Deductibles 23. Incidental contracts 24. Binders C. Policy provisions 1. Declarations 2. Insuring Agreement 3. Conditions 4. Exclusions 5. Definition of the Insured 6. Duties of the Insured 7. Cancellation and Nonrenewal Provisions 8. Supplementary Payment (Additional Coverages) 9. Proof of Loss 10. Notice of Claim 11. Arbitration 12. Pro Rata Liability (Other Insurance) 13. Subrogation 14. Compliance with Provisions of Fair Credit Reporting Act 15. Claims Made Policy Form 16. Salvage 17. Consent to Settle a Loss 18. Limitations V. District of Columbia Insurance Law -- 6 Hours A. General rate standards B. Prohibited classifications of risks C. Surplus lines 1. Definition 2. Prohibitions and restrictions 3. Responsibilities of agents and brokers D. Oral contracts E. Automobile liability 1. Financial responsibility a. Definitions b. Persons required to show proof 2. Required coverages and prohibited exclusions Uninsured motorist 3. Cancellation or nonrenewal 4. Responsibility for minors operating motor vehicles 5. District of Columbia Automobile Insurance Plan (DCAIP) F. Worker's compensation 1. Purpose 2. Definitions
• SOURCE: Final Rulemaking published at 50 DCR 10371 (December 5, 2003). APPENDIX 2 - PROPERTY INSURANCE COURSE REQUIREMENTS SECTION A I. Principles of Insurance -- 2 Hours A. Nature of risk B. Risk management C. Insurance and noninsurable risk D. Pooling concept--law of large numbers E. Government as insurer F. Forms of ownership G. Marketing systems H. Competition in the industry I. Functions of insurers J. Reinsurance II. General District of Columbia Insurance Laws -- 3 Hours A. Duties and powers of Insurance Commissioner--statutory and rule-making B. Knowledge of administrative action process, including hearings and penalties C. Purpose of licensing, including procedures and who must be licensed D. Record keeping and changes in agent status, including change of address E. Agent license expiration, revocation, suspension, and limitation F. General regulations regarding misrepresentation, knowledge of acts of agent, rebating G. Regulation of specific insurance contact changes regarding cancellation, nonrenewal, notice of proof of loss, and payment of claims H. Unfair claims methods and practices--timely payment of claims I. Fair rating practices III. Ethics -- 3 Hours A. Fiduciary duties, and responsibilities B. Conflict of interest C. Ethical marketing practices, including fair and ethical treatment of policyholders D. Appropriate claims practices E. Suitability of product to client F. Social responsibility of insurance agent G. Agent/company relationships H. Maintaining appropriate insurance expertise I. Education of policyholders J. Understanding of client needs SECTION B IV. Policies, Terms, and Concepts -- 6 Hours A. Types of policies 1. Standard fire 2. Personal lines a. Dwelling and contents b. CPL (comprehensive personal liability) c. Homeowners 3. Commercial a. General property b. Special multi-peril c. Business owner policy d. Business interruption (i) Gross earnings (ii) Earnings (iii) Extra expense 4. Inland marine a. Personal floaters b. Commercial floaters 5. Others a. Flood b. Watercraft B. Insurance terms and related concepts 1. Insurance 2. Insurable interest 3. Risk 4. Hazard 5. Peril a. Specified (named) perils (i) Standard fire (ii) Extended coverage (iii) Broad form b. All-risk 6. Loss a. Direct b. Indirect 7. Proximate cause 8. Deductible 9. Indemnity 10. Actual cash value 11. Replacement cost 12. Limits of liability 13. Coinsurance 14. Pair and set clause 15. Extensions of coverage 16. Additional coverages 17. Accident 18. Occurrence 19. Cancellation 20. Nonrenewal 21. Vacancy and unoccupancy 22. Right of Salvage 23. Abandonment 24. Liability 25. Negligence C. Policy provisions and contract law 1. Declarations 2. Insuring agreement 3. Conditions 4. Exclusions 5. Definition of the insured 6. Duties of the insured 7. Obligations of the insurance company 8. Mortgagee rights 9. Proof of loss 10. Notice of claim 11. Appraisal 12. Pro rata liability (other insurance) 13. Assignment 14. Subrogation 15. Arbitration 16. Elements of a contract 17. Warranties, representations, and concealment 18. Binders 19. Sources of insurability information 20. Fair Credit Reporting Act V. District of Columbia Insurance Law -- 6 Hours A. General rate standards - use and file provisions B. Prohibited classification of risks C. Surplus lines 1. Definitions 2. Prohibitions and restrictions 3. Responsibilities of agents and brokers D. Oral contracts E. Content of forms F. Definition of loss G. Insurance Placement Facility/Fair Plan
• SOURCE: Final Rulemaking published at 50 DCR 10371 (December 5, 2003) APPENDIX 3 - LIFE INSURANCE COURSE REQUIREMENTS SECTION A I. Principles of Insurance -- 2 Hours A. Nature of risk B. Risk management C. Insurable and noninsurable risk D. Pooling concept--law of large numbers E. Government as insurer F. Forms of ownership G. Marketing systems H. Competition in the industry I. Functions of insurers J. Reinsurance II. General District of Columbia Insurance Laws -- 3 Hours A. Duties and powers of Insurance Commissioner--statutory and rule-making B Knowledge of administrative action process, including hearings and penalties C. Purpose of licensing, including procedures and who must be licensed D. Record keeping and changes in agent status, including change of address E. Agent license expiration, revocation, suspension, and limitation F. General regulations regarding misrepresentation, knowledge of acts of agent, rebating G. Regulation of specific insurance contract changes regarding cancellation, nonrenewal, notice of proof of loss, payment of claims H. Unfair claims methods and practices--timely payment of claims I. Fair rating practices III. Ethics -- 3 Hours A. Fiduciary duties, and responsibilities B. Conflict of interest C. Ethical marketing practices, including fair and ethical treatment of policyholders D. Appropriate claims practices E. Suitability of life products to clients including sales to the elderly F. Social responsibility of insurance agent G. Agent/company relationships H. Maintaining appropriate insurance expertise I. Education of policyholders J. Understanding of client needs SECTION B IV. Policies, Terms and Concepts -- 6 Hours A. Types of policies 1. Traditional whole life products a. Ordinary (straight) life b. Limited-pay and single-premium life c. Modified and graded premium whole life d. Adjustable life 2. Interest-sensitive whole life products a. Universal like b. Variable whole life c. Variable universal life 3. Term life a. Level, decreasing, and increasing term b. Renewal term c. Convertible term 4. Annuities a. Single, level, and flexible premium b. Immediate and deferred c. Fixed and variable--requirement of security license 5. Endowment 6. Combination plans a. Family policy b. Family income policy c. Family maintenance policy B. Policy riders, provisions, options, and exclusions 1. Policy riders a. Waiver of premium b. Guaranteed insurability c. Payor benefit d. Accidental death and/or accidental death and dismemberment e. Term riders f. Other insureds (e.g., spouse, children, nonfamily) 2. Policy provisions and options a. Entire contract b. Insuring clause c. Free look d. Consideration clause e. Owner's rights f. Primary and contingent beneficiaries g. Revocable and irrevocable beneficiaries h. Change of beneficiary i. Modes of premium payment j. Grace period k. Automatic premium loan l. Reinstatement m. Policy loan n. Nonforfeiture options o. Dividends and dividend options p. Incontestability q. Assignment r. Suicide s. Misstatement of age t. Settlement options u. Conversion options (individual policy) 3. Policy exclusions C. Completing the application, underwriting, and delivering the policy 1. Completing the application a. Requiring signatures b. Changes in the application c. Consequences of incomplete applications d. Warranties and representations e. Collecting the initial premium and issuing the receipt 2. Underwriting a. Insurable interest b. Medical; information and consumer reports c. Fair Credit Reporting Act d. Risk classification 3. Delivering the policy a. When coverage begins b. Obtaining a statement of good health c. Explaining the policy and its provisions, riders, exclusions, and ratings D. Taxes, Retirement, and Other Insurance Concepts 1. Third-party ownership 2. Group life insurance 3. Retirement plans 4. Business insurance (e.g., key employee, buy sell agreement, split-dollar, etc.) 5. Social security benefits and taxes 6. Tax treatment of insurance premiums, and proceeds V. District of Columbia Insurance Law -- 6 Hours A. Policy provisions 1. Grace period 2. Separate benefits 3. Incontestability 4. Misstatement of age 5. Assignment of rights 6. Designation of beneficiaries 7. Variable contracts B. Marketing practices 1. Bonuses 2. Replacement of policies 3. Disclosure requirements 4. Suitability 5. Combination sales 6. Record keeping
• SOURCE: Final Rulemaking published at 50 DCR 10371 (December 5, 2003) APPENDIX 4 - ACCIDENT AND HEALTH INSURANCE COURSE REQUIREMENTS SECTION A I. Principles of Insurance -- 2 Hours A. Nature of risk B. Risk management C. Insurable and noninsurable risk D. Pooling concept--law of large numbers E. Government as insurer F. Forms of ownership G. Marketing systems H. Competition in the industry I. Functions of insurers J. Reinsurance II. General District of Columbia Insurance Law -- 3 Hours A. Duties and powers of Insurance Commissioner--statutory and rule-making B. Knowledge of administrative action process, including hearings and penalties C. Purpose of licensing, including procedures and who must be licensed D. Record keeping and changes in agent status, including change of address E. Agent license expiration, revocation, suspension, and limitation F. General regulations regarding misrepresentation, knowledge of acts of agent, rebating G. Regulation of specific insurance contract changes regarding cancellation, nonrenewal, notice of proof of loss, and payment of claims H. Unfair claims methods and practices--timely payment of claims I. Fair rating practices III. Ethics -- 3 Hours A. Fiduciary duties, and responsibilities B. Conflict of interest C. Ethical marketing practices, including fair and ethical treatment of policyholders D. Appropriate claims practices E. Suitability of accident and health products to clients including specifically sales to the elderly F. Social responsibility of insurance agent G. Agent/company relationships H. Maintaining appropriate Insurance expertise I. Education of policyholders J. Understanding of client needs SECTION B IV. Policies, Terms, and Concepts -- 6 Hours A. Types of policies 1. Disability income a. Individual disability income policy b. Business overhead expense policy c. Business health insurance 2. Accidental death and dismemberment 3. Medical expense insurance a. Basic hospital, medical, and surgical policies b. Major medical policies c. Comprehensive major medical policies d. Health Maintenance Organizations (HMO) e. Multiple Employer Trusts (MET) f. Service organizations (Blue Plans) 4. Medicare supplement policies 5. Group insurance a. Group conversion b. Differences between individual and group contracts c. General concepts B. Policy provisions, clauses, and riders 1. Mandatory provisions a. Entire contract b. Time limit on certain defenses (incontestable) c. Grace period d. Reinstatement e. Notice of claim f. Claim forms g. Proof of loss h. Time of payment of claims i. Payment of claims j. Physical examination and autopsy k. Legal actions l. Change of beneficiary 2. Optional provisions a. Change of occupation b. Misstatement of age c. Illegal occupation 3. Other provisions and clauses a. Insuring clause b. Free look (10-day, 20-day, etc.) c. Consideration clause d. Probationary (waiting) period e. Elimination (waiting) period f. Waiver of premium g. Exclusions h. Pre-existing conditions i. Recurrent disability j. Coinsurance k. Deductibles 4. Riders a. Impairment rider b. Guaranteed insurability rider c. Multiple indemnity rider (double, triple) 5. Rights of renewability a. Noncancellable b. Cancelable c. Guaranteed renewable d. Conditionally renewable e. Optionally renewable f. Period of time C. Social insurance 1. Medicare 2. Medicaid 3. Social security benefits D. Other insurance concepts 1. Total, partial, and residual disability 2. Owner's rights 3. Dependent children benefits 4. Primary and contingent beneficiaries 5. Modes of premium payments (annually, semiannual, etc.) 6. Nonduplication and coordination of benefits (e.g., primary vs. excess) 7. Occupational vs. Nonoccupational 8. Tax treatment of premiums and proceeds of insurance contracts (e.g., disability income, and medical expense, etc...) E. Field underwriting procedures 1. Completing application and obtaining necessary signatures 2. Explaining sources of insurability information (e.g., MIB Report, Fair Credit Reporting Act, etc.) 3. Upon payment of initial premium, giving prospect conditional receipt, and explaining the effect of that receipt (e.g., medical exam, etc...) 4. Submitting application and initial premium to company for underwriting 5. Assuring delivery of policy to client 6. Explaining policy and its provisions, riders, exclusions, and ratings to clients 7. In cases where initial premium did not accompany application, obtaining signed statement of continued good health, and obtaining premium for transmittal 8. Contract law a. Requirements of a contract b. Insurable interest c. Warranties and representations V. District of Columbia Insurance Law -- 6 Hours A. General policy provisions 1. Right of return 2. Right of insurer to contest 3. Pre-existing conditions 4. Application process 5. Grace periods B. Mandated benefits 1. Handicapped children 2. Newborn children 3. Chiropractors services 4. Alcoholism, drug abuse, and mental and nervous disorders 5. Home health care 6. Skilled nursing care 7. Kidney disease treatment 8. Diabetes 9. Maternity benefits C. Riders and endorsements D. Marketing methods and practices 1. Advertising 2. Suitability 3. Outline of coverage 4. Replacement 5. Medicare supplement policies 6. Nursing home policies 7. Continuation and conversion 8. Cancer insurance and other dread disease E. Health Insurance Risk-Sharing Plan
• SOURCE: Final Rulemaking published at 50 DCR 10371 (December 5, 2003) Appendix 5 CERTIFICATE OF PRELICENSING EDUCATION I hereby certify that ___ has completed a prelicensing educational course which complies with the requirements in Chapter 1 of Title 26 of the DCMR for the insurance lines of (life & health) (property & casualty). The last day of class/studies for section B of this particular course was (date). I have verified the identification of this applicant by using: ___ District of Columbia driver's license; ___ District of Columbia identification card; or ___ Other (please describe) ___ Authorized Representative Name of Program Date
• SOURCE: Final Rulemaking published at 50 DCR 10371 (December 5, 2003)

26-A2 RESTRICTIONS ON SOLICITATIONS AND SALES

26-A DCMR § 200 PROHIBITION ON GEOGRAPHICAL DISCRIMINATION

200.1 No insurer, policy-writing agent, soliciting agent, broker, or salaried company employee shall decline to insure or to renew contracts of insurance because of the geographic area within the District of Columbia wherein is located the subject of the risk or the applicant's or insured's address.

200.2 The prohibition contained in §200.1 shall not act to prevent an insurer, agent, broker, or company employee from declining to issue contracts or fire or property insurance due to a determination, after on-site inspection and written report, that the condition of the property proposed to be insured does not meet applicable underwriting standards; Provided, that an applicant for that insurance shall be furnished a statement describing any improvements as are necessary to bring the property into conformity with applicable underwriting standards.

200.3 The prohibition contained in §200.1 shall not act to prevent an insurer, agent, broker, or company employee from declining to issue contracts for fire or property insurance due to a determination that the property proposed to be insured will cause, due to its geographic location, a concentration of liability which will exceed reasonable underwriting standards based upon actual properties then insured and, either (1) excessive loss experience or (2) potential excessive loss experience within that geographical area; Provided, that the following requirements are satisfied:

(a) A copy of the underwriting standard shall be furnished to the applicant for insurance, if the application is denied;

(b) The Commissioner of Insurance may rule on the reasonableness of the applicable underwriting standard; and

(c) In any action arising with respect to this subsection, the burden of proof of reasonableness of the underwriting standard shall be on the proponent of the underwriting standard.

200.4 Any insurer, policy-writing agent, soliciting agent, broker or salaried insurance company employee who violates any provision of this section shall be imprisoned for not more than ten (10) days, or fined not more than three hundred dollars ($300), or both, for each offense.

26-A DCMR § 201 SOLICITATION BY MAIL

201.1 Any solicitation shall be made by the insurance company or its agents, including the mailing of canvassing material. A mailing list may be purchased from any source.

201.2 The solicitation material shall state that payment of premiums may be made in cash, by check, or by a charge to a specific credit card. No soliciting letter shall display the emblem of the credit card corporation so as to give the impression of inducement or preferential treatment, by the insurer's advertisement, of that corporation.

201.3 No credit card shall play a role in the solicitation and shall serve no other purpose than is served by a preauthorized check or similar means of payment.

201.4 Premium payments may be made by the card holder by using a credit card as long as there is no violation of insurance laws such as provisions dealing with rebating or discrimination.

26-A DCMR § 202 RESERVED

26-A DCMR § 203 SALE OF INSURANCE TO FEDERAL AND DISTRICT GOVERNMENT EMPLOYEES

203.1 It is the purpose of this section to establish standards for the sale of insurance to Federal or District government employees.

203.2 No company, agent, or broker shall make any implication, either verbal or written, which conveys the impression that any insurance program being offered by the company, agent, or broker, is affiliated with the Federal Employees Group Life Insurance or any other insurance or retirement program for government employees established pursuant to federal law (hereinafter collectively referred to as "FEGLI") or that the insurance is sponsored or endorsed by any agency, department, or arm of the Federal or District Government.

203.3 No agent or solicitor shall make any representation that he or she represents any insurance agency if that insurance agency does not hold a current, valid license issued by the Commissioner of Insurance of the District of Columbia.

203.4 No company, agent, or broker shall fail to divulge the role of the bank, savings bank, savings and loan association, or similar institution, or Federal or State Chartered credit union, (hereinafter referred to as "a financial organization") and of the government, with respect to any arrangement which utilizes a financial organization as an intermediary for purposes of collecting insurance premiums.

203.5 No company, agent, or broker shall fail to inform prospects that the financial organization's willingness to continue its role in the savings account-allotment arrangement throughout the entire premium paying period or the entire term of the prospect's Federal or District government employment cannot be guaranteed by that company, agent, or broker.

203.6 No company, agent, or broker shall make any representation to the effect that a salary allotment to a financial organization is an exclusive arrangement between the federal or District government and that insurance company, agent, or broker, or that the availability of the allotment arrangement is indicative of government endorsement of the insurance for which the solicitation is being made.

203.7 No agent, solicitor, or broker shall make any representation to the effect that he or she is a "counselor", "advisor", or similar designation, for any association or group of government employees, so as to obscure his or her true role with respect to the solicitation or sale of insurance.

203.8 No company, agent, or broker shall make any quotation or reference to premiums on a basis of intervals more frequent than those actually being specified in policies or contracts of the kind which would be issued by the company if the solicitation is successful. For example, a statement such as "Premium as low as $1.00 weekly" is misleading if the most frequent premium mode interval specified in policies or contracts for which the solicitation is being made is monthly.

203.9 Any unfair discrimination between the rates charged for policies sold under a savings account-allotment arrangement with a financial organization and those charged by the same company for similar policies issued under the company's regular premium plans shall be prohibited.

203.10 Any act for the purpose of inducing an applicant to sign a form in blank shall be prohibited.

203.11 Any inaccurate or misleading description of FEGLI including any omission of the fact that an employee's life insurance coverage increases through the years as his or her salary increases, shall be prohibited.

203.12 No company, agent, or broker shall make any attempt to arrange a sales interview with a prospect by conveying the impression that such insurance company, agent, or broker has been officially authorized by the federal or District Government to contact that prospect for the purpose of reviewing, modifying, or discussing his or her existing FEGLI program. This prohibition shall also apply to any statement or act which implies that the company, agent, or broker has access to official federal or District government records pertaining to the employee's FEGLI insurance or his or her employment.

203.13 Use of the initials "FEGLI" or any other reference to FEGLI as a part of the title of any insurance program utilizing a financial organization as an intermediary in a salary allotment arrangement or the use of any other title which is so similar as to create confusion between the plan being offered and FEGLI, shall be prohibited.

203.14 The use of any facsimile of any FEGLI certificates or other official documents in connection with the solicitation or sale of insurance shall be prohibited.

203.15 Any implication that the insurance being solicited would serve to increase the federal or District government employee's FEGLI, as opposed to constituting a separate and distinct policy of insurance, completely unrelated to FEGLI, shall be prohibited.

203.16 Any act of aiding or abetting a person or company in the solicitation or sale of insurance when that person or company does not possess a current valid license issued by the Department of Consumer and Regulatory Affairs shall be prohibited.

203.17 No company, agent, or broker shall make any statement to the effect that the insurance company for which the insurance is being solicited is "participating in the Program" so as to create confusion as the company's possible role as an official participating reinsurer in the FEGLI program as opposed to the same company's role in the sale of insurance under its own program.

203.18 The making of any misrepresentation, by commission or omission, to any person insured in any company, for the purpose of inducing or attempting to induce a policyholder in any company, including the FEGLI program, to lapse, forfeit, or surrender existing insurance, either directly or indirectly, shall be prohibited.

203.19 Nothing contained in this section shall be construed as prohibiting or restricting any insurance company, agent, broker, or other person from performing any act which has been duly authorized by the federal or District government.

26-A DCMR § 204 RESERVED

26-A DCMR § 205 PREMIUM FINANCING AGREEMENTS

205.1 A copy of the premium finance agreement shall, in every case, be furnished to the insured not later than the date on which the first installment payment to the finance company is due to be paid.

205.2 No change involving an increased payment shall be made in any premium finance agreement unless, prior to the time when the increased payment becomes due to be paid, there has been full written disclosure to the insured of the change, and the insured has consented to the change.

26-A DCMR § 206 CONSISTENCY IN ACCOUNTING METHODS

206.1 Any insurer or rating bureau making rate filings with the Commissioner of Insurance within the scope of Chapter 17 of Title 35 of the D.C. Code, 1981 ed., shall calculate expenses on an accrual basis if it calculates premiums on an accrual basis, and shall calculate expenses on a cash basis if it calculates premiums on a cash basis.

206.2 No rate revision or rate schedule shall be approved by the Commissioner unless premiums and expenses are calculated consistently on either the cash or the accrual basis.

206.3 The net investment income (including the realized capital gains) on all cash and invested assets (as defined on page 2 of the 1969 National Association of Insurance Commissioners Convention Form Annual Statement for Fire and Casualty Companies) held against all unearned premium reserves and loss reserves of any nature shall be considered by the Commissioner as part of an insurance company's income in determining the necessity for adjustment of rates within the scope of Chapter 17 of Title 35, D.C. Code, 1981 ed.

206.4 Any agreement, by law, rule, regulation or amendment thereto of the rating bureau, with respect to rate filings with the Commissioner of Insurance which is contrary to the provisions of this section shall be disapproved.

26-A DCMR § 207 CONSISTENCY IN THE USE OF INFLATION FACTORS

207.1 If any insurer or rating bureau making rate filings with the Commissioner of Insurance within the scope of Chapter 17 of Title 35 of the D.C. Code, 1981 ed., estimates the effects of inflation on its incurred or paid losses in any period, it shall for the same period fully reflect the effects of inflation on the sales of insurance and premiums earned or written.

207.2 No rate revision or rate schedule shall be approved by the Commissioner unless the effects of inflation are either omitted entirely from his or her consideration or are fully reflected in the data relating to sales of insurance, premiums, losses, and expenses.

207.3 Any agreement, by-law, rule, regulation or amendment thereto of a rating bureau, with respect to rate filings with the Commissioner, which is contrary to this section, shall be disapproved.

26-A DCMR § 208 DENIAL OF SURETY BONDS

208.1 Any surety company doing business in the District of Columbia which shall deny an applicant a bid bond, performance bond, or payment bond for any construction contract shall reasonably explain in writing the reason or reasons for the denial and make recommendations which would aid the contractor to overcome the deficiency.

208.2 There shall be no liability on the part of, and no cause of action of any nature shall arise against, any officer or employee of the District of Columbia, any surety, its authorized representative, its agents, its employees, or any firm, person, or corporation who in good faith does any of the following:

(a) Furnishes to the applicant for a bond specified in §208.1, information required in §208.1 of this section;

(b) Makes any statement in any communication, oral or written, specifying the reasons for denial of bond;

(c) Provides any information pertaining thereto; or

(d) Makes or submits evidence at any proceeding which may arise due to the provisions of this section.

208.3 No applicant for any bond specified in §208.1 of this section shall be required, as a condition precedent to obtaining that bond, to disclose either in writing or orally, whether he or she has ever been rejected for such a bond or had such a bond cancelled; Provided, that an applicant may be required to disclose at the time of application any information that the surety company may need to make a reasonable judgment as to the applicant's qualifications for being bonded.

208.4 Upon request of the applicant, the surety company shall within five (5) days after a denial furnish a copy of the written statement required in §208.1 to the Department of Consumer and Regulatory Affairs; Provided, that at the time of denial the applicant is advised of his or her right to make that request.

208.5 Any surety company agent, broker, or salaried surety company employee who violates any provision of this section shall be imprisoned for not more than ten (10) days or fined not more than three hundred dollars ($300), or both, for each offense.

26-A DCMR § 209 RESERVED

26-A DCMR § 210 RESERVED

26-A DCMR § 211 ADVERTISEMENTS: ACCIDENT AND SICKNESS INSURANCE

211.1 It is the purpose of this section to establish specific guidelines for advertisements relating to individual, group, blanket, and franchise accident and sickness insurance. The provisions of this section shall be applicable to all persons and entities authorized to transact accident and sickness insurance in the District of Columbia, and to agents and brokers to the extent that they are responsible for the advertisement of any such policy.

211.2 To facilitate compliance with this section the Commissioner may issue interpretations which shall be consistent to the extent possible with the interpretations recommended by the National Association of Insurance Commissioners, adopted December 2, 1971.

211.3 Advertisements shall be truthful and not misleading in fact or in implication. No words or phrases the meaning of which is clear only by implication or by familiarity with insurance terminology shall be used.

211.4 No words, phrases, or illustrations shall be used in a manner which misleads or has the capacity and tendency to deceive as to the extent of any policy benefit payable, loss covered, or premium payable. An advertisement relating to any policy benefit payable, loss covered, or premium payable shall be sufficiently complete and clear as to avoid deception or the capacity and tendency to deceive.

211.5 The words and phrases "all," "full," "complete," "total," "comprehensive," "unlimited," "up to," "as high as," "extra cash," " this policy will pay your hospital and surgical bills" or "this policy will replace your income," or similar words and phrases shall not be used so as to exaggerate any benefit beyond the terms of the policy, but shall be used only in a manner as fairly to describe the benefit.

211.6 Phrases such as "this policy pays $5,000 for hospital room and board expenses" shall be considered incomplete without indicating the maximum daily benefit and the maximum time limit for hospital room and board expenses.

211.7 No policy covering only one disease or a list of specified diseases shall be advertised so as to imply coverage beyond the terms of the policy. No synonymous terms shall be used to refer to any disease so as to imply broader coverage than is fact.

211.8 No advertisement covered by the provisions of this section shall do any of the following:

(a) Shall state or imply that an insurer or a policy has been approved or an insurer's financial condition has been examined and found to be satisfactory by a governmental agency;

(b) State or imply that an insurer or a policy has been approved or endorsed by any individual, group of individuals, society, association or other organization, unless that is the fact;

(c) Contain untrue statements with respect to the time within which claims are paid or statements which imply that claim settlements will be liberal or generous beyond the terms of the policy;

(d) Contain statements which are untrue in fact or by implication misleading with respect to the insurer's assets, corporate structure, financial standing, age or relative position in the insurance business;

(e) Directly or indirectly make unfair or incomplete comparisons of policies or benefits or otherwise falsely disparage competitors, their policies, services or business methods;

(f) Imply licensing beyond the limits of the jurisdiction in which the insurer is licensed;

(g) State or imply that prospective policyholders become group or quasi-group members and as such enjoy special rates or underwriting privileges, unless that is the fact; and

(h) State or imply that enrollment in a plan or under a policy is limited to a specific period unless the period of time to enroll is disclosed, or that a particular policy or combination of policies is an introductory, initial or special offer and that the applicant will receive advantages by accepting the offer, if the insurer has offered, or plans to repeat such offer for the same or substantially the same product.

211.9 The benefits of a policy which pays varying amounts or the same loss occurring under different conditions or which pays benefits only when a loss occurs under certain conditions shall not be advertised without disclosing the limited conditions under which the benefits referred to are provided by the policy.

211.10 When an advertisement refers to any dollar amount, period of time for which any benefit is payable, cost of policy, or specific benefit or the loss for which such benefit is payable, it shall also disclose those exceptions, reductions and limitations affecting the basic provisions of the policy without which the advertisement would have the capacity and tendency to mislead or deceive.

211.11 When a policy contains a time period between the effective date of the policy and the effective date of coverage under the policy or a time period between the date a loss occurs and the date benefits begin to accrue for that loss, an advertisement covered by §211.10 shall disclose the existence of those periods.

211.12 An advertisement covered by §211.10 shall disclose the extent to which any loss is not covered if the cause of the loss is traceable to a condition existing prior to the effective date of the policy.

211.13 When a policy does not cover losses traceable to pre-existing conditions no advertisement of the policy shall state or imply that the applicant's physical condition or medical history will not affect the issuance of the policy or payment of a claim under the policy, and this shall limit the use of the phrase "no medical examination required" and phrases of similar import.

211.14 An advertisement which refers to renewability, cancellability, or termination of a policy, or which refers to a policy benefit, or which states or illustrates time or age in connection with eligibility of applicants or continuation of the policy, shall disclose the provisions relating to renewability, cancellability, and termination and any modification of benefits, losses covered, or premiums because of age or for other reasons, in a manner which shall not minimize or render obscure the qualifying conditions.

211.15 All information required to be disclosed by this section shall be set out conspicuously and in close conjunction with the statements to which such information relates or under appropriate captions of such prominence that it shall not be minimized, rendered obscure, or presented in an ambiguous fashion or intermingled with the context of the advertisement so as to be confusing or misleading.

211.16 Testimonials used in advertisements shall be genuine, represent the current opinion of the author, be applicable to the policy advertised, and be accurately reproduced. The insurer, in using a testimonial, shall make as its own all of the statements contained therein, and the advertisement, including those statements, shall be subject to all of the provisions of this section.

211.17 No advertisement relating to the dollar amounts of claims paid, the number of persons insured, or similar statistical information relating to any insurer or policy shall be used unless it accurately reflects all of the relevant facts. That advertisement shall not imply that the statistics are derived from the policy advertised unless that is the fact.

211.18 An offer in an advertisement of inspection of a policy or offer of a premium refund shall not be a cure for misleading or deceptive statements contained in that advertisement.

211.19 When a choice of the amount of benefits is referred to, an advertisement shall disclose that the amount of benefits provided depends upon the plan selected and that the premium will vary with the amount of the benefits.

211.20 When an advertisement refers to various benefits which may be contained in two (2) or more policies, other than group master policies, the advertisement shall disclose that those benefits are provided only through a combination of such policies.

211.21 The identity of the insurer shall be made clear in all of its advertisements. No advertisement shall use a trade name, service mark, slogan, symbol, or other device which has the capacity and tendency to mislead or deceive as to the true identity of the insurer.

211.22 No insurer shall use an introductory offer of a reduced or deviated initial premium for the first month or months of coverage under a renewable policy, unless actuarial soundness was established.

211.23 A limited enrollment period within which a particular insurance product may be purchased on an individual basis shall not be offered to residents of the District unless there has been a lapse of not less than ninety (90) days between the close of the immediately preceding enrollment period for the same or substantially same product and the opening of the new enrollment period. This ninety (90) day period shall apply to all advertising media, including mail, newspapers, radio, television, magazines, and periodicals by any one insurer. It is inapplicable to solicitations of employees or members of a particular group or association which otherwise would be eligible under existing contractual provisions.

211.24 Advertising in magazines, periodicals, and newspapers printed and published in other states for circulation in the District shall comply with the ninety (90) day period applicable to publications originating in the District.

211.25 Each insurer shall maintain at its home or principal office a complete file containing every printed, published, or prepared advertisement of individual policies and typical printed, published or prepared advertisements of blanket, franchise, and group policies disseminated in the District or in any state whether or not licensed in that state, with a notation attached to each such advertisement which shall indicate the manner and extent of distribution and the form number of any policy advertised. This file shall be subject to inspection by the Department. All advertisements shall be maintained in this file for a period of not less than three (3) years.

211.26 Each insurer required to file an annual statement shall file with the Department, together with its annual statement, a certificate executed by an authorized officer of the insurer wherein it is stated that to the best of his or her knowledge, information, and belief the advertisements which were disseminated by the insurer during the preceding statement year complied or were made to comply in all respects with the provisions of this section.

26-A DCMR § 212 LICENSE PREREQUISITES FOR SOLICITATION FOR LIFE INSURANCE AGENTS

212.1 The sale or solicitation of fire and casualty insurance policies by any person who is licensed only to sell policies of a life insurance company shall be considered by this Department to be in deliberate violation of law, justifying appropriate action under §35-426, D.C. Code, 1981 ed.

212.2 No person shall act as a life insurance agent for any company without being licensed to do so.

212.3 A person licensed as a life insurance agent to represent a particular company shall not act as a life insurance agent for any other company without an additional license. The additional license shall be required without regard to whether an attempt to sell is successful.

212.4 A life insurance agent licensed for only one (1) company shall solicit for that company only and shall submit applications in good faith to that one (1) company for its consideration.

212.5 A life insurance agent who is licensed for one (1) company and wishes to obtain applications for policies of one (1) or more other particular companies shall be licensed for each of those other companies.

212.6 A life insurance agent who is licensed for one (1) company and desires the privilege of submitting applications to any other company in general rather than in particular, shall be licensed as a broker.

212.7 A life insurance agent who tells a prospect that he or she represents a certain company but can obtain a policy in any other company is performing the act of a broker and shall be so licensed.

212.8 A life insurance agent who offers to obtain from a company named by the prospect a kind of policy written by that company but not written by his or her own company shall be licensed for the second company.

212.9 Wherever an additional license is required, it shall be secured, at the outset of the solicitation and not at a later date merely to legalize the payment of a commission.

212.10 The Department shall not knowingly ratify an illegal act of solicitation by issuing a life insurance license to permit the violator to receive a commission on a policy already sold.

212.11 No company shall knowingly permit or encourage an unlicensed person to solicit for the company until a policy is sold and then appoint that unlicensed person as their agent and pay a commission to that person when the license is issued.

212.12 A license issued to a life insurance agent shall authorize him or her to solicit only that business as may be written through his or her company. An agent exceeds his or her license privileges when he or she deliberately solicits business which he or she knows must necessarily be placed with another company.

26-A DCMR § 213 INDUCEMENTS USED BY LIFE INSURANCE AGENTS OR COMPANIES

213.1 A life insurance company or agent shall not use certain inducement events in the selling of life insurance. For example, a company or agent shall not hold a "Child's Picnic" nor use "picnic eligibility" as an inducement to a parent in selling insurance covering a child.

26-A DCMR § 214 POLICY APPLICATIONS REJECTED BY LIFE INSURANCE COMPANIES

214.1 If a life insurance policy application is rejected in whole or in part by the company which an agent represents, the agent may, if that company approves, undertake without additional license to have the desired policy written by another company. The statutory privilege of placing excess or rejected risks without an additional license shall not permit an agent to solicit business in the name of another company.

214.2 The term "rejected" shall not include risks which are rejected as a class.

214.3 For the purposes of §214.2, examples of excess or rejected risks are as follows:

(a) When, as a matter of company policy, insurance on a member of a class (such as military personnel) is limited to a certain amount and no consideration whatever in an individual case is given to an application for a larger amount, it cannot be said that the amount which the company will not write is excess; or

(b) When, as a matter of company policy, insurance for a class (such as military personnel) will not be written at standard rates and forms, or where a company does not write certain types of insurance as a matter of company policy, an application for an individual member of the class to be insured contrary to company policy is not to be considered as excess or rejected.

214.4 For the purposes of this section, rejections shall involve consideration and may include a refusal to accept or receive.

214.5 For the purposes of this section, the term "excess" is, that which passes the ordinary, reasonable, or required limit.

214.6 For the purposes of this section, "excess or rejected business" means business which is submitted to a company in good faith in the expectation that it will be written by that company. It is of a class which is acceptable to the company, but is declined in whole or in part in a particular instance.

26-A DCMR § 215 LIFE INSURANCE APPLICATIONS TO A SECOND COMPANY

215.1 If a licensed life insurance agent submits a proposal to his or her own company which is rated "declined" or "postponed", the agent may, with the consent of his or her own company and without being licensed with the second company, submit and procure the proposal from a second company.

215.2 If a licensed life insurance agent submits a proposal to his or her own company which issues part of the insurance applied for at standard rates, the agent may, with the consent of his or her own company and without being licensed with the second company, submit and procure a proposal from a second company.

215.3 If a licensed life insurance agent submits a proposal to a prospect from his or her own company which underwrites insurance with Military exclusions, the agent shall not, even with the consent of his or her own company, submit and procure a proposal of a second company without being licensed by the second company.

215.4 If a licensed life insurance agent submits a proposal to a prospect from his or her own company which underwrites a certain fixed amount of insurance without Military restrictions, and any excess with-certain Military restrictions, the agent shall not, even with the consent of his or her own company, submit and procure a proposal from a second company without being licensed by the second company.

215.5 If a licensed life insurance agent submits a proposal to a prospect for a form of insurance from his or her own company whose underwriting rules does not include that form or plan of insurance, the agent may, with the consent of his or her own company and without being licensed by the second company, submit and procure a proposal from a second company.

26-A DCMR § 216 DISCLOSURE OF ASSIGNED RISK RATES

216.1 In every instance wherein a rate for automobile insurance in excess of the comparable District of Columbia Automobile Insurance Plan (D.C.A.I.P.) rate is quoted by an insurer or agent, the applicable D.C.A.I.P. rate shall be quoted. If an automobile policy is written at a rate in excess of the applicable D.C.A.I.P. rate, a written waiver of the D.C.A.I.P. rate shall be obtained from the insured before the effective date of the automobile policy.

216.2 Any insurer, policy-writing agent, soliciting agent, broker or salaried insurance company employee who violates any provision of this section shall be imprisoned for not more than ten (10) days, or fined not more than three hundred dollars ($300), or both, for each offense.

26-A DCMR § 299 DEFINITIONS

299.1 For the purposes of §211, the following words and phrases shall have the meanings ascribed:

Advertisement - any of the following: (1) printed and published material and descriptive literature of an insurer used in newspapers, magazines, radio and TV scripts, billboards and similar displays; (2) descriptive literature and sales aids of all kinds issued by an insurer for presentation to members of the public, including but not limited to circulars, leaflets, booklets, depictions, illustrations, and form letters; and (3) prepared sales talks, presentations and material for use by agents and brokers, and representations made by agents and brokers in accordance therewith.

Policy - any policy, plan, certificate, contract, agreement, statement of coverage, rider or endorsement which provides disability benefits, or medical, surgical or hospital expense benefits, whether on a cash indemnity, reimbursement, or service basis, except when issued in connection with another kind of insurance other than life, and except disability and double indemnity benefits included in life insurance and annuity contracts.

Insurer - any individual, corporation, association partnership, reciprocal exchange, inter-insurer, Lloyds, fraternal benefit society, and any other legal entity engaged in the advertisement of a policy as herein defined.

Exception - any provision in a policy whereby coverage for a specified hazard is entirely eliminated; it is a statement of a risk not assumed under the policy.

Reduction - any provision which reduces the amount of the benefit; a risk of loss is assumed but payment upon the occurrence of such loss is limited to some amount of period less than would be otherwise payable had such reduction clause not be used.

Limitation - any provision which restricts coverage under the policy other than an exception or a reduction.

Department - Department of Consumer and Regulatory Affairs.

26-A3 PROHIBITIONS ON ARBITRARY CANCELLATION

26-A DCMR § 300 PERMISSIBLE REASONS FOR CANCELLATION

300.1 No automobile policy shall be cancelled, nor shall any cancellation be effective for any purpose, unless the insured has done any of the following:

(a) Refused or failed to pay a premium due under the terms of the policy;

(b) Been subjected to suspension of his or her operator's permit at any time during the policy period if he or she is the named insured in an operator's policy;

(c) Been subjected to suspension of the registration of a motor vehicle designated in his or her owner's or automobile policy at any time during the policy period, if as a result of that suspension no motor vehicle specifically described in that owner's policy is validly registered;

(d) Made a material and willful misstatement or omission of fact to the insurer or its employees, agents or brokers in connection with any application to or claim against that insurer; or

(e) The motor vehicle or other interest of the insured shall have been transferred to a person other than the insured or beneficiary, unless the transfer is permissible under the terms of the policy, or unless the motor vehicle, interest or use thereof shall have materially changed with respect to its insurability.

300.2 No other policy shall be cancelled nor shall that cancellation be effective for any purpose, unless any of the following conditions happen:

(a) The insured has refused or failed to pay a premium due under the terms of the policy;

(b) The insured has made a material and willful misstatement or omission of fact to the insurer or its employees, agents, or brokers in connection with any application to or claim against that insurer; or

(c) The property or other interest of the insured shall have been transferred to a person other than the insured or beneficiary, unless the transfer is permissible under the terms of the policy, or unless the property, interest or use thereof shall have materially changed with respect to its insurability.

26-A DCMR § 301 PROCEDURE FOR CANCELLATION OR NONRENEWAL

301.1 Cancellation by an insurer shall be permissible and effective with respect to a policy only if each of the conditions in this section is met with respect to that cancellation in addition to the conditions set forth in § 300. Unless the insurer complies with each of the conditions specified in this section, a policyholder has a right to renewal for an additional period of time equivalent to the expiring term if the agreed term is a year or less, or for one year if the agreed term is longer than one year.

301.2 Notice of a cancellation or nonrenewal shall be given by the insurer to the insured at least thirty (30) days prior to the proposed date of cancellation, or in the case of nonrenewal, thirty days prior to the end of the policy period.

301.3 The notice shall be mailed or delivered in a manner reasonably designed to assure delivery to the last known address of the insured. The envelope containing the notice shall be labelled "Important Insurance Notice" in at least eighteen (18) point or larger type.

301.4 Thirty (30) days prior to a proposed date of cancellation the insurer shall also furnish a copy of the notice to the Commissioner of Insurance; provided no copy need be furnished the Commissioner prior to a cancellation for non-payment of premium, or in any case of nonrenewal.

301.5 At least five (5) days before sending the notice of cancellation or nonrenewal referred to in §§ 301.1 - 301.4 the insurer shall notify the insurance agent or broker who wrote the policy being nonrenewed or cancelled.

301.6 The notice of cancellation or nonrenewal referred to in §§ 301.1 - 301.4 shall set forth a reasonable explanation of the ground or grounds relied upon by the insurer as the basis of cancellation or nonrenewal.

301.7 The notice of cancellation or nonrenewal referred to in §§ 301.1 - 301.4 shall advise the insured of his or her possible eligibility for insurance under the District of Columbia Insurance Placement Act, the District of Columbia Automobile Insurance Plan, or other similar plans existing at the time of the notice, and shall advise him or her where and how to inquire as to eligibility for coverage under the plan or plans, and shall advise him or her of all appeal rights and the appeal procedures under § 308.

26-A DCMR § 302 RESERVED

26-A DCMR § 303 RESERVED

26-A DCMR § 304 RESERVED

26-A DCMR § 305 PRIOR POLICY CANCELLATIONS OR NONRENEWALS

305.1 No applicant for an automobile, operator's or owner's insurance policy as a condition precedent to obtaining or renewing that policy, shall be required to disclose whether he or she or any person reasonably expected to operate the applicant's motor vehicle has ever had such a policy cancelled or nonrenewed; Provided, however, that an applicant may be required to disclose at the time of application his or her or any persons reasonably expected to operate the motor vehicle, experience as an operator of a motor vehicle for an immediately past period of not more than three (3) years.

26-A DCMR § 306 POLICIES IN EFFECT LESS THAN THIRTY (30) DAYS

306.1 The restrictions on cancellation contained in this chapter shall not be effective with respect to any policy which shall have been in force for thirty (30) days or less, provided that such policy is not a renewal policy.

26-A DCMR § 307 IMMUNITY

307.1 There shall be no liability on the part of and no cause of action of any nature shall arise against any officer or employee of the District, any insurer, its authorized representatives, its agents, its employees, or any firm, person or corporation who in good faith does any of the following:

(a) Furnishes to the insured information as to reasons for cancellation or nonrenewal;

(b) Makes any statement in any written notice of cancellation or nonrenewal;

(c) Makes any other communication, oral or written, specifying the reasons for cancellation or nonrenewal;

(d) Provides information pertaining thereto; or

(e) Makes statements or submits evidence at any hearing conducted in connection with a cancellation or nonrenewal.

26-A DCMR § 308 APPEAL PROCEDURE

308.1 If the insured disputes the validity under this chapter of a purported cancellation or nonrenewal, he or she may at any time before the effective date of the cancellation, or in the case of nonrenewal, the end of the policy period, send written notification to the Commissioner of the reasons why the insured believes the purported cancellation or nonrenewal is invalid. The insured shall, at the same time, send the insurer a copy of that notification.

308.2 The Commissioner shall, unless the matter has been settled, proceed to determine whether the cancellation or nonrenewal was authorized under the terms of this chapter.

308.3 Decisions of the Commissioner shall be appealable under the applicable provisions of the D.C. Code.

26-A DCMR § 309 RESERVED

26-A DCMR § 310 ENFORCEMENT

310.1 Any insurer, policy-writing agent, soliciting agent, broker or salaried insurance company employee who violates any provision of this chapter shall be imprisoned for not more than ten (10) days or fined not more than three hundred dollars ($300), or both, for each offense.

26-A DCMR § 311 ASSIGNED RISK PLANS: ACCIDENT AND HEALTH INSURANCE

311.1 The provisions of this chapter shall not apply to the policies of insurance issued under the District of Columbia Insurance Placement Act (FAIR Plan), the District of Columbia Automobile Insurance Plan (D.C.A.I.P.), the District of Columbia Workmen's Compensation Act, on any accident or health insurance policy.

26-A DCMR § 312 WAIVERS

312.1 A policy may provide terms more favorable to policyholders than are required by this chapter, but no policy shall contain any provision which waives any of the requirements of this chapter.

26-A DCMR § 313 OTHER RIGHTS

313.1 The rights provided by this chapter shall be in addition to and shall not prejudice any other rights the policyholder may have at common law or otherwise.

26-A DCMR § 314 EXCLUSIONS

314.1 This chapter shall not apply to any motor vehicle insurance policy or operators policy in the District of Columbia which is subject to § 10 of the Compulsory/No-Fault Motor Vehicle Insurance Act of 1982, as amended

26-A DCMR § 315 REFUNDS ON CREDIT LIFE AND CREDIT ACCIDENT AND HEALTH INSURANCE

315.1 In the event of termination of insurance prior to the scheduled maturity date of the indebtedness, no refund need be made where the amount due is less than one dollar ($1).

26-A DCMR § 399 DEFINITIONS

399.1 As used in this chapter, the following words and phrases shall have the meanings ascribed:

Automobile Policy - any contract wherein one party called the "company" for a consideration, undertakes to pay money or its equivalent, or to do an act valuable to any other party upon the happening of a hazard or peril insured against whereby the party insured suffers loss or injury or is subject to legal liability for bodily injury, property damage, collision or personal liability, due to the owning or operation of a motor vehicle. "Automobile Policy" shall not include policies of common carriers, nor shall any portion of this regulation apply to common carriers' insurance, nor to any commercial fleet of five vehicles or more.

Cancellation - the insurer's termination, or attempted termination, of the effectiveness of a policy before the end of the policy period. Modification of automobile collision, or physical damage, coverage by the inclusion of an additional deductible not exceeding one hundred fifty dollars ($150) shall not be deemed a cancellation of the coverage or of the policy.

Nonrenewal or to Nonrenew - the refusal or failure of the insurer to issue a renewal policy unless that insurer has indicated its intention not to renew any policy issued or delivered in the District of Columbia and to withdraw therefrom.

Owner's policy - an automobile policy containing the provisions referred to in § 40-473(b), D.C. Code, 1981 ed.

Operator's policy - an automobile policy containing the provisions referred to in § 40-473(c), D.C. Code, 1981 ed.

Policy - any contract wherein one party called the "company," for a consideration, undertakes to pay money or its equivalent, or to do an act valuable to any other party upon the happening of a hazard or peril within Title 35 of the District of Columbia Code, except as defined in "Automobile Policy" in this section, whereby the party insured suffers loss or injury or is subject to legal liability.

Renewal - the issuance and delivery of a policy of comparable terms which replaces, at the end of the policy period, a policy previously issued and delivered by the same insurer to the same named insured.

Renewal Policy - a policy of comparable terms to take effect upon the expiration of a policy by which the same insurer provided the same coverage.

Commissioner - the Commissioner of Insurance of the District of Columbia or his or her designated agent.

Suspension - the revocation, or suspension, for good cause under Title 40 of the District of Columbia Code, or the District of Columbia Traffic and Motor Vehicle Regulations, or the applicable laws of any other jurisdiction of the effectiveness of an operator's permit or a motor vehicle registration, whether such revocation or suspension is permanent or temporary.

26-A5 MOTOR VEHICLE INSURANCE: REQUIRED INSURANCE

26-A DCMR § 500 REQUIRED INSURANCE AND AVAILABILITY OF OPTIONAL INSURANCE

500.1 Each owner of a motor vehicle (including a motorcycle) required to be registered in the District and each owner required to obtain a reciprocity sticker in the District shall maintain the insurance coverage required by the District of Columbia Compulsory/No-Fault Motor Vehicle Insurance Act of 1982 Amendments Act of 1985 (D.C. Law 6-96; § 35-2101) et seq., (1986 Supp.), hereinafter referred to as the Act.

500.2 Each nonresident of the District owning a motor vehicle shall maintain the coverages required by the Act while the motor vehicle is present in the District.

500.3 Each insurer selling motor vehicle insurance in the District shall be required to offer to each owner of a motor vehicle required to be registered or obtain a reciprocity sticker in the District, insurance which shall provide at least all minimum benefits required by the Act with respect to the following:

(a) Property damage liability;

(b) Third party personal liability (bodily injury liability); and

(c) Uninsured motorist protection.

500.4 In addition to the required coverages listed in §500.3, each insurer shall offer optional personal injury protection as required by §5 of the Act and Underinsured Motor Vehicle Coverage as required by §7 of the Act.

500.5 Each insurer authorized to sell personal injury protection in the District shall provide to its insureds the coverages required by the Act in any insurance sold or offered to be sold by that insurer to any nonresident it insures for a motor vehicle that has not been issued a District registration. The policy shall provide the coverages required by the Act when the nonresidents insured motor vehicle is present in the District.

History

• SOURCE: Final Rulemaking published at 35 DCR 7649 (October 21, 1988).

26-A DCMR § 501 ENDORSEMENTS TO OUTSTANDING POLICIES

501.1 As soon as possible, after the effective date of the regulations, insurers shall mail to all policyholders who have policies bearing expiration dates on or after June 2, 1986, endorsements providing coverages required by the Act.

History

• SOURCE: Final Rulemaking published at 35 DCR 7649 (October 21, 1988).

26-A DCMR § 502 REQUIREMENTS FOR NONRESIDENT

502.1 Any nonresident operating a motor vehicle in the District who has not been issued a District registration may maintain a valid policy of motor vehicle insurance issued by an insurer which is not authorized to sell motor vehicle insurance in the District, provided the following applies:

(a) The insurer is authorized to sell motor vehicle insurance in any state of the United States;

(b) The insurer who issues the policy executed a power of attorney authorizing the Commissioner to accept service, on behalf of the insurer, of notice of process in any action arising out of a motor vehicle accident in the District; and

(c) The insurer who issued a policy agrees, in writing, to treat the policy as providing, at a minimum, all of the coverages required by the Act while its named insured is operating a motor vehicle in the District, whether or not the policy or any endorsement specifically provided that coverage.

502.2 Any nonresident operating a motor vehicle in the District who has been issued a District registration may maintain a valid policy of motor vehicle insurance pursuant to §502.1 of this chapter.

History

• SOURCE: Final Rulemaking published at 35 DCR 7649 (October 21, 1988).

26-A DCMR § 503 ELECTION OF BENEFITS UNDER OPTIONAL PERSONAL INJURY PROTECTION (PIP) COVERAGE

503.1 A victim sustaining injury in a motor vehicle accident which forms the basis of a claim against an insurer shall have the responsibility of informing the insurer of the accident according to the terms of the policy provided by the insurer.

503.2 Upon notification of an accident by the victim, or in any event whenever notification is received of an accident involving a person covered under any optional personal injury protection plan, the insurer providing such coverage shall immediately upon notification, mail to any identifiable victim a letter informing the victim of his or her right to elect to receive benefits under optional personal injury protection coverage within sixty (60) days of the date of the accident.

503.3 The notification by the insurer to all identifiable victims referred to in § 503.2 shall be by Post Office Receipt Secured mail to the stated address as written in the policy providing coverage or to the last known address of the victim.

503.4 The notification to the victim shall state the following:

(a) The possible benefits comprising the optional personal injury protection coverage provided by the policy;

(b) The restrictions on bringing a civil action based on the liability of another person as stated in § 504 of the regulations;

(c) The consequences of failing to make an election within sixty (60) days; and

(d) That there is an available space for making an election or waiver of benefits and an appropriate signature line for the victim.

503.5 The notification to the victim shall contain a form by which the victim can request extension of the sixty (60) day limit to make an election.

503.6 The notification to the victim will be written in ordinary non-technical language.

503.7 The envelope containing the notification to the victim and the request for extension form shall have printed on the outside "IMPORTANT INSURANCE NOTICE" in capital letters of at least eighteen (18) point bold face type or larger size.

503.8 The insurer shall mail the notification to the victim so as to allow reasonable time for the victim to either make an election or to request an extension of time to make such an election.

503.9 The victim shall notify an insurer providing coverage under an optional personal injury protection plan, of his or her election to receive benefits under such coverage for injuries sustained in an accident within sixty (60) days of the date of such accident, unless the insurer failed to mail such notification in the manner provided in § 503.3 and in a timely fashion as required by §§ 503.8 of this chapter.

503.10 In the event that the insurer fails to mail the required notification within a reasonable time, an extension of time shall be given the victim in order to make a reasonable decision as to the election or waiver of benefits.

503.11 If a victim requests an extension of time to make an election, the mailing of a request by midnight of the sixtieth (60) day after the date of the accident shall be considered a timely request for an extension.

503.12 Notification by a victim may be made in any of the following ways:

(a) By telephone;

(b) In person;

(c) By telegraph, letter or postcard; or

(d) By any other means reasonably calculated to give notification to the insurer providing the optional personal injury protection coverage; provided, that if a victim is incapacitated or in some way unable to make the election, it may be made by the next closest relative, or if there is no relative, an individual taking responsibility for the victim's affairs.

503.13 The sixty (60) day election period may be extended upon the mutual written agreement of the victim and the insurer.

History

• SOURCE: Final Rulemaking published at 35 DCR 7649 (October 21, 1988).

26-A DCMR § 504 RESTRICTION ON FILING A CIVIL ACTION TO RECOVER LOSSES

504.1 A victim who elects to receive benefits under the optional personal injury protection coverage may maintain a civil action based on the liability of another person, only under the following circumstances:

(a) The injury sustained in the accident, for which the victim is claiming benefits, directly results in substantial permanent scarring or disfigurement;

(b) Substantial and medically demonstrable permanent impairment has significantly affected the ability of the victim to perform his or her professional activities or usual and customary daily activities;

(c) A medically demonstrable impairment prevents the victim from performing all or substantially all of the material acts and duties that constitute his or her usual and customary daily activities for more than one hundred and eighty (180) continuous days; or

(d) The medical and rehabilitation expenses of a victim or the work loss of a victim exceeds the amount of the personal injury protection coverage provided by the insurer.

504.2 §504.1 shall not be construed so as to prevent the survivors of a victim whose death arises out of the maintenance or use of a motor vehicle, from maintaining a civil action based on the liability of another person for the economic and noneconomic loss resulting from the death of the victim, even though the victim may or may not have elected to receive benefits from personal injury protection coverage prior to the victim's death.

History

• SOURCE: Final Rulemaking published at 35 DCR 7649 (October 21, 1988).

26-A DCMR § 505 SELF INSURERS

505.1 Any person may maintain the coverages required by the Act by obtaining a Certificate of Self Insurance from the Director of the Department of Public Works, in accordance with the Act and § 40-478, of the D.C. Code, 1981 Edition, (as amended) and chapter 8 of DCMR, Title 18, in lieu of maintaining a policy of insurance issued by an insurer authorized to sell insurance in the District.

505.2 The District of Columbia, the United States, and the Washington Metropolitan Area Transit Authority may maintain the coverages required by the Act by obtaining from the Director of the Department of Public Works, a Certificate of Self Insurance. The certificate shall be issued upon receipt of a written statement by the applicant that the applicant is self insured for the payment of claims made under the Act.

History

• SOURCE: Final Rulemaking published at 35 DCR 7649 (October 21, 1988).

26-A DCMR § 506 ARBITRATION

506.1 Any person having a claim under the mandatory insurance required in §7 of the Act or the optional insurance provisions in §5 of the Act, may request that the claim be arbitrated before the Board of Consumer Claims Arbitration for the District of Columbia. If all parties to the action consent, the Board may hear and decide the matter. The Board's decision on the matter shall be binding on the parties.

506.2 All procedures related to the filing of claims, the conduct of hearings, and determinations of awards shall be in accordance with the regulations promulgated by the Board of Consumer Claims Arbitration in accordance with the Automobile Consumer Protection Act (D.C. Law 5-162, 16 DCMR 909).

History

• SOURCE: Final Rulemaking published at 35 DCR 7649 (October 21, 1988).

26-A DCMR § 507 CONSUMER RIGHT TO INFORMATION

507.1 Each insurer who offers to sell motor vehicle insurance in the District shall provide, prior to renewal or denial of a motor vehicle insurance policy, a document which shall provide, but not be limited to, the following information:

(a) The cost of the minimum package of mandatory liability insurance required by the Act;

(b) A listing of each type of coverage provided;

(c) The dollar amount premium for each type of coverage;

(d) An explanation of the mandatory insurance and required options created under the Act; and

(e) In the case of commercial vehicles, where due to the method of rating, it is impossible to quote precise premiums, compliance may be achieved by insurers providing good faith estimates which may be subject to future modifications.

507.2 Each insurer shall, at the time of nonrenewal or denial of motor vehicle insurance policy, provide the named insured or applicant the specific reason for the nonrenewal or denial.

507.3 Each insurer is required to include the following statement in the document required under § 507.1 of the regulations:"You (and any covered person) have important rights if we do not pay a covered claim for personal injury protection benefits within thirty (30) days after we receive reasonable proof of the fact and amount of your loss. You may go to court to collect that payment and you may hire an attorney to represent you. If the court finds that your claim is valid and that we did not pay the claim within thirty (30) days after we received it, we must pay the claim, interest on the claims, and your reasonable attorney's fees. But, if your claim is found to be fraudulent, you may be required to pay the reasonable attorney's fees which we incurred to defend against the claim."

507.4 Upon application for, or at the time of issuance of any new policy and with respect to policies already in force at the time of the first renewal after the date of applicability of the Act, each insurer shall provide the named insured with a copy of the provisions as required under § 10 of the Act.

507.5 Each insurer shall deliver to each named insured with each new policy of motor vehicle insurance a description of the coverages required by § 507.1.

History

• SOURCE: Final Rulemaking published at 35 DCR 7649 (October 21, 1988).

26-A DCMR § 508 CONVERSION AND RENEWAL OF OUTSTANDING POLICIES

508.1 Insurers shall treat all outstanding motor vehicle insurance policies in effect after June 2, 1986, containing personal injury protection as providing, at a minimum, all of the coverages required by the Act, notwithstanding that an endorsement of the policy specifically providing that coverage has not yet been sent to the named insured. In no event shall this provision do the following:

(a) Diminish the insurer's obligation with respect to coverages set forth in the policy in excess of the minimum required by the Act; or

(b) Be construed to require an insurer to compensate a named insured more than once for a single element of loss.

508.2 No insurer shall cancel, refuse to renew, or rewrite any policy for the purpose of circumventing the requirements of § 508.1 of this chapter.

508.3 No insurer shall impose any additional premium charge upon a named insured for providing the coverages required by the Act in accordance with § 508.2, or reduce the coverage of a named insured if the coverage exceeds the minimum coverages required by the Act.

508.4 The costs of renewal shall be prospective only and calculated from the month of renewal rather than from June 2, 1986.

History

• SOURCE: Final Rulemaking published at 35 DCR 7649 (October 21, 1988).

26-A DCMR § 509 ENDORSEMENTS TO OUTSTANDING POLICIES

509.1 Insurers shall mail to all policyholders who have policies bearing expiration dates after June 2, 1986, endorsements providing the coverages required by the Act.

History

• SOURCE: Final Rulemaking published at 35 DCR 7649 (October 21, 1988).

26-A DCMR § 510 FORMS

510.1 Any insurer offering or selling motor vehicle insurance in the District of Columbia shall provide coverages using forms authorized as set forth in this section.

510.2 The provisions of this section apply to forms used to provide or offer optional coverage as well as to coverages required by the Act.

510.3 A form providing the information described in this chapter shall not be considered authorized unless the following occurs:

(a) The forms have been filed with the Commissioner of Insurance of the District of Columbia by the insurer or rating bureau;

(b) The insurer or rating bureau files the proposed form together with the certification form contained in Appendix 5-1 with the Commissioner;

(c) The certification form of the insurer is signed by an officer of the insurer or rating bureau;

(d) The insurer or rating bureau certifies on the certification form that the proposed policy or endorsement form meets the readability standards set forth in § 511 of this chapter; and

(e) The insurer certifies on the certification form that the proposed form, together with the policy and endorsement forms with which it will be used, provide no less coverages than those required by the Act.

History

• SOURCE: Final Rulemaking published at 35 DCR 7649 (October 21, 1988).

26-A DCMR § 511 READABILITY STANDARDS FOR POLICIES AND ENDORSEMENTS

511.1 The provisions of this section specifying standards for format and language shall apply to all motor vehicle insurance policies issued or renewed on or after June 2, 1986, and endorsements required by the Act and this chapter.

511.2 Each policy shall include a table of contents.

511.3 Each section shall be self-contained and independent. However, general provisions applicable to more than one (1) section may be included in a common section.

511.4 The policy or endorsements, except for declarations pages, schedules, and tables shall be printed in not less than ten (10) point type.

511.5 The policy and endorsements shall be printed in a legible type style with adequate contrast between ink and paper. Captions, headings, and spacing shall be used to increase overall legibility.

511.6 The policy or endorsement shall be written in everyday, conversational language, consistent with its standing as a contract. Short sentences and personal style shall be used wherever possible.

511.7 Technical terms and words with special meaning shall be avoided wherever possible.

511.8 The policy or endorsement text shall achieve a minimum score of forty (40) on the Flesch Reading Ease Test or an equivalent score o any other comparable test, or a lower score on either, if the Commissioner finds the policy or endorsement reasonable easy to read.

511.9 For the purpose of this section, a Flesch Reading Ease Test shall be scored by the following method:

(a) For a policy or endorsement containing ten thousand (10,000) words or less of text, the entire policy or endorsement shall be analyzed. For a policy or endorsement containing more than ten thousand (10,000) words or the readability of two (2) one hundred (100) word samples per page may be analyzed instead. The samples shall be separated by at least 20 printed lines.

(b) The total number of words in the text or sample shall be divided by the total number of sentences. The figure obtained shall be multiplied by 1.015;

(c) The total number of syllables in the test or sample shall be divided by the total number of words. The figure obtained shall be multiplied by 84.6; and

(d) The sum of the figures computed under §§ 511.9(b) and 511.9(c) of this chapter subtracted from 206.835 equals the Flesch Reading Ease Test Score.

511.10 For purposes of § 511.9 the following procedures shall be used:

(a) A contraction, hyphenated word, numbers and letters, when separated by spaces, shall be counted as one word;

(b) A unit of text ending with a period, semi-colon, or colon shall be counted as a sentence;

(c) A syllable means a unit of spoken language consisting of one (1) or more letters of a word as divided by an accepted dictionary. Where the dictionary shows two (2) or more equally acceptable pronunciations of a work, the pronunciation containing fewer syllables may be used; and

(d) At the option of the insurer, or rating bureau any form made a part of the policy may be scored separately or as a part of the policy.

511.11 The term "text" as used in § 511.9 includes all printed matter except the following:

(a) The name and address of the insurer;

(b) The name, number, or title of the policy or form;

(c) The table of contents or index;

(d) Heading and captions;

(e) Defined Terms;

(f) Proper nouns;

(g) Declaration pages; and

(h) Schedules or tables.

History

• SOURCE: Final Rulemaking published at 35 DCR 7649 (October 21, 1988). APPENDIX 5-1 [To be used pursuant to the provisions of §506] Policy Form Certification The [Definitions and General Provisions] of this policy apply unless modified by the [endorsement]. SECTION 1. Personal Injury Protection Coverage We will pay Personal Injury Protection benefits in accordance with the District of Columbia Compulsory/No Fault Motor Vehicle Insurance Act of 1982, as amended (the Act). We will pay these benefits to or for a covered person who sustains bodily injury in an accident arising out of the maintenance or use of a motor vehicle or vehicle. These Personal Injury Protection benefits consist of: (1) Medical expense benefits up to $100,000 for reasonable charges incurred for reasonably necessary products, services and accommodations for a covered person's: (a) Care; (b) Recovery; or (c) Rehabilitation. Only semi-private hospital room charges will be paid unless special or intensive care is required. We will pay for a product, service or accommodation only if its provider is licensed or approved and complies with any applicable laws or regulations pertinent thereto. (2) Funeral expense benefits up to $2,000 for actual costs incurred for a covered person's funeral or funeral-related expenses. (3) Work loss benefits up to a maximum aggregate limit of $24,000. Work Loss Benefits consist of: (1) Loss of Income. Subject to the maximum aggregate limit, 80% of the loss of gross income, but not to exceed $2,000 per month for work which a covered person would have performed except for the bodily injury. We will pay a higher percentage to the extend that a covered person furnishes us with reasonable proof that his or her income tax is less than 20% of gross income. (b) Replacement Services. Subject to the maximum aggregate limit, expenses not to exceed $50 per day which are reasonably incurred to obtain ordinary and necessary services to replace those the covered person would have performed for personal or family benefit except for the bodily injury. The services must be performed within 3 years after the date of the accident. The services cannot be obtained to produce income for the covered person. Work loss benefits do not continue after a covered person dies. The amounts stated above are the most we will pay to or for a covered person as the result of any one accident regardless of the number of: (1) Claims made; (2) Your covered autos; (3) Motor Vehicles or vehicles involved in the accident; or (4) Insurers providing Personal Injury Protection benefits. Deductible Any amount payable to or for a covered person shall be reduced by the amount of the deductible you elect as shown in the [schedule or declarations]. The deductible applies only to you and to any family member. However, the deductible does not apply to benefits payable for emergency medical services furnished during the first 72 hours after the accident.
• Note: Deductible provision may be deleted at company's option. Exclusions We will not pay Personal Injury Protection benefits for bodily injury: (1) Sustained by any person injured While intentionally causing or attempting to cause injury to himself, herself or any other person. (2) Sustained by a person using a motor vehicle or vehicle he or she has taken unlawfully, unless that person reasonably believed, at the time he or she first used the motor vehicle or vehicle, that he or she was entitled to take and use the motor vehicle or vehicle. (3) Sustained by the owner of a motor vehicle involved in the accident for. which the coverage required by the Act is not in effect. (4) Sustained by a non-resident of the District While operating or occupying a motor vehicle, other than your covered auto, if that motor vehicle is not registered in the District. (5) Sustained by the owner or operator of a vehicle involved in the accident if no motor vehicle is involved in the accident. This exclusion does not apply if any vehicle involved in the accident is your covered auto. Note: The second sentence of Exclusion (5) is not to be used with policies covering motor vehicles only. (6) Sustained by any person injured as a result of conduct within the course of the business of repairing, servicing or otherwise maintaining motor vehicles or vehicles. This exclusion does not apply if the conduct is as follows: (a) Off the business premises; or (b) In the course of loading or unloading a motor vehicles or vehicles. (7) Sustained by any person while occupying a motor vehicle or vehicle located for use as a residence or premises. (8) Caused by or as a consequence of the following: (a) Discharge of a nuclear weapon (even if accidental); (b) War (declared or undeclared); (c) Civil war; (d) Insurrection; or (e) Rebellion or revolution. (9) From or as a consequence of the following, whether controlled or uncontrolled or however caused; (a) Nuclear reaction; (b) Radiation; or (c) Radioactive contamination.] Definitions Under this coverage the definitions are as follows: (1) "you" and "your" means the [Named Insured] shown in [the Declarations.] (2) "we" "us" and our means [the company providing this coverage]. (3) "bodily injury" means bodily harm sustained in an accident including any illness, disease or death resulting from that bodily harm. (4) ["covered person"] means: (A) You and any family member; (B) Any person while occupying your covered auto; (C) Any other person sustaining bodily injury in an accident within the District of Columbia in which your covered auto is involved. (5) ["family member"] means your spouse or any person related to you by blood, marriage or adoption who is a resident of your household. This includes any other resident of your household under age 18 who is in your custody or your relative's custody. (6) "motor vehicle" means any device propelled by an internal combustion engine, electricity or steam. However, "motor vehicle" does not mean a motorcycle, a traction engine used exclusively for drawing vehicles in fields, a road roller or a vehicle propelled only upon rails and tracks. (7) "occupying" means in, upon, getting in, on, out or off. (8) "vehicle" means: (a) A trailer as defined in the Act; or (b) An appliance moved or designed to be moved over a publicly maintained way on wheels or traction tread which is: i. Operated by power other than muscular power; or ii. Drawn by a draft animal or beast of burden. 9. [ your covered auto"] means a motor vehicle: (a) For which you are required to maintain security under the Act; and (b) To which liability coverage under this policy applies. 9. ["your covered auto"] means a motorcycle: (a) For which a premium for the coverage is charged, and (b) To which liability coverage under this policy applies. 9 ["your covered auto"] means: (a) A motor vehicle: (i) For which you are required to maintain security under the Act, and (ii) To which liability coverage under this policy applies; and (b) A motorcycle: (i) For which a premium for this coverage is charged; and (ii) To which liability coverage under this policy applies.
• Note: For use with policies covering motor vehicles only. For use with policies covering motorcycles only. For use with policies covering both motor vehicles and motorcycles. Coordination and Non-Duplication (1) Personal Injury protection benefits are excess over but shall not duplicate amounts paid, payable or required to be provided under: (a) Social security (except medicaid benefits); (b) Workers' compensation; (c) Temporary nonoccupational disability insurance that is required by a state or the District of Columbia government; or (d) Any government program (except the proceeds of government life insurance). This does not apply if the law authorizing these benefits makes them secondary to or duplicative of the benefits provided under the Act. (2) No person may recover duplicate Personal Injury Protection benefits for the same element of loss. (3) If a covered person is entitled to Personal Injury Protection benefits under more than one policy, the maximum recovery under all policies will not exceed the amount payable under the policy with the highest dollar limits of benefits. Priorities of Policies We will pay Personal Injury Protection benefits in accordance with the order of priorities set forth by the Act. We will not pay if there is another insurer at a higher level of priority. The priority or is: First - The insurer of the employer, if the covered person is: (a) An employee or relative of an employee; and (b) Occupying a motor vehicle provided or made available by the employer in the course of employment. Second - The insurer of the owner or operator of a motor vehicle in the business of transporting passengers for hire, if the covered person is a passenger. This priority does not apply to the insurer of a school bus or bus operating under a government sponsored program. Third - The insurer providing benefits to the covered person as a named insured. It two or more policies apply under this priority and one specifically insures the motor vehicle or motorcycle involved in the accident, it shall be the policy under which benefits are payable. Fourth - The insurer providing benefits to the covered person as a family member who is not a named insured under another policy providing coverage under the Act. If two or more policies apply under this priority and one specifically insures the motor vehicle or motorcycle involved in the accident, it shall be the policy under Which benefits are payable. Fifth - The insurer of the motor vehicle or motorcycle occupied by the covered person. Sixth - The insurer providing Personal Injury Protection coverage on any motor vehicle or motorcycle involved in the accident if the covered person is not provided coverage under any other policy. If two or more policies have equal priority, the insurer against which the claim is first made shall process and pay the claim as if wholly responsible, subject to subsequent contribution pro rata. For the purposes of determining priorities, an unoccupied parked motor vehicle or motorcycle is not a motor vehicle or motorcycle involved in an accident unless it was parked in a manner as to create an unreasonable risk of injury. Duties After an Accident of Loss We must be notified promptly of how, when, and where the accident happened. Notice should also include the names and addresses of any injured persons and of any witnesses. A person seeking coverage shall do the following: (a) Cooperate with us in the investigation or settlement of any claim. (b) Submit as often as we reasonably require to physical examinations by physicians we select. We will pay for these exams. (c) Authorize us to obtain the following: (1) Medical reports; (2) Statements of earnings; and (3) Other pertinent records. (d) Submit a written proof of claim when required by us. (e) Promptly send us copies of the legal papers if a suit is brought. (f) If we request, furnish us a sworn statement of earnings or lack of earnings: (1) For a reasonable time prior to the accident; and (2) Since the accident. General Provisions Policy Period and Territory This coverage applies only to accidents which occur during the policy period as shown in [the Declarations] and within the policy territory. The policy territory is the United States of America, its Territories or Possessions, or Canada. Legal Action Against Us No legal action may be brought against us until there has been full compliance with all the terms of this policy. Our Right to Recover Payment Subject to any applicable limitations stated in the Act and applicable Regulations: (1) If we make a payment under this coverage and the person to or for whom payment was made has a right to recover damages for another, we shall be subrogated to that right. That person shall do: (a) Whatever is necessary to enable us to exercise our rights; and (b) Nothing after loss to prejudice them. (2) If we make a payment under this coverage and the person to or from whom payment is made recovers damages from another, that person shall: (a) Hold in trust for us the proceeds of the recovery; and (b) Reimburse us to the extent of our payment. Assignment of Claims to Future Benefits A covered person, may not assign his or her right to any Personal Injury Protection benefits payable in the future. SECTION 2. Premiums Recomputation Section 6 of the Act places limitations on a person's right to sue for damages. The premium for the policy reflects these limitations. If a court declares any of these limitations unenforceable we have the right to recompute the premium.
• Note: Companies may substitute the appropriate terms, reference or language for matter in brackets.

26-A6 DISTRICT OF COLUMBIA AUTOMOBILE INSURANCE PLAN

26-A DCMR § 600 PURPOSE

600 The District of Columbia Automobile Insurance Plan (the "Plan") shall keep its Constitution and Plan of Operation on file at the Plan's headquarters and make copies of these documents available to members of the public upon request. Individuals desiring copies of the Plan's Constitution and Plan of Operation may contact the Plan directly at:

4501 Highwoods Parkway, Suite 230

P.O. Box 4830

Glen Allen, VA 23058-4830

(804) 217-9990

(804) 217-9950 Fax

History

• SOURCE: Final Rulemaking published at 49 DCR 11395 (December 20, 2002); as amended by Final Rulemaking published at 51 DCR 11849 (December 31, 2004).

26-A8 TAXICAB INSURANCE

26-A DCMR § 800 GENERAL PROVISIONS

800.1 Taxicabs shall continue to be subject to the rates of Insurance set forth in § 801.3. The provisions of § 10 of the Compulsory/No-Fault Motor Vehicle Insurance Act of 1982 Amendments Act of 1985, are applicable to taxicab insurance policies.

800.2 Each company writing or desiring to write public liability and property damage insurance on vehicles for hire in the District shall, as a prerequisite to the approval of the Commissioner, make written application for a certificate of approval upon forms to be furnished by the Department.

800.3 Each policy form and endorsement shall be submitted in triplicate to the Commissioner for approval.

800.4 No company shall engage in or conduct the business of insuring or bonding any risk arising out of the operation of any passenger motor vehicle for hire unless the actual management of that company is at all times capable by experience or otherwise of conducting the business in the public interest and in a manner to safeguard the solvency of the company and the interests of its policyholders and creditors.

800.5 If the Commissioner finds after hearing that the actual management is not capable by experience or otherwise or that the business of the company is not being conducted in a manner as to safeguard its solvency and the interests of its policyholders and creditors or that the provisions of Public Law 85-792, 85th Congress, or these rules have been violated, the certificate of approval may be withdrawn.

History

• SOURCE: Final Rulemaking published at 35 DCR 7649 (October 21, 1988).

26-A DCMR § 801 PREMIUMS

801.1 Policy durations shall be for a term of not less than 6 months, except that the initial term for a new policyholder may be for a period of less than six (6) months, in which case the premium shall be computed on a pro-rata basis. The initial premium for a policy shall be collected in advance.

801.2 Insurance companies offering insurance pursuant to this chapter shall file rates and report statistics in accordance with the provisions of D.C. Official Code § 31-2700 et seq.

801.3 Under no condition shall any premium be waived or discounted while insurance is in force. Insurance shall be deemed in force until cancellation or nonrenewal is actually effected in accordance with the provisions of the policy and requirements of the District of Columbia Taxicab Commission Establishment Act of 1985, effective March 25, 1986, D.C. Law 6-97, D.C. Official Code § 50-314.

801.4 (a) The minimum limits of taxicab liability insurance required to be offered in the District of Columbia shall be:

(1) For bodily injury, twenty-five thousand dollars ($25,000) per person/ fifty thousand dollars ($50,000) per accident; and

(2) For property damage, ten thousand dollars ($10,000) for each accident.

(b) In addition to the minimum limits of liability insurance required in subsection (a) above, insurance companies shall also be required to offer optional insurance in the following lines, with the prescribed dollar limits, and under the following conditions:

(1) Option A higher limits for taxicab liability: For bodily injury, fifty thousand dollars ($50,000) per person/one hundred thousand dollars ($100,000) per accident; and for property damage twenty-five thousand dollars ($25,000);

(2) Option B higher limits for taxicab liability: For bodily injury, three hundred thousand dollars ($300,000) per person/three hundred thousand dollars ($300,000) per accident; and for property damage one hundred thousand dollars ($100,000);

(3) Medical payments coverage for drivers of at least four thousand dollars ($4,000) per occurrence;

(4) Medical payments coverage of at least five thousand dollars ($5,000) per occurrence, per passenger;

(5) Loss of income benefits for full time drivers of at least two hundred fifty dollars ($250) per week for 52 weeks;

(6) Insurance companies may institute multiple premium rate classifications; and

(7) Direct sales of insurance policies to policyholders, either from an insurance company or through a licensed producer.

801.5 Premium deposit requirements and payment options shall be as follows:

(a) A full six-month premium shall be one hundred percent (100%) of the gross six-month premium for the coverage afforded.

(b) Installment premium payment options:

(1) Forty percent (40%) of the total six-month premium plus an installment service charge of four dollars ($4) must accompany the application as a deposit; thirty percent (30%) of the total six-month premium plus an installment service charge of four dollars ($4) no later than two months after the effective date of the policy; and the balance, plus an installment service charge of four dollars ($4), no later than four months after the effective date of the policy; or

(2) Any other payment plan approved by the Commissioner.

(c) The installment premium payment option is not available if any portion of the six-month premium is financed by a premium finance company. If any portion of the six-month premium is financed after the installment premium payment option is elected, the servicing carrier may bill the insured immediately for the unpaid balance of the six-month premium.

History

• SOURCE: Final Rulemaking published at 51 DCR 7298 (July 23, 2004).

26-A DCMR § 802 DIVIDENDS

802.1 No dividends to policyholders or stockholders shall be paid or declared by a domestic company without the prior written approval of the Commissioner.

26-A DCMR § 803 OFFICERS AND EMPLOYEES

803.1 All officers and employees of domestic companies shall at all times be covered by a "primary commercial blanket fidelity bond" in the amount of not less than $15,000.00. These bonds shall include by endorsement or otherwise a provision requiring the surety to notify the Commissioner in writing prior to cancellation or to any change in principal or penalty. The bond or a certified copy shall be filed with the Commissioner.

803.2 No director, trustee, or officer of any company doing business in the District shall receive any money or valuable thing for negotiating, procuring, recommending, or aiding in any purchase by or sale to that company or any property, or any loan from that company, nor be pecuniarily interested, either as principal, co-principal, agent, or beneficiary, in any such director, trustee, or officer be guaranteed by that company in any capacity.

803.3 Notice of the appointment or election by any domestic company of any new officer, manager, or trustee shall within five (5) days after that appointment or election be submitted to the Commissioner.

26-A DCMR § 804 INVESTMENTS IN BONDS OR NOTES

804.1 No investment in bonds or notes secured by mortgages or deeds of trust on real estate or perpetual lease thereon shall be made by any company which has surplus amounting to less than that required by Section 13 of the Fire and Casualty Act.

804.2 No company which has surplus in an amount equal to or exceeding that required by Section 13 of the Fire and Casualty Act may invest in such bonds, notes or perpetual leases more than the amount by which the sum of its admitted assets, excluding such bonds, notes, and perpetual leases, exceeds the sum of its liabilities, including all reserves required by law or by these rules, and its capital if any, plus the amount of surplus required by Section 13 of the Fire and Casualty Act.

804.3 No company may without written approval of the Commissioner hold such investments when the aggregate amount thereof is in excess of such limitation.

26-A9 AMBULANCE INSURANCE

26-A DCMR § 900 LIABILITY INSURANCE REQUIRED

900.1 No ambulance license shall be issued unless and until there is in full force and effect liability insurance for the term of the license in the form and for at least the minimum limits prescribed in this section.

900.2 No ambulance license shall continue in effect unless there is in full force and effect liability insurance in the form and for at least the minimum limits prescribed in this section.

26-A DCMR § 901 LIABILITY INSURANCE COVERAGE

901.1 Insurance coverage shall be pursuant to the terms, conditions, and limitations of the Insurance Policy defined in §999 unless otherwise specified.

901.2 Upon cancellation by the insured, the company shall mail written notices to the Department of Consumer and Regulatory Affairs, the Department of Human Services and the Department of Public Works, stating when (not less than fifteen (15) days thereafter) that cancellation shall be effective.

901.3 Upon cancellation by the company, the company shall mail written notices to the Department of Consumer and Regulatory Affairs, the Department of Human Services, and the Department of Public Works, stating when (not less than thirty (30) days thereafter) that cancellation shall be effective.

901.4 The provisions contained in Chapter 3 of this title shall also be applicable unless in conflict with Chapter 5 of DCMR Title 29.

26-A DCMR § 902 LIMITS OF LIABILITY INSURANCE

902.1 A minimum limit of $100,000 each person and $500,000 each occurrence under Section A, Bodily Injury Liability, of the Insurance Policy is required. A minimum limit of $100,000 each occurrence under Section B, Property Damage Liability, of the Insurance Policy is required.

26-A DCMR § 903 INSURANCE POLICY DISTRIBUTION

903.1 On or before the effective date of coverage, Insurance Companies shall submit an original policy to the named insured and comparable evidence of the policy to the Departments of Consumer and Regulatory Affairs, Human Services, and Public Works.

26-A DCMR § 904 PENALTIES

904.1 Penalties provided in Chapter 15, Title 35 of the D.C. Code, 1981 edition, Chapter 5 of DCMR Title 29, and §310 of Chapter 3 of this title.

26-A DCMR § 999 DEFINITIONS

999.1 For the purposes of this chapter, the following words and phrases shall have the meaning ascribed:

Ambulance - any privately or publicly owned vehicle specially designed, constructed, modified or equipped for use as a means for transporting persons in an emergency; or any privately or publicly owned vehicle that is advertised, marked or in any way held out as a vehicle for transportation of persons in an emergency except those enumerated in §509 of DCMR Title 29.

Ambulance License - the license referred to in §501 of DCMR Title 29, and issued by the Department of Consumer and Regulatory Affairs.

Insurance Policy - the 1974 revision of the 1955 edition of the Basic Automobile Liability Policy filed with the Department of Insurance by the Insurance Services Office, New York City, New York.

Insurance Company - any insurance company authorized to write automobile liability and property damage insurance contracts covering District of Columbia risks pursuant to Chapter 15 of Title 35 and pursuant to Chapter 3 of Title 44 of the D.C. Code, 1981 edition.

Liability Insurance - automobile bodily injury and property damage insurance in accordance with the terms, conditions, and endorsements of Insurance Policy as defined in this subsection.

Commissioner - the Commissioner of Insurance of the District.

26-A10 LIFE INSURANCE

26-A DCMR § 1000 CALCULATION OF ADMITTED ASSETS

1000.1 The Department shall allow, as an admitted asset, the cost of electronic data processing equipment purchased by each domestic life insurance company; Provided, that any amount so allowed shall not at any time exceed the lesser of the following:

(a) Two percent (2%) of the company's admitted assets; or

(b) The company's unassigned surplus in excess of the legal minimum.

1000.2 The amounts specified in §1000.1(a) and (b) shall be determined according to the company's last annual statement.

1000.3 The entire cost of electronic data processing equipment shall be amortized in full over a period not to exceed ten (10) calendar years.

26-A DCMR § 1001 FOREIGN AND ALIEN INSURANCE COMPANIES

1001.1 The Commissioner may satisfy himself or herself by investigation that a foreign life insurance company is qualified to transact business in the District. This investigation may include consideration of a company's condition, record, and reputation after it has actively engaged in the business of insurance for a reasonable period of time.

1001.2 No foreign life insurance company shall be licensed to transact business in the District until it has continuously, actively, and successfully transacted the business of insurance in the state of its domicile for at least two (2) years immediately prior to the time the license is applied for.

1001.3 An exception to §1001.2 may be made in the case of any of the following:

(a) An applicant which is owned or controlled by a company which has been licensed in the District for at least three years prior to the date of the new company's application;

(b) An applicant which has surplus (or combined capital and surplus) of not less than three million dollars ($3,000,000); or

(c) Where, for the protection of District policyholders and claimants exclusively, the company has established an escrow fund in the District in an amount not less than three hundred thousand dollars ($300,000) under conditions approved by the Commissioner of Insurance

26-A DCMR § 1002 INDUSTRIAL LIFE INSURANCE

1002.1 No agent of an industrial insurance company shall accept partial payments on account of revival of lapsed policies. All arrears shall be collected at one time.

1002.2 Every premium payment paid by the policyholder to an agent shall be recorded in the receipt book of the insured and in the collection book of the agent. The policyholder's receipt book and the agent's collection book shall agree.

1002.3 The license of a soliciting agent for a company writing industrial life insurance, as well as that of the agent's manager, shall be subject to revocation, as provided under Chapter II, Section 27, of Public Law 436, 73rd Congress, if a company allows the agent to carry blind advances.

1002.4 Whenever this Department finds that a person operates in willful violation of this section, that person shall be considered untrustworthy and that conduct may be deemed by the Department to constitute sufficient grounds for the revocation of his or her license.

26-A DCMR § 1003 GROUP LIFE INSURANCE

1003.1 For the purposes of this section, survivor insurance benefits also known as survivorship annuity, consist of benefits similar to a reversionary annuity, modified by a cutoff of benefits in case of remarriage. These benefits are seldom offered, if at all, in individual contracts.

1003.2 For the purposes of this section and §§35-514 and 35-515 of the D.C. Code, 1981 ed., the expressions "term insurance" and "insurance" are not used as synonyms but to differentiate between these terms.

1003.3 Survivor insurance benefits, whether in the form of an annuity or not, shall not be classified as term insurance.

1003.4 Amount limits applicable to term insurance pursuant to §§35-514 and 35-515 of the D.C. Code, 1981 ed., shall not apply to contracts for survivor insurance benefits.

26-A DCMR § 1004 VARIABLE ANNUITIES

1004.1 No company shall be authorized by the Commissioner to issue or deliver variable contracts in or from the District until that company has satisfied the Commissioner that its condition and methods of operation in connection with the issuance of those variable contracts shall not render its operation hazardous to the public or to its contract holders or to its policyholders.

1004.2 In determining the qualifications of a company to issue or deliver variable contracts in the District, the Commissioner shall consider, among other things, the history and financial condition of the company; the character, responsibility, and general fitness of the officers and directors of the company; and, in the case of a foreign or alien company,whether the regulation provided by the laws of its domicile provides a degree of protection to the public and to its contract holders and policyholders substantially equal to that provided by the laws of the District of Columbia and by the rules and regulations issued by the Commissioner pursuant thereto.

1004.3 No company which has been authorized by the Commissioner to issue variable contracts shall be permitted to continue to conduct that business unless the actual management of the company is, in the opinion of the Commissioner, at all times capable by experience or otherwise of conducting the business in the public interest and in such a manner as to safeguard the solvency of the company and the interests of its contract holders, policyholders, and creditors.

1004.4 The authority of the company to issue variable contracts may be withdrawn by the Commissioner by procedures which afford due process of law if the Commissioner finds any of the following circumstances:

(a) The actual management of the company is not capable;

(b) The business of the company is not being conducted so as to safeguard its solvency or the interests of its contract holders, policyholders, and creditors; or

(c) The company has not complied with the law or with this title.

1004.5 Written notice of the appointment or election by any company of any new officer, manager, director, or trustee, or, of the resignation, discharge, or death of any person while occupying such a position with the company, shall, within five (5) days thereafter be submitted to the Commissioner.

1004.6 The computation of the net investment factor shall be based exclusively upon the investment experience of the variable contract account, except as regards contracts issued prior to December 31, 1960, specifying otherwise.

1004.7 No person while serving as an elected or appointed officer or as a director or trustee of any company shall receive directly or indirectly any commission on the business transactions of the company.

1004.8 The company shall effect no transfer of assets or liabilities to or from the variable contract account except in making the adjustments necessitated by contract and the mortality experience adjustment specified in §35-541(a), D.C. Code, 1981 ed. These adjustments shall be made by a case transfer only.

1004.9 The company shall value assets of the variable contract account at market values, where possible, or, in the absence of a market value, by appraisal.

1004.10 Each company shall file with its annual statement the supplement included with the blank form.

1004.11 All variable annuity contracts and the applications therefor shall contain a prominent notice that payments by the company, when based on investment experience, are variable and are not guaranteed as to fixed dollar amount.

1004.12 The company shall establish one or more separate bank accounts into which only and all variable contract premiums and considerations will be deposited. All amounts so deposited will be appropriately transferred periodically, consistent with the company's general accounting procedure.

1004.13 For each variable annuity contract the company shall maintain a history record card or ledger sheet showing, in addition to the usual premium or contract consideration information, each net annuity consideration applied and the increment and accumulated balance on either a unit or dollar value basis.

26-A DCMR § 1005 DEVIATED OR REDUCED INITIAL PREMIUMS

1005.1 The Department has determined that the submission of actuarial justification for reduced or deviated initial premiums for the first policy month or months shall no longer be required as a condition precedent to engaging in the use of deviated or reduced initial premiums applicable to the first month or months of life insurance coverage.

1005.2 Section 1005.1 shall not in any way be construed to liberalize the Department's policy of strict enforcement of all statutes and regulations pertaining to discrimination and misrepresentation with respect to the manner in which those deviated or reduced premiums are applied and the way in which they are advertised or otherwise represented to the insurance buying public in the District.

26-A DCMR § 1006 POLICIES CONTAINING LIMITED DEATH BENEFITS

1006.1 The Department of Insurance shall not disapprove of certain policies solely for the reason that the policies provide limited death benefits during the first few policy years.

1006.2 In order for policies providing limited death benefits during the first few policy years to receive favorable consideration by the Department they shall meet all statutory requirements, including those pertaining to misrepresentation, and shall be filed in accordance with §35-512 of the D.C. Code, 1981 ed.

1006.3 Policies providing limited death benefits during the first few policy years shall conform to the following requirements:

(a) The brief description appearing on the front and back of each policy shall contain prominent cautionary language as to the limited death benefit feature; and

(b) No accidental death benefits may be substituted for regular death benefits so as to disguise or obscure the limited death benefit feature of the policy.

26-A11 ANNUITY MORTALITY TABLES

26-A DCMR § 1100 INDIVIDUAL ANNUITY OR PURE ENDOWMENT CONTRACTS

1100.1 Except as provided in Subsections 1100.2, 1100.2a, and 1100.3 of this section, the 1983 Table "a" and the Annuity 2000 Mortality Table shall be the individual annuity mortality tables for valuation and, at the option of the company, either of these tables may be used for purposes of determining the minimum standard of valuation for any individual annuity or pure endowment contract issued on or after October 13, 1978.

1100.2 Except as provided in Subsections 1100.2a and 1100.3 of this section, the Annuity 2000 Mortality Table shall be used for determining the minimum standard of valuation for any individual annuity or pure endowment contract issued on or after January 1, 2000.

1100.2a Except as provided in Subsection 1100.3 of this section, the 2012 IAR Mortality Table shall be used for determining the minimum standard of valuation for any individual annuity or pure endowment contract issued on or after January 1, 2015.

1100.3 The 1983 Table "a" without projection is to be used for determining the minimum standards of valuation for an individual annuity or pure endowment contract issued on or after January 1, 2000, solely when the contract is based on life contingencies and is issued to fund periodic benefits arising from:

(a) Settlements of various forms of claims pertaining to court settlements or out of court settlements from tort actions;

(b) Settlements involving similar actions such as worker's compensation claims; or

(c) Settlements of long term disability claims where a temporary or life annuity has been used in lieu of continuing disability payments.

History

• SOURCE: Final Rulemaking published at 47 DCR 2414 (April 7, 2000); as amended by Final Rulemaking published at 62 DCR 5493 (May 1, 2015). District of Columbia Municipal Regulations Insurance 26-A DCMR § 1100

26-A DCMR § 1101 GROUP ANNUITY OR PURE ENDOWMENT CONTRACTS

1101.1 Except as provided in subsections 1101.2 of this section, the 1983 GAM Table, the 1983 Table "a" and the 1994 GAR Table are recognized and approved as group annuity mortality tables for valuation and, at the option of the company, any one of these tables may be used for purposes of valuation for an annuity or pure endowment purchased on or after October 13, 1978, but before January 1, 2000, under a group annuity or pure endowment contract.

1101.2 The 1994 GAR Table shall be used for determining the minimum standard of valuation for any annuity or pure endowment purchased on or after January 1, 2000 under a group annuity or pure endowment contract.

History

• SOURCE: Final Rulemaking published at 47 DCR 2414 (April 7, 2000). District of Columbia Municipal Regulations Insurance 26-A DCMR § 1101

26-A DCMR § 1102 APPLICATION OF THE 1994 GAR TABLE

1102.1 In using the 1994 GAR Table, the mortality rate for a person age x in year (1994 + n) is calculated as follows:

q[x]<1994 + n> = q[x]<1994> (1 - AA[x])

where the q[x]<1994> and AA[x]s are as specified in the 1994 GAR Table.

History

• SOURCE: Final Rulemaking published at 47 DCR 2414 (April 7, 2000). District of Columbia Municipal Regulations Insurance 26-A DCMR § 1102

26-A DCMR § 1103 APPLICATION OF THE 2012 IAR MORTALITY TABLE

1103.1 In using the 2012 IAR Mortality Table, the mortality rate for a person age x in year (2012 + n) is calculated as follows:

qx2012+n = qx2012 (1-G2x)n

The resulting qx2012+n shall be rounded to three decimal places per 1,000, e.g., 0.741 deaths per 1,000. Also, the rounding shall occur according to the formula above, starting at the 2012 period table rate.

For example, for a male age 30, qx2012 = 0.741.

qx2013 = 0.741 * (1 – 0.010) ^ 1 = 0.73359, which is rounded to 0.734.

qx2014 = 0.741 * (1 – 0.010) ^ 2 = 0.7262541, which is rounded to 0.726.

A method leading to incorrect rounding would be to calculate qx2014 as qx 2013 * (1 – 0.010), or 0.734 * 0.99 = 0.727. It is incorrect to use the already rounded qx2013 to calculate qx2014.

History

• SOURCE: Final Rulemaking published at 62 DCR 5493 (May 1, 2015). District of Columbia Municipal Regulations Insurance 26-A DCMR § 1103

26-A DCMR § 1199 DEFINITIONS

1199.1 "1983 Table 'a'" means the mortality table developed by the Society of Actuaries Committee to Recommend a New Mortality Basis for Individual Annuity Valuation and adopted by the National Association of Insurance Commissioners as a recognized mortality table for annuities in June 1982.

1199.2 "1983 GAM Table" means the mortality table developed by the Society of Actuaries Committee on Annuities and adopted in December 1983, by the National Association of Insurance Commissioners as a recognized mortality table for annuities.

1199.3 "1994 GAR Table" means the mortality table developed by the Society of Actuaries Group Annuity Valuation Table Task Force. The 1994 GAR Table is included in the report, Transactions of the Society of Actuaries (Volume XLVII, pages 865-919) (1995).

1199.4 "Annuity 2000 Mortality Table" means the mortality table developed by the Society of Actuaries Committee on Life Insurance Research. The Annuity 2000 Table is included in the report, Transactions of the Society of Actuaries (Volume XLVII, pages 211-249) (1995).

1199.5 “Period table” means a table of mortality rates applicable to a given calendar year (the Period).

1199.6 “Generational mortality table” means a mortality table containing a set of mortality rates that decrease for a given age from one year to the next based on a combination of a Period table and a projection scale containing rates of mortality improvement.

1199.7 “2012 IAR Table” means that Generational mortality table developed by the Society of Actuaries Committee on Life Insurance Research and containing rates, qx2012+n, derived from a combination of the 2012 IAM Period Table and Projection Scale G2, using the methodology stated in § 1103 of this chapter.

1199.8 “2012 Individual Annuity Mortality Period Life (2012 IAM Period) Table” means the Period table containing loaded mortality rates for calendar year 2012. This table contains rates, qx2012, developed by the Society of Actuaries Committee on Life Insurance Research and is shown in Appendices 1-2.

1199.9 “Projection Scale G2 (Scale G2)” is a table of annual rates, G2x, of mortality improvement by age for projecting future mortality rates beyond calendar year 2012. This table was developed by the Society of Actuaries Committee on Life Insurance Research and is shown in Appendices 3-4.

APPENDIX I

2012 IAM Period Table

Female, Age Nearest Birthday

AGE 1000 ( qx2012 AGE 1000 ( qx2012 AGE 1000 ( qx2012 AGE 1000 ( qx2012

0

1.621

30

0.300

60

3.460

90

88.377

1

0.405

31

0.321

61

3.916

91

97.491

2

0.259

32

0.338

62

4.409

92

107.269

3

0.179

33

0.351

63

4.933

93

118.201

4

0.137

34

0.365

64

5.507

94

130.969

5

0.125

35

0.381

65

6.146

95

146.449

6

0.117

36

0.402

66

6.551

96

163.908

7

0.110

37

0.429

67

7.039

97

179.695

8

0.095

38

0.463

68

7.628

98

196.151

9

0.088

39

0.504

69

8.311

99

213.150

10

0.085

40

0.552

70

9.074

100

230.722

11

0.086

41

0.600

71

9.910

101

251.505

12

0.094

42

0.650

72

10.827

102

273.007

13

0.108

43

0.697

73

11.839

103

295.086

14

0.131

44

0.740

74

12.974

104

317.591

15

0.156

45

0.780

75

14.282

105

340.362

16

0.179

46

0.825

76

15.799

106

362.371

17

0.198

47

0.885

77

17.550

107

384.113

18

0.211

48

0.964

78

19.582

108

400.000

19

0.221

49

1.051

79

21.970

109

400.000

20

0.228

50

1.161

80

24.821

110

400.000

21

0.234

51

1.308

81

28.351

111

400.000

22

0.240

52

1.460

82

32.509

112

400.000

23

0.245

53

1.613

83

37.329

113

400.000

24

0.247

54

1.774

84

42.830

114

400.000

25

0.250

55

1.950

85

48.997

115

400.000

26

0.256

56

2.154

86

55.774

116

400.000

27

0.261

57

2.399

87

63.140

117

400.000

28

0.270

58

2.700

88

71.066

118

400.000

29

0.281

59

3.054

89

79.502

119

400.000

120

1000.000

APPENDIX II

2012 IAM Period Table

Male, Age Nearest Birthday

AGE 1000 ( qx2012 AGE 1000 ( qx2012 AGE 1000 ( qx2012 AGE 1000 ( qx2012

0

1.605

30

0.741

60

5.096

90

109.993

1

0.401

31

0.751

61

5.614

91

123.119

2

0.275

32

0.754

62

6.169

92

137.168

3

0.229

33

0.756

63

6.759

93

152.171

4

0.174

34

0.756

64

7.398

94

168.194

5

0.168

35

0.756

65

8.106

95

185.260

6

0.165

36

0.756

66

8.548

96

197.322

7

0.159

37

0.756

67

9.076

97

214.751

8

0.143

38

0.756

68

9.708

98

232.507

9

0.129

39

0.800

69

10.463

99

250.397

10

0.113

40

0.859

70

11.357

100

268.607

11

0.111

41

0.926

71

12.418

101

290.016

12

0.132

42

0.999

72

13.675

102

311.849

13

0.169

43

1.069

73

15.150

103

333.962

14

0.213

44

1.142

74

16.860

104

356.207

15

0.254

45

1.219

75

18.815

105

380.000

16

0.293

46

1.318

76

21.031

106

400.000

17

0.328

47

1.454

77

23.540

107

400.000

18

0.359

48

1.627

78

26.375

108

400.000

19

0.387

49

1.829

79

29.572

109

400.000

20

0.414

50

2.057

80

33.234

110

400.000

21

0.443

51

2.302

81

37.533

111

400.000

22

0.473

52

2.545

82

42.261

112

400.000

23

0.513

53

2.779

83

47.441

113

400.000

24

0.554

54

3.011

84

53.233

114

400.000

25

0.602

55

3.254

85

59.855

115

400.000

26

0.655

56

3.529

86

67.514

116

400.000

27

0.688

57

3.845

87

76.340

117

400.000

28

0.710

58

4.213

88

86.388

118

400.000

29

0.727

59

4.631

89

97.634

119

400.000

120

1000.000

APPENDIX III

Projection Scale G2

Female, Age Nearest Birthday

AGE G2x AGE G2x AGE G2x AGE G2x

0

0.010

30

0.010

60

0.013

90

0.006

1

0.010

31

0.010

61

0.013

91

0.006

2

0.010

32

0.010

62

0.013

92

0.005

3

0.010

33

0.010

63

0.013

93

0.005

4

0.010

34

0.010

64

0.013

94

0.004

5

0.010

35

0.010

65

0.013

95

0.004

6

0.010

36

0.010

66

0.013

96

0.004

7

0.010

37

0.010

67

0.013

97

0.003

8

0.010

38

0.010

68

0.013

98

0.003

9

0.010

39

0.010

69

0.013

99

0.002

10

0.010

40

0.010

70

0.013

100

0.002

11

0.010

41

0.010

71

0.013

101

0.002

12

0.010

42

0.010

72

0.013

102

0.001

13

0.010

43

0.010

73

0.013

103

0.001

14

0.010

44

0.010

74

0.013

104

0.000

15

0.010

45

0.010

75

0.013

105

0.000

16

0.010

46

0.010

76

0.013

106

0.000

17

0.010

47

0.010

77

0.013

107

0.000

18

0.010

48

0.010

78

0.013

108

0.000

19

0.010

49

0.010

79

0.013

109

0.000

20

0.010

50

0.010

80

0.013

110

0.000

21

0.010

51

0.010

81

0.012

111

0.000

22

0.010

52

0.011

82

0.012

112

0.000

23

0.010

53

0.011

83

0.011

113

0.000

24

0.010

54

0.011

84

0.010

114

0.000

25

0.010

55

0.012

85

0.010

115

0.000

26

0.010

56

0.012

86

0.009

116

0.000

27

0.010

57

0.012

87

0.008

117

0.000

28

0.010

58

0.012

88

0.007

118

0.000

29

0.010

59

0.013

89

0.007

119

0.000

120

0.000

APPENDIX IV

Projection Scale G2

Male, Age Nearest Birthday

AGE G2x AGE G2x AGE G2x AGE G2x

0

0.010

30

0.010

60

0.015

90

0.007

1

0.010

31

0.010

61

0.015

91

0.007

2

0.010

32

0.010

62

0.015

92

0.006

3

0.010

33

0.010

63

0.015

93

0.005

4

0.010

34

0.010

64

0.015

94

0.005

5

0.010

35

0.010

65

0.015

95

0.004

6

0.010

36

0.010

66

0.015

96

0.004

7

0.010

37

0.010

67

0.015

97

0.003

8

0.010

38

0.010

68

0.015

98

0.003

9

0.010

39

0.010

69

0.015

99

0.002

10

0.010

40

0.010

70

0.015

100

0.002

11

0.010

41

0.010

71

0.015

101

0.002

12

0.010

42

0.010

72

0.015

102

0.001

13

0.010

43

0.010

73

0.015

103

0.001

14

0.010

44

0.010

74

0.015

104

0.000

15

0.010

45

0.010

75

0.015

105

0.000

16

0.010

46

0.010

76

0.015

106

0.000

17

0.010

47

0.010

77

0.015

107

0.000

18

0.010

48

0.010

78

0.015

108

0.000

19

0.010

49

0.010

79

0.015

109

0.000

20

0.010

50

0.010

80

0.015

110

0.000

21

0.010

51

0.011

81

0.014

111

0.000

22

0.010

52

0.011

82

0.013

112

0.000

23

0.010

53

0.012

83

0.013

113

0.000

24

0.010

54

0.012

84

0.012

114

0.000

25

0.010

55

0.013

85

0.011

115

0.000

26

0.010

56

0.013

86

0.010

116

0.000

27

0.010

57

0.014

87

0.009

117

0.000

28

0.010

58

0.014

88

0.009

118

0.000

29

0.010

59

0.015

89

0.008

119

0.000

120

0.000

History

• SOURCE: Final Rulemaking published at 47 DCR 2414 (April 7, 2000); as amended by Final Rulemaking published at 62 DCR 5493 (May 1, 2015). District of Columbia Municipal Regulations Insurance 26-A DCMR § 1199

26-A13 INSURANCE PLACEMENT FACILITIES

26-A DCMR § 1300 GENERAL PROVISIONS

1300.1 It is the purpose of this chapter to establish a constitution and provide for the administration of an industry placement facility pursuant to the provisions of D.C. Official Code § 31-5004(b) (2001) ("Statute").

1300.2 The Commissioner and his or her designee shall be responsible for performing the duties and responsibilities with respect to exercising the regulatory authority conferred by the Statute, through the Mayor, pursuant to D.C. Official Code § 31-103(a)(1) (2001).

History

• SOURCE: Final Rulemaking published at 51 DCR 11573 (December 24, 2004).

26-A DCMR § 1301 NAME AND STYLE OF ORGANIZATION

The name of this organization shall be District of Columbia Property Insurance Facility ("Facility"). The Facility shall be an unincorporated association.

History

• SOURCE: Final Rulemaking published at 51 DCR 11573 (December 24, 2004).

26-A DCMR § 1302 OBJECTIVE

The objective of the Facility shall be the formulation and administration of a program seeking the equitable apportionment of insurance among its Members in accordance with the provisions of the Statute and pursuant to the District of Columbia Property Insurance Facility's Plan of Operation ("Plan of Operation").

History

• SOURCE: Final Rulemaking published at 51 DCR 11573 (December 24, 2004).

26-A DCMR § 1303 MEMBERSHIP

1303.1 Every insurer licensed to write and engaged in writing in the District of Columbia, on a direct basis, Basic Property Insurance, as defined in the Plan of Operation, or components of such insurance in multi-peril policies, shall be a Member of the District of Columbia Property Insurance Facility.

1303.2 Each Member shall participate, subject to a maximum as hereinafter provided, in the writings, expenses, profits and losses of the Facility in the proportion that such Member's Premiums Written during the preceding calendar year, on property located in the District of Columbia, bear to the aggregate of such Premiums Written by all Members of the Facility.

1303.3 The maximum liability of a Member on any single risk shall not exceed one and one-half percent (1 1/2%) of the Member's surplus to policyholders. The remaining Members shall assume liability in excess of such maximum and they shall share ratably the premiums applicable thereto.

1303.4 The Facility may procure, through assessment of all its Members, subject to reasonable minimum assessments, funds necessary to defray expenses required to operate.

1303.5 A Member, which has withdrawn from the District, has had its license revoked or has been placed in liquidation, shall remain liable for all obligations through the entire fiscal year of the District of Columbia Property Insurance Facility in which such withdrawal, license revocation or liquidation occurs. When a Member has been merged or consolidated into another insurer, the Member, or its successor in interest, shall remain liable for all obligations hereunder and shall continue to participate in the Facility, based upon the Premiums Written by it and by the other insurers with which it has been merged or consolidated.

History

• SOURCE: Final Rulemaking published at 51 DCR 11573 (December 24, 2004).

26-A DCMR § 1304 OFFICE

The principal office of the Facility shall be in the District of Columbia or at a location approved by the Commissioner.

History

• SOURCE: Final Rulemaking published at 51 DCR 11573 (December 24, 2004).

26-A DCMR § 1305 BOARD OF DIRECTORS FOR THE FACILITY

1305.1 The Facility shall be governed by a Board of Directors ("Board") composed of eleven (11) directors elected annually by cumulative vote of the Members of the Facility whose votes in such election shall be weighted in accordance with each Member's proportionate share of aggregate Premiums Written during the most recent calendar year for which data is available.

1305.2 Directors shall serve for a period of one (1) year or until their successors are elected.

1305.3 No more than one (1) Member in a group of insurers under the same management or ownership shall serve as a director on the Board at the same time.

1305.4 The Board shall have responsibility for the administration of the Facility and shall adopt and promulgate such rules as may be necessary to carry out the objective of the Facility subject to the powers of the Commissioner set forth in the Statute.

1305.5 The Board shall elect from its directors a Chairperson and a Vice Chairperson and shall appoint a Secretary.

1305.6 The Board shall make appropriate arrangements for the daily management of the affairs of the Facility.

1305.7 Regular and special meetings of the Board shall be held in the District, unless another place shall be designated by the Chairperson of the Board.

1305.8 The Board shall meet as often as may be required to perform the general duties of administration and shall meet upon the request of any two (2) directors or of any ten (10) Members.

1305.9 Notice of Board meetings shall be furnished by the Secretary.

1305.10 Six (6) directors shall constitute a quorum.

1305.11 Each director shall have one (1) vote. Any matter submitted shall be carried provided it is voted in the affirmative by a majority of the Board. Voting by proxy at meetings of the Board shall not be permitted.

1305.12 Any action required or permitted by law to be taken at a meeting may be taken without a meeting if the action is taken by unanimous consent of all directors entitled to vote on the action. The action must be evidenced by one or more written consents describing the action taken, signed by all the directors entitled to vote on the action, and delivered to the Secretary for inclusion in the minutes for filing with the corporate records. The action shall be deemed effective when the last director signs the consent, unless the consent specifies a different effective date.

1305.13 The Board or any committee of the Board may permit any or all directors or committee members to participate in a regular or special meeting by, or conduct the meeting through, the use of any means of communication by which all directors or committee members participating may simultaneously hear each other during the meeting. A director or committee member participating in a meeting by this means shall be deemed to be present in person at the meeting.

1305.14 The Chairperson, or in his or her absence the Vice Chairperson, shall preside at meetings of the Board and at annual or special meetings of the Members of the Facility. The Secretary, or a designee appointed by the Chairperson or Vice Chairperson, shall act as Secretary at such meetings.

1305.15 The Chairperson may appoint or the Board may elect such standing committees or temporary or special committees as may be deemed necessary for the transaction of the Board's business. The Chairperson and. Vice Chairperson shall be ex- officio Members of all committees of the Board with the right to vote.

1305.16 The Board shall have the right, in person or through representatives, at all reasonable times, to audit and inspect the books and records of any Member of the Facility as to matters coming within the purview of the Constitution and the Plan of Operation.

History

• SOURCE: Final Rulemaking published at 51 DCR 11573 (December 24, 2004).

26-A DCMR § 1306 ANNUAL AND SPECIAL MEETINGS OF MEMBERS OF THE FACILITY

1306.1 There shall be an annual meeting of Members, on a date fixed by the Board, for the election of directors and for such other business as may be necessary.

1306.2 Special meetings of the Members may be called by the Board on its own motion or upon the written request to the Board by any ten (10) Members, no two (2) of which shall be in the same group of insurers with respect to management or ownership.

1306.3 Written notice of the annual or any special meeting, stating the time and place and the matters to be considered, shall be given to all Members at least ten (10) days in advance of each meeting.

1306.4 Notice, in the case of a special meeting, shall be accompanied by the agenda for such meeting and such supporting data and information as may be assembled by the Board. No matter may be considered at any special meeting that has not been included in the agenda.

1306.5 At any annual or special meeting, Members representing at least fifty-one percent (51%), of the aggregate Premiums Written by Members of the Facility, based on the most recent available data, shall constitute a quorum. Members may be represented by proxy.

1306.6 Voting on matters requiring a vote by the Members, including amendment to the Constitution or termination of the Facility, shall be weighted in accordance with the Premiums Written by each Member as determined from the most recent available data.

1306.7 A proposal, other than for the election of directors, shall be considered adopted by the Members when approved by at least two-thirds (2/3) of the votes cast on the weighted basis described in subsection 1306.6.

1306.8 Any matter subject to vote by the Members may be proposed and voted upon by mail, facsimile or electronic communication, provided such procedure is authorized by a majority of the Board.

History

• SOURCE: Final Rulemaking published at 51 DCR 11573 (December 24, 2004).

26-A DCMR § 1307 INDEMNIFICATION

1307.1 The Facility shall indemnify:

(a) each director of the Board (or other board empowered to act in the capacity of a board of directors) and the representatives of any insurer Member of the Board, each Member of any other committee or any subcommittee of the Facility, and the estate, executor, administrator, personal representative, heirs, legatees and devisees of any such person made a party to a proceeding by reason of service in that capacity unless it is proved that:

(1) The act or omission of such Member or person was material to the cause of action adjudicated in the proceeding; and (A) was committed in bad faith or (B) was the result of active and deliberate dishonesty;

(2) Such Member or person actually received an improper personal benefit in money, property, or services; or

(3) In the case of any criminal proceeding, such Member or person had reasonable cause to believe that the act or omission was unlawful.

(b) every Member of the Facility, both as a Member and by reason of such Member having one or more of its personal representatives or employees serving in any of the capacities or positions specified in paragraph (a) above, or as an officer or employee of the Facility, which has been made a party to a proceeding by reason of service in that capacity, unless it is proved that:

(1) The act or omission of such Member or person was material to the cause of action adjudicated in the proceeding; and (A) was committed in bad faith or (B) was the result of active and deliberate dishonesty;

(2) Such Member or person actually received an improper personal benefit in money, property, or services; or

(3) In the case of any criminal proceeding, such Member or person had reasonable cause to believe that the act or omission was unlawful.

1307.2 Indemnification under subsection 1307.1 shall be against judgments, penalties, fines, settlements, and reasonable expenses actually incurred by the Member or person in connection with the proceeding. However, if the proceeding was commenced by, on behalf of, or in the right of, the Facility, indemnification shall not be made in respect of any proceeding in which the Member or person shall have been adjudged to be liable to the Facility.

1307.3 The termination of any proceeding by judgment, order, or settlement does not create a presumption that the Member or person did not meet the requisite standard of conduct set forth in subsection 1307.1. The termination of any proceeding by conviction, or a plea of nolo contendre or its equivalent, or an entry of an order of probation prior to judgment, creates a rebuttable presumption that the Member or person did not meet that standard of conduct.

1307.4 The Facility may indemnify any officer or employee of the Facility, any consultant to, or independent contractor retained by the Facility, or the estate, executor, administrator, personal representative, heirs, legatees or devisees of such person made a party to a proceeding by reason of service in that capacity unless it is proved that:

(a) The act or omission of such person was material to the cause of action adjudicated in the proceeding; and (i) was committed in bad faith or (ii) was the result of active and deliberate dishonesty;

(b) Such person actually received an improper personal benefit in money, property, or services; or

(c) In the case of any criminal proceeding, such person had reasonable cause to believe that the act or omission was unlawful.

1307.5 Indemnification under subsection 1307.4 may be against judgments, penalties, fines, settlement, and reasonable expenses actually incurred by the person in connection with the proceeding. However, if the proceeding was commenced by, on behalf of, or in the right of, the Facility, indemnification may not be made in respect of any proceeding in which the person shall have been adjudged to be liable to the Facility.

1307.6 The termination of any proceeding by judgment, order or settlement does not create a presumption that the person did not meet the requisite standard of conduct set forth in subsection 1307.4. The termination of any proceeding by conviction, or a plea of nolo contendre or its equivalent, or an entry of an order of probation prior to judgment, creates a rebuttable presumption that the person did not meet that standard of conduct.

1307.7 A Member or person shall not be indemnified under of subsection 1307.1 or 1307.4 in respect of any proceeding charging improper personal benefit to the Member or person, whether or not involving action in the Member's or person's official capacity, in which the Member or person was adjudged to be liable on the basis that personal benefit was improperly received.

1307.8 A court of appropriate jurisdiction, upon application of a Member or person and such notice as the court shall require, may order indemnification in the following circumstances:

(a) If it determines a Member or person is entitled to reimbursement under subsection 1307.1, the court shall order indemnification, in which case the Member or person shall be entitled to recover the expenses of securing such reimbursement; or

(b) If it determines that the Member or person is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not the Member or person met the standards of conduct set forth in subsections 1307.1 or 1307.4, or has been adjudged liable under the circumstances described in subsection 1307.7, the court may order such indemnification as the court shall deem proper. However, indemnification with respect to any proceeding commenced by, on behalf of, or in the right of, the Facility, or in which liability shall have been adjudged in the circumstances described in subsection 1307.7, shall be limited to expenses.

1307.9 A court of appropriate jurisdiction may be the same court in which the proceeding involving the Member or person's liability took place.

1307.10 Indemnification under subsection 1307.1 shall not be made by the Facility unless authorized for a specific proceeding after a determination has been made that indemnification of the Member or person is required in the circumstances because the Member or person has met the standard of conduct set forth in subsection.

1307.11 Such determination under subsection 1307.10 shall be made:

(a) By the Board by a majority vote of a quorum consisting of directors not, at the time, parties to the proceeding, or, if such a quorum cannot be obtained, then by a majority vote of a subcommittee of the Board consisting solely of two or more directors not, at the time, parties to such proceeding and who were duly designated to act in the matter by a majority vote of the full Board in which the designated directors who are parties may participate;

(b) By special legal counsel selected by the Board or a subcommittee of the Board by vote as set forth in subparagraph (a) hereof, or if the requisite quorum of the full Board cannot be obtained therefore and the subcommittee cannot be established, by a majority vote of the full Board in which directors who are parties may participate; or

(c) By the Members of the Facility.

1307.12 Indemnification under subsection 1307.4 may not be made by the Facility unless authorized for a specific proceeding after a determination has been made that indemnification of the person is permitted in the circumstances because the person has met the standard of conduct set forth in that subsection and that under the circumstances indemnification is in the best interests of the Facility.

1307.13 Such determination under subsection 1307.12 shall be made:

(a) by the Board by a majority vote of a quorum consisting of directors not, at the time, parties to the proceeding, or, if such a quorum cannot be obtained, then by a majority vote of a subcommittee of the Board consisting solely of two or more directors not, at the time, parties to such proceeding and who were duly designated to act in the matter by a majority vote of the full Board in which the designated directors who are parties may participate; or

(b) by the Members of the Facility.

1307.14 Authorization of indemnification and determination as to reasonableness of expenses shall be made in the same manner as the determination that indemnification is required or permitted. However, if special legal counsel makes a determination that indemnification is required, authorization of indemnification and determination as to reasonableness of expenses shall be made in the manner specified in paragraph 1307.13(b) for selection of such counsel.

1307.15 Reasonable expenses incurred by a Member or person, other than an officer or employee, who is a party to a proceeding shall be paid or reimbursed by the Facility, and in the case of an officer or employee, reasonable expenses incurred may be paid or reimbursed by the Facility in advance of the final disposition of the proceeding upon receipt by the Facility of:

(a) A written affirmation by the Member or person of the Member's or person's good faith belief that the standard of conduct necessary for indemnification by the Facility as authorized by this section has been met; and

(b) A written undertaking by or on behalf of the Member or person to repay the amount if it shall ultimately be determined that the standard of conduct has not been met.

1307.16 The undertaking required by paragraph 1307.15(b) shall be an unlimited general obligation of the Member or person but, in the discretion of the Board, need not be secured and may be accepted without reference to financial ability to make the repayment.

1307.17 Payments under subsection 1307.15 shall be made as provided by contract or as specified in subsection 1307.8 or subsection 1307.10.

1307.18 The indemnification and advancement of expenses provided or authorized by this section shall not be deemed exclusive of any other rights, including, but not limited to, indemnification, any right to which the Member or person may be entitled under this chapter, any resolution of the Members or the Board or any contract or other agreement, both as to actions in an official capacity and as to actions in another capacity while holding such position.

1307.19 This chapter does not limit the Facility's power to pay or reimburse expenses incurred by a Member or person in connection with an appearance as a witness in a proceeding at a time when the Member or person has not been made a named defendant or respondent in the proceeding.

1307.20 The Facility may purchase and maintain insurance on behalf of any entity or person who is or was a Member, a director, a representative of any director of the Board, a member of any other committee or any subcommittee of the Facility, and the estate, executor, administrator, personal representative, heirs, legatee and devisees of any such person, or an officer or employee of the Facility and the estate, executor, administrator, personal representative, heirs, legatees or devisees of such officer or employee, or which (or who), while a Member, director of the Board, representative of a director of the Board, member of any other committee or any subcommittee, officer or employee of the Facility, is or was serving at the request of the Facility as a director, officer, partner, trustee, employee, or agent of a foreign or domestic corporation, partnership, joint venture, trust, other enterprises, or employee benefit plan, against any liability asserted against and incurred by such entity or person in any such capacity or arising out of such entity's or person's position, whether or not the Facility would have the power to indemnify against liability under the provisions of this chapter.

1307.21 The Facility may provide similar protection to that referenced in subsection 1307.20, including a trust fund, letter of credit, or surety bond, not inconsistent with this chapter.

1307.22 Any insurance or similar protection provided by the Facility may be procured through a Member or other affiliate of the Facility.

1307.23 The indemnification provided by this chapter shall be secondary to any benefits which the Member or person may be entitled to receive from any applicable insurance policy providing Directors and Officers, Errors and Omissions or other applicable insurance coverage, which has been procured by the Facility or for which the Facility has paid the premium.

1307.24 The indemnification provided by this chapter shall be primary over any indemnification provided by a Member or a director of the Board at his or its own expense. The indemnification provided for in this chapter shall be deemed to be an expense of the Facility to which all of the Members of the Facility shall contribute in the proportion that such Member participates according to law in writings, expenses, and losses of the Facility.

1307.25 In this section, the following terms shall have the meanings ascribed:

"Member" means any entity that is or was an insurer member of the Facility or a director of the Board of Directors of the Facility.

"Expenses" includes, but not limited to, attorney's fees.

"Official capacity" means the following:

(i) The role of a Member of the Facility, when used with respect to a Member;

(ii) The position of director of the Board of Directors of the Facility, when used with respect to a director of the Board of Directors; and

(iii) The elective or appointive office in the Facility held by the officer, or the employment relationship undertaken by the employee on behalf of the Facility, when used with respect to an entity or person other than a Member of the Facility or a director of the Board of Directors.

"Party" includes a person who was, is, or may be made, a named defendant or respondent in a proceeding.

"Proceeding" means any threatened, pending or completed action or suit, whether civil, criminal, administrative, or investigative.

History

• SOURCE: Final Rulemaking published at 51 DCR 11573 (December 24, 2004).

26-A DCMR § 1308 INSOLVENCY

1308.1 If any Member fails, by reason of insolvency to pay its proportion of any expense or of any loss incurred by the Facility, the unpaid loss or the remaining Members shall pay expense, each contribution in the manner provided for distribution of expenses and losses under the Constitution, deleting thereby the proportion of the defaulting Member.

1308.2 The Facility shall be subrogated to the rights of the remaining Members in any liquidation proceeding and shall have full authority on their behalf to exercise their rights in any action or proceeding.

1308.3 In the event of insolvency of a Member, any reinsurance assumed by the Facility with respect to policies issued by such Member pursuant to the previous Plan of Operation shall be payable as follows:

(a) On the basis of the liability of the Member without diminution;

(b) Directly to the Member; or

(c) To its liquidator, receiver or statutory successor.

1308.4 An exception to subsection 1308.3 shall apply when the Facility, with the consent of the insured under the reinsured policy, as evidenced by endorsement, has assumed the policy obligations of the Member as direct obligations of the Facility to the payees under the policy and as a substitute for the obligations of the Member to the payees.

1308.5 The liquidator, receiver or statutory successor of the Member shall give written notice to the Facility of the pendency of a claim against the Member on the policy reinsured within a reasonable time after the claim is filed in the insolvency proceeding.

1308.6 During the pendency of a claim, the Facility may investigate the claim and, at its own expense, in the proceeding where the claim is to be adjudicated, interpose any defense or defenses that it may deem available to the Member or its liquidator, receiver or statutory successor.

1308.7 The expense incurred by the Facility shall be chargeable subject to court approval against the insolvent Member as part of the expense of liquidation to the extent of a proportionate share of the benefit that may accrue to the Member solely as a result of the defense undertaken by the Facility.

History

• SOURCE: Final Rulemaking published at 51 DCR 11573 (December 24, 2004).

26-A DCMR § 1309 AMENDMENTS

The Facility's Constitution may be amended by the Members subject to the powers of the Commissioner as set forth in the Statute.

History

• SOURCE: Final Rulemaking published at 51 DCR 11573 (December 24, 2004).

26-A DCMR § 1310 PLAN OF OPERATION

1310.1 The revised Plan of Operation, which was approved by the Commissioner and deemed effective as of April 1, 2004, replaces the prior Plan of Operation that had been effective as of October 1, 1972, as amended, provides that the Plan of Operation shall remain effective to complete all unfinished business in progress and until such time as all liability has ceased, claims are settled and final settlement has been made with respect to insurance written pursuant to the Plan of Operation.

1310.2 The Facility is authorized to issue policies or certificates of insurance on risks in a form where each Member of the Facility shall be a direct insurer hereunder in such proportion as its Premiums Written bear to the total Premiums Written of all Members.

1310.3 Liability of each Member shall be several, each of itself, and not joint, and no Member shall be liable under any such policy or certificate for the liability of any other Member, except as otherwise provided in this chapter.

1310.4 Members of the Facility shall be deemed to have authorized the manager of the Facility to act as attorney-in fact for all Members to execute policies on behalf of the Member companies.

1310.5 Any policy or certificate of insurance issued pursuant to this section shall be executed on behalf of the participating Members by any attorney-in-fact appointed.

1310.6 The attorney-in-fact shall pay, on behalf of such Members, premium and other taxes related to Facility business on terms and conditions agreeable to the taxing authority involved.

1310.7 In the event of death, resignation or incapacity of said attorney-in-fact to act, the Board shall nominate a successor.

1310.8 No policy or certificate of insurance shall be affected or invalidated by any change of the attorney-in-fact who, at the time the policy or certificate of insurance was issued, shall have duly acted pursuant to the powers vested in him or her.

History

• SOURCE: Final Rulemaking published at 48 DCR 4663(May 25, 2001); as amended by Final Rulemaking published at 51 DCR 11573 (December 24, 2004).

26-A DCMR § 1311 INSPECTIONS AND REPORTS

1311.1 Any property owner is entitled to an inspection by the Facility of property that is eligible for Basic Property Insurance or Homeowners Insurance and, if unable to obtain such insurance in the normal market, may apply to the Facility for such inspection.

1311.2 The application shall include a request for inspection and the original inspection or attempt to inspect shall be made at no cost to the applicant. If the inspector is unable to complete an inspection of the property due to the fault of the owner, the applicant or their designated responsible representative, the Facility shall require the applicant to pay, in advance, the reasonable cost of any subsequent inspection efforts. The Board of Directors shall set the fee for the reasonable cost of any subsequent inspection efforts.

1311.3 The inspector must be provided full access to the property for which the inspection is sought, but the presence of the owner of a building may not be required when a tenant is seeking insurance.

1311.4 An Inspection Report shall be made for each property inspected and shall be sent to the Facility. The report shall cover pertinent structural and occupancy features, as well as the general condition of the building and surrounding structures. Representative photographs of the property shall be taken during the inspection.

1311.5 Once an eligible risk has been inspected and found insurable, it shall be re-inspected only:

(a) Upon request of the property owner;

(b) Upon a limited basis for statistical purposes as determined by the Board;

(c) Upon a change in type of occupancy;

(d) Upon a schedule of not more than once every three (3) years as determined by the Board; or

(e) Upon information or well founded belief of the Manager of the Facility that the occupancy hazards or physical condition of the property have substantially changed since the last inspection.

History

• SOURCE: Final Rulemaking published at 51 DCR 11573 (December 24, 2004).

26-A DCMR § 1312 PROCEDURE AFTER INSPECTION

1312.1 In order to achieve maximum uniformity in the definition and application of reasonable underwriting standards, the Board of Directors shall specify criteria that are contained in the Rules of the Plan of Operation, which shall be used by the Facility in determining insurability.

1312.2 A risk shall not be declined for reason of neighborhood or area location or Environmental Hazard beyond the control of the Property Owner.

1312.3 The Facility shall advise the licensed insurance producer or applicant that:

(a) The risk is acceptable and the policy will be issued upon receipt of the full required amount of the premium;

(b) The risk is not acceptable, but will be acceptable if improvements, noted on the Report of Declination, are made by the applicant and confirmed by reinspection or other means; or

(c) The risk is not acceptable for the reason stated in the Report of Declination.

1312.4 If the inspection of the property reveals that there are one or more substandard conditions, condition charges may be imposed in conformity with the substandard rating plan approved by the Commissioner. Whenever improvements are specified, they shall be set forth in such a way that the applicant will know what must be done to achieve insurability at standard rates: (a) with an approved condition charge, or (b) without any condition charge. If an approved condition charge is applicable, coverage shall be provided immediately at the approved - higher rate during the period in which any improvements are being made. If improvements are completed and are verified by the Facility through inspection or other means, the premium shall be pro-rated and adjusted to the proper level. Coverage bound and approved and cancelled prior to policy issuance shall be pro-rated, with applicable condition charges, for purposes of earned premium calculations.

1312.5 In the event a risk is declined because it fails to meet reasonable underwriting standards, or if the applicant is notified that coverage will be written if stated improvements are made, the Facility shall send copies of the Inspection Report and the Report of Declination to the Property Owner along with an explanation of the Facility's action and the procedures for appealing that action.

1312.6 Forms listing all condition charges applied by the Facility will be furnished with the Approval Notice.

History

• SOURCE: Final Rulemaking published at 51 DCR 11573 (December 24, 2004).

26-A DCMR § 1313 PLACEMENT OF INSURANCE

1313.1 Premiums are payable by licensed insurance producers on a net basis to the Facility by means and in a form acceptable to the Facility. The Facility must have on file a copy of the producer's current license issued by the Department of Insurance, Securities and Banking of the District of Columbia. Premium financing arrangements will be honored by the Facility.

1313.2 All others seeking insurance are required to pay gross premium by means and in a form acceptable to the Facility.

1313.3 Payment may be made in person or by mail, but cash shall not be sent through the mail.

1313.4 Payment shall be received by the Facility before coverage can become effective.

1313.5 Dishonored first payments will void the policy. Other dishonored payments will cause the policy to be cancelled on a pro-rata equity basis.

1313.6 Customers may elect an installment payment plan developed by the Facility and approved by the Commissioner. Commissions shall be paid only on payments received, excluding installment payment fees.

History

• SOURCE: Final Rulemaking published at 51 DCR 11573 (December 24, 2004).

26-A DCMR § 1314 IMMEDIATE BINDING

Eligible risks shall be subject to immediate binding in accordance with procedures adopted by the Board in the Rules of the Plan of Operation.

History

• SOURCE: Final Rulemaking published at 51 DCR 11573 (December 24, 2004).

26-A DCMR § 1315 STANDARD POLICY COVERAGE

1315.1 All policies issued shall be for Basic Property Insurance or Homeowners Insurance on standard policy forms and shall be issued for a term of one (1) year. Policies may be continued on a year-to-year basis only upon the annual submission of a properly completed continuation application, receipt of the proper premium and approval by the Facility.

1315.2 Deductibles, percentage participation clauses, and other underwriting devices may be employed to meet special problems of insurability, subject to approval of the Commissioner.

1315.3 The Facility shall, subject to the provisions of the Plan of Operation, write insurance up to the reasonable insurable value of the property, subject to a maximum of one million five hundred thousand dollars ($1,500,000) on all interests at one location. The Board may set sub-limits on certain lines of insurance subject to approval of the Commissioner.

1315.4 After the issuance of a policy, the following procedure shall be followed to effect any change by endorsement:

(a) The request for change must be in writing;

(b) The endorsement shall be prepared by the Facility;

(c) The request for endorsement shall be implemented by proper adjustment of premium;

(d) The endorsement shall be signed by the attorney-in-fact of the Facility; and

(e) The original of the endorsement shall be sent to the named insured or licensed producer.

History

• SOURCE: Final Rulemaking published at 51 DCR 11573 (December 24, 2004).

26-A DCMR § 1316 CANCELLATIONS

1316.1 Grounds for Cancellation shall be:

(a) Non-payment of premium;

(b) Evidence of incendiarism;

(c) Cause which would have been grounds for non-acceptance of the risk at the time of acceptance;

(d) Cause arising subsequent to the inspection, which would have been grounds for non-acceptance of the risk under the Plan of Operation, had such cause existed at the time of inspection; or

(e) Two (2) unsuccessful attempts to inspect the property.

1316.2 Except for non-payment of premium, or evidence of incendiarism, or a cause, which would have been grounds for non-acceptance of the risk at the time of inspection, or a misrepresentation of fact, thirty (30) days notice of cancellation, together with a statement of the reasons therefore, shall be sent to the insured. A statement explaining that the insured has a right of appeal shall accompany all notices.

History

• SOURCE: Final Rulemaking published at 51 DCR 11573 (December 24, 2004).

26-A DCMR § 1317 RIGHT OF APPEAL

1317.1 Any applicant for insurance, any person insured pursuant to the Plan of Operation or any affected insurer may appeal to the Board within fifteen (15) days after any ruling, action or decision of the Facility. The Board or an appeals committee designated by the Board shall hear and determine such appeal within fifteen (15) days after the same is filed. Such determination may be appealed to the Commissioner within ninety (90) days as provided in the Statute.

1317.2 Orders of the Commissioner shall be subject to judicial review as provided in the Statute.

History

• SOURCE: Final Rulemaking published at 51 DCR 11573 (December 24, 2004).

26-A DCMR § 1318 COMMISSIONS

1318.1 Commissions to the licensed producers, designated by the Property Owner or the insured, shall be twelve percent 12% until the Board determines a different amount and that amount is approved by the Commissioner.

1318.2 If a policy is canceled, or if an endorsement is issued which requires a premium to be returned to the insured, the unearned premium, net of any commission, will be sent to the licensed producer. The producer shall add to that return the commission on that unearned premium and refund the total amount to the insured.

1318.3 Notwithstanding the provisions of subsection 1318.2, if a policy is canceled, or if an endorsement is issued which requires a premium to be returned to the insured, and a licensed premium finance company has paid the insured's premium pursuant to a premium finance agreement of which the Facility has been notified, the unearned premium, net of any commission, will be sent directly to the licensed premium finance company. The producer shall be solely responsible for the return to the licensed premium finance company of the commission on that unearned premium.

History

• SOURCE: Final Rulemaking published at 51 DCR 11573 (December 24, 2004).

26-A DCMR § 1319 STATISTICS AND REPORTS

1319.1 All business written pursuant to the Plan of Operation shall be coded separately in order that the experience of the business may be viewed separately from the experience on general business.

1319.2 The Facility shall furnish to all Members, to the Commissioner and to other entities as required by statute or regulation, a written report at such intervals and containing such information as may be required.

History

• SOURCE: Final Rulemaking published at 51 DCR 11573 (December 24, 2004).

26-A DCMR § 1320 CANCELLATION OR NON-RENEWAL OF ELIGIBLE RISKS

1320.1 Each Member Company agrees that on cancellations and non-renewals that it initiates on risks eligible for insurance under the Plan of Operation (except in cases of non-payment of premium, or evidence of incendiarism), it will:

(a) Furnish the policyholder thirty (30) days advance written notice in order to allow time for the application for coverage to be made and a policy to be written under the provisions of the Plan of Operation; and

(b) Furnish the policyholder notice of the availability and location of the Facility.

History

• SOURCE: Final Rulemaking published at 51 DCR 11573 (December 24, 2004); as amended by ERRATA published at 52 DCR 51(January 7, 2005).

26-A DCMR § 1321 CONTINUING EDUCATION

The Facility shall undertake a continuing education program to assure that this program receives adequate public attention.

History

• SOURCE: Final Rulemaking published at 51 DCR 11573 (December 24, 2004); as amended by ERRATA published at 52 DCR 51(January 7, 2005).

26-A DCMR § 1322 MODIFICATION

The Plan of Operation may be amended by the Board in any manner not inconsistent with the Constitution of the Facility, subject to disapproval by the Commissioner in whole or in part in accordance with the provisions of the Statute.

History

• SOURCE: Final Rulemaking published at 51 DCR 11573 (December 24, 2004); as amended by ERRATA published at 52 DCR 51(January 7, 2005).

26-A DCMR § 1399 DEFINITIONS

When used in this chapter, the following terms shall have the meanings ascribed:

"Commissioner" means the Commissioner of Insurance, Securities and Banking of the District of Columbia or his designated agent.

"Basic Property Insurance" means insurance against direct loss to property caused by perils as defined and limited in the standard fire policy and extended coverage endorsement, including builder's risk coverage and vandalism and malicious mischief endorsements thereon and other insurance as the Commissioner has designated or may designate in accordance with the authority vested in him by the Statute.

"Environmental Hazard" means any hazardous condition that might give rise to loss under an insurance contract, but which is beyond the control of the Property Owner.

"Facility" means the District of Columbia Property Insurance Facility.

"Homeowner's Insurance" means insurance for residential property that provides a combination of coverages, including fire, extended coverage, vandalism and malicious mischief, burglary, theft, and personal liability. The term shall include a policy of insurance that is limited to basic market value, repair cost, or actual cash value contracts for owner-occupants of one-to-four-family dwellings as approved by the Commissioner.

"Licensed Insurance Producer" means an insurance producer required to be licensed in the District of Columbia to sell, solicit, or negotiate insurance.

"Manager" means the principal administrative officer of the District of Columbia Property Insurance Facility appointed by the Board of Directors.

"Member Company" or "Member" means a participant in the District of Columbia Property Insurance Facility.

"Plan of Operation" means the District of Columbia Property Insurance Facility's Plan of Operation.

"Premiums Written" means gross direct premiums charged with respect to property in the District of Columbia on all policies of Basic Property Insurance, Homeowners Insurance and the Basic Property Insurance premium components of all multi-peril policies, less all premiums and dividends returned, paid or credited to policyholders or the unused or unabsorbed portions of premium deposits.

"Property Owner" means any person having an insurable interest in real, personal, or mixed real and personal property.

History

• SOURCE: Final Rulemaking published at 51 DCR 11573 (December 24, 2004).

26-A14 INSIDER TRADING

26-A DCMR § 1400 SECURITIES "HELD OF RECORD"

1400.1 For the purposes of determining whether the equity securities of an insurer are "held of record" by one hundred (100) or more persons, securities shall be considered to be "held of record" by each person who is identified as the owner of such securities on records of security holders maintained by or on behalf of the insurer, subject to the following conditions:

(a) In cases where the records of security holders have not been maintained in accordance with accepted practice, or any additional person(s) who is identified as an owner on such records, shall be included as a "holder of record", if the records were maintained in accordance with accepted practice;

(b) Securities identified as "held of record" by a corporation, a partnership, a trust whether or not the trustees are named, or other organization shall be included as so held by one person;

(c) Securities identified as "held of record" by one or more persons as trustees, executors, guardians, custodians or in other fiduciary capacities with respect to a single trust, estate or account shall be included as "held of record" by one person;

(d) Securities held by two (2) or more persons as co-owners shall be included as held by one (1) person;

(e) Each outstanding unregistered or bearer of certificate shall be included as "held of record" by a separate person, except to the extent that, if the insurer can establish that the securities were registered, he or she shall be "held of record" under the provisions of this rule by a lesser number of persons; and

(f) Securities registered in substantially similar names where the insurer has reason to believe because of the address or other indications that the names represent the same person, may be included as "held of record" by one person.

1400.2 Notwithstanding §1400.1, the following shall apply:

(a) Securities held to the knowledge of the insurer, subject to a voting trust, deposit agreement or similar arrangement shall be included as "held of record" by the record holders of the voting trust certificates, certificates of deposit, receipts or similar evidences of interest in such securities; provided however, that the insurer may rely in good faith on the information as is received in response to its request from a non-affiliated insurer of the certificates or evidences of interest; and

(b) If the insurer knows or has reason to know that the form of holding securities of record is used primarily to circumvent the provisions of the Act, the beneficial owners of the securities shall be considered to be the record owners.

26-A DCMR § 1401 TRANSACTIONS EXEMPTED FROM THE OPERATION OF SECTION 3(b) OF THE ACT

1401.1 Any acquisition or disposition of any equity security by a director or officer of an insurer within six (6) months prior to the date on which the Act shall first become applicable with respect to the equity securities of the insurer shall not be subject to the operation of Section 3(b) of the Act.

26-A DCMR § 1402 FILING OF STATEMENTS

1402.1 Initial statements of beneficial ownership of equity securities required by Section 3(a) of the Act shall in all respects comply with the instructions set forth in Schedule A of Appendix 14-1 and shall be filed in a form as the Commissioner may prescribe.

1402.2 Statements of changes in a beneficial ownership required by Section 3(a) of the Act shall in all respects comply with the instructions set forth in Schedule B of Appendix 14-2 and shall be filed in a form the Commissioner may prescribe.

26-A DCMR § 1403 OWNERSHIP OF MORE THAN TEN PER CENT OF AN EQUITY SECURITY

1403.1 For the purposes of Section 3(a) of the Act, in determining whether a person is the beneficial owner, directly or indirectly, of more than ten per cent (10%) of any class of any equity security, a class shall be considered to consist of the total amount of the class outstanding, exclusive of any securities of the class held by or for the account of the insurer or a subsidiary of the insurer.

1403.2 Except for the purpose of determining percentage ownership of voting trust certificates or certificates of deposit for equity securities, the class of voting trust certificates or certificates of deposit shall be considered to consist of the amount of voting trust certificates or certificates of deposit issuable with respect to the total amount of outstanding equity securities of the class which may be deposited under the voting trust agreement or deposit agreement in question, whether or not all of the outstanding securities have been so deposited.

1403.3 For the purposes of this section, a person acting in good faith may rely on the information contained in the latest Convention Form Statement filed with the Commissioner with respect to the amount of securities of a class outstanding or in the case of voting trust certificates or certificates of deposit the amount thereof issuable.

26-A DCMR § 1404 DISCLAIMER OF BENEFICIAL OWNERSHIP

1404.1 Any person filing a statement may expressly declare that the filing of a statement shall not be construed as an admission that the person is the beneficial owner of any equity securities covered by the statement.

26-A DCMR § 1405 EXEMPTIONS FROM SECTIONS 3(a) AND 3(b)

1405.1 During the period of twelve (12) months following their appointment and qualification, securities held by the following persons shall be exempt from Section 3(a) and 3(b) of the Act:

(a) Executors or administrators of the estate of a decedent;

(b) Guardians or committees for an incompetent; and

(c) Receivers, trustees in bankruptcy, assignees for the benefit of creditors, conservators, liquidating agents, and other similar persons duly authorized by law to administer the estate or assets of other persons.

1405.2 After the twelve (12) month period following their appointment or qualification, the foregoing persons shall be required to file reports with respect to the securities held by the estates which they administer under Section 3(a) of the Act, and shall be liable for profits realized from trading in the securities pursuant to Section 3(b) of the Act only when the estate being administered is a beneficial owner of more than ten percent (10%) of any class of equity security of an insurer subject to the Act.

1405.3 Securities reacquired by or for the account of an insurer and held by it for its account shall be exempt from Sections 3(a) and 3(b) during the time they are held by the insurer.

26-A DCMR § 1406 EXEMPTION FROM THE ACT OF SECURITIES PURCHASED OR SOLD BY ODD-LOT DEALERS

1406.1 Securities purchased or sold by an odd-lot dealer in odd-lots so far as reasonably necessary to carry on odd-lot transactions or in round lots to offset odd-lot transactions previously or simultaneously executed or reasonably anticipated in the usual course of business shall be exempt from the provisions of the Act with respect to participation by the odd-lot dealer in the transactions.

26-A DCMR § 1407 CERTAIN TRANSACTIONS SUBJECT TO SECTION 3(a) OF THE ACT

1407.1 The acquisition or disposition of any transferable option, put, call, spread or straddle shall be considered a change in the beneficial ownership of the security to which a privilege relates as to require the filing of a statement reflecting the acquisition or disposition of such privilege.

1407.2 Nothing in this section shall exempt any person from filing the statements required upon the exercise of such option, put, call, spread or straddle.

26-A DCMR § 1408 OWNERSHIP OF SECURITIES HELD IN TRUST

1408.1 Beneficial ownership of a security for the purpose of Section 3(a) shall include the following:

(a) The ownership of securities as a trustee where either the trustee or members of his or her immediate family have a vested interest in the income or corpus of the trust;

(b) The ownership of a vested beneficial interest in a trust; and

(c) The ownership of securities as a settlor of a trust in which the settlor has the power to revoke the trust without obtaining the consent of all the beneficiaries.

1408.2 Except as provided in §1408.1(c), beneficial ownership of securities solely as a settlor or beneficiary of a trust shall be exempt from the provisions of Section 3(a) where less than twenty per cent (20%) in market value of the securities having a readily ascertainable market value held by the trust, determined as of the end of the preceding fiscal year of the trust, consists of equity securities with respect to which reports shall be required.

1408.3 Exemption shall be accorded from Section 3(a) with respect to any obligation which shall be imposed solely by reason of ownership as settlor or beneficiary of securities held in trust, and where the ownership, acquisition, or disposition of the securities by the trust is made without prior approval by the settlor or beneficiary.

1408.4 No exemption pursuant to this section shall be acquired or lost solely as a result of changes in the value of the trust assets during any fiscal year or during any time when there is no transaction by the trust in the securities otherwise subject to the reporting requirements of Section 3(a).

1408.5 In the event that ten per cent (10%) of any class of any equity security of an insurer is held in a trust, that trust and the trustees shall be considered a person required to file the reports specified in Section 3(a) of the Act.

1408.6 Not more than one (1) report need be filed to report any holdings or with respect to any transaction in securities held by a trust, regardless of the number of officers, directors, or ten per cent (10%) stockholders who are either trustees, settlors, or beneficiaries of a trust, provided that the report filed shall disclose the names of all trustees, settlors and beneficiaries who are officers, directors or ten per cent (10%) stockholders.

1408.7 Any person having an interest only as a beneficiary of a trust shall not be required to file a report so long as he or she relies in good faith upon an understanding that the trustee of the trust shall file whatever reports is required of the beneficiary.

1408.8 As used in this section the "immediate family" of a trustee shall have the following meaning:

(a) The son or daughter of the trustee, or a descendant of either;

(b) The stepson or stepdaughter of the trustee;

(c) The father or mother of the trustee, or an ancestor of either;

(d) The stepfather or stepmother of the trustee; and

(e) The spouse of the trustee.

1408.9 For the purpose of determining whether any of the foregoing relations exists, a legally adopted child of a person shall be considered a child of such person by blood.

1408.10 In determining whether a person is the beneficial owner, directly or indirectly of more than ten per cent (10%) of any class of any equity security, the interest of the person in the remainder of a trust shall be excluded from the computation.

1408.11 No report shall be required by any person, whether or not otherwise subject to the requirement of filing reports under Section 3(a), with respect to his or her indirect interest in portfolio securities held by the following:

(a) A pension or retirement plan holding securities of an insurer whose employees generally are the beneficiaries of the plan; and

(b) A business trust with over twenty five (25) beneficiaries.

1408.12 Nothing in this section shall be deemed to impose any duties or liabilities with respect to reporting any transaction or holding prior to its effective date.

26-A DCMR § 1409 EXEMPTION FOR SMALL TRANSACTIONS

1409.1 Any acquisition of securities shall be exempt from Section 3(a) if it meets the following requirements:

(a) The person effecting the acquisition does not within six (6) months thereafter effect any disposition, otherwise than by gift, of securities of the same class; and

(b) The person effecting the acquisition does not participate in acquisitions or in dispositions of securities of the same class having a total market value in excess of three thousand dollars ($3,000) for any six (6) months' period which the acquisition occurs.

1409.2 Any acquisition or disposition of securities by way of gift, where the total amount of the gifts does not exceed three thousand dollars ($3,000) in market value for any six (6) months's period, shall be exempt from Section 3(a) and may be excluded from the computations prescribed in §1409.1(b).

1409.3 Any person exempted by §§1409.1 and 1409.2 shall include in the first report filed by him or her after a transaction within the exemption a statement showing his or her acquisitions and dispositions for each six (6) months' period or portion thereof which has elapsed since his or her last filing.

26-A DCMR § 1410 EXEMPTION FROM SECTION 3(b) OF THE ACT OF TRANSACTIONS WHICH NEED NOT BE REPORTED UNDER SECTION 3(a)

1410.1 Any transaction which has been or shall be exempted from the requirements of Section 3(a) of the Act shall, insofar as it is otherwise subject to the provisions of Section 3(b), also be exempted from Section 3(b).

26-A DCMR § 1411 EXEMPTION FROM SECTION 3(b) OF CERTAIN TRANSACTIONS EFFECTED IN CONNECTION WITH A DISTRIBUTION

1411.1 Any transaction of purchase and sale, or sale and purchase of a security which is effected in connection with the distribution of a substantial block of securities shall be exempt from the provisions of Section 3(b) of the Act, to the extent specified in this section as not comprehended within the purpose of the Act, upon the following conditions:

(a) The person effecting the transaction is engaged in the business of distributing securities and is participating in good faith, in the ordinary course of business, in the distribution of a block of securities;

(b) The security involved in the transaction is as follows:

(1) A part of a block of securities and is acquired by the person effecting the transaction, with a view to the distribution, from the insurer or other person on whose behalf the securities are being distributed or from a person who is participating in good faith in the distribution of the block of securities; or

(2) A security purchased in good faith by or for the account of the person effecting the transaction for the purpose of stabilizing the market price of securities of the class being distributed or to cover an over-allotment or other short position created in connection with the distribution; and

(c) Other persons not within the purview of Section 3(b) of the Act are participating in the distribution of the block of securities on terms at least as favorable as those on which the person is participating and to an extent at least equal to the aggregate participation of all persons exempted from the provisions of Section 3(b) of the Act by this section. However, the performance of the functions of manager of a distributing group and the receipt of a distributing group and the receipt of a bona fide payment for performing the functions shall not preclude an exemption which shall otherwise be available under this section.

1411.2 The exemption of a transaction pursuant to this section with respect to the participation of one party shall not render the transaction exempt with respect to participation of any other party unless the other party also meets the conditions of this section.

26-A DCMR § 1412 EXEMPTION FROM SECTION 3(b) OF ACQUISITIONS OF SHARES OF STOCK AND STOCK OPTIONS UNDER CERTAIN STOCK BONUS, STOCK OPTION OR SIMILAR PLANS

1412.1 Any acquisition of shares of stock (other than stock acquired upon the exercise of an option, warrant or right) pursuant to a stock bonus, profit sharing, retirement, incentive, thrift, savings or similar plan, or any acquisition of a qualified or a restricted stock option pursuant to a qualified or a restricted stock option plan, or a stock option pursuant to an employee stock purchase plan, by a director or officer of an insurer issuing the stock or stock option shall be exempt from the operation of Section 3(b) of the Act if the plan meets the following conditions:

(a) The plan has been duly approved, directly or indirectly as follows:

(1) By the holders of a majority of the securities of the insurer present, or represented, and entitled to vote at a meeting for which proxies were solicited substantially in accordance with the rules and regulations issued under Section 2(a) of the Act;

(2) By the written consent of the holders of a majority of the securities of the insurer entitled to vote solicited substantially in accordance with the rules and regulations, whether or not the rules and regulations were applicable to the solicitations; or

(3) By the holders of a majority of the securities of a predecessor corporation entitled to vote, in the manner specified in §§1412(a)(1) and 1412(a)(2), if the plan or obligations to participate were assumed by the insurer in connection with the succession.

(b) If the selection of any director or officer of the insurer to whom stock may be allocated or to whom qualified, restricted or employee stock purchase plan stock options may be granted pursuant to the plan, or the determination of the number or maximum number of shares of stock which may be allocated to any director or officer or which may be covered by qualified, restricted or employee stock purchase plan stock options granted to any director or officer, shall be subject to the discretion of any person. The discretion shall be exercised only as follows:

(1) With respect to the participation of directors the following apply:

(A) By the board of directors of the insurer, a majority of which board and a majority of the directors acting in the matter are disinterested persons;

(B) By, or only in accordance with the recommendations of a committee of three (3) or more persons having full authority to act in the matter, all of the members of which committee are of disinterested persons; or

(C) Otherwise in accordance with the plan, if the plan states the following:

(i) Specifies the number or maximum number of shares of stock which directors may acquire or which may be subject to qualified, restricted or employee stock purchase plan stock options granted to directors and the terms upon which, and the times at which, or the periods within which, the stock may be acquired or the options may be acquired and exercised; or

(ii) Sets forth, by formula or otherwise, effective and determinable limitations with respect to the foregoing based upon earnings of the insurer, dividends paid, compensation received by participants, options prices, market value of shares, outstanding shares or percentages outstanding from time to time or similar factors;

(2) With respect to the participation of officers who are not directors the following apply:

(A) By the board of directors of the insurer or a committee of three (3) or more directors; or

(B) By, or only in accordance with the recommendations of, a committee of three (3) or more persons having full authority to act in the matter, all of the members of which committee are disinterested persons; and

(C) For the purposes of this section, a director or committee member shall be considered as follows:

(i) To be a disinterested person only if the person is not at the time such discretion is exercised eligible and has not at any time within one (1) year prior thereto been eligible for selection as a person to whom stock may be allocated; or

(ii) To whom qualified, restricted or employee stock purchase plan stock options may be granted pursuant to the plan or any other plan of the insurer or any of its affiliates entitling the participation to acquire stock or qualified, restricted or employee stock purchase plan stock options of the insurer or any of its affiliates;

(3) The provisions of this section shall not apply with respect to any option granted, or other equity security acquired, prior to the date that the Act became applicable with respect to any class of equity security of any insurer;

(c) The plan shall, for each participant, limit the aggregate dollar amount or the aggregate number of shares of stock which may be allocated, or which may be subject to qualified, restricted, or employee stock purchase plan stock options granted, pursuant to the plan;

(d) The limitations shall be established on an annual basis, or for the duration of the plan, whether or not the plan has fixed termination date; and shall be determined either by fixed or maximum dollar amounts or fixed or maximum numbers of shares or by formulas based upon earnings of the insurer, dividends paid, compensation received by participants, option prices, market value of shares, outstanding or similar factors which will result in an effect and determinable limitation;

(e) The limitations shall be subject to any provisions for adjustment of the plan or of stock allocable or options outstanding to prevent dilution or enlargement or rights; and

(f) For the purposes of this section, the following terms shall apply:

(1) The term "plan" includes any plan, whether or not set forth in any formal written document or documents and whether or not approved in its entirety at one time;

(2) The term "qualified stock option" and "employee stock purchase plan" that are set for forth in §§422 and 423 of the Internal Revenue Code of 1954, as amended, are to be applied to those terms where used in this section; and

(3) The term "restricted stock option" as defined in §424(b) of the Internal Revenue Code of 1954, as amended, shall be applied to that term as used in this section, provided however, that for the purposes of this section an option which meets all of the conditions of that Section, other than the date of issuance shall be considered to be a "restricted stock option."

26-A DCMR § 1413 EXEMPTION FROM SECTION 3(b) OF CERTAIN TRANSACTIONS IN WHICH SECURITIES ARE RECEIVED BY REDEEMING OTHER SECURITIES

1413.1 Any acquisition of an equity security (other than a convertible security or right to purchase a security) by a director or officer of the insurer issuing the security shall be exempt from the operation of Section 3(b) of the Act upon the following conditions:

(a) The equity security is acquired by way of redemption of another security of an insurer substantially all of whose assets other than cash (or Government bonds) consist of securities of the insurer issuing the equity security so acquired, and which the following conditions are met:

(1) That represented substantially and in practical effect a stated or readily ascertainable amount of the equity security;

(2) That had a value which was substantially determined by the value of the equity security; and

(3) That conferred upon the holder the right to receive the equity security without the payment of any consideration other than than the security redeemed.

(b) No security of the same class as the security redeemed was acquired by the director or officer within six (6) months prior to the redemption or is acquired within six (6) months after the redemption; and

(c) The insurer issuing the equity security acquired has recognized the applicability of §1413.1(a) by appropriate corporate action.

26-A DCMR § 1414 EXEMPTION OF LONG TERM PROFITS INCIDENT TO SALES WITHIN SIX MONTHS OF THE EXERCISE OF AN OPTION

1414.1 To the extent specified in §1414.2, the Mayor shall exempt, as not comprehended within the purposes of Section 3(b) of the Act, any transaction(s) involving the purchase and sale, or sale and purchase, of any equity security where the purchase is pursuant to the exercise of an option or similar right either acquired more than six (6) months before its exercise, or acquired pursuant to the terms of an employmentcontract entered into more than six (6) months before its exercise.

1414.2 In respect to transactions specified in §1414.1, the profits inuring to the insurer shall not exceed the difference between the proceeds of sale and the lowest market price of any security of the same class within six (6) months before or after the date of sale.

1414.3 Nothing in this section shall be considered to enlarge the amount of profit which shall inure to the insurer in the absence of this section.

1414.4 The Mayor shall exempt, as not comprehended within the purposes of Section 3(b) of the Act the following:

(a) The disposition of a security, purchased in a transaction specified in §1414.1, pursuant to a plan or agreement for merger or consolidation;

(b) The classification of the insurer's securities; or

(c) The exchange of securities for the securities of another person which has acquired its assets, or which is in control, as defined in §368(c) of the Internal Revenue Code of 1954, of a person which has acquired its assets, where the terms of the plan or agreement are binding upon all stockholders of the insurer;

(d) Exception to this section shall be to the extent that dissenting stockholders may be entitled, under statutory provisions or provisions contained in the certificate of incorporation, to receive the appraised or fair value of their holdings.

1414.6 The exemptions proved by this section shall not apply to any transaction made unlawful by Section 3(c) of the Act or by any regulations of this chapter.

1414.7 The burden of establishing market price of a security for the purpose of this section shall rest upon the person claiming the exemption.

26-A DCMR § 1415 EXEMPTION FROM SECTION 3(b) OF CERTAIN ACQUISITIONS AND DISPOSITIONS OF SECURITIES PURSUANT TO MERGER OR CONSOLIDATIONS

1415.1 The following transactions shall be exempt from the provisions of Section 3(b) of the Act as not comprehended within the purpose of this section:

(a) The acquisition of a security of an insurer, pursuant to a merger or consolidation, in exchange for a security of a company which, prior to the merger or consolidation, owned eighty-five percent (85%) or more of the equity securities of all other companies involved in the merger or consolidation except, in the case of consolidation, the resulting company;

(b) The disposition of a security, pursuant to a merger or consolidation of an insurer which, prior to the merger or consolidation, owned eighty-five percent (85%) or more of the equity securities of all other companies involved in the merger or consolidation except, in the case of consolidation, the resulting company.

(c) The acquisition of a security of an insurer, pursuant to a merger or consolidation, in exchange for a security of a company which, prior to the merger or consolidation, held over eighty-five percent (85%) of the combined assets of all the companies undergoing merger or consolidation, computed according to their book values prior to the merger or consolidation as determined by reference to their most recent available financial statements for a twelve (12) month period prior to the merger or consolidation;

(d) The disposition of a security, pursuant to a merger of consolidation, of an insurer which, prior to the merger or consolidation, held over eighty-five percent (85%) of the combined assets of all the companies undergoing merger or consolidation computed according to their book values prior to merger or consolidation, as determined by reference to their most recent available financial statements for a period to the merger or consolidation.

1415.2 A merger within the meaning of this section shall include the sale or purchase of substantially all the assets of one (1) insurer by another in exchange for stock which is then distributed to the security holders of the insurer which sold its assets.

1415.3 Notwithstanding the provisions of this section, if an officer, director or stockholder shall make any purchase (other than a purchase exempted by this section) of a security in any company involved in the merger or consolidation and any sale (other than a sale exempted by this section) of a security in any other company involved in the merger or consolidation within any period of less than six (6) months during which the merger or consolidation took place, the exemption provided by this section shall be unavailable to the officer, director, or stockholder.

26-A DCMR § 1416 EXEMPTION FROM SECTION 3(b) OF CERTAIN SECURITIES RECEIVED UPON SURRENDER OF SIMILAR EQUITY SECURITIES

1416.1 Any receipt by a person from an insurer of shares of stock of a class having general voting power, upon the surrender by such person of an equal number of shares of stock of the insurer of a class which does not have general voting power, pursuant to provisions of the insurer's certificate of incorporation, for the purpose of an accompanied simultaneously or followed immediately by the sale of the shares so received, shall be exempt from the operation of Section 3(b) of the Act as a transaction not comprehended within the purpose of this section, if the following conditions exist:

(a) The person receiving the shares is not an officer or director, or the beneficial owner, directly or indirectly, immediately prior to the receipt, of more than ten (10) per cent of an equity security of the insurer:

(b) The shares surrendered and the shares issued upon the surrender shall be of classes which are freely transferable and entitle the holders to participate equally per share in all distributions of earnings and assets;

(c) The surrender and issuance are made pursuant to provisions of a certificate of incorporation which required that the shares issued upon the surrender shall be registered upon issuance in the name of a person(s) other than the holder of the shares surrendered and may be required to be issued as of right only in connection with the public offering, sale and distribution of the shares and the immediate sale by the holder of the shares for that purpose, or in connection with a gift of the shares;

(d) Neither the shares so surrendered nor any shares of the same class, nor other shares of the same class as those issued upon the surrender, have been or are purchased (otherwise than in a transaction exempted by this section), by the person surrendering the shares, within six (6) months before or after the surrender or issuance.

26-A DCMR § 1417 EXEMPTION FROM SECTION 3(b) OF CERTAIN TRANSACTIONS INVOLVING AN EXCHANGE OF SIMILAR SECURITIES

1417.1 Any acquisition or disposition of securities made in an exchange of shares of a class (or series) of stock of an insurer for an equivalent number of shares of another class (or series) of stock of the same insurer, pursuant to a right of conversion under the terms of the insurer's charter or other governing instruments, shall be exempt from the operation of Section 3(b) of the Act under the following conditions:

(a) If the shares surrendered and those acquired in exchange therefor evidence substantially the same rights and privileges except that, pursuant to the provisions of the insurer's character or other governing instruments, the board of directors may declare and pay a lesser dividend per share on shares of the class surrendered than on shares of the class acquired in exchange, or may declare and pay no dividend on shares of the class surrendered; and

(b) If the transaction was effected in contemplation of a public sale of the shares acquired in the exchange; Provided, that this section shall not be construed to exempt from the operation of Section 3(b) any purchase or sale of shares of the class surrendered and any sale or purchase of shares of the class acquired in the exchange (otherwise than in the transaction of exchange exempted by this section) within a period of less than six (6) months.

26-A DCMR § 1418 EXEMPTION OF CERTAIN SECURITIES FROM SECTION 3(c) OF THE ACT

1418.1 Any security shall be exempt from the operation of Section 3(c) of the Act to the extent necessary to render lawful under the section the execution by a broker of an order for an account in which he or she has no direct or indirect interest.

26-A DCMR § 1419 EXEMPTION FROM SECTION 3(c) OF THE ACT OF CERTAIN TRANSACTIONS EFFECTED IN CONNECTION WITH A DISTRIBUTION

1419.1 Any security shall be exempt from the operation of Section 3(c) of the Act to the extent necessary to render lawful under the section any sale made by or on behalf of a dealer in connection with a distribution of a substantial block of securities, upon the following conditions:

(a) The sale is represented by an over-allotment in which the dealer is participating as a member of an underwriting group, or the dealer or a person acting on his or her behalf intends in good faith to offset the sale with a security to be acquired by or on behalf of the dealer as a participant in an underwriting, selling or soliciting-dealer group of which the dealer is a member at the time of the sale, whether or not the security to be so acquired is subject to a prior offering to existing security holders or some other class of persons; and

(b) Other persons not within the purview of Section 3 of the Act are participating in the distribution of the block of securities on terms at least as favorable as those on which the dealer is participating and to an extent at least equal to aggregate participation of all persons exempted from the provisions of Section 3(c) of the Act by this section. However, the performance of the functions of manager of a distributing group and the receipt of a bona fide payment for performing the functions shall not preclude an exemption which shall otherwise be available under this section.

26-A DCMR § 1420 EXEMPTION FROM SECTION 3(c) OF THE ACT OF SALES OF SECURITIES TO BE ACQUIRED

1420.1 Whenever any person is entitled, as an incident to his or her ownership of an issued security and without the payment of consideration, to receive another security "when issued" or "when distributed," the security to be acquired shall be exempt from the operation of Section 3(c), provided that the following conditions are met:

(a) The sale is made subject to the same conditions as those attaching to the right of acquisition;

(b) The person exercises reasonable diligence to deliver the security to the purchaser promptly after his or her right of acquisition matures; and

(c) The person reports the sale on the appropriate form for reporting transactions by persons subject to Section 3(a) of the Act.

1420.2 This section shall not be construed as exempting transactions involving both a sale of a security "when issued" or "when distributed" and a sale of the security by virtue of which the seller expects to receive the "when issued" or "when distributed" security, if the two (2) transactions combined result in a sale of more units than the aggregate of those owned by the seller plus those to be received by him or her pursuant to his or her right of acquisition.

26-A DCMR § 1421 ARBITRAGE TRANSACTIONS UNDER SECTION 3(e) OF THE ACT

1421.1 It shall be unlawful for any director or officer of an insurer to effect any foreign or domestic arbitrage transaction in any equity security of the insurer, unless he or she include the transaction in the statements required by Section 3(a) of the Act and shall account to the insurer for the profits arising from the transaction, as provided in Section 3(b).

1421.2 The provisions of the Act shall not apply to any bona fide foreign or domestic arbitrage transaction insofar as it is effected by any person other than a director or officer of the insurer.

26-A DCMR § 1422 AUTHORITY AND EFFECTIVE DATE

1422.1 These regulations were approved by the then Board of Commissioners pursuant to the authority contained in Public Law 89-402 (D.C. Code, Title 35, Chapter 2, Subchapter II), and became effective on June 30, 1966.

26-A DCMR § 1499 DEFINITIONS

1499.1 When used in this title, the following terms and phrases shall have the meanings ascribed, in accordance with the provisions of this section:

ACT - the Act of Congress approved April 18, 1966, Public Law 89-402.

CLASS - all securities of an insurer which are of substantially similar character and the holders of which enjoy substantially similar rights and privileges.

EQUITY SECURITY - any stock or similar security; or any voting trust certificate or certificate of deposit for a security; or any security convertible, with or without consideration, into such a security, or carrying any warrant or right to subscribe to or purchase such a security; or any such warrant or right.

INSURER - a stock insurance company incorporated or organized under the laws of the District of Columbia.

MAYOR - the Mayor of the District of Columbia.

OFFICER - a president, vice president, treasurer, actuary, secretary, controller and any other person who performs for the insurer functions corresponding to those performed by the officers.

COMMISSIONER - the Commissioner of the Department of Insurance, D.C.

APPENDIX 14-1

[To be used pursuant to the provisions of §1402.1]

SCHEDULE A

Initial Statements of Beneficial Ownership Instructions

1. Persons Required To File Statements

An initial statement of beneficial ownership is required to be filed by every person who is directly or indirectly the beneficial owner of more than 10 per cent of any class of any equity security of a domestic stock insurance company, or who is a director or an officer of a company.

2. When Statements Are To Be Filed

(a) Persons who hold any of the relationships specified in Instruction 1 are required to file a statement within 10 days after assuming the relationship or within 90 days after the effective date of these regulations, which ever is later.

(b) Statements are not deemed to have been filed with the Commissioner until they have actually been received by him or her.

3. Where Statements Are To Be Filed

One signed copy of each statement shall be filed with the Commissioner of Insurance.

4. Separate Statement For Each Company

A separate statement shall be filed with respect to the securities of each company.

5. Relationship Of Reporting Person To Company

Indicate clearly the relationship of the reporting person to the company; for example, "Director," "Director and Vice President," "Beneficial owner of more than 10 per cent of the company's stock," etc.

6. Date As Of Which Beneficial Ownership Is To Be Given

The information as to beneficial ownership of securities shall be given as of December 31, 1965, or in the case of persons who subsequently assume any of the relationships specified in Instruction 1, as of the date that relationship was assumed.

7. Title Of Security

The statement of the title of a security shall be written so as to clearly identify the security even though there may be only one class; for example, “Class A common Stock,” “$6 Convertible Preferred Stock,” “5% Debentures Due 1965,” etc.

8. Nature Of Ownership

State whether ownership of the securities is “direct” or “indirect.” If the ownership is indirect, i.e. through a partnership, corporation, trust or other entity, indicate, in a footnote or other appropriate manner, the name or identity of the medium through which the securities are indirectly owned. The fact that securities are held in the name of a broker or other nominee does not, of itself, constitute indirect ownership. Securities owned indirectly shall be reported on separate lines from those owned shall be reported on separate lines from those owned directly and also from those owned through a different type of indirect ownership.

9. Statement Of Amount Owned

In stating the amount of securities beneficially owned, give the face amount of debt securities or the number of shares or other units of other securities. In the case of securities owned indirectly, the entire amount of securities owned by the partnership, corporation, trust or other entity shall be stated. The person whose ownership is reported may, if he or she so desires, also indicate in a footnote, or other appropriate manner, the extent of his or her interest in the partnership, corporation, trust or other entity.

10. Inclusion Of Additional Information

A statement may include any additional information or explanation considered relevant by the person filing the statement.

11. Signature

If the statement is filed for a corporation, partnership, trust, etc., the name of the organization shall appear over the signature of the officer or other person authorized to sign the statement. If the statement is filed for an individual, it shall be signed by him or her or specifically on his or her behalf by a person authorized to sign for him or her.

APPENDIX 14-2

[To be used pursuant to the

provisions of §1402.2]

SCHEDULE B

Statement of Changes in Beneficial Ownership

(Instructions)

1. Persons Required To File Statements

A statement of changes in beneficial ownership is required to be filed by every person who at any time during any calendar month was directly or indirectly the beneficial owner of more than 10 per cent of any class of equity security of a domestic stock insurance company, or a director or officer of the company which is the issuer of the securities, and who during the month had any change in his or her beneficial ownership of any class of equity security of the company.

2. When Statements Are To Be Filed

Statements are required to be filed on or before the 10th day after the end of each month in which any change in beneficial ownership has occurred. Statements are not deemed to have been filed with the Commissioner until they have actually been received by him or her.

3. Where Statements Are To Be Filed

One signed copy of each statement shall be filed with the Commissioner of Insurance.

4. Separate Statement For Each Company

A separate statement shall be filed with respect to the securities of each company.

5. Relationship Of Reporting Person to Company

Indicate clearly the relationship of the reporting person to the company; for example, "Director," "Director and Vice President," "Beneficial owner of more than 10 per cent of the company's common stock," etc.

6. Transactions And Holdings To Be Reported

Every transaction shall be reported even though purchases and sales during the month are equal or the change involves only the nature of the ownership; for example, direct to indirect ownership. Beneficial ownership at the end of the month of all classes of securities required to be reported shall be shown even though there has been no change during the month in the ownership of securities of one or more classes.

7. Title Of Security

The statement of the title of the security shall be clearly identified even though there may be only one class; for example; "Class A Common Stock," "$6 Convertible Preferred Stock," "5% Debentures Due 1965," etc.

8. Date of Transaction

The exact date (month, day and year) of each transaction shall be stated opposite the amount involved in the transaction.

9. Statement Of Amounts Of Securities

In stating the amount of the securities acquired, disposed of, or beneficially owned, give the face amount of debt securities or the number of shares or other units of other securities. In the case of securities owned indirectly, i.e., through a partnership, corporation, trust or other entity, the entire amount of securities involved in the transaction or owned by the partnership, corporation, trust or other entity shall be stated. The person whose ownership is reported may, if he or she so desires, also indicate in a footnote, or other appropriate manner, the extent of his or her interest in the transaction or holdings of the partnership, corporation, trust or other entity.

10. Nature Of Ownership

State whether ownership of the securities is “direct” or “indirect” If the ownership is indirect, i.e., through a partnership, corporation, trust or other entity, indicate in a footnote, or other appropriate manner, the name or identity of the medium through which the securities are indirectly owned. The fact that securities are held in the name of a broker of other nominee does not, of itself, constitute indirect ownership. Securities owned indirectly shall be reported on separate lines from those owned directly and from those owned through a different type of indirect ownership.

11. Character Of Transaction

If the transaction was the issuer of the securities, so state. If it involved the purchase of securities through the exercise of options, so state and give the exercise price per share. If any other purchase or sale as effected otherwise than in the open market, that fact shall be indicated. If the transaction was not a purchase or sale, indicate its character; for example, gift, 5% stock dividend, etc., as the case may be. The foregoing information may be appropriately set forth in the table or under "Remarks" at the end of the table.

12. Inclusion of Additional Information

A statement may include any additional information or explanation considered relevant by the person filing the statement.

13. Signature

If the statement is filed for a corporation, partnership, trust, etc., the name of the organization shall appear over the signature of the officer or other person authorized to sign the statement. If the statement is filed for an individual, it shall be signed by him or her specifically on his or her behalf by a person authorized to sign for him or her.

26-A15 PROXY SOLICITATION

26-A DCMR § 1500 APPLICABILITY

1500.1 This chapter is applicable to all insurers having one hundred (100) or more stockholders; Provided, that this chapter shall not apply to any insurer if ninety-five percent (95%) or more of its stock is owned or controlled by a parent or an affiliated insurer and the remaining shares are held by less than five hundred (500) stockholders.

1500.2 An insurer which files with the Securities and Exchange Commission forms of proxies, consents, and authorizations complying with the requirements of the Securities and Exchange Act of 1934 and the Securities and Exchange Acts Amendments of 1964 and Regulation X-14 of the Securities and Exchange Commission promulgated thereunder shall be exempt from the provisions of this chapter.

26-A DCMR § 1501 PROXIES, CONSENTS, AND AUTHORIZATIONS

1501.1 No stock insurer, nor any director, officer, or employee of that insurer subject to §1500, nor any other person, shall solicit, or permit the use of his or her name to solicit, by mail or otherwise, any proxy, consent or authorization in respect of any stock of that insurer in contravention of this chapter.

26-A DCMR § 1502 DISCLOSURE OF EQUIVALENT INFORMATION

1502.1 Unless proxies, consents, or authorizations in respect of a stock of an insurer subject to §1500 are solicited by or on behalf of the management of that insurer from the holders of record of stock of that insurer in accordance with this chapter and the schedules in Appendices 15-1 and 15-2 prior to any annual or other meeting, that insurer shall, in accordance with this chapter and any further rules and regulations duly adopted, file with the Commissioner and transmit to all stockholders of record information substantially equivalent to the information which would be required to be transmitted if a solicitation were made.

26-A DCMR § 1503 INFORMATION TO BE FURNISHED TO STOCKHOLDERS

1503.1 No solicitation subject to this chapter shall be made unless each person solicited is concurrently furnished or has previously been furnished with a written proxy statement containing the information specified in Schedule A of Appendix 15-1 of this chapter.

1503.2 If the solicitation is made on behalf of the management of the insurer and relates to an annual meeting of stockholders at which directors are to be elected, each proxy statement furnished pursuant to §1500 shall be accompanied or preceded by an annual report (in preliminary or final form) to those stockholders containing any financial statements for the last fiscal year as are required by law to be filed with the Commissioner. Subject to the foregoing requirements with respect to financial statements, the annual report to stockholders may be in any form deemed suitable by the management.

1503.3 Two (2) copies of each report sent to the stockholders pursuant to this section shall be mailed to the Commissioner, not later than the date on which that report is first sent or given to stockholders or the date on which preliminary copies of solicitation material are filed with the Commissioner, pursuant to §1505.1, whichever date is later.

26-A DCMR § 1504 REQUIREMENTS AS TO PROXY

1504.1 The form of proxy shall do the following:

(a) Indicate in bold-face type whether or not the proxy is solicited on behalf of the management;

(b) Provide a specifically designated blank space for dating the proxy; and

(c) Identify clearly and impartially each matter or group of related matters intended to be acted upon, whether proposed by the management, or stockholders.

1504.2 No reference need be made in the proxy to proposals as to which discretionary authority is conferred pursuant to §1504.5.

1504.3 Means shall be provided in the proxy for the person solicited to specify by ballot a choice between approval or disapproval of each matter or group of related matters referred to therein, other than elections to office.

1504.4 A proxy may confer discretionary authority with respect to matters as to which a choice is not so specified if the form of proxy states in bold-face type how it is intended to vote the shares or authorization represented by the proxy in each case.

1504.5 A proxy may confer discretionary authority with respect to other matters which may come before the meeting; Provided, that the persons on whose behalf the solicitation is made are not aware in a reasonable time prior to the time the solicitation is made that any other matters are to be presented for action at the meeting; and Provided, further, that a specific statement to that effect is made in the proxy statement or in the form of proxy.

1504.6 No proxy shall confer authority to do any of the following:

(a) To vote for the election of any person to any office for which a bona fide nominee is not named in the proxy statement; or

(b) To vote at any annual meeting other than the next annual meeting (or any adjournment thereof) to be held after the date on which the proxy statement and form of proxy are first sent or given to stockholders.

1504.7 The proxy statement or form of proxy shall provide, subject to reasonable specified conditions, that the proxy will be voted and that where the person solicited specifies by means of ballot provided pursuant to §1504.3 and §1504.4 a choice with respect to any matter to be acted upon, the vote will be in accordance with the specifications so made.

1504.8 The information included in the proxy statement shall be clearly presented and the statements made shall be divided into groups according to subject matter, with appropriate headings.

1504.9 All proxy statements shall be printed and shall be clearly and legibly presented.

26-A DCMR § 1505 MATERIAL REQUIRED TO BE FILED

1505.1 Two (2) preliminary copies of the proxy statement and form of proxy and any other soliciting material to be furnished to stockholders concurrently therewith shall be filed with the Commissioner at least ten (10) days prior to the day definitive copies of that material are first sent or given to stockholders, or any shorter period prior to that date as the Commissioner may authorize upon a showing of good cause.

1505.2 Two (2) preliminary copies of any additional soliciting material relating to the same meeting or subject matter to be furnished to stockholders subsequent to the proxy statements shall be filed with the Commissioner at least two (2) days (exclusive of Saturdays, Sundays, or holidays) prior to the date copies of this material are first sent or given to stockholders or a shorter period prior to that date as the Commissioner may authorize upon a showing of good cause.

1505.3 Two (2) definitive copies of the proxy statement, form of proxy, and all other soliciting material, in the form in which this material is furnished to stockholders, shall be filed with, or mailed for filing to, the Commissioner not later than the date that material is first sent or given to the stockholders.

1505.4 When any proxy statement, form of proxy, or other material filed pursuant to this chapter is amended or revised, the copies of those amended statements to be filed with the Commissioner shall be marked to clearly show the changes.

1505.5 Copies of replies to inquiries from stockholders requesting further information and copies of communications which do no more than request that forms of proxy solicited be signed and returned need not be filed pursuant to this section.

1505.6 Notwithstanding the provisions of §1505.1 and §1505.2 and §1505.8, copies of soliciting material in the form of speeches, press releases and radio or television scripts may, but need not, be filed with the Commissioner prior to use or publication. Definitive copies, however, shall be filed with or mailed for filing to the Commissioner as required by §1505.3 not later than the date that material is used or published. The provisions of §§1505.1 and 1505.2 and 1508.11 shall apply, however, to any reprints or reproductions of all or any part of that material.

26-A DCMR § 1506 FALSE OR MISLEADING STATEMENTS

1506.1 No solicitation subject to this chapter shall be made by means of any proxy statement, form of proxy, notice of meeting, or other communication, written or oral, containing any statement which at the time and in the light of the circumstances under which it is made, is false or misleading with respect to any material fact, or which omits to state any material fact necessary in order to make the statements therein not false or misleading or necessary to correct any statement in any earlier communication with respect to the solicitation of a proxy for the same meeting or subject matter which has become false or misleading.

26-A DCMR § 1507 PROHIBITION OF CERTAIN SOLICITATIONS

1507.1 No person making a solicitation which is subject to this chapter shall solicit any undated or postdated proxy or any proxy which provides that it shall be deemed to be dated as of any date subsequent to the date on which it is signed by the stockholder.

26-A DCMR § 1508 SPECIAL PROVISIONS APPLICABLE TO ELECTION CONTESTS

1508.1 This section shall apply to any solicitation subject to this chapter by any person or group for the purpose of opposing a solicitation subject to this chapter by any other person or group with respect to the election or removal of directors at any annual or special meeting of stockholders.

1508.2 For the purposes of this section the terms "participant" and "participant in a solicitation" include the following:

(a) The insurer;

(b) Any director of the insurer, and any nominee for whose election as a director proxies are solicited; and

(c) Any other person, acting alone or with one or more other persons, committees or groups, in organizing, directing, or financing the solicitation.

1508.3 For the purposes of this section the terms "participant" and "participant in a solicitation" do not include the following:

(a) A bank, broker, or dealer who, in the ordinary course of business, lends money or executes orders for the purchase or sale of stock and who is not otherwise a participant;

(b) Any person or organization retained or employed by a participant to solicit stockholders or any person who merely transmits proxy soliciting material or performs ministerial or clerical duties;

(c) Any person employed in the capacity of attorney, accountant, or advertising, public relations or financial adviser, and whose activities are limited to the performance of his or her duties in the course of that employment;

(d) Any person regularly employed as an officer or employee of the insurer or any of its subsidiaries or affiliates who is not otherwise a participant; or

(e) Any officer or director of, or any person regularly employed by any other participant, if that officer, director, or employee is not otherwise a participant.

1508.4 No solicitation subject to this section shall be made by any person other than the management of an insurer unless at least five (5) business days prior thereto, or any shorter period as the Commissioner may authorize upon a showing of good cause, there has been filed with the Commissioner, by or on behalf of each participant in that solicitation, a statement in duplicate containing the information specified by Schedule B of Appendix 15-2 of this chapter and a copy of any material proposed to be distributed to stockholders in furtherance of such solicitation.

1508.5 Where preliminary copies of any materials are filed pursuant to §1508.4, distribution to stockholders should be deferred until the Commissioner's comments have been received and complied with.

1508.6 Within five (5) business days after a solicitation subject to this section is made by the management of an insurer, or any longer period as the Commissioner may authorize upon a showing of good cause, there shall be filed with the Commissioner by or on behalf of each participant in that solicitation, other than the insurer, and by or on behalf of each management nominee for director, a statement in duplicate containing the information specified by Schedule B of Appendix 15-2.

1508.7 If any solicitation on behalf of management or any other person has been made, or if proxy material is ready for distribution, prior to a solicitation subject to this section in opposition thereto, a statement in duplicate containing the information specified in Schedule B shall be filed with the Commissioner by or on behalf of each participant in that prior solicitation, other than the insurer, as soon as reasonably practicable after the commencement of the solicitation in opposition thereto.

1508.8 If, subsequent to the filing of the statements required by §§1508.4 - 1508.7, additional persons become participants in a solicitation subject to this rule, there shall be filed with the Commissioner, by or on behalf of each such person, a statement in duplicate containing the information specified by Schedule B, within three business days after that person becomes a participant, or any longer period as the Department may authorize upon a showing of good cause.

1508.9 If any material change occurs in the facts reported in any statement filed by or on behalf of any participant, an appropriate amendment to that statement shall be filed promptly with the Commissioner.

1508.10 Each statement and amendment thereto filed pursuant to this paragraph shall be part of the public files of the Commissioner.

1508.11 Notwithstanding the provisions of §1503.1 a solicitation subject to this section may be made prior to furnishing stockholders a written proxy statement containing the information specified in Schedule A with respect to that solicitation; Provided, that the following requirements are met:

(a) The statements required by §§1508.4-1508.10 are filed by or on behalf of each participant in that solicitation;

(b) No form of proxy is furnished to stockholders prior to the time the written proxy statement required by §1503.1 is furnished to such persons; Provided, that the requirements of this sub-subsection shall not apply where a proxy statement then meeting the requirements of Schedule A has been furnished to stockholders;

(c) At least the information specified in §§1508.6 - 1508.7 to be filed by each participant, or an appropriate summary thereof, are included in each communication sent or given to stockholders in connection with the solicitation; and

(d) A written proxy statement containing the information specified in Schedule A with respect to a solicitation is sent or given stockholders at the earliest practicable date.

1508.12 Two (2) copies of any soliciting material proposed to be sent or given to stockholders prior to the furnishing of the written proxy statement required by §1503.1 shall be filed with the Commissioner in preliminary form at least five (5) business days prior to the date definitive copies of that material are first sent or given to those persons, or shorter period as the Commissioner may authorize upon a showing of good cause therefor.

1508.13 Notwithstanding the provisions of §§1503.2 and 1503.3, two (2) copies of any portion of the report referred to in §1503.2 which comments upon or refers to any solicitation subject to this section, or to any participant in any such solicitation, other than the solicitation by the management, shall be filed with the Commissioner as proxy material subject to this chapter. That portion of the report shall be filed with the Commissioner in preliminary form at least five (5) business days prior to the date copies of the report are first sent or given to stockholders.

26-A DCMR § 1599 DEFINITIONS

1599.1 The definitions and instructions set out in Schedule SIS (in effect as of the date of adoption of this chapter), as promulgated by the National Association of Insurance Commissioners, shall be applicable for purposes of this chapter. In addition, the following words and phrases shall have the meanings ascribed:

Solicit and Solicitation - shall include:

(a) Any request for a proxy, whether or not accompanied by or included in a form of proxy;

(b) Any request to execute or not to execute, or to revoke a proxy; or

(c) The furnishing of a proxy or other communication to stockholders under circumstances reasonably calculated to result in the procurement, withholding or revocation of a proxy.

Solicit and Solicitation - shall not include the following:

(a) Any solicitation by a person in respect of stock of which he or she is the beneficial owner; or

(b) Action by a broker or other person in respect to stock carried in her or his name or in the name of her or his nominee in forwarding to the beneficial owner of that stock soliciting material received from the company, or impartially instructing that beneficial owner to forward a proxy to the person, if any, to whom the beneficial owner desires to give a proxy, or impartially requesting instructions from the beneficial with respect to the authority to be conferred by the proxy and stating that a proxy will be given if the instructions are received by a certain date; the furnishing of a form of proxy to a stockholder upon the unsolicited request of that stockholder, or the performance by any person of ministerial acts on behalf of a person soliciting a proxy.

Insurer - any stock insurance company incorporated or organized under the laws of the District.

Mayor - Mayor of the District of Columbia.

Commissioner - Commissioner of Insurance of the District of Columbia.

APPENDIX 15-1

[To be used pursuant to the requirements of §1503.1]

---

SCHEDULE A

Information Required in Proxy Statement

Item 1. Revocability of Proxy

State whether or not the person giving the proxy has the power to revoke it. If the right of revocation before the proxy is exercised is limited or is subject to compliance with any formal procedure, briefly describe such limitation or procedure.

Item 2. Dissenters' Right of Appraisal

Outline briefly the rights of appraisal or similar rights of dissenting stockholders with respect to any matter to be acted upon and indicate any statutory procedure required to be followed by such stockholders in order to perfect their rights. Where such rights may be exercised only within a limited time after the date of adoption of a proposal, the filing of a charter amendment, or other similar act, state whether the person solicited with be notified of such date.

Item 3. Persons Making Solicitations Not Subject to §1508

(a) If the solicitation is made by the management of the insurer, so state. Give the name of any director of the insurer who has informed the management in writing that he intends to oppose any action intended to be taken by the management and indicate the action which he intends to oppose.

(b) If the solicitation is made otherwise than by the management of the insurer, state the names and addresses of the persons by whom and on whose behalf it is made and the names and addresses of the persons by whom the cost of solicitation has been or will be borne, directly or directly.

(c) If the solicitation is to be made by specially engaged employees or paid solicitors, state (i) the material features of any contract or arrangement for such solicitation and identify the parties, and (ii) the cost or anticipated cost thereof.

Item 4. Interest of Certain Persons in Matters to be Acted Upon

Describe briefly any substantial interest, direct or indirect, by stockholdings or otherwise, of any director, nominee for election for director, officer and, if the solicitation is made otherwise than on behalf of management, each person on whose behalf the solicitation is made, in any matter to be acted upon other than elections to office.

Item 5. Stocks and Principal Stockholders

(a) State, as to each class of voting stock of the insurer entitled to be voted at the meeting, the number of shares outstanding and the number of votes to which each class is entitled.

(b) Give the date as of which the record list of stockholders entitled to vote at the meeting will be determined. If the right to vote is not limited to stockholders of record on that date, indicate the conditions under which other stockholders may be entitled to vote.

(c) If action is to be taken with respect to the election of directors and if the persons solicited have cumulative voting rights, make a statement that they have such rights and state briefly the conditions precedent to the exercise thereof.

Item 6. Nominees and Directors

If action is to be taken with respect to the election of directors furnish the following information, in tabular form to the extent practicable, with respect to each person nominated for election as a director and each other person whose term of office as a director will continue after the meeting:

(a) Name each such person, state when his or her term of office or the term of office for which he or she is a nominee will expire, and all other positions and offices with the insurer presently held by him or her, and indicate which persons are nominees for election as directors at the meeting.

(b) State his or her present principal occupation or employment and give the name and principal business of any corporation or other organization in which such employment is carried on. Furnish similar information as to all of his or her principal occupations or employments during the last five years, unless he or she is now a director and was elected to his or her present term of office by a vote of stockholders at a meeting for which proxies were solicited under this regulation.

(c) If he or she is or has previously been a director of the insurer, state the period or periods during which he or she has served as such.

(d) State, as of the most recent practicable date, the approximate amount of each class of stock of the insurer or any of its parents, subsidiaries of affiliates other than directors' qualifying shares, beneficially owned directly or indirectly by him or her. If he or she is not the beneficial owner of any such stocks make a statement to that effect.

Item 7. Remuneration and Other Transactions With Management and Others

Furnish the information reported or required in item one of Schedule SIS under the heading "Information Regarding Management and Directors" if action is to be taken with respect to (a) the election of directors, (b)___ any remuneration plan, contract or arrangement in which any director, nominee for election as a director, or officer of the insurer will participate, (c) any pension or retirement plan in which any such person will participate, or (d) the granting or extension to any such person of any options, warrants or right to purchase any stocks, other than warrants or rights issued to stockholders, as such, on a pro-rata basis. If the solicitation is made on behalf of persons other than the management information shall be furnished only as to Item IA of the aforesaid heading of Schedule SIS.

Item 8. Bonus, Profit Sharing and Other Remuneration Plans

If action is to be taken with respect to any bonus, profit sharing, or other remuneration plan, of the insurer furnish the following information:

(a) A brief description of the material features of the plan, each class of persons who will participate therein, the approximate number of persons in each such class, and the basis of such participation.

(b) The amounts which would have been distributable under the plan during the last calendar year to (1) each person named in item seven of this schedule, (2) directors and officers as a group, and (3) to all other employes as a group, if the plan had been in effect.

(c) If the plan to be acted upon may be amended (other than by a vote of stockholders) in a manner which would materially increase the cost thereof to the insurer or to materially alter the allocation of the benefits as between the groups specified in paragraph (b) of this item, the name of such amendments should be specified.

Item 9. Pension and Retirement Plans

If action is to be taken with respect to any pension or retirement plan of the insurer, furnish the following information:

(a) A brief description of the material features of the plan, each class of persons who will participate therein, the approximate number of persons in each such class, and the basis of such participation.

(b) State (1) the approximate total amount necessary to fund the plan with respect to past services, the period over which such amount is to be paid, and the estimated annual payments necessary to pay the total amount over such period; (2) the estimated annual payment to be made with respect to current services; and (3) the amount of such annual payments to be made for the benefit of (i) each person named in item seven of this schedule, (ii) directors and officers as a group, and (iii) employees as a group.

(c) If the plan to be acted upon may be amended (other than by a vote of stockholders) in a manner which would materially increase the cost thereof to the insurer or to materially alter the allocation of the benefits as between the groups specified in subparagraph (b)(3) of this item, the nature of such amendments should be specified.

Item 10. Options, Warrants, or Rights

If action is to be taken with respect to the granting or extension of any options, warrants or rights (all referred to herein as "warrants) to purchase stock or the insurer or any subsidiary or affiliate, other than warrants issued to all stockholders on a pro rata basis, furnish the following information:

(a) The title and amount of stock called for or to be called for, the prices, expiration dates and other material conditions upon which the warrants may be exercised, the consideration received or to be received by the insurer, subsidiary or affiliate for the granting or extension of the warrants and the market value of the stock called for or to be called for by the warrants, as of the latest practicable date.

(b) If known, state separately the amount of stock called for or to be called for by warrants received or to be received by the following persons, naming each such person: (1) each person named in item seven of this schedule, and (2) each other person who will be entitled to acquire five percent or more of the stock called for or to be called for by such warrants.

(c) If known, state also the total amount of stock called for or to be called for by such warrants, received or to be received by all directors and officers of the company as a group and all employees, without naming them.

Item 11. Authorization or Issuance of Stock

(a) If action is to be taken with respect to the authorization or issuance of any stock of the insurer furnish the title, amount and description of the stock to be authorized or issued.

(b) If the shares of stock are other than additional shares or common stock of a class outstanding, furnish a brief summary of the following, if applicable: dividend, voting, liquidation, preemptive, and conversion rights, redemption and sinking fund provisions, interest rate and date of maturity.

(c) If the shares of stock to be authorized or issued are other than additional shares of common stock of a class outstanding, the Commissioner may require financial statements comparable to those contained in the annual report

Item 12. Mergers, Consolidations, Acquisitions and Similar Matters

(a) If action is to be taken with respect to a merger, consolidation, acquisition, or similar matter, furnish in brief outline the following information:

(1) The rights of appraisal or similar rights of dissenters with respect to any matters to be acted upon. Indicate any procedure required to be followed by dissenting stockholders in order to perfect such rights.

(2) The material features of the plan or agreement.

(3) The business done by the company to be acquired or whose assets are being acquired.

(4) If available, the high and low sales prices for each quarterly period within two years.

(5) The percentage of outstanding shares which must approve the transaction before it is consummated.

(b) For each company involved in a merger, consolidation or acquisition, the following financial statements should be furnished:

(1) A comparative balance sheet as of the close of the last two fiscal years.

(2) A comparative statement of operating income and expenses for each statement a statement of earning per share after related taxes and cash dividends paid per share.

(3) A pro forma combined balance sheet and income and expenses statement for the last fiscal year giving effect to the necessary adjustments with respect to the resulting company.

Item 13. Restatement of Accounts

If action is to be taken with respect to the restatement of any asset, capital, or surplus of the insurer, furnish the following information:

(a) State the nature of the restatement and the date as of which it is to effective.

(b) Outline briefly the reasons for the restatement and for the selection of the particular effective date.

(c) State the name and amount of each account effected by the restatement and the effect of the restatement thereon.

Item 14. Matters Not Required to be Submitted

If action is to be taken with respect to any matter which is not required to be submitted to a vote of stockholders, state the nature of such matter, the reason for submitting it to a vote of stockholders and what action is intended to be taken by the management in the event of a negative vote on the matter by the stockholders.

Item 15. Amendment of Charter, By-Laws, or Other Documents

If action is to be taken with respect to any amendment of the insurer's charter, by-laws or other documents as to which information is to required above, state briefly the reasons for the general effect of such amendment and the vote needed for its approval.

APPENDIX 15-2

[To be used pursuant to the requirements of §1508]

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SCHEDULE B

Information to be Included in Statements Filed by or on Behalf of a Participant (Other Than the Insurer) in a Proxy Solicitation in an Election Contest

Item 1. Insurer

State the name and address of the insurer.

Item 2. Identity and Background

(a) State the following:

(1) Your name and business address.

(2) Your present principal occupation or employment and the name, principal business and address of any corporation or other organization in which such employment is carried on.

(b) State the following:

(1) Your residence address.

(2) Information as to all material occupations, positions, offices or employments during the last ten years, giving starting and ending dates of each and the name, principal business and address of any business corporation or other business organization in which each such occupation, position, office or employment was carried on.

(c) State whether or not you are or have been a participant in any other proxy contest involving this company or other companies within the past ten years. If so, identify the principals, the subject matter and your relationship to the parties and the outcome.

(d) State whether or not, during the past ten years, you have been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) and, if so, give dates nature of conviction, name and location of court, and penalty imposed or other disposition of the case. A negative answer to this subitem need not be included in the proxy statement or other proxy soliciting material.

Item 3. Interest in Stock of the Insurer

(a) State the amount of each class of stock of the insurer which you own beneficially, directly or indirectly.

(b) State the amount of each class of stock of the insurer which you own of record but not beneficially.

(c) State with respect to the stock specified in (a) and (b) the amounts acquired within the past two years, the dates of acquisition and the amounts acquired on each date.

(d) If any part of the purchase price or market value of any of the stock specified in paragraph (c) is represented by funds borrowed or other wise obtained for the purpose of acquiring or holding such stock, so state and indicate the amount of the indebtedness as of the latest practicable date. If such funds were borrowed or obtained otherwise than pursuant to a margin account or bank loan in the regular course of business of a bank, broker or dealer, briefly describe the transaction, and state the names of the parties.

(e) State whether or not you are a party to any contracts, arrangements or understandings with any person with respect to any stock of the insurer, including but not limited to joint ventures, loan or option arrangements, puts or call, guarantees against loss or guarantees of profits, division of losses or profits, or the giving or withholding of proxies. If so name the persons with whom such contracts, arrangements or understanding exist and give the details thereof.

(f) State the amount of stock of the insurer owned beneficially, directly or indirectly, by each of your associates and the name and address of each such associate.

(g) State the amount of each class of stock of any parent, subsidiary of affiliate of the insurer which you won beneficially, directly or indirectly.

Item 4. Further Matters

(a) Describe the time and circumstances under which you became a participant in the solicitation and state the nature and extent of your activities or proposed activities a a participant.

(b) Describe briefly, and where practicable state the approximate amount of, any material interest, direct or indirect, of yourself and of each of your associates in any material transactions since the beginning of the company's last fiscal year, or in any material proposed transactions, to which the company or any of its subsidiaries or affiliates was or is to be a party.

(c) State whether or not you or any of your associates have any arrangement or understanding with any person--

(1) with respect to any future employment by the insurer or its subsidiaries or affiliates; or

(2) with respect to any future transactions to which the insurer or any of its subsidiaries or affiliates will or may be a party.

If so, describe such arrangement or understanding and state the names of the parties thereto.

Item 5. Signature

The statement shall be dated and signed in the following manner:

I certify that the statements made in this statement are true, complete, and correct, to the best of my knowledge and belief.

---

(Date) (Signature of participant or authorized representative)

26-A16 INSURANCE HOLDING COMPANY SYSTEM REGULATIONS

26-A DCMR § 1600 PURPOSE

1600.1 The purposes of these regulations are: to set forth rules and procedural requirements which the Commissioner deems necessary to carry out the provisions of the Holding Company System Regulatory Act of the 1983, D.C Law 10-4, hereinafter referred to as "the Act". The information called for by these regulations is hereby declared to be necessary and appropriate in the public interest and for the protection of the policyholders in the District of Columbia.

History

• SOURCE: 33 DCRR § 875.2 (March 1975); as amended by Final Rulemaking published at 41 DCR 2185 (April 22, 1994). District of Columbia Municipal Regulations Insurance 26-A DCMR § 1600

26-A DCMR § 1601 SEVERABILITY CLAUSE

1601.1 If any of these regulations, or the application thereof to any person or circumstance, is held invalid, such determination shall not affect other provisions or applications of these regulations which can be given effect without the invalid provision or application, and to that end the provisions of these regulations are severable.

History

• SOURCE: 33 DCRR § 875.3 (March 1975); as amended by Final Rulemaking published at 41 DCR 2185 (April 22, 1994). District of Columbia Municipal Regulations Insurance 26-A DCMR § 1601

26-A DCMR § 1602 FORMS - GENERAL REQUIREMENTS

1602.1 Forms A, B, C, D, E, and F set forth in the appendix to chapter, are intended to be guides in the preparation of the statements required by Sections 3, 4, and 5 of this Act. They are not intended to be blank forms which are to be filled in. These statements filed shall contain the numbers and captions of all items, but the text of the items may be omitted provided the answers thereto are prepared in such a manner as to indicate clearly the scope and coverage of the items. All instructions, whether appearing under the items of the form or elsewhere therein, are to be omitted. Unless expressly provided otherwise, if any item is inapplicable or the answer thereto is in the negative, an appropriate statement to that effect shall be made.

1602.2 Two complete copies of each statement including exhibits and all other papers and documents filed as a part thereof, shall be filed with Commissioner by personal delivery or mail addressed to: Department of Insurance, Securities and Banking, 810 First Street, N.E., Suite 701, Washington, D.C. 20002. At least one of the copies shall be signed in a manner prescribed on the form. Unsigned copies shall be conformed. If the signature of any person is affixed pursuant to a power of attorney or other similar authority, a copy of such power of attorney or other authority shall also be filed with the statement.

1602.2a If an applicant requests a hearing on a consolidated basis under Section 4(g)(3A) of the Act, in addition to filing the Form A with the commissioner, the applicant shall file a copy of Form A with the National Association of Insurance Commissioners (NAIC) in electronic form.

1602.3 Statements should be prepared electronically. Statements shall be easily readable and suitable for review and reproduction. All copies of any statement, financial statements, or exhibits shall be clear, easily readable and suitable for photocopying. Debits in credit categories and credits in debit categories shall be designated so as to be clearly distinguishable as such on photocopies. Statements shall be in the English language and monetary values shall be stated in U.S. currency. If any exhibit or other paper or document filed with the statement is in a foreign language, it shall be accompanied by a translation into the English language and any monetary value shown in a foreign currency normally shall be converted into United States currency.

History

• SOURCE: 33 DCRR § 875.9 (March 1975); as amended by Final Rulemaking published at 41 DCR 2185 (April 22, 1994); as amended by Final Rulemaking published at 62 DCR 13004 (October 2, 2015). . District of Columbia Municipal Regulations Insurance 26-A DCMR § 1602

26-A DCMR § 1603 FORMS - INCORPORATION BY REFERENCE, SUMMARIES AND OMISSION

1603.1 Information required by any item of Form A, Form B, Form D, Form E or Form F may be incorporated by reference in answer or partial answer to any other item. Information contained in any financial statement, annual report, proxy statement filed with a governmental authority, or any other document may be incorporated by reference in answer or partial answer to any item of Form A, Form B, Form D, Form E or Form F, provided such document is filed as an exhibit to the statement. Excerpts of documents may be filed as exhibits if the documents are extensive. Documents currently on file with the Commissioner which were filed within three years need not be attached as exhibits. References to information contained in exhibits or in documents already on file shall clearly identify the material and shall specifically indicate that such material is to be incorporated by reference in answer to the item. Matter shall not be incorporated by reference in any case where such incorporation would render the statement incomplete, unclear or confusing.

1603.2 Where an item requires a summary or outline of the provisions of any document, only a brief statement shall be made as to the pertinent provisions of the document. In addition to such statement, the summary or outline may incorporate by reference particular particular parts of any exhibit or document currently on file with the Commissioner which was filed within three years and may be qualified in its entirety by such reference. In any case where two or more documents required to be filed as exhibits are substantially identical in all material respects except as to the parties thereto, the dates of execution, or other details, a copy of only one of such documents need be filed with a schedule identifying the omitted documents and setting forth the material details in which such documents differ from the documents a copy of which is filed.

History

• SOURCE: 33 DCRR § 875.10 (March 1975); as amended by Final Rulemaking published at 41 DCR 2185 (April 22, 1994); as amended by Final Rulemaking published at 62 DCR 13004 (October 2, 2015). District of Columbia Municipal Regulations Insurance 26-A DCMR § 1603

26-A DCMR § 1604 FORMS - INFORMATION UNKNOWN OR UNAVAILABLE AND EXTENSION OF TIME TO FURNISH

1604.1 [REPEALED].

1604.2 If it is impractical to furnish any required information, document or report at the time it is required to be filed, there shall be filed with the Commissioner as a separate document

(a) Identifying the information, document or report in question;

(b) Stating why the filing thereof at the time required is impractical; and

(c) Requesting an extension of time for filing the information, document or report to specified date. The request for extension shall be deemed granted unless the Commissioner within (60) days after receipt thereof enters an order denying the request.

History

• SOURCE: 33 DCRR § 875.11 (March 1975); as amended by Final Rulemaking published at 41 DCR 2185 (April 22, 1994); as amended by Final Rulemaking published at 62 DCR 13004 (October 2, 2015). District of Columbia Municipal Regulations Insurance 26-A DCMR § 1604

26-A DCMR § 1605 FORMS - ADDITIONAL INFORMATION AND EXHIBITS

1605.1 In addition to the information expressly required to be included in Form A, Form B, Form D, Form E or Form F, there shall be added such further material information, if any, as may be necessary to make the information contained therein not misleading. The person filing may also file such exhibits as it may desire in addition to those expressly required by the statement. Such exhibits shall be so marked as to indicate clearly the subject matters to which they refer. Changes to Form A, Form B, Form D, Form E or Form F shall include on the top of the cover page the phrase: "Changes No. (insert number) to" and shall indicate the date of the change and not the date of the original filing.

History

• SOURCE: 33 DCRR § 875.12 (March 1975); as amended by Final Rulemaking published at 41 DCR 2185 (April 22, 1994); as amended by Final Rulemaking published at 62 DCR 13004 (October 2, 2015); as corrected by Errata Notice published at 62 DCR 13807 (October 23, 2015). District of Columbia Municipal Regulations Insurance 26-A DCMR § 1605

26-A DCMR § 1606 SUBSIDIARIES OF DOMESTIC INSURERS

1606.1 The authority to invest in subsidiaries under Section 3 of the Act is in addition to any authority to invest in subsidiaries which may be contained in any other provision of the Insurance Code.

History

• SOURCE: 33 DCRR § 875.5 (March 1975); as amended by Final Rulemaking published at 41 DCR 2185 (April 22, 1994). District of Columbia Municipal Regulations Insurance 26-A DCMR § 1606

26-A DCMR § 1607 ACQUISITION OF CONTROL - STATEMENT FILING

1607.1 A person required to file a statement pursuant to Section 4 of the Act shall furnish the required information on Form A, hereby made a part of this regulation.

History

• SOURCE: 33 DCRR § 875.6 (March 1975); as amended by Final Rulemaking published at 41 DCR 2185 (April 22, 1994). District of Columbia Municipal Regulations Insurance 26-A DCMR § 1607

26-A DCMR § 1608 AMENDMENTS TO FORM A

1608.1 The applicant shall promptly advise the Commissioner of any changes in the information so furnished on Form A arising subsequent to the date upon which such information was furnished but prior to the Commissioner's disposition of the application.

History

• SOURCE: 33 DCRR § 875.13 (March 1975); as amended by Final Rulemaking published at 41 DCR 2185 (April 22, 1994). District of Columbia Municipal Regulations Insurance 26-A DCMR § 1608

26-A DCMR § 1609 ACQUISITION OF SECTION 4(b) INSURERS

1609 Acquisition of Section 4(b)(4) Insurers

1609.1 If the person being acquired is deemed to be a “domestic insurer” solely because of the provisions of Section 4(b)(4) of the Act, the name of the domestic insurer on the cover page should be indicated as follows:

“ABC Insurance Company, a subsidiary of XYZ Holding Company”.

1609.2 Where a Section 4(b)(4) insurer is being acquired, references to the “the insurer” contained in Form A shall refer to both the domestic subsidiary insurer and the person being acquired.

1609a. Pre-Acquisition Notification

1609a.1 If a domestic insurer, including any person controlling a domestic insurer, is proposing a merger or acquisition pursuant to Section 4(b)(1) of the Act, that person shall file a pre-acquisition notification form, Form E, which was developed pursuant to Section 5(c)(2) of the Act.

1609a.2 If a non-domiciliary insurer licensed to do business in this state is proposing a merger or acquisition pursuant to section 5 of the Act, that person shall file a pre-acquisition notification form, Form E. No pre-acquisition notification form need be filed if the acquisition is beyond the scope of Section 5 as set forth in Section 5(b)(2).

1609a.3 In addition to the information required by Form E, the Commissioner may wish to require an expert opinion as to the competitive impact of the proposed acquisition.

History

• SOURCE: Final Rulemaking published at 41 DCR 2185 (April 22, 1994); as amended by Final Rulemaking published at 62 DCR 13004 (October 2, 2015). District of Columbia Municipal Regulations Insurance 26-A DCMR § 1609

26-A DCMR § 1610 ANNUAL REGISTRATION OF INSURERS - STATEMENT FILING

1610.1 An insurer required to file an annual registration statement pursuant to Section 6 of the Act shall furnish the required information on Form B, hereby made a part of these regulations.

History

• SOURCE: 33 DCRR § 875.8 (March 1975); as amended by Final Rulemaking published at 41 DCR 2185 (April 22, 1994). District of Columbia Municipal Regulations Insurance 26-A DCMR § 1610

26-A DCMR § 1611 SUMMARY OF REGISTRATION - STATEMENT FILING

1611.1 An insurer required to file an annual registration statement pursuant to Section 6 of the Act shall also furnish the required information on Form C, hereby made a part of these regulations.

History

• SOURCE: Final Rulemaking published at 41 DCR 2185 (April 22, 1994); as amended by Final Rulemaking published at 62 DCR 13004 (October 2, 2015). District of Columbia Municipal Regulations Insurance 26-A DCMR § 1611

26-A DCMR § 1612 AMENDMENTS TO FORM B [RESERVED]

History

• SOURCE: 33 DCRR § 875.13 (March 1975); as amended by Final Rulemaking published at 41 DCR 2185 (April 22, 1994). District of Columbia Municipal Regulations Insurance 26-A DCMR § 1612

26-A DCMR § 1613 ALTERNATIVE AND CONSOLIDATED REGISTRATIONS

1613.1 Any authorized insurer may file a registration statement on behalf of any affiliated insurer or insurers which are required to register under Section 6 of the Act. A registration statement may include information not required by the Act regarding any insurer in the insurance holding company system even if such insurer is not authorized to do business in this jurisdiction. In lieu of filing a registration statement on Form B, the authorized insurer may file a copy of the registration statement or similar report which it is required to file in its jurisdiction of domicile, provide:

(a) The statement or report contains substantially similar information required to be furnished on Form B; and

(b) The filing insurer is the principal insurance company in the insurance holding company system.

1613.2 The question of whether the filing insurer is the principal insurance company in the insurance holding company system is a question of fact and an insurer filing a registration statement or report in lieu of Form B on behalf of an affiliated insurer, shall set forth a brief statement of facts which will substantiate the filing insurer's claim that it, in fact, is the principal insurer in the insurance holding company system.

1613.3 With the prior approval of the Commissioner, an unauthorized insurer may follow any of the procedures which could be done by an authorized insurer under Subsection 1613.1 above.

1613.4 Any insurer may take advantage of the provisions of Section 6(h) or 6(i) of the Act without obtaining the prior approval of the Commissioner. The Commissioner, however, reserves the right to require individual filings if he or she deems such filings necessary in the interest of clarity, ease of administration or the public good.

History

• SOURCE: 33 DCRR § 875.14 (March 1975); as amended by Final Rulemaking published at 41 DCR 2185 (April 22, 1994). District of Columbia Municipal Regulations Insurance 26-A DCMR § 1613

26-A DCMR § 1614 DISCLAIMERS AND TERMINATION OF REGISTRATION

1614.1 A disclaimer of affiliation or a request for termination of registration claiming that a person does not, or will not upon the taking of some proposed action, control another person (hereinafter referred to as the "subject") shall contain the following information:

(a) The number of authorized, issued and outstanding voting securities of the subject;

(b) With respect to the person whose control is denied and all affiliates of such person, the number and percentage of shares of the subject's voting securities which are held of record or known to be beneficially owned, and the number of such shares concerning which there is a right to acquire, directly or indirectly;

(c) All material relationships and bases for affiliation between the subject and the person whose control is denied and all affiliates of such person;

(d) A statement explaining why such person should not be considered to control the subject.

1614.2 A request for termination of registration shall be deemed to have been granted unless the Commissioner, within 30 days after he receives the request, notifies the registrant otherwise.

History

• SOURCE: 33 DCRR § 875.16 (March 1975); as amended by Final Rulemaking published at 41 DCR 2185 (April 22, 1994). District of Columbia Municipal Regulations Insurance 26-A DCMR § 1614

26-A DCMR § 1615 TRANSACTIONS SUBJECT TO PRIOR NOTICE - NOTICE FILING

1615.1 An insurer required to give notice of a proposed transaction pursuant to Section 7 of the Act shall furnish the required information on Form D, hereby made a part of these regulations.

1615.2 Agreements for cost sharing services and management services shall at a minimum and as applicable:

(a) Identify the person providing services and the nature of such services;

(b) Set forth the methods to allocate costs;

(c) Require timely settlement, not less frequently than on a quarterly basis, and compliance with the requirements in the Accounting Practices and Procedures Manual;

(d) Prohibit advancement of funds by the insurer to the affiliate except to pay for services defined in the agreement;

(e) State that the insurer will maintain oversight for functions provided to the insurer by the affiliate and that the insurer will monitor services annually for quality assurance;

(f) Define books and records of the insurer to include all books and records developed or maintained under or related to the agreement;

(g) Specify that all books and records of the insurer are and remain the property of the insurer and are subject to control of the insurer;

(h) State that all funds and invested assets 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;

(i) Include standards for termination of the agreement with and without cause;

(j) 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;

(k) Specify that, if the insurer is placed in receivership or seized by the commissioner under the State Receivership Act:

(1) All of the rights of the insurer under the agreement extend to the receiver or commissioner; and,

(2) All books and records will immediately be made available to the receiver or the commissioner, and shall be turned over to the receiver or commissioner immediately upon the receiver or the commissioner’s request;

(l) Specify that the affiliate has no automatic right to terminate the agreement if the insurer is placed in receivership pursuant to the State Receivership Act; and

(m) Specify that the affiliate will continue to maintain any systems, programs, or other infrastructure notwithstanding a seizure by the commissioner under the State Receivership Act, and will make them available to the receiver, for so long as the affiliate continues to receive timely payment for services rendered.

History

• SOURCE: Final Rulemaking published at 41 DCR 2185 (April 22, 1994); as amended by Final Rulemaking published at 62 DCR 13004 (October 2, 2015). District of Columbia Municipal Regulations Insurance 26-A DCMR § 1615

26-A DCMR § 1616 EXTRAORDINARY DIVIDENDS AND OTHER DISTRIBUTIONS

1616.1 Requests for approval of extraordinary dividends or any other extraordinary distribution to shareholders shall include the following:

(a) The amount of the proposed dividend;

(b) The date established for payment of the dividend;

(c) A statement as to whether the dividend is to be in cash or other property and, if in property, a description thereof, its cost, and its fair market value together with an explanation of the basis for valuation;

(d) A copy of the calculations determining that the proposed dividend is extraordinary. - The work paper shall include the following information:

(1) The amounts, dates and form of payment of all dividends or distributions (including regular dividends but excluding distributions of the insurers own securities) paid within the period of 12 consecutive months ending on the date fixed for payment of the proposed dividend for which approval is sought and commencing on the day after the same day of the same month in the last preceding year.

(2) Surplus as regards policyholders (total capital and surplus) as of the 31st day of December next preceding;

(3) If the insurer is a life insurer, the net gain from operations for the 12 month period ending the 31 st day of December next preceding;

(4) If the insurer is not a life insurer, the net income less realized capital gains for the 12-month period ending the 31st day of December next preceding and the two preceding 12-month periods; and

(5) If the insurer is not a life insurer, the dividend paid to stockholders excluding distributions of the insurer's own securities in the preceding two calendar years.

(e) A balance sheet and statement of income for the period intervening from the last annual statement filed with the Commissioner and the end of the month preceding the month in which the request for dividend approval in submitted; and

(f) A brief statement as to the effect of the proposed dividend upon the insurer's surplus and the reasonableness of surplus in relation to insurer's outstanding liabilities and the adequacy of surplus relative to the insurer's financial needs.

1616.2 Subject to subjection (b) of Section 7 of the Act, each registered insurer shall report to the Commissioner all dividends and other distributions to shareholders within 15 business days following the declaration thereof, including the same information required by sections 1616.1 (d) (1)-(5).

History

• SOURCE: 33 DCRR § 875.17 (March 1975); as amended by Final Rulemaking published at 41 DCR 2185 (April 22, 1994). District of Columbia Municipal Regulations Insurance 26-A DCMR § 1616

26-A DCMR § 1617 ADEQUACY OF SURPLUS

1617.1 The factors set forth in Section 7(d) of the Act are not intended to be an exhaustive list. In determining the adequacy and reasonableness of an insurer's surplus no single factor is necessarily controlling. The Commissioner, instead, will consider the net effect of all of these factors plus other factors bearing on the financial condition of the insurer. In comparing the surplus maintained by other insurers, the Commissioner will consider the extent to which each of these factors varies from company to company and in determining the quality and liquidity of investments in subsidiaries, the Commissioner will consider the individual subsidiary and may discount or disallow its valuation to the extent that the individual investments so warrant.

History

• SOURCE: Final Rulemaking published at 41 DCR 2185 (April 22, 1994). District of Columbia Municipal Regulations Insurance 26-A DCMR § 1617

26-A DCMR § 1618 ENTERPRISE RISK REPORT

1618.1 The ultimate controlling person of an insurer required to file an enterprise risk report pursuant to Section 5(k-1) of the Act shall furnish the required information on Form F, hereby made a part of these regulations.

History

• SOURCE: Final Rulemaking published at 62 DCR 13004 (October 2, 2015). District of Columbia Municipal Regulations Insurance 26-A DCMR § 1618

26-A DCMR § 1699 DEFINITIONS

1699.1 The following words and phrases shall have the meaning ascribed in this section. Unless the context otherwise requires, other terms found in these regulations and in Section 2 of the Act are used as defined in the said Section 2. Other nomenclature or terminology is according to the Insurance Code, or industry usage if not defined by Code.

"Executive officer" means chief executive officer, chief operating officer, chief financial officer, treasurer, secretary, controller, and any other individual performing functions corresponding to those performed by the foregoing officers under whatever title.

"Foreign insurer" shall include an alien insurer except where clearly noted otherwise.

"Material Transaction" means all sales, purchases, exchanges, loans, extensions of credit, investments, retirement of indebtedness, pledging of assets as security, transactions not in the ordinary course of business, guarantees or undertakings for the benefit of a subsidiary of affiliate, management contracts, service contracts, cost-sharing arrangements, and all reinsurance agreements that are in the amount of $25,000 or more; provided, however, that any series of transactions of similar nature which, in the aggregate, total $25,000 or in any 12-month period, shall be considered as one transaction for the purpose of this subsection.

"Ultimate controlling person" means that person which is not controlled by any other person.

APPENDIX 16-1

[To be used pursuant to the provision of Sec. 1602, 1603 and 1608.]

FORM A

STATEMENT REGARDING THE ACQUISITION OF CONTROL OF OR MERGER WITH A DOMESTIC INSURER

---

Name of Domestic Insurer

BY

---

Name of Acquiring Person (Applicant)

Filed with the Insurance Department of

___ (jurisdiction of Domicile of insurer being acquired)

Date: ___, 19 ___

Name, Title, address and telephone number of Individual to Whom Notices and Correspondence Concerning this Statement Should be Addressed: ___

ITEM 1. INSURER AND METHOD OF ACQUISITION

State the name and address of the domestic insurer to which this application relates and a brief description of how control is to be acquired.

ITEM 2. IDENTITY AND BACKGROUND OF THE APPLICANT

(a) State the name and address of the applicant seeking to acquire control over the insurer.

(b) If the applicant is not an individual, state the nature of its business operations for the past five years or for such lesser period as such person and any predecessors thereof shall have been in existence. Briefly describe the business intended to be done by the applicant and the applicant's subsidiaries.

(c) Furnish a chart or listing clearly presenting the identities of the inter-relationships among the applicant and all affiliates of the applicant. Indicate in such chart or listing the percentage of voting securities of each such person is maintained other than by the ownership or control voting securities, indicate the basis of such control. As to each person specified in such chart or listing indicate the type of organization (e.g. corporation, trust, partnership) and the state or other jurisdiction of domicile. If court proceedings involving a reorganization or liquidation are pending with respect to any such person, indicate which person, set forth the title of the court, nature of proceedings and the date when commenced.

ITEM 3. IDENTITY AND BACKGROUND OF INDIVIDUALS ASSOCIATED WITH THE APPLICANT

On the biographical affidavit, include a third party background check, and state the following with respect to (1) the applicant if (s)he is an individual or (2) all persons who are directors, executive officers or owners of 10% or more of the voting securities of the applicant if the applicant is not an individual.

(a) Name and business address;

(b) Present principal business activity, occupation or employment including position and office held and the name, principal business and address of any corporation or other organization in which such employment is carried on;

(c) Material occupations, positions, offices or employment during the last five years, giving the starting and ending dates of each and the name, principal business and address of any business corporation or other organization in which each such occupation, position, office or employment was carried on; if any such occupation, position, office or employment required by licensing or registration with any federal, state or municipal governmental agency, indicate such fact, the current status of such licensing or registration, and an explanation of any surrender, revocation, suspension or disciplinary proceedings in connection therewith.

(d) Whether or not such person has ever been convicted in a criminal proceeding (excluding minor traffic violations) during the last ten years and, if so, give the date, nature of conviction, name and location of court, and penalty imposed or other disposition of the case.

ITEM 4. NATURE, SOURCE AND AMOUNT OF CONSIDERATION

(a) Describe the nature, source and amount of funds or other considerations used or to be used in effecting the merger or other acquisition of control. If any part of the same is represented or is to be represented by funds or other consideration borrowed or otherwise obtained for the purpose of acquiring, holding or trading securities, furnish a description of the transaction, the names of the parties thereto, the relationship, if any, between the borrower and the lender, the amounts borrowed or to be borrowed, and copies of all agreements, promissory notes and security arrangements relating thereto.

(b) Explain the criteria used in determining the nature and amount of such consideration.

(c) If the source of the consideration is a loan made in the lender's ordinary course of business and if the applicant wishes the identity of the lender to remain confidential, he must specifically request that the identity be kept confidential.

ITEM 5. FUTURE PLANS OF INSURER

Describe any plans or proposals which the applicant may have to declare an extraordinary dividend, to liquidate such insurer, to sell its assets to or merged it with any person or persons or to make any other material change in its business operations, corporate structure or management.

ITEM 6. VOTING SECURITIES TO BE ACQUIRED

State the number of shares of the insurer's voting securities which the applicant, its affiliates and any person listed in Item 3 plan to acquire, and the terms of the offer, request, invitation, agreement or acquisition, and a statement as to the method by which the fairness of the proposal was arrived at.

ITEM 7. OWNERSHIP OF VOTING SECURITIES

State the amount of each class of any voting security of the insurer which is beneficially owned or concerning which there is a right to acquire beneficial ownership by the applicant, its affiliates or any person listed in Item 3.

ITEM 8. CONTRACTS, ARRANGEMENTS, OR UNDERSTANDINGS WITH RESPECT TO VOTING SECURITIES OF THE INSURER

Give a full description of any contracts, arrangement or understandings with respect to any voting security of the insurer in which the applicant, its affiliates or any person listed in Item 3 is involved, including but not limited to transfer of any of the securities, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss or guarantees of profits division of losses or profits, or the giving or withholding of Proxies. Such description shall identify the persons with who such contracts, arrangements or understanding have been entered into.

ITEM 9. RECENT PURCHASE OF VOTING SECURITIES

Describe any purchase of any voting securities of the insurer by the applicant, its affiliates or any person listed in Item 3 during the 12 calendar months preceding the filing of this Statement. Include in such description the dates of purchase, the names of the purchasers, and the consideration paid or agreed to be paid therefor. State whether any such shares so purchased are hypothecated.

ITEM 10. RECENT RECOMMENDATIONS TO PURCHASE

Describe any recommendations to purchase any voting security of the insurer made by the applicant, its affiliates or any person listed in Item 3, or by anyone based upon interviews or at the suggestion of the applicant, its affiliates or any person listed in Item 3 during the 12 calendar months preceding the filing of this statement.

ITEM 11. AGREEMENTS WITH BROKER-DEALERS

Describe the terms of any agreement, contract or understanding made with any broker-dealer as to solicitation of voting securities of the insurer for tender and the amount of any fees, commissions or other compensation to be paid to broker-dealers with regard thereto.

ITEM 12. FINANCIAL STATEMENTS AND EXHIBITS

(a) Financial statements and exhibits and three-year financial projections of the insurer(s) shall be attached to this statement as an appendix, but list under this item the financial statements and exhibits so attached.

(b) The financial statements shall include the annual financial statements of the persons identified in Item 2(c) for the preceding five fiscal years (or for such lesser period as such applicant and its affiliates and any predecessors thereof shall have been in existence), and similar information covering the period from the end of such person's last fiscal year, if such information is available. Such statements may be prepared on either an individual basis, or, unless the Commissioner otherwise requires, on a consolidated basis if such consolidated statements are prepared in the usual course of business.

The annual financial statements of the applicant shall be accompanied by the certificate of an independent public accountant to the effect that such statements present fairly the financial position of the applicant and the results of its operations for the year the ended, in conformity with generally accepted accounting principles or with requirements of insurance or other accounting principles prescribed or permitted under law. If the applicant is an insurer which is actively engaged in the business of insurance, the financial statements need not be certified, provided they are based on the Annual Statement of such person filed with the insurance department of the person's domiciliary jurisdiction and are in accordance with the requirements of insurance or other accounting principles prescribed or permitted under the law and regulations of such jurisdiction.

(c) File as exhibits copies of all tender offers for, requests or invitations for, tenders of, exchange offers for, the agreements to acquire or change any voting securities of the insurer and (if distributed) of additional soliciting material relating thereto, any proposed employment, consultation, advisory or management contracts concerning the insurer, annual reports to the stockholders of the insurer and the applicant for the last two fiscal years, and any additional documents or papers required by Form A or District Regulations.

ITEM 13. SIGNATURE AND CERTIFICATION

Signature and certification required as follows:

SIGNATURE

Pursuant to the requirements of Section 4 of the Act ___ has caused this applicant to be duly signed on it behalf in the City of ___ and State of ___ on the ___ day of ___. 19 ___.

(SEAL) ___

Name of Applicant

BY ___

(Name) (Title)

Attest:

---

(Signature of Officer)

---

(Title)

CERTIFICATION

The undersigned deposes and says that (s)he duly executed the attached application dated ___, 19 ___, for and on behalf of ___ (Name of Applicant); that (s)he is the ___ (Title of Officer) of such company and that (s)he is authorized to executed and file such instrument. Deponent further says that (s)he is familiar with such instrument and the contents thereof, and that the facts therein set forth are true to the best of his/her knowledge, information and belief.

(Signature) ___

(Type or print name Beneath) ___

ITEM 13a. AGREEMENT REQUIREMENTS FOR ENTERPRISE RISK MANAGEMENT

Applicant agrees to provide, to the best of its knowledge and belief, the information required by Form F within fifteen (15) days after the end of the month in which the acquisition of control occurs.

APPENDIX 16-2

[To be used pursuant to the provision of Sec. 1602 and 1603.]

FORM B

INSURANCE HOLDING COMPANY SYSTEM ANNUAL REGISTRATION STATEMENT

Filed with the Insurance Department of the State of ___

By

---

Name of Registrant

On behalf of Following Insurance Companies

Name Address

---

Date: ___, 19 ___

Name, Title, Address and telephone number of Individual to Whom Notices and Correspondence Concerning This Statement Should Be Addressed: ___

ITEM 1. IDENTITY AND CONTROL OR REGISTRANT

Furnish the exact name of each insurer registering or being registered (hereinafter called "the Registrant"), the home office address and principal executive offices of each: the date on which each Registrant became part of the insurance holding company system and the method(s) by which control of each Registrant was acquired and is maintained.

ITEM 2. ORGANIZATIONAL CHART

Furnish a chart or listing clearly presenting the identities of any interrelationships among all affiliated persons within the insurance holding company system. The chart or listing should show the percentage of each class of voting securities of each affiliate which is owned, directly or indirectly, by another affiliate. If control of any person within the system is maintained other than by the ownership or control of voting securities, indicate the basis of such control. As to each person specified in such chart or listing indicate the type of organization (e.g., - corporation, trust, partnership) and the state or other jurisdiction of domicile.

ITEM 3. THE ULTIMATE CONTROLLING PERSON

As to the ultimate controlling person in the insurance holding company system furnish the following information:

(a) Name.

(b) Home office address.

(c) Principal executive office address.

(d) The organizational structure of the person, i.e., corporation, partnership, individual, trust, etc.

(e) The principal business of the person.

(f) The name and address of any person who holds or owns 10% or more of any class of voting security, the class of such security, the number of shares held of record or known to be beneficially owned, and the percentage of class so held or owned.

(g) If court proceedings involving a reorganization or liquidation are pending, indicate the title and location of the court, the nature of proceedings and the date when commenced.

ITEM 4. BIOGRAPHICAL INFORMATION

If the ultimate controlling person is a corporation, an organization, a limited liability company, or other legal entity, furnish the following information for the directors and executive officers of the ultimate controlling person: the individual’s name and address, his or her principal occupation and all offices and positions held during the past five (5) years, and any conviction of crimes other than minor traffic violations. If the ultimate controlling person is an individual, furnish the individual's name and address, his or her principal occupation and all offices and positions held during the past five (5) years, and any conviction of crimes other than minor traffic violations.

ITEM 5. TRANSACTIONS AND AGREEMENTS

Briefly describe the following agreements in force, and transactions currently outstanding or which have occurred during the last calendar year between the Registrant and its affiliates:

(1) Loans, other investments, or purchases, sales or exchanges of securities of the affiliates by the Registrant or of the Registrant by its affiliates:

(2) Purchases, sales or exchanges of assets;

(3) Transactions not in the ordinary course of business;

(4) Guarantees or undertakings for the benefit of an affiliate which result in an actual contingent exposure of the Registrant's assets to liability, other than insurance contracts entered into in the ordinary course of the Registrant's business;

(5) All management agreements, service contracts and all cost-sharing arrangements;

(6) Reinsurance agreements;

(7) Dividends and other distributions to shareholders;

(8) Consolidated tax allocation agreements; and

(9) Any pledge of the Registrant's stock and/or of the stock of any subsidiary or controlling affiliate, for a loan made to any member of the insurance holding company system.

No information need be disclosed if such information is not material for purposes of Section 6 of the Act.

Sales, purchases, exchanges, loan or extensions of credit, investments or guarantees involving one-half of 1% or less of the Registrant's admitted assets as of the 31st day of December next preceding shall not be deemed material. (Note: Commissioner may rule, regulation or order provide otherwise).

The description shall be in a manner as to permit the proper evaluation thereof by the Commissioner, and shall include at least the following: the nature purpose of the transaction, the nature and amounts of any payments or transfer of assets between the parties, the identity of all parties to such transaction, and relationship of the affiliated parties to the Registrant.

ITEM 6. LITIGATION OR ADMINISTRATIVE PROCEEDINGS

A brief description of any litigation or administrative proceedings of the following types, either then pending or concluded within the preceding fiscal year, to which the ultimate controlling person or any of its directors or executive officers was a party or of which the property of any such person is or was the subject; give the names of the parties and the court or agency in which such litigation or proceeding is or was pending:

(a) Criminal prosecutions or administrative proceedings by any government agency or authority which may be relevant to the trustworthiness of any party thereto; and

(b) Proceedings which may have a material effect upon the solvency or capital structure of the ultimate holding company including, but not necessarily limited to bankruptcy, receivership or other corporate reorganizations.

ITEM 7. STATEMENT REGARDING PLAN OR SERIES OF TRANSACTIONS

The insurer shall furnish a statement that transactions entered into since the filing of the prior year's annual registration statement are not part of a plan or series of like transactions, the purpose of which is to avoid statutory threshold amounts and the review that might otherwise occur.

ITEM 8. FINANCIAL STATEMENTS AND EXHIBITS

(a) Financial statements and exhibits should be attached to this statement as an appendix, but list under this item the financial statements and exhibits so attached.

(b) If the ultimate controlling person is a corporation, an organization, a limited liability company, or other legal entity, the financial statements shall include the annual financial statements of the ultimate controlling person in the insurance holding company system as of the end of the person’s latest fiscal year.

If at the time of the initial registration, the annual financial statements for the latest fiscal year are not available, annual statements for the previous fiscal year may be filed and similar financial information shall be filed for any subsequent period to the extent such information is available. Such financial statements may be prepared on either an individual basis; or, unless the Commissioner otherwise requires, on a consolidated basis if consolidated statements are prepared in the usual course of business.

Other than with respect to the foregoing, such financial statement shall be filed in a standard form and format adopted by the National Association of Insurance Commissioners, unless an alternative form is accepted by the Commissioner. Documentation and financial statements filed with the Securities and Exchange Commission or audited GAAP financial statements shall be deemed to be an appropriate form and format.

Unless the Commissioner otherwise permits, the annual financial statements shall be accompanied by the certificate of an independent public accountant to the effect that the statements present fairly the financial position of the ultimate controlling person and the results of its operations for the year then ended, in conformity with generally accepted accounting principles or with requirements of insurance or other accounting principles prescribed or permitted under law. If the ultimate controlling person is an insurer which is actively engaged in the business of insurance, the annual financial statements need not be certified, provided they are based on the Annual Statement of the insurer’s domiciliary state and are in accordance with requirements of insurance or other accounting principles prescribed or permitted under the law and regulations of that state.

Any ultimate controlling person who is an individual may file personal financial statements that are reviewed rather than audited by an independent public accountant. The review shall be conducted in accordance with standards for review of personal financial statements published in the Personal Financial Statements Guide by the American Institute of Certified Public Accountants. Personal financial statements shall be accompanied by the independent public accountants’ Standard Review Report stating that the accountant is not aware of any material modifications that should be made to the financial statements in order for the statements to be in conformity with generally accepted accounting principles.

If at the time of the initial registration, the annual financial statements for the latest fiscal year are not available, annual statements for the previous fiscal year may be filed and similar financial information shall be filed for any subsequent period to the extent such information is available. Such financial statements may be prepared on either an individual basis, or unless the Commissioner otherwise requires, on a consolidated basis, or unless the Commissioner otherwise requires, on a consolidated basis if such consolidated statements are prepared in the usual course of business.

Unless the Commissioner otherwise permits, the annual financial statements shall be accompanied by the certificate of an independent public accountant to the effect that such statements present fairly the financial position of the ultimate controlling person and the results of its or with requirements of insurance or other accounting principles prescribed or permitted under law. If the ultimate controlling person is an insurer which is actively engaged in the business of insurance, the annual financial statements need not be certified, provided they are based on the Annual Statement of such insurer filed with requirements of insurance or other accounting principles prescribed or permitted under the law and regulation of such jurisdiction.

(c) Exhibits shall include copies of the latest annual reports to shareholders of the ultimate controlling person and proxy material used by the ultimate controlling person; and any additional documents or papers required by Form B or District Regulations.

ITEM 9. FORM C REQUIRED

A FORM C, Summary of Changes to Registration Statement, must be prepared and filed with this Form B.

ITEM 10. SIGNATURE AND CERTIFICATION

Signature and certification required as follows:

SIGNATURE

Pursuant to the requirements of Section 6 of the Act, the Registrant has caused this annual registrant statement to be duly signed on its behalf in the City of ___ and State of ___ on the ___ day of ___, 19 ___.

(SEAL) ___

Name of Registrant

BY ___

(Name) (Title)

Attest: ___

(Signature of Officer)

---

(Title)

CERTIFICATION

The undersigned deposes and says that (s)he has duly executed the attached annual registration statement dated ___, 19 ___, for and on be half of ___ (Name of Company); that (s)he is the ___ (Title of Officer) of such company and that (s)he is authorized to execute and file such instrument. Deponent further says that (s)he is familiar with such instrument and the contents thereof, and that the facts therein set forth are true to the best of his/her knowledge, information and belief.

(Signature) ___

(Type or print name Beneath) ___

APPENDIX 16-3

[To be used pursuant to the provisions of Sec. 1602]

FORM C

SUMMARY OF CHANGES TO REGISTRATION STATEMENT

Filed with the Insurance Department of the District of ___

By

---

Name of Registrant

On Behalf of Following Insurance Companies

Name Address

---

Date: ___, 19 ___

Name, Title, Address and telephone number of Individual to Whom Notices and Correspondence Concerning This Statement Should Be Addressed: ___

Furnish a brief description of all items in the current annual registration statement which represent changes from the prior year's annual registration statement. The description shall be in a manner as to permit the proper evaluation thereof by the Commissioner, and shall include specific references to Item numbers in the annual registration statement and to the terms contained therein.

Changes occurring under Item 2 of Form B insofar as changes in the percentage of each class of voting securities held by each affiliate is concerned, need only be included where such changes are ones which result in ownership or holdings of 10 percent or more of voting securities, loss or transfer of control, or acquisition or loss of partnership interest.

Changes occurring under Item 4 of Form B need only be included where: an individual is, for the first time, made a director or executive officer of the ultimate controlling person; a director or executive officer terminates his or her responsibilities with the ultimate controlling person; or in the event an individual is named president of the ultimate controlling person.

If a transaction disclosed on the prior year's annual registration statement has been changed, the nature of such change shall be included. If a transaction disclosed on the prior year's annual registration statement has been effectuated, furnish the mode of completion and any flow of funds between affiliates resulting from the transaction.

The insurer shall furnish a statement that transactions entered into since the filing of the prior year's annual registration statement are not part of a plan or series of like transactions whose purpose it is to avoid statutory threshold amounts and the review that might otherwise occur.

SIGNATURE AND CERTIFICATION

Signature and certification required as follows:

SIGNATURE

Pursuant to the requirements of Section 6 of the Act, the Registrant has caused this summary of registration statement to be duly signed on its behalf in the City of ___ and State of ___ on the ___ day of ___, 19 ___.

(SEAL) ___

Name of Registrant

By ___

(Name) (Title)

Attest:

---

(Signature of Officer)

---

(Title)

CERTIFICATION

The undersigned deposes and says that (s)he has duly executed the attached summary of registration statement dated ___, 19 ___, for and on behalf of ___ (Name of Company); that (s)he is the ___ (Title of Officer) of such company and that (s)he is authorized to execute and file such instrument. Deponent further says that (s)he is familiar with such instrument and the contents thereof, and that the facts therein set forth are true to the best of his/her knowledge, information and belief.

(Signature) ___

(Type or print name beneath) ___

APPENDIX 16-4

[To be used pursuant to the provisions of Sec. 1602 and 1603.]

FORM D

PRIOR NOTICE OF A TRANSACTION

Filed with the Insurance Department of the State of ___

By

---

Name of Registrant

On Behalf of Following Insurance Companies

Name Address

---

Date: ___, 19 ___

Name, Title, Address and telephone number of Individual to Whom Notices and Correspondence Concerning This Statement Should Be Addressed: ___

ITEM 1. IDENTITY OF PARTIES TO TRANSACTION

Furnish the following information for each of the parties to the transaction:

(a) Name.

(b) Home office address,

(c) Principal executive office address.

(d) The organizational structure, i.e. corporation, partnership, individual, trust, etc.

(e) A description of the nature of the parties' business operations.

(f) Relationship, if any, of other parties to the transaction to the insurer filing the notice, including any ownership or debtor/creditor interest by any other parties to the transaction in the insurer seeking approval, or by the insurer filing the notice in the affiliated parties.

(g) Where the transaction is with a non-affiliate, the name(s) of the affiliate(s) which will receive, in whole or in substantial part, the proceeds of the transaction.

ITEM 2. DESCRIPTION OF THE TRANSACTION

Furnish the following information for each transaction for which notice is being given:

(a) A statement as to whether notice is being given under Section 7(a)2(A), (B), (C), (D), or (E) of the Act.

(b) A statement of the nature of the transaction.

(c) A statement of how the transaction meets the ‘fair and reasonable’ standard in § 7(a)(1)(a) of the Act; and

(d) The proposed effective date of the transaction.

ITEM 3. SALES, PURCHASES, EXCHANGES, LOANS, EXTENSIONS OF CREDIT, GUARANTEES OR INVESTMENTS

Furnish a brief description of the amount and source of funds, securities, property or other consideration for the sale, purchase, exchange, loan, extension of credit, guarantee, or investment, whether any provision exists for purchase by the insurer filing notice, by any party to the transaction, or by any affiliate of the insurer filing notice, by any party to the securities being received, if any, and a description of any other agreements relating to the transaction involves other than cash, furnish a description of the consideration, its cost and its fair market value, together with an explanation of the basis for evaluation.

If the transaction involves a loan, extension of credit or a guarantee, furnish a description of the maximum amount which the insurer will be obligated to make available under such loan, extension of credit or guarantee, the date on which the credit or guarantee will terminate, and any provisions for the accrual of or deferral of interest.

If the transaction involves an investment, guarantee or other arrangement, state the time period during which the investment, guarantee or other arrangement will remain in effect, together with any provisions for extensions or renewals such investments, guarantees or arrangements. Furnish a brief statement as to the effect of the transaction upon the insurer's surplus.

No notice need be given if the maximum amount which can at any time be outstanding or for which the insurer can be legally obligated under the loan, extension of credit or guarantee is less than, (a) in the case of non-life insurer's, the lesser of 3% of the insurer's admitted assets or 25% of surplus as regards policyholders or, (b) in case of life insurers, 3% of the insurer's admitted assets, each as of the 31st day of December next preceding.

ITEM 4. LOANS OR EXTENSIONS OF CREDIT TO A NON-AFFILIATE

If the transaction involves a loan or extension of credit any person who is not an affiliate, furnish a brief description of the agreement or understanding whereby the proceeds of the proposed transaction, in whole or in substantial part, are to be used to make loan or extensions of credit to, to purchase the assets of, or to make investment in, any affiliate of the insurer making such loans or extensions of credit, and specify in what manner the proceeds are to be used to loan to, extend credit to, purchase assets of or make investments in any affiliate. Describe the amount and source of funds, securities, property or other consideration for the loan or extension of credit and, if the transaction is one involving consideration other than cash, a description of its cost and its fair market value together with an explanation of the basis for evaluation. Furnish a brief statement as to the effect of the transaction upon the insurer's surplus.

No notice need be given if the loan or extension of credit is one which equals less than, in the case of non-life insurer's, the lesser of 3% of the insurer's admitted assets or 25% of surplus as regards policyholders or, with respect to life insurers, 3% of the insurer's admitted assets, each as of the 31st day of December next preceding.

ITEM 5. REINSURANCE

If the transaction is a reinsurance agreement or modification thereto, as described by Section 7(a)(2)(c)(ii) of the Act, or a reinsurance pooling agreement or modification thereto as described by Section 7(a)(2)(c)(i) of the Act, furnish a description of the known and/or estimated amount of liability to be ceded and/or assumed in each calendar year, the period of time during which the agreement will be in effect, and a statement whether an agreement or understanding exists between the insurer and non-affiliate to the effect that any portion of the assets constituting the consideration for the agreement will be transferred to one or more of the insurer’s affiliates. Furnish a brief description of the consideration involved in the transaction, and a brief statement as to the effect of the transaction upon the insurer’s surplus.

No notice need be given for reinsurance agreements or modifications thereto if the reinsurance premium or a change in the insurer’s liabilities, or the projected reinsurance premium or change in the insurer’s liabilities in any of the next three years, in connection with the reinsurance agreement or modification thereto is less than five percent (5%) of the insurer’s surplus as regards policyholders, as of the 31st day of December next preceding. Notice shall be given for all reinsurance pooling agreements including modifications thereto.

ITEM 6. MANAGEMENT AGREEMENTS, SERVICE AGREEMENTS COST-SHARING ARRANGEMENTS

For management and service agreements, furnish:

(a) A brief description of the managerial responsibilities, or services to be performed.

(b) A brief description of the agreement, including a statement of its duration, together with brief descriptions of the basis for compensation and the terms under which payment or compensation is to be made.

For cost-sharing arrangements, furnish:

(a) A brief description of the purpose of the agreement;

(b) A description of the period of time during which the agreement is to be in effect;

(c) A brief description of each party's expenses or costs covered by the agreement;

(d) A brief description of the accounting basis to be used in calculating each party's costs under the agreement;

A brief statement as to the effect of the transaction upon the insurer’s policyholder surplus;

A statement regarding the cost allocation methods that specifies whether proposed charges are based on “cost or market.” If market based, rationale for using market instead of cost, including justification for the company’s determination that amounts are fair and reasonable; and

A statement regarding compliance with the NAIC Accounting Practices and Procedure Manual regarding expense allocation.

ITEM 7. SIGNATURE AND CERTIFICATION

Signature and certification required as follows:

SIGNATURE

Pursuant to the requirements of Section 7 of the Act, ___ has caused this notice to be duly signed on its behalf in the City of ___ and State of ___ on the ___ day of ___, 19 ___.

(SEAL) ___

Name of Applicant

By ___

(Name) (Title)

Attest:

---

(Signature of Office)

---

(Title)

CERTIFICATION

The undersigned deposes and says that (s)he has duly executed the attached notice dated ___, 19 ___, for and on behalf of ___ (Name of Applicant); that (s)he is the ___ (Title of Officer) of such company and that (s)he is authorized to execute and file such instrument. Deponent further says that (s)he is familiar with such instrument and the contents thereof, and that the facts therein set forth are true to the best of his/her knowledge, information and belief.

(Signature) ___

(Type or print name beneath) ___

APPENDIX 16-5

[To be used pursuant to the provision of Sec. 1609a.]

FORM E

PRE-ACQUISITION NOTIFICATION FORM REGARDING THE POTENTIAL COMPETITIVE IMPACT OF A PROPOSED MERGER OR ACQUISITION BY A

NON-DOMICILIARY INSURER DOING BUSINESS IN THIS STATE OR BY A DOMESTIC INSURER

---

Name of Applicant

---

Name of Other Person

Involved in Merger or

Acquisition

Filed with the Insurance Department of

---

Dated:__________________________, 20 _______________

Name, title, address and telephone number of person completing this statement:

---

---

---

---

ITEM 1. NAME AND ADDRESS

State the names and addresses of the persons who hereby provide notice of their involvement in a pending acquisition or change in corporate control.

ITEM 2. NAME AND ADDRESSES OF AFFILIATED COMPANIES

State the names and addresses of the persons affiliated with those listed in Item 1. Describe their affiliations.

ITEM 3. NATURE AND PURPOSE OF THE PROPOSED MERGER OR ACQUISITION

State the nature and purpose of the proposed merger or acquisition.

ITEM 4. NATURE OF BUSINESS

State the nature of the business performed by each of the persons identified in response to Item 1 and Item 2.

ITEM 5. MARKET AND MARKET SHARE

State specifically what market and market share in each relevant insurance market the persons identified in Item 1 and Item 2 currently enjoy in this state. Provide historical market and market share data for each person identified in Item 1 and Item 2 for the past five years and identify the source of such data. Provide a determination as to whether the proposed acquisition or merger, if consummated, would violate the competitive standards of the state as stated in Section 3.1D of the Act. If the proposed acquisition or merger would violate competitive standards, provide justification of why the acquisition or merger would not substantially lessen competition or create a monopoly in the state.

For purposes of this question, market means direct written insurance premium in this state for a line of business as contained in the annual statement required to be filed by insurers licensed to do business in this state.

APPENDIX 16-6

[To be used pursuant to the provision of Sec. 1615a.]

FORM F

ENTERPRISE RISK REPORT

Filed with the Insurance Department of the State of______________________

By

---

Name of Registrant/Applicant

On Behalf of/Related to Following Insurance Companies

Name Address

---

---

---

---

Date:_______________, 20

Name, Title, Address and telephone number of Individual to Whom Notices and Correspondence Concerning This Statement Should Be Addressed:

---

---

---

ITEM 1. ENTERPRISE RISK

The Registrant/Applicant, to the best of its knowledge and belief, shall provide information regarding the following areas that could produce enterprise risk as defined in Section 2 of the Act, provided such information is not disclosed in the Insurance Holding Company System Annual Registration Statement filed on behalf of itself or another insurer for which it is the ultimate controlling person:

Any material developments regarding strategy, internal audit findings, compliance or risk management affecting the insurance holding company system;

Acquisition or disposal of insurance entities and reallocating of existing financial or insurance entities within the insurance holding company system;

Any changes of shareholders of the insurance holding company system exceeding ten percent (10%) or more of voting securities;

Developments in various investigations, regulatory activities or litigation that may have a significant bearing or impact on the insurance holding company system;

Business plan of the insurance holding company system and summarized strategies for next 12 months;

Identification of material concerns of the insurance holding company system raised by supervisory college, if any, in last year;

Identification of insurance holding company system capital resources and material distribution patterns;

Identification of any negative movement, or discussions with rating agencies which may have caused, or may cause, potential negative movement in the credit ratings and individual insurer financial strength ratings assessment of the insurance holding company system (including both the rating score and outlook);

Information on corporate or parental guarantees throughout the holding company and the expected source of liquidity should such guarantees be called upon; and

Identification of any material activity or development of the insurance holding company system that, in the opinion of senior management, could adversely affect the insurance holding company system.

The Registrant/Applicant may attach the appropriate form most recently filed with the U.S. Securities and Exchange Commission, provided the Registrant/Applicant includes specific references to those areas listed in Item 1 for which the form provides responsive information. If the Registrant/Applicant is not domiciled in the U.S., it may attach its most recent public audited financial statement filed in its country of domicile, provided the Registrant/Applicant includes specific references to those areas listed in Item 1 for which the financial statement provides responsive information.

ITEM 2. OBLIGATION TO REPORT

If the Registrant/Applicant has not disclosed any information pursuant to Item 1, the Registrant/Applicant shall include a statement affirming that, to the best of its knowledge and belief, it has not identified enterprise risk subject to disclosure pursuant to Item 1.

History

• SOURCE: 33 DCRR § 875.4 (March 1975); as amended by Final Rulemaking published at 41 DCR 2185 (April 22, 1994); as amended by Final Rulemaking published at 62 DCR 13004 (October 2, 2015). District of Columbia Municipal Regulations Insurance 26-A DCMR § 1699

26-A17 MOTOR VEHICLE INSURANCE: ADMINISTRATION FUND BUREAU AND ADMINISTRATION FUND

26-A DCMR § 1700 GENERAL PROVISIONS

1700.1 The Bureau shall be administered by a Governing Committee and Manager, in accordance with the Act and this title.

1700.2 The Bureau shall come into existence on the effective date of these rules, and shall be responsible for claims arising from accidents occurring on or after June 2, 1986.

1700.3 The principal office of the Bureau shall be located in the District of Columbia.

1700.4 Every insurer authorized to sell motor vehicle insurance and every Self-Insurer, except for the District of Columbia Government, the United States Government, and the Washington Metropolitan Area Transit Authority, providing motor vehicle insurance in the District as required by the Act, shall be members of the Bureau.

1700.5 The membership of any member of the Bureau shall terminate when the member no longer provides motor vehicle insurance as required by the Act.

1700.6 Any member who has been terminated shall continue to be subject to an governed by this chapter in order to complete all obligations incurred during its term of membership, with respect to assessments, losses, expenses, contracts, or any activities required under the Act or this chapter.

1700.7 The Administration Fund Bureau, hereinafter "The Bureau", shall be an unincorporated non-profit association.

History

• SOURCE: Final Rulemaking published at 35 DCR 7649(October 21, 1988).

26-A DCMR § 1701 GOVERNING COMMITTEE

1701.1 The Bureau shall be administered by a Governing Committee and a Manager, in accordance with the Act and this title.

1701.2 The Governing Committee shall consist of seven (7) members whose terms in office except as provided in § 1701.3 shall be as follows:

(a) Three (3) Governing committee members shall serve for a term of four (4) years;

(b) Two (2) Governing Committee members shall serve for a term of three (3) years; and

(c) Two (2) Governing Committee members shall serve for a term of two (2) years.

1701.3 The first Governing Committee shall be appointed by the Commissioner, and shall serve a term which shall expire on September 30, 1987.

1701.4 Members of the first Governing Committee may be replaced or vacancies filled by appointment of the Commissioner. Subsequently, the Governing Committee members shall be elected pursuant to §§1701.2, 1701.6, and 1702.1.

1701.5 Only those Insurers who qualify for membership in the Bureau under §1700.4 shall be eligible to serve as Governing Committee members.

1701.6 At least one (1) Governing Committee member shall represent the self-insured members of the Bureau and the full Governing Committee in the aggregate, not less than fifty percent (50%) of the total assessment to be made and controlled by the bureau during the immediately following calendar year.

26-A DCMR § 1702 MEETINGS AND NOTICES

1702.1 Annually, on a date fixed by the Governing Committee, there shall be a meeting of representatives of all of the members of the Bureau for the purposes of electing Governing Committee members, receiving reports from the Governing Committee and the Manager regarding the operation of the Bureau, and for the discussion of matters pertaining thereto.

1702.2 The Governing Committee shall give not less than twenty (20) days written notice of the annual meeting of the Bureau to all members and the notice shall be accompanied by an agenda for the meeting.

1702.3 At any meeting of the Governing Committee, five (5) members shall constitute a quorum for the transaction of business, and the acts of a majority of those present at a meeting at which a quorum is present shall be the acts of the Governing Committee.

1702.4 The Governing Committee shall meet at least once annually as required by §1702.1 and as often as required to disburse funds, to modify budgets, and to perform the general duties of administration of the Bureau.

History

• SOURCE: Final Rulemaking published at 35 DCR 7649(October 21, 1988).

26-A DCMR § 1703 DUTIES OF THE GOVERNING COMMITTEE

1703.1 The duties of the Governing Committee shall include, but are not limited to, the following:

(a) The appointment of a Manager;

(b) The establishment of the Administration Fund Bureau Offices;

(c) The budgeting of expenses;

(d) The levying and collection of assessments; and

(e) The disbursement and investment of funds.

1703.2 The Governing Committee shall establish and maintain the Administration Fund under the terms of the Act and this chapter.

1703.3 The Governing Committee Shall require the Manager to prepare and submit for their approval budgets for the operation of the Bureau and the Administration Fund.

1703.4 The Governing Committee shall appoint a firm to conduct an annual audit of the operations of the Bureau and the Administration Fund and shall prepare a detailed report of its operations and a financial report for submission to the Commissioner for examination by November 15th of each year.

1703.5 The Governing Committee shall develop, subject to the approval of the Commissioner, rules and operating procedures for the Bureau consistent with the Act and this title.

1703.6 The Governing Committee shall elect annually from its membership a Chairperson and a Vice Chairperson.

1703.7 The Chairperson shall preside over all meetings of the Governing Committee and the annual meeting of the Bureau.

1703.8 The Vice Chairperson shall preside at all meetings in the absence of the Chairperson and if the position of Chairperson becomes vacant, the Vice Chairperson shall perform the duties of the Chairperson until the position is filled.

1703.9 The Governing Committee shall select the Manager of the Bureau.

1703.10 The Chairperson of the Governing Committee may appoint subcommittees from among the members of the Governing Committee for specified purposes consistent with the objectives of this title.

History

• SOURCE: Final Rulemaking published at 35 DCR 7649(October 21, 1988).

26-A DCMR § 1704 DUTIES OF THE MANAGER

1704.1 The Manager shall perform the following duties:

(a) Serve as an ex-officio member of the Governing Committee;

(b) Perform the duties of Secretary and Treasurer of the Bureau at the direction of the Governing Committee; and

(c) Supervise the day-to-day operations of the Bureau Office.

1704.2 As an ex-officio member of the Governing Committee pursuant to §1704.1 (a), the Manager shall not have a vote or be counted for the purpose of establishing a quorum.

History

• SOURCE: Final Rulemaking published at 35 DCR 7649(October 21, 1988).

26-A DCMR § 1705 ASSESSMENTS

1705.1 In accordance with § 1705.3, members of the Bureau shall bear all costs of the administration of the Bureau, including the following:

(a) the administrative costs;

(b) the costs of claim payments and related expenses; and

(c) the establishment and maintenance of the Administration Fund.

1705.2 The Governing Committee shall assess the members based upon its determination of either or both actual and projected requirements of the Bureau, and the Administration Fund.

1705.3 After determining the total required for each assessment, the Governing Committee shall assess its members in the following manner:

(a) Each Self-Insurer member's portion of the total assessment shall be determined by multiplying the total assessment by a fraction of the numerator of which is the number of motor vehicles it has self-insured, and the denominator of which is the total number of motor vehicles registered in the District;

(b) After subtracting the total amount to be assessed to Self-Insurers based on the formula outlined in § 1705.3 (a), the balance of the assessment shall be paid by Insurer members in proportion to their total written premium in the District for motor vehicle insurance coverage required to be offered by the Act, as reported to the Commissioner for the most recent year that data is available;

(c) Until such time as written premium data is available for the motor vehicle insurance coverages required by the Act and required to be offered by insurers pursuant to the Act an assessment shall be made on the same written premium basis as utilized by the Assigned Claims Bureau prior to June 2, 1986; and

(d) The manager, at the direction of the Committee, shall prepare and send to each member an assessment billing, accompanied by the most recent financial statement of the Bureau. A composite listing shall be sent to each member and the Commissioner. The Assessment shall be paid within thirty (30) days of billing.

1705.4 The Bureau shall pay to the District one-half (1/2) of the District's projected expenses to be incurred pursuant to the Act and this chapter by October 1 and one-half (1/2) by April 1 of each fiscal year; provided, that the Bureau shall pay to the District within one hundred twenty (120) days of the effective date of this chapter all costs incurred since March 4, 1986, as a result of efforts to implement the Act.

1705.5 The fiscal year shall start October 1 of each calendar year and shall end on September 30 of each calendar year.

1705.6 Within ninety (90) days after the end of each fiscal year, each District agency that received funds from the Administration Fund shall provide an accounting of the money received. If the amount spent is less than the amount received the District shall reimburse the difference to the Bureau within thirty (30) days of the transmittal date of the report.

1705.7 A District agency may revise its budget projection during the course of a fiscal year. If the revision does not exceed fifteen percent (15%) of its original budget, the Bureau shall pay the increase within forty-five (45) days. If the revision is in excess of fifteen percent (15%), the revision shall be considered pursuant to §§ 1705.7 and 1705.8.

1705.8 Disbursements from the Administration Fund shall be authorized by the Governing Committee in accordance with projections of the District agencies.

History

• SOURCE: Final Rulemaking published at 35 DCR 7649(October 21, 1988).

26-A DCMR § 1706 DISPUTED BUDGET ITEMS

1706.1 If the Bureau disputes an item in a budget, the affected District agency shall reconsider whether the item is reasonable and necessary to administer and enforce the Act.

1706.2 If the agency determines that the item is reasonable and necessary that item shall be funded unless the Governing Committee by unanimous vote, recommends to the Commissioner that the item not be funded.

1706.3 The Commissioner shall refer the matter to the Director of the Department of Consumer and Regulatory Affairs to be resolved at the cabinet level. If the matter is not resolved at the cabinet level, it shall be referred to the City Administrator, whose decision shall be final.

History

• SOURCE: Final Rulemaking published at 35 DCR 7649(October 21, 1988).

26-A DCMR § 1707 INDEMNIFICATION

1707.1 Each person serving on the Governing Committee, subcommittee, as an employee of the Governing Committee or the Bureau shall be indemnified by the Bureau against all costs and expenses actually and necessarily incurred by him or her in connection with the defense of any action, suit or proceeding in which he or she is made a party by reason of serving on the Governing Committee, subcommittee, as an employee of the Governing Committee or the Bureau.

1707.2 The provisions of § 1706.1 shall not apply to matters in which a person serving on the Governing Committee, subcommittee, or as an employee of the Governing Committee or Bureau shall be judged in such action, suit or proceeding to be liable by reason of willful misconduct in the performance of his or her official duties.

1707.3 Indemnification shall not be exclusive of the rights to which such member or employee may be entitled as a matter of law.

History

• SOURCE: Final Rulemaking published at 35 DCR 7649(October 21, 1988).

26-A DCMR § 1708 RECORDS

1708.1 The manager and the bureau members shall, at all reasonable times, make books, records, and files available to the Governing Committee or its representative, and the Commissioner, for the purpose of examining any matter coming within the scope of the rules of this chapter and the insurance laws of the District.

History

• SOURCE: Final Rulemaking published at 35 DCR 7649(October 21, 1988).

26-A DCMR § 1709 FAILURE TO PAY SHARE OF ASSESSMENT

1709.1 In the event that any member fails, by reason of insolvency or otherwise, to pay its proportionate share of any expense or of any loss incurred by the Bureau under the program, the unpaid loss or expense shall be paid by the remaining members, each contributing on a pro rata basis, deleting therefrom the proportionate share of the defaulting member.

History

• SOURCE: Final Rulemaking published at 35 DCR 7649(October 21, 1988).

26-A DCMR § 1710 APPEALS

1710.1 Any person or member aggrieved by any ruling, order, decision, action or refusal to act on the part of the Bureau may appeal to the Governing Committee.

1710.2 The Governing Committee shall promptly notify the person or member as to its ruling on the appeal. In the case of refusal to sustain the appeal, the refusal shall include notice of the right to appeal to the Commissioner.

1710.3 The Governing Committee shall cite to the Commissioner the failure by any member to comply with this chapter or with any rules prescribed hereunder by the Governing Committee or to pay any assessments levied within thirty (30) days of notice.

1710.4 Failure by an Insurer member to pay an assessment within thirty (30) days following receipt of the assessment billing authorized by §1705.3 (d) shall be grounds for action pursuant to §35-1506 of the D.C. Code, (1981 Edition).

1710.5 The Commissioner shall refer to the Director, for appropriate action, any failure by a Self-Insurer member to pay within thirty (30) days an assessment billing authorized by §1705.3 (d).

History

• SOURCE: Final Rulemaking published at 35 DCR 7649(October 21, 1988).

26-A DCMR § 1711 INTER-COMPANY ARBITRATION

1711.1 All matters involving the subrogation of motor vehicle insurance personal injury protection benefits in which insurance companies cannot agree to entitlement shall be arbitrated by a company so designated by the Commissioner.

History

• SOURCE: Final Rulemaking published at 35 DCR 7649(October 21, 1988).

26-A DCMR § 1799 DEFINITIONS

1799.1 The definitions of terms found in D.C. Law 6-96 shall apply to this chapter.

History

• SOURCE: Final Rulemaking published at 35 DCR 7649(October 21, 1988).

26-A18 UNINSURED MOTORIST FUND

26-A DCMR § 1800 GENERAL PROVISIONS

1800.1 The regulations set forth in this chapter govern the administration of the Uninsured Motorist Fund, (hereinafter referred to as the "Fund") as set forth in §9a of the Compulsory/No-Fault Motor Vehicle Insurance Act of 1982 amended by §2h of the Compulsory/No-Fault Motor Vehicle Insurance Act of 1982 Amendments Act of 1985, D.C. Code §35-2114 (1986 supp.) (hereinafter referred to as the "Act").

1800.2 The Fund awards compensation to victims of accidents who sustain injury therefrom and who would not otherwise be compensated for their loss.

1800.3 The term "victim" shall have the meaning as defined in §3 of the Act. 1800.4 The term "survivors" shall have the meaning as defined in §3 of the Act.

History

• SOURCE: Final Rulemaking published at 35 DCR 7649(October 21, 1988).

26-A DCMR § 1801 ADMINISTRATION OF THE FUND

1801.1 The Department of Consumer and Regulatory Affairs, and the Insurance Administration shall be responsible for administration of the Fund.

1801.2 Pursuant to §9a of the Act, the Department shall report annually to the Mayor on the status and activities of the Fund.

History

• SOURCE: Final Rulemaking published at 35 DCR 7649(October 21, 1988).

26-A DCMR § 1802 ELIGIBILITY

1802.1 A victim may be eligible for compensation if he or she meets the requirements of §9a(b) of the Act and would not otherwise be compensated for his or her loss.

1802.2 The one hundred eighty (180) day filing requirement under § 9a(b)(2) of the Act may be extended for good cause shown or if the victim is still undergoing medical treatment for injuries relating to the accident which forms the basis of the claim for compensation.

1802.3 Nothing in § 1802.2 of this chapter shall preclude the Commissioner of Insurance from conducting an independent assessment of the conditions surrounding each application for compensation to determine whether good cause for not reporting the accident exists.

1802.4 A victim shall not be eligible for compensation if he or she falls into the categories provided by § 9a(c) of the Act or would not otherwise be compensated for his or her loss.

1802.5 Good cause as used under this section shall mean substantial and reasonable cause not tainted by negligence or lack of diligence on the part of the claimant, which in the discretion of the Administration provides a legal excuse for failure to file or which would otherwise result in undue hardship.

History

• SOURCE: Final Rulemaking published at 35 DCR 7649(October 21, 1988).

26-A DCMR § 1803 PROCEDURE FOR FILING

1803.1 Unless authorized by the Administration, all claims shall be filed on forms as provided by the Department.

1803.2 A claim shall be considered filed when the victim submits to the Administration a completed application within one hundred eighty (180) days after the accident occurs.

1803.3 The application for a claim shall contain the following:

(a) Statement(s) to establish eligibility pursuant to § 1802 of this chapter;

(b) A statement of the nature of the claim, including whether the claim is for injury, or death benefits;

(c) A statement of the claimant's relationship to the victim;

(d) A description of the accident and injury or death and the date of accident;

(e) The name, address, phone number, social security number, birthdate, sex and marital status of the victim;

(f) The name(s), address(s), social security number(s), birthdate(s), sex and marital status of dependents;

(g) Out of pocket expenses itemization;

(h) Medical expenses;

(i) Collateral sources of income or payment of benefits;

(j) Income itemization;

(k) Monthly expenses itemization;

(l) A declaration of subrogation and suit notification to be signed by the claimant;

(m) Any information that the Administration may require to adequately evaluate and process the claim; and

(n) Any other information that the Administration may require to adequately evaluate and process the claim.

1803.4 The term "collateral sources" as stated in § 1803.3 (i) shall include, but not be limited to, the following items:

(a) Proceeds from an accident policy;

(b) Payments from a health benefits or group health plan;

(c) Medicare or medicaid;

(d) Any other plan or system of payment providing compensation, including but not limited to medical and rehabilitative expenses, wage continuation, or loss benefit or funeral benefits for injury or death as a result of an accident; and

(e) Any potential civil action based on the liability of another person, unless a determination is made by the Administration that such civil action would not result in compensating the victim.

History

• SOURCE: Final Rulemaking published at 35 DCR 7649(October 21, 1988).

26-A DCMR § 1804 DETERMINATION OF ELIGIBILITY AND AWARD

1804.1 The Administration shall investigate the claim as necessary to determine a victim's eligibility and the amount, if any, of compensation.

1804.2 The Administration shall examine all documentation received and request from the victim any additional documentation which may be necessary to make a determination on the claim as required under §9a of the Act.

1804.3 The final burden of proof of the authenticity and eligibility of a claim, or any part of a claim, shall rest with the victim.

1804.4 When an award cannot be made because aspects of the claim cannot be verified, the victim shall be given written notice of the particular deficiency of verification.

1804.5 The information requested by the Administration to verify the claim shall be supplied by the victim, as necessary.

1804.6 If the victim does not comply with a request for information made by the Administration within ten (10) days, the claim may be denied in whole or in part as appropriate.

1804.7 The Administration shall make a preliminary determination as to the eligibility and the amount of compensation within sixty (60) days of receipt of the claim.

1804.8 The sixty (60) day time limitation shall not begin to run until all requests for information or verification of those sources listed under §1803 have been responded to by the victim.

1804.9 The Administration shall keep records of each claim showing what requests are outstanding and when such requests were made.

History

• SOURCE: Final Rulemaking published at 35 DCR 7649(October 21, 1988).

26-A DCMR § 1805 NOTICE OF ELIGIBILITY AND AWARD

1805.1 An investigation shall be made in order to determine the eligibility and award of the victim.

1805.2 The determination for loss of earnings shall include replacement services not exceeding fifty ($50) dollars per day.

1805.3 Work loss shall be determined through review of the documentation and information provided by the victim, including but not limited to, the following items:

(a) Receipts;

(b) W-2 forms;

(c) Payroll stubs; and

(d) Any other evidence that the Administration finds relevant and credible.

1805.4 The determination of medical and funeral expenses shall be based upon but not limited to the following factors:

(a) Receipts showing services rendered by medical providers or funeral establishments; and

(b) Any other evidence that the Administration finds relevant and credible.

1805.5 Determination of the cost of Medical services under the Act shall include those services rendered by the treatment of injuries suffered by the victim as a result of the accident as well as those services provided for the rehabilitation of the victim of such injuries.

1805.6 Determinations of funeral expenses under the Act shall include those services rendered for the disposition of the deceased victim whose death was the result of injuries sustained in the accident which forms the basis of the claim.

1805.7 The Administration shall send a notice of the determination by first class mail to the victim.

1805.8 The notice of determination shall contain the following information:

(a) Disposition of the claim;

(b) The specific reason(s) for any denial;

(c) The amount of the award and whether the award is to be made in installments or in one lump sum;

(d) The date, time, and place of a proposed hearing if the victim disagrees with the determination; and

(e) Any other information the Administration finds relevant.

1805.9 A statement of agreement shall accompany the determination.

1805.10 If the victim agrees with the determination, the victim shall complete the statement of agreement and return it to the Administration within ten (10) days of receipt of the determination. The statement of agreement shall be signed and returned to the Administration prior to the payment of any award.

1805.11 If the victim request a hearing under §1805.8(d) he or she shall sign a request for hearing which will accompany the determination and return it to the Administration. If a request is timely made, the hearing shall be held on the date contained in the notice, or not less than fourteen (14) days after a new hearing notice is mailed to the victim.

1805.12 If within ten (10) days the victim does not inform the Administration as to whether a hearing is desired or whether the determination is agreed to, the final determination and award shall remain with the Administration until further notice from the victim.

History

• SOURCE: Final Rulemaking published at 35 DCR 7649(October 21, 1988).

26-A DCMR § 1806 MODIFICATION OF DETERMINATION

1806.1 The Administration may rescind or modify in whole or in part an award made to the victim under the following circumstances:

(a) If evidence is presented to the Administration which would reasonably appear to indicate that the victim has made a material omission or false statement with regard to the application for compensation; or

(b) Any other circumstances listed under § 1807.18.

1806.2 If the evidence presented to the Administration meets the requirements of § 1806.1, the Administration shall mail to the victim a notice of hearing for the purpose of modifying the award within ten (10) days of the receipt of the evidence.

1806.3 The notice contained in § 1806.2 shall contain the following information:

(a) Name and address of the victim;

(b) The amount of the original determination;

(c) The reason why a hearing is to be held; and

(d) The date and time of the hearing.

History

• SOURCE: Final Rulemaking published at 35 DCR 7649(October 21, 1988).

26-A DCMR § 1807 HEARINGS

1807.1 If the victim signs a request for hearing, it shall be held in accordance with procedures set forth in this section.

1807.2 The victim may be present at the hearing and shall be allowed to present testimony or cross examine witnesses in person or by counsel.

1807.3 The Administration may receive as evidence any statement, document, information or matter that it finds in its discretion is relevant and of such a nature as to afford the parties a fair hearing.

1807.4 The Administration may also accept hospital reports and physician's reports as proof of the injury sustained, without requiring the presence of the attending physician at the hearing.

1807.5 In disputes of medical facts, the Administration may direct medical examination of the victim by a physician designated by the Administration solely for this purpose.

1807.6 The victim shall present himself or herself to the physician designated by the Administration for this purpose within a time specified by the Administration.

1807.7 All hearings shall be conducted in an orderly manner.

1807.8 All witnesses shall testify under oath or by affirmation and a record of the proceedings may be transcribed.

1807.9 The cost of the transcription shall be borne by the requesting party except where evidence of financial hardship is submitted to the satisfaction of the hearing officer.

1807.10 The Administration shall not be bound by common law, statutory rules of evidence, technical or formal rules for procedure.

1807.11 Hearings may be adjourned on motion of the Administration or upon timely request of any interested party.

1807.12 The failure of the victim to appear at the time of the hearing may, in the discretion of the Administration, upon good cause shown, be excused and a new hearing scheduled.

1807.13 A case may be reopened if upon written application by the victim or; his/her attorney; or upon motion of the Administration; and good cause shown. Further investigation and testimony may be presented if the Administration finds it necessary.

1807.14 A hearing shall be held at a place designated by the Administration.

1807.15 A final determination following a hearing, shall be made as soon as possible, but not later than thirty (30) days after the hearing. The final determination shall include findings of fact and conclusions of law and a decision and an order.

1807.16 The record of a hearing shall be open to the public.

1807.17 Any record or report obtained by the Administration in which the victim's confidentiality is protected by any other law or regulation shall be kept confidential.

1807.18 Pursuant to § 1806, a claim may be reopened at any time if new evidence reveals the following information relative to the victim:

(a) The victim is not eligible;

(b) The victim is guilty of misconduct which contributed to the loss arising out of the accident upon which the claim is based;

(c) The victim knowingly provided false or misleading information; or

(d) The victim suppressed relevant information concerning a claim.

1807.19 Hearings shall be held in accordance with the District of Columbia Administrative Procedure Act (§ 1-1501, et seq of the D.C. Code, (1981 ed.) and this title.

History

• SOURCE: Final Rulemaking published at 35 DCR 7649(October 21, 1988).

26-A DCMR § 1808 AWARD COMPENSATION

1808.1 To compute wage loss of a victim, the following steps shall be taken:

(a) If the victim was employed, the computation shall be as follows:

(1) Determine the net weekly income of the victim for the twelve (12) months immediately preceding the accident;

(2) Determine the number of weeks of lost earnings as verified by the employer and the physician of the victim; earnings lost for court attendance, physical therapy, medical or remedial care, or other services reasonably necessary may be included; and

(3) Multiply the net weekly income by the number of weeks of lost earnings up to a maximum of $ 24,000; or

(b) If the victim was self-employed the computation shall be as follows:

(1) Determine the net annual profit, excluding bad debt entries, for the calendar year immediately preceding the year of the accident on which the claim is based;

(2) Subtract from the net annual profit the victim's liabilities for social security tax, city income tax, and local wage taxes to determine the net adjusted profit for the calendar year immediately preceding the year of the accident;

(3) Divide the net adjusted profit by fifty-two (52) to establish the net amount of earnings lost per week;

(4) Determine the number of weeks during which the victim was unable to attend to the affairs of business as verified by the attending physician; earnings lost for court attendance physical therapy, medical or remedial care, or other services reasonably necessary may be included; and

(5) Multiply the net weekly income by the number of weeks of lost earnings up to a maximum of twenty-four thousand dollars ($ 24,000).

1808.2 The award shall be paid in a lump sum except as provided in § 1808.4 and § 1808.5 of this chapter.

1808.3 Direct payments may be made to providers of medical care of other services.

1808.4 Installment payments may be made to compensate for continuing medical services and support and services where protracted disability has occurred. Payments shall be made up to the maximum for each type of expense or loss as provided in the Act.

1808.5 Each award paid in installments shall be reviewed annually to verify dependency or medical need.

History

• SOURCE: Final Rulemaking published at 35 DCR 7649(October 21, 1988).

26-A DCMR § 1809 EMERGENCY AWARDS

1809.1 Emergency awards may be made not to exceed one thousand dollars ($ 1,000), if it appears that a final award is probable. The amount of the award shall be determined by the following factors:

(a) Actual documented economic need which is a direct result of the injury or death; and

(b) The basic necessities of goods, clothing and shelter where it is shown that the victim shall not be able to maintain minimum living standards relative thereto.

1809.2 The emergency award shall be deducted from the final award.

1809.3 If it is determined that no compensation will be awarded, the emergency award shall be repaid by the victim.

1809.4 No application for an emergency award shall be considered unless an application for compensation has been filed with the Administration.

History

• SOURCE: Final Rulemaking published at 35 DCR 7649(October 21, 1988).

26-A DCMR § 1810 PROFESSIONAL FEES

1810.1 In addition to the amount of compensation awarded to a successful claimant, a reasonable fee may be awarded for any professional assistance required in connection with any claim, not exceeding the amount permitted by §9a of the Act.

1810.2 If a victim designates an attorney or other representative to handle the claim, the attorney or representative shall file a notice of appearance with the Administration.

1810.3 The notice shall remain in effect until the party represented files with the Administration a written statement of withdrawal from the case or until the attorney or representative makes a written statement of withdrawal from the case.

1810.4 All written communications or notices concerning the claim shall be sent to both the attorney or representative of record and the victim.

1810.5 If a fee is requested under §1810.1 the Administration shall require from the attorney a sworn affidavit of services rendered which shall include, but not be limited to, the following information:

(a) The nature of each service rendered;

(b) The amount of time spent in rendering such service; and

(c) An itemized list of costs in the preparation, procuring and filing of documents regarding the claim.

1810.6 Where an attorney asserts a false claim as to the time spent on a matter concerning a claim or as to services rendered, the Administration may reduce or deny attorney's fees.

History

• SOURCE: Final Rulemaking published at 35 DCR 7649(October 21, 1988).

26-A DCMR § 1811 SUBROGATION AND PRESERVATION

1811.1 The victim shall have the right to sue to recover damages or restitution from the negligent party, as provided in § 9a(g)(1) of the Act.

1811.2 The District of Columbia may initiate a suit against the negligent party for damages or restitution.

1811.3 The victim shall sign, a declaration that the victim shall notify the Administration of the initiation of any suit against the negligent party for damages or restitution and that the District of Columbia may intervene in such suit and have a lien on any recovery from such suit.

History

• SOURCE: Final Rulemaking published at 35 DCR 7649(October 21, 1988).

26-A DCMR § 1812 FALSE CLAIMS

1812.1 The Administration, upon a finding that a claim has been falsely asserted, shall promptly notify the Office of the Corporation Counsel that a false claim has been asserted and request an investigation by the Office of Compliance of the Department of Consumer and Regulatory Affairs.

History

• SOURCE: Final Rulemaking published at 35 DCR 7649(October 21, 1988).

26-A19 INSURANCE COVERAGE FOR DRUG ABUSE, ALCOHOL ABUSE, AND MENTAL ILLNESS

26-A DCMR § 1900 COVERAGE

1900.1 These rules shall apply to all types of group and individual health insurance policies providing coverage as contained in §3 of the Drug Abuse, Alcohol Abuse, and Mental Illness Insurance Coverage Act of 1986 ("the Act"), D.C. Code §35-2302, and those treatment centers which are certified pursuant to §7 of the Act, D.C. Code §35-2306.

History

• SOURCE: Final Rulemaking published at 36 DCR 4922 (July 14, 1989).

26-A DCMR § 1901 METHOD OF PAYMENT

1901.1 If an insurance policy or plan includes deductibles, copayments, or annual and lifetime limitations for alcohol abuse, drug abuse and mental illness coverage which are separate and distinct from those imposed for the treatment of physical illness, the following shall apply:

(a) The methods for determining level of payment or reimbursement for services, or for the types of facility charges, shall be consistent with those for physical illness and shall take into account the usual, customary, and reasonable charges for the services rendered;

(b) The policy or plan shall apply deductibles, copayments, and annual or lifetime dollar limits which are no less favorable than those applied to physical illness generally; and

(c) The levels and types of payment or reimbursement shall be subject to review by the Commissioner pursuant to §10(b) and (c) of the Act, D.C. Code §§35-2309(b) and (c).

1901.2 Co-payment and deductible plans shall not set limits which are contrary to benefits set forth in §5(b) of the Act, D.C. Code §35-2304(b), and mental illness benefits shall not have a lifetime limit which is less than eighty thousand ($80,000) dollars or one third of the lifetime maximum for physical illness, whichever is greater.

1901.3 Before an insured may qualify for benefits under these rules, a licensed physician, psychologist, or social worker shall certify that:

(a) the insured requires treatment for drug abuse, alcohol abuse, or other mental illness; and

(b) an inpatient, residential, outpatient, and treatment program is medically or psychologically necessary.

1901.4 Certifications from licensed physicians, psychologists, or social workers, when certifying that the services are medically or psychologically necessary, shall include, but not be limited to, the following information:

(a) The name, address, telephone number, and social security number of the patient;

(b) The actual condition or illness complained of;

(c) The duration of the illness;

(d) History of the treatment of the illness;

(e) The names of any prior attending physician(s);

(f) A description of the illness from the most recent edition of the International Classification of Disease or the Diagnostic and Statistics Manual of the American Psychiatric Association;

(g) A description of the medical or psychological treatment called for by the references used to describe the illness;

(h) The duration of treatment;

(i) A designation of the type of providers capable of rendering the Treatment; and

(j) A designation of the setting, or facility type, in which the treatment would be suitable.

1901.5 If an insurer reimburses a type of provider for rendering medical services, then it shall reimburse the same type of provider for rendering similar service for drug abuse, alcohol abuse and mental illness.

History

• SOURCE: Final Rulemaking published at 36 DCR 4922 (July 14, 1989).

26-A DCMR § 1902 INITIATION OF PEER REVIEW

1902.1 If an insurer has specific questions concerning the diagnosis or treatment given or, prescribed, by a physician, psychologist, or social worker, the insurer may request that the health professional undergo peer review as a condition of approving payment or reimbursement.

1902.2 Peer review shall be conducted by an appropriate committee of physicians, psychologists, or social workers as applicable under the Act.

1902.3 The insurer shall give substantial weight to the decision of any peer review committee, but shall not be bound by its determination.

1902.4 If initiation of peer review is requested by the insurer the request shall not be made to circumvent the Act or prolong payment or reimbursement of a claim.

History

• SOURCE: Final Rulemaking published at 36 DCR 4922 (July 14, 1989).

26-A DCMR § 1903 CERTIFICATION OF NONHOSPITAL RESIDENTIAL FACILITIES AND OUT-PATIENT TREATMENT FACILITIES

1903.1 Pursuant to §7 of the Act, D.C. Code §35-2306, the Director shall certify each nonhospital residential facility and out-patient facility as a provider of treatment for drug abuse, alcohol abuse, mental illness, or any combination thereof.

1903.2 An applicant for certification pursuant to this section shall submit the following information on a form prescribed by the Director:

(a) The name and address of the facility;

(b) The services for which the facility seeks certification;

(c) The identities of the owners of the facility;

(d) A description of the services provided by the facility;

(e) The number of staff and positions held by each;

(f) The number of persons served by the facility; and

(g) A listing of all other licenses or certifications held by the facility.

1903.3 In order to be certified pursuant to this section, an applicant shall meet at least one of the following criteria:

(a) Possess current certification from the Joint Commission on Hospital Accreditation (JCHA) for the treatment of drug abuse, alcohol abuse, or mental illness;

(b) Be currently certified as eligible for Medicaid reimbursement as a free standing mental health clinic;

(c) Be currently certified by the U.S. Food and Drug Administration as meeting its standards for drug and alcohol outpatient treatment facilities;

(d) Be currently licensed under D.C. Law 5-48; or

(e) Be approved by the Director in accordance with the procedures set forth in §§1903.4 and 1903.5.

1903.4 A nonhospital residential facility or outpatient facility applying for certification pursuant to §1903.3(e) shall submit proof to the Director that the facility meets the requirements of §7 of the Act, by providing the following documentation on a form prescribed by the Director:

(a) A physical description of the facility;

(b) A detailed description of the program offered;

(c) The specific qualifications, training, and experience of the director and all supervisory staff;

(d) The specific qualifications, training, and experience of all staff; and

(e) Any additional information required by the Director.

1903.5 For facilities which apply pursuant to §§1902.3(e) and 1903.4, the Director shall make a case-by-case determination as to whether or not the facility meets the standards set forth in §7(c) of the Act. Prior to making the determination, the Director may make one or more inspections pursuant to §1903.6.

1903.6 The Director shall have a right to inspect any facility certified or applying for certification pursuant to this section upon presentation of credentials of identification, with or without prior notice.

1903.7 A certification issued pursuant to this section shall be for a period of one (1) year from the date of issuance.

1903.8 A facility certified pursuant to this section shall apply for renewal of its certification at least thirty (30) days prior to its expiration on a form prescribed by the Director.

History

• SOURCE: Final Rulemaking published at 36 DCR 4922 (July 14, 1989).

26-A DCMR § 1904 DENIAL, SUSPENSION, OR REVOCATION OF A FACILITY CERTIFICATION

1904.1 The Director may refuse to issue or renew or may revoke, or suspend a certification issued pursuant to this chapter for one or more of the reasons set forth in §1904.7 below.

1904.2 Every applicant for or holder of a certification, or applicant for reinstatement after revocation, shall be afforded notice and an opportunity to be heard prior to the action of the Director, if the effect of the action would be one of the following:

(a) To deny an application for certification for cause which raises an issue of fact;

(b) To suspend a certification;

(c) To revoke a certification;

(d) To refuse to reinstate a certification;

(e) To issue a limited renewal certification; or

(f) To refuse to issue a renewal certification for any cause other than failure to pay the prescribed fees.

1904.3 When the Director contemplates taking any action of the type specified in §1904.2(a) of these rules, the Director shall give to the applicant a written notice containing the following statements:

(a) That the applicant has failed to satisfy the Director as to the applicant’s qualifications;

(b) The respect in which the applicant has failed to satisfy the Director; and

(c) That the denial shall become final unless the applicant files a request for a hearing with the Director within fifteen (15) days of receipt of the notice.

1904.4 When the Director contemplates taking any action of the type specified in §1904.2(b), (c), (d), (e), or (f) of these rules, the Director shall give the applicant a written notice containing the following statements:

(a) That the Director has sufficient evidence (setting forth the nature of the evidence) which, if not rebutted or explained, justifies taking the proposed action; and

(b) That the Director shall take the proposed action unless within fifteen (15) days of the receipt of the notice, the facility files with the Director a written request for a hearing or in the alternative submits documentary evidence for the Director's consideration before the Director takes final action.

1904.5 If the facility does not respond to the notice within the time specified, the Director may, without a hearing, take the action contemplated in the notice. The Director shall inform the applicant, in writing, of the action taken.

1904.6 If the facility chooses to submit documentary evidence but does not request a hearing, the Director shall consider the material submitted and take such action as is appropriate without a hearing. The Director shall notify the facility in writing of the action taken.

1904.7 Grounds for suspension, revocation, limitation, or refusal to issue or renew a certification shall include the following:

(a) Failure to meet or maintain the standards required by these rules or the Act;

(b) Willful submission of false or misleading information to the Director in connection with an application for certification or related to certification procedures;

(c) Violation of these rules, the Act, or other laws and regulations of the District of Columbia or the United States relating to the operation of a facility and which are applicable to facilities operating in the District of Columbia;

(d) Failure to allow inspections pursuant to these rules;

(e) Failure to obey any lawful order of the Director, pursuant to these rules;

(f) Conviction of a member of the governing body, a Director, Administrator, the Chief Executive Officer, department head, or other key staff member, of a felony involving the management or operation of a facility, or which is directly related to the integrity of the facility or the public health or safety; or

(g) Any act which constitutes a threat to the public's health or safety.

1904.8 If an applicant or certification holder scheduled for a hearing does not appear and no continuance has been granted, the Director may hear the evidence of the witnesses who have appeared, and the Director may proceed to consider the matter and render a decision on the basis of the evidence available.

1904.9 If, because of accident, illness, or other good cause, a person fails to receive a hearing or fails to appear for a requested hearing, and has been diligent in bringing the matter to the Director's attention, the Director may grant appropriate relief.

History

• SOURCE: Final Rulemaking published at 36 DCR 4922 (July 14, 1989).

26-A DCMR § 1905 SERVICE OF NOTICE

1905.1 Any notice required by this chapter may be served either personally, by certified mail or return receipt requested, directed to the applicant or certification holder at the last known address as shown by the records of the Department of Consumer and Regulatory Affairs.

History

• SOURCE: Final Rulemaking published at 36 DCR 4922 (July 14, 1989).

26-A DCMR § 1906 CONDUCT OF HEARINGS FOR DENIAL, SUSPENSION, OR REVOCATION OF CERTIFICATION

1906.1 Every hearing before the Director shall be open to the public.

1906.2 An applicant or certification holder entitled to a hearing shall have the following rights:

(a) To be represented by counsel;

(b) To present oral and/or documentary evidence;

(c) To cross-examine all opposing witnesses on any matter relevant to the issues; and

(d) To have subpoenas issued to compel the attendance of witnesses and the production of relevant books, papers, and documents upon making written request therefore to the Director.

1906.3 In connection with any hearing held pursuant to this chapter, the Director shall have the power to do the following:

(a) To administer oaths or affirmations to witnesses called to testify;

(b) To subpoena respondents and other witnesses and relevant books, papers, and documents;

(c) To take testimony;

(d) To examine witnesses;

(e) To direct the continuance of any case; and

(f) To enter into a consent agreement.

1906.4 In proceedings before the Director, if any person refuses to respond to a subpoena or refuses to take the oath or affirmation as a witness or thereafter refuses to be examined, or refuses to obey any lawful order of the Director contained in the Director's decision rendered after hearing, the Director may make application to the proper court for an order requiring obedience thereto.

1906.5 In all proceedings the Director shall receive and consider any evidence or testimony. However, the Director may exclude irrelevant, immaterial, or unduly repetitious evidence or testimony.

1906.6 In any proceeding resulting from the Director's contemplated action to deny a new certification or to refuse to reinstate a suspended certification, the applicant shall have the burden of satisfying the Director of the applicant's qualifications.

1906.7 In any proceeding resulting from the Director's contemplated action to refuse to renew, to suspend, or to revoke a certification, the Department shall have the burden of proving that such action should be taken.

1906.8 In all hearings conducted by the Director, a complete record shall be made of all evidence presented during the course of a hearing. Any party to the proceedings desiring a copy of the record shall be furnished with a copy, upon payment of the cost thereof.

History

• SOURCE: Final Rulemaking published at 36 DCR 4922 (July 14, 1989).

26-A DCMR § 1907 FINDINGS AND DECISIONS ON HEARINGS REGARDING CERTIFICATIONS

1907.1 The Director shall render a decision, in writing, within forty-five (45) days after the hearing is completed.

1907.2 The decision of the Director shall contain the following:

(a) Findings of fact made by the Director;

(b) Application by the Director of the Act and rules to the facts as found by the Director;

(c) The decision of the Director; and

(d) A statement informing the aggrieved person of his or her appeal rights and the time within which review must be sought.

1907.3 Within seven (7) business days after the decision is rendered, the Director shall serve, either personally or by certified mail, upon the applicant, the certification holder, or the attorney of record, a copy of the written decision.

History

• SOURCE: Final Rulemaking published at 36 DCR 4922 (July 14, 1989).

26-A DCMR § 1908 RECONSIDERATION

1908.1 A petition for reconsideration may be filed by an aggrieved person within ten (10) days after service of the decision by the Director.

1908.2 Neither the filing nor the granting of that petition shall operate as a stay of a final order unless specifically ordered by the Director.

1908.3 A stay shall be granted only upon good cause which shall consist of unusual or exceptional circumstances.

1908.4 The petition shall state briefly and specifically the following:

(a) The matters of record alleged to have been erroneously decided;

(b) The grounds relied upon; and

(c) The relief sought.

1908.5 If the petition is based in whole or in part on new or additional evidence, the new or additional evidence shall be set forth in an affidavit and accompanied by a statement that the petitioner could not with due diligence have known or discovered the new evidence prior to the date the case was presented to the Director for a decision.

1908.6 The Director may permit or require oral argument upon a petition for reconsideration.

1908.7 The Director shall grant or deny a petition for reconsideration within ten (10) days after the filing of the petition. Failure of the Director to act within that period shall be deemed a denial of the petition.

History

• SOURCE: Final Rulemaking published at 36 DCR 4922 (July 14, 1989).

26-A DCMR § 1909 REINSTATEMENT AFTER REVOCATION

1909.1 A facility shall not file an application for reinstatement of a revoked certification until one year from the date of the Director's decision, unless the Director's decision should provide otherwise.

History

• SOURCE: Final Rulemaking published at 36 DCR 4922 (July 14, 1989).

26-A DCMR § 1910 GUIDE FOR FILING OF POLICY RATES AND FORMS

1910.1 Each insurer shall submit, in duplicate, all proposed policy rates and forms for filing; one copy to be used by the Insurance Administration, the other to be used for acknowledgement, or approval purposes and returned to the insurer.

1910.2 The proposed forms shall:

(a) State the name of the form and identifying information;

(b) State whether the form is a new form;

(c) State whether the form is intended to supersede another, and if so, the form number to be replaced; and

(d) State whether the form has been approved by the Insurance Department of the domicilary state, and if not, a statement that the form is not to be used in the domicilary state.

1910.3 Within one hundred twenty (120) days after these regulations take effect, every insurer bound by the provisions of the Act which issues coverage in the District of Columbia shall file with the Commissioner all rates and rating plans, rules and classifications that it proposes to use in providing or offering the coverage required by the Act.

1910.4 A policy, rate, rating plan, rule, or classification shall not be deemed complete unless accompanied by an actuarial memorandum.

1910.5 The actuarial memorandum shall include, but not be limited to, a demonstration that the benefits and rating structure are no less than equal to the benefits and rating structures of the included coverage.

1910.6 Each insurer shall file with the Commissioner any changes in rates and rating plans, rules and classifications related to coverage at least ninety (90) days prior to the date the changes will take effect.

1910.7 The ninety (90) day time period referred to in §1910.6 shall commence on the date that all documentation required by the Commissioner shall have been submitted, including the policy forms and an actuarial memorandum which completely describes the rate, rating plan, or change in rates.

1910.8 Whenever in the judgment of the Commissioner a rate or rating plan is excessive or a rule or classification is not in compliance with the Act, the Commissioner shall send to the insurer a written notice which includes the following:

(a) The action which the Commissioner proposes to take with respect to the subject rate, rating plan, rule, or classification;

(b) The insurer’s right to a hearing under the contested case provisions of the District of Columbia Administrative Procedure Act, D.C. Code §1-1509, provided that the insurer files a written request for a hearing within fifteen (15) days of receipt of the notice; and

(c) Notice that if the insurer does not timely request a hearing, the Commissioner may proceed to determine the matter and take the proposed action with or without a hearing.

History

• SOURCE: Final Rulemaking published at 36 DCR 4922 (July 14, 1989).

26-A DCMR § 1911 READABILITY

1911.1 Each insurer which issues policies providing coverage for drug abuse, alcohol abuse, and mental illness for delivery in the District of Columbia shall outline such coverage in no less than ten (10) point type.

1911.2 The policy or endorsement text shall achieve a minimum score of forty (40) on the Flesch Reading Ease Test.

1911.3 For the purposes of this section, a Flesch Reading Ease Test shall be scored by the following method:

(a) For a policy or endorsement containing ten thousand (10,000) words or less of text, the entire policy or endorsement shall be analyzed. For a policy or endorsement containing more than ten thousand (10,000) words the readability of two (2) one hundred (100) word samples per page may be analyzed instead. The samples shall be separated by at least twenty (20) printed lines.

(b) The total number of words in the text or sample shall be divided by the total number of sentences. The figure obtained shall be multiplied by 1.015;

(c) The total number of syllables in the test or sample shall be divided by the total number of words. The figure obtained shall be multiplied by 84.6; and

(d) The sum of the figures computed under subsections (b) and (c) of this section subtracted from 206.835 equals the Flesch Reading Ease Test score.

1911.4 For purposes of §1911.3 the following procedures shall be used:

(a) Contractions, hyphenated words, numbers, and letters, when separated by spaces, shall be counted as one word;-‘

(b) A unit of text ending with a period, semi-colon, or colon shall be counted as a sentence;

(c) A syllable means a unit of spoken language consisting of one (1) or more letters of words as divided by an accepted dictionary. Where the dictionary shows two (2) or more equally acceptable pronunciations of a word, the pronunciation containing fewer syllables may be used; and

(d) At the option of the insurer, any form made a part of the policy may be scored separately or as a part of the policy.

1911.5 The term "text" as used in §1911.2 includes all printed matter except the following:

(a) The name and address;

(b) The name, number, or title of the policy or form;

(c) The table of contents or index;

(d) Headings and captions;

(e) Defined terms;

(f) Proper nouns;

(g) Declarations pages; and

(h) Schedules or tables.

History

• SOURCE: Final Rulemaking published at 36 DCR 4922 (July 14, 1989).

26-A DCMR § 1912 EXCLUSIONS

1912.1 The Act and these rules shall not apply to the following:

(a) Health or disability policies offered by health carriers to employees participating in the Federal Employees’ Health Benefits program administered by the U.S. Government Office of Personnel Management; and

(b) Policies delivered to public international organizations designated by the President of the United States, pursuant to 22 U.S.C. §288.

History

• SOURCE: Final Rulemaking published at 36 DCR 4922 (July 14, 1989).

26-A20 CERTIFICATION FOR PARTICIPATION IN THE MEDICAL LIABILITY CAPTIVE INSURANCE PROGRAM

26-A DCMR § 2000 CERTIFICATION FOR PARTICIPATION IN THE MEDICAL LIABILITY CAPTIVE INSURANCE PROGRAM

2000.1 In order to be eligible to participate in the District of Columbia Medical Liability Captive Insurance program, a Health Center shall apply for and obtain a certification from the Commissioner. The term “Health Center” shall have the same meaning as used in the District of Columbia Medical Liability Captive Insurance Agency Establishment Act of 2008, effective July 18, 2008 (D.C. Law 17-196; D.C. Official Code § 1-307.81, et seq. (2001)).

2000.2 To apply for certification, a prospective Health Center shall submit to the Commissioner the following information:

A certificate of good standing and certified copy of the Health Center’s articles of incorporation issued by the Department of Consumer and Regulator Affairs;

A certified copy of the Health Center’s Certificate of Occupancy issued by the Department of Consumer and Regulatory Affairs;

A copy of the Health Center’s letter from the Internal Revenue Service confirming its status as a tax exempt organization pursuant to section 501(c)(3) of the Internal Revenue Code;

A copy of the Health Center’s Basic Business License;

A notarized letter from the president or executive director of the Health Center stating, under oath, that the Health Center provides services to individuals regardless of their ability to pay and satisfies all other requirements of the Medical Liability Agency Establishment Act of 2008.

2000.3 All Health Centers shall apply for recertification annually.

2000.4 To obtain recertification, a Health Center shall file, not later than sixty (60) days before the expiration of the Health Center’s insurance coverage, either:

(a) A complete application containing all of the information listed in subsection 2000.2 of this section;

(b) All updates to the information and documentation submitted in the Health Center’s prior application for certification, along with a notarized affidavit from the president or executive director of the Health Center attesting that there are no changes, since the submission of the prior application, to any other information or documents listed in subsection 2000.2 of this section; or

(b) A notarized affidavit from the president or executive director of the Health Center attesting that there are no changes, since the submission of the Health Center’s prior application, to any information or documents listed in subsection 2000.2 of this chapter.

2000.5 If a Health Center fails to file an application, has its application denied, or has its certification revoked, then the Health Center will no longer be eligible to participate in the D.C. Medical Liability Captive Insurance program. A Health Center that is no longer eligible to participate in the D.C. Medical Liability Captive Insurance program shall be subject to having its insurance coverage cancelled or non-renewed.

2000.6 The Commissioner may, after notice and hearing, deny or revoke the certification of any Health Center that is in violation of any law or becomes otherwise ineligible to participate in the D.C. Medical Liability Captive Insurance program.

History

• Source: Notice of Final Rulemaking published at 58 DCR 820 (January 28, 2011). 2

26-A21 SINKING FUND

26-A DCMR § 2100 APPLICABILITY

2100.1 This chapter applies to all sinking funds created and maintained pursuant to Section 16 of the District of Columbia Taxicab Commission Establishment Act of 1985, D.C. Code, §40-1715 (1986).

History

• SOURCE: Final Rulemaking published at 36 DCR 5113 (July 21, 1989).

26-A DCMR § 2101 CREATION OF A SINKING FUND

2101.1 Any owner of a taxicab maintaining an existing sinking fund or seeking to create a sinking fund shall file with the Commissioner of Insurance the following:

(a) An original copy of a written trust agreement (hereinafter Sinking Fund Trust Agreement) governing the maintenance of the sinking fund to be approved by Commissioner;

(b) Except as provided in paragraphs (c) and (d), an original copy of the trust’s (hereafter Sinking Fund Trust) financial statement evidencing that the sinking fund has a minimum net worth of six hundred thousand ($600,000) dollars;

(c) A notarized actuarial statement evidencing a minimum net worth of two hundred and fifty thousand ($250,000) dollars for all sinking funds created on or before June 23, 1987;

(d) For sinking funds created on or before June 23, 1987, a plan, acceptable to the Commissioner, to increase the fund's net worth to the level of six hundred thousand ($600,000) dollars within a reasonable period.

(e) A verified financial statement that includes a valuation of the fund’s assets and liabilities using statutory accounting principles;

(f) An application to create or maintain a sinking fund in a form prescribed by the Commissioner;

(g) In the case of a corporation, a certificate of good standing from the District of Columbia’s office of Business Regulation Administration;

(h) A form appointing the Commissioner of Insurance agent for service of process; and

(i) Biographical data for all administrators, officers, and recommended trustees of the sinking fund.

2101.2 The management of the sinking fund shall purchase a collateral instrument on or before April 1 of each year in an amount deemed sufficient by the Commissioner. On or before March 1 of each year, the management of the sinking fund shall submit to the Commissioner an actuarial certified financial statement for the year ending December 31st immediate preceding and any other relevant information requested by the Commissioner, so that the Commissioner may make a determination as to the dollar value of the collateral instrument to be submitted.

2101.3 The collateral instrument shall be deposited in a bank designated by the management of the sinking fund.

2101.4 At the time of such deposit into the designated bank, representatives from the following District of Columbia government agencies are to be present:

(a) The Insurance Administration of the Department of Consumer and Regulatory Affairs;

(b) The Department of Finance and Revenue; and

(c) The Office of the Inspector General.

2101.5 In order for any transaction to be effectuated upon the collateral instrument, written authorization from the above referenced District of Columbia agencies is required.

History

• SOURCE: Final Rulemaking published at 36 DCR 5113 (July 21, 1989).

26-A DCMR § 2102 APPROVAL OF SINKING FUNDS

2102.1 An application to maintain or create a sinking fund may be approved by the Commissioner after the management of the fund has complied with all of the requirements of Section 2101, provided that the Commissioner determines on the basis of the information submitted that the fund is qualified and its owner is capable of properly conducting the business of the fund so that it will be able to pay claims and judgments against participating members.

2102.2 Such approval shall expire on the 30th day of April of each year.

2102.3 The management of an approved sinking fund must submit on the 1st day of March each year a certified actuarial financial statement for the year ending December 31st immediate preceding on a form furnished by the Commissioner.

History

• SOURCE: Final Rulemaking published at 36 DCR 5113 (July 21, 1989).

26-A DCMR § 2103 DEDICATION OF FUNDS

2103.1 All monies received or collected by the management from members for payment into a sinking fund pursuant to an approved Sinking Fund Trust Agreement or Application shall be deposited into the Sinking Fund Trust account within ten (10) days of receipt.

2103.2 The management of a sinking fund may recommend one or more trustees subject to the Commissioner's approval. If none are approved by the Commissioner, the Commissioner shall designate one or more trustees.

2103.3 Monies "received or collected" shall include interest and investment income earned by the corpus of the sinking fund.

2103.4 Funds deposited into a Sinking Fund Trust Account shall remain segregated and shall not be commingled with any other funds.

History

• SOURCE: Final Rulemaking published at 36 DCR 5113 (July 21, 1989).

26-A DCMR § 2104 REQUIRED COVERAGE FOR BODILY INJURY AND PROPERTY DAMAGE

2104.1 The limits of liability coverage provided for in the liability coverage document shall be the same as those required of insurance companies offering taxicab liability insurance in the District of Columbia.

History

• SOURCE: Final Rulemaking published at 36 DCR 5113 (July 21, 1989).

26-A DCMR § 2105 PRINCIPAL BUSINESS OFFICE, BOOKS, RECORDS, AND FILES TO REMAIN IN DISTRICT

2105.1 The management of a sinking fund subject to this chapter shall maintain its principal business office within the District of Columbia, shall keep all books, records, and files concerning the sinking fund within the District and shall not remove them from the District without the prior written approval of the Commissioner.

History

• SOURCE: Final Rulemaking published at 36 DCR 5113 (July 21, 1989).

26-A DCMR § 2106 EXAMINATION OF SINKING FUNDS

2106.1 The Commissioner may examine all books, papers, property, and affairs concerning the sinking fund. Further, the Commissioner may examine under oath all persons deemed to have material information regarding the property or business of the fund.

2106.2 The management of the sinking fund shall produce at its principal business office at a time designated by the Commissioner its books of original entry, and all records and papers relating to its or their business or affairs.

2106.3 The management of a fund shall take whatever steps are necessary to facilitate the examination of the fund.

2106.4 The Commissioner shall examine each sinking fund to determine whether the fund has the ability to pay judgments obtained against it and to meet the financial obligations imposed by this chapter.

History

• SOURCE: Final Rulemaking published at 36 DCR 5113 (July 21, 1989).

26-A DCMR § 2107 COST OF SINKING FUND COVERAGE

2107.1 The management of a sinking fund shall provide to the members of or participants in the fund, documentation evidencing liability coverage that clearly itemizes the following:

(a) The name and address of the individual covered;

(b) The term of liability coverage;

(c) The cost of liability coverage; and

(d) The limits of liability coverage.

History

• SOURCE: Final Rulemaking published at 36 DCR 5113 (July 21, 1989).

26-A DCMR § 2108 LIMITATION OF EXPENSES AND LOSSES PAYABLE BY SINKING FUNDS

2108.1 Only two types of disbursements may be made from a sinking fund:

(a) Paid losses; and

(b) Allocated loss adjustment expenses.

2108.2 A paid loss includes all sums paid to claimants, or members, or participants in the sinking fund, in direct settlement or in satisfaction of a judgment for a liability covered by the liability coverage document.

2108.3 An allocated loss adjustment expense is an expense incurred by a sinking fund that is related to a specific claim. Allocated loss adjustment expenses include:

(a) Attorney’s fees for claims in a suit;

(b) Adjuster's fees and medical expenses incurred to determine the extent of the sinking fund's liability for particular claims; and

(c) Court related expenses for: expert testimony, stenographic services, summons, and copies of legal documents.

History

• SOURCE: Final Rulemaking published at 36 DCR 5113 (July 21, 1989).

26-A DCMR § 2109 REVOCATION OR MODIFICATION OF APPROVAL OF SINKING FUNDS

2109.1 The Commissioner may revoke or modify prior approval of a sinking fund which has failed to comply with any provision of this chapter, or which:

(a) Is impaired in net worth;

(b) Is in such condition that its further transaction of business in the District would be hazardous to its participants, claimants, or the public;

(c) Has refused, neglected, or failed to pay a valid judgment against such fund within thirty (30) days after such judgment has become final;

(d) Has violated any law of the District;

(e) Has refused to submit its books, papers, accounts, records, or affairs to the reasonable inspection or examination of the Commissioner;

(f) Has made, circulated, or caused to be made any statement of any sort misrepresenting its status, or the benefits and advantages promised thereby; or

(g) The trustee(s) are found to be, by their conduct or otherwise, untrustworthy, incompetent, or have failed to carry out their responsibilities.

2109.2 The Commissioner may, in lieu of revoking or modifying prior approval of a sinking fund, impose a fine as set forth in section 2114.1.

2109.3 The Commissioner shall not revoke or modify prior approval of a sinking fund until the management of the fund has been given not less than thirty (30) days notice of the proposed action, the grounds therefore, and an opportunity for a hearing. Based upon the findings after a hearing, the Commissioner may impose any reasonable and necessary requirement that will assure the financial integrity of the fund or revoke prior approval and require that the management file a bond or policy of insurance.

2109.4 Hearings held pursuant to Section 2109.3 shall be conducted in accordance with the requirements of Section 10 of the D.C. Administrative Procedures Act, D.C. Code, Section 1-1509 (1987).

History

• SOURCE: Final Rulemaking published at 36 DCR 5113 (July 21, 1989).

26-A DCMR § 2110 HEARING PROCEDURES

2110.1 The Commissioner may hold a public hearing to determine whether a sinking fund meets the requirements of this chapter.

2110.2 Notice of the hearing shall be given as follows:

(a) By publishing same in the D.C. Register; and

(b) By sending a copy via certified mail to the principal business office of the sinking fund at least thirty (30) days prior to the hearing.

2110.3 Failure to appear at the hearing does not preclude the Commissioner from rendering a final disposition in this matter.

History

• SOURCE: Final Rulemaking published at 36 DCR 5113 (July 21, 1989).

26-A DCMR § 2111 CESSATION OF A SINKING FUND

2111.1 The management of a sinking fund may not terminate the fund without the written approval of the Commissioner. After a final disposition of all claims, any remaining funds shall be returned to the owner.

2111.2 Notwithstanding Section 2111.1, the minimum period to return any remaining funds shall be three (3) years.

History

• SOURCE: Final Rulemaking published at 36 DCR 5113 (July 21, 1989).

26-A DCMR § 2112 LIQUIDATION OF SINKING FUND

2112.1 If any sinking fund becomes impaired, insolvent, ceases operation, or violates any provision of this chapter the Commissioner may liquidate the fund in accordance with D.C. Code, Section 35-1508(a)(2), 1981 Edition (as amended).

History

• SOURCE: Final Rulemaking published at 36 DCR 5113 (July 21, 1989).

26-A DCMR § 2113 EXEMPTION FROM ATTACHMENT OR LEVY

2113.1 Any sinking fund provided for in this chapter shall be exempt from attachment or levy for any obligation or liability of the depositor except as provided in Section 16 of the District of Columbia Taxicab Commission Establishment Act of 1985, D.C. Code, §40-1715 (1986).

History

• SOURCE: Final Rulemaking published at 36 DCR 5113 (July 21, 1989).

26-A DCMR § 2114 ENFORCEMENT PROVISIONS

2114.1 Any violation of any provision of this chapter shall be subject to a civil fine not to exceed five hundred ($500) dollars.

History

• SOURCE: Final Rulemaking published at 36 DCR 5113 (July 21, 1989).

26-A DCMR § 2199 DEFINITIONS

COLLATERAL INSTRUMENT - A financial guarantee instrument consisting of a bond, letter of credit or any other instrument which acts as security against management misconduct, financial impairment or insolvency of the sinking fund and non-payment of claims.

MANAGEMENT - A taxicab owner, taxicab company or taxicab association which creates or maintains a sinking fund and which has a fiduciary duty to manage, direct, or administer the affairs of the sinking fund.

TAXICAB OWNER - Any person, corporation, partnership, or association that holds the legal title to a taxicab the registration of which is required in the District of Columbia.

History

• SOURCE: Final Rulemaking published at 36 DCR 5113 (July 21, 1989).

26-A22 MEDICARE SUPPLEMENT INSURANCE MINIMUM STANDARDS

26-A DCMR § 2200 PURPOSE

2200.1 The purpose of this chapter is:

(a) To provide for the reasonable standardization of coverage and simplification of terms and benefits of Medicare supplement policies;

(b) To facilitate public understanding and comparison of such policies;

(c) To eliminate provisions contained in such policies which may be misleading or confusing in connection with the purchase of such policies or with the settlement of claims; and

(d) To provide for full disclosure in the sale of accident and sickness insurance coverages to persons eligible for Medicare.

History

• SOURCE: Final Rulemaking published at 46 DCR 10175 (December 17, 1999); as amended by Final Rulemaking published at 50 DCR 4166 (May 30, 2003); as amended by Final Rulemaking published at 50 DCR 5882 (July 25, 2003); as amended by Final Rulemaking published at 53 DCR 2955(April 14, 2006).

26-A DCMR § 2201 AUTHORITY

This chapter is issued pursuant to the authority vested in the Commissioner of Insurance, Securities and Banking under the Medicare Supplement Insurance Minimum Guidelines Act of 1992, effective July 22, 1992 (D.C. Law 9-170; D.C. Official Code § 31-3701 et seq.).

History

• SOURCE: Final Rulemaking published at 46 DCR 10175 (December 17, 1999); as amended by Final Rulemaking published at 50 DCR 4166 (May 30, 2003); as amended by Final Rulemaking published at 50 DCR 5882 (July 25, 2003); as amended by Final Rulemaking published at 53 DCR 2955(April 14, 2006).

26-A DCMR § 2202 APPLICABILITY AND SCOPE

2202.1 Except as otherwise specifically provided in sections 2206, 2209, 2211, 2217 and 2225, this chapter shall apply to:

(a) All Medicare supplement policies delivered or issued for delivery in the District of Columbia on or after May 1, 1999; and

(b) All certificates issued under group Medicare supplement policies which certificates have been delivered or issued for delivery in the District.

2202.2 This chapter shall not apply to:

(a) A policy or contract of one or more employers or labor organizations; or

(b) The trustees of a fund established by one or more employers or labor organizations, or combination thereof, for employees or former employees, or a combination thereof, or for members or former members, or a combination thereof, of the labor organizations.

History

• SOURCE: Final Rulemaking published at 46 DCR 10175 (December 17, 1999); as amended by Final Rulemaking published at 50 DCR 4166 (May 30, 2003); as amended by Final Rulemaking published at 50 DCR 5882 (July 25, 2003); as amended by Final Rulemaking published at 53 DCR 2955(April 14, 2006).

26-A DCMR § 2203 RESERVED

History

• SOURCE: Final Rulemaking published at 46 DCR 10175 (December 17, 1999); as amended by Final Rulemaking published at 50 DCR 4166 (May 30, 2003); as amended by Final Rulemaking published at 50 DCR 5882 (July 25, 2003); as amended by Final Rulemaking published at 53 DCR 2955(April 14, 2006).

26-A DCMR § 2204 POLICY DEFINITIONS AND TERMS

2204.1 No policy or certificate may be advertised, solicited or issued for delivery in the District as a Medicare supplement policy or certificate unless such policy or certificate contains definitions or terms which conform to the requirements of this section.

2204.2 "Accident", "accidental injury", or "accidental means" shall be defined to employ "result" language and shall not include words which establish an accidental means test or use words such as "external, violent, visible wounds" or similar words of description or characterization.

(a) The definition shall not be more restrictive than the following: "Injury or injuries for which benefits are provided means accidental bodily injury sustained by the insured person which is the direct result of an accident, independent of disease or bodily infirmity or any other cause, and occurs while insurance coverage is in force."

(b) The definition may provide that injuries shall not include injuries for which benefits are provided or available under any workers' compensation, employer's liability or similar law, or motor vehicle no-fault plan, unless prohibited by law.

2204.3 "Benefit period" or "Medicare benefit period" shall not be defined more restrictively than as defined in the Medicare program.

2204.4 "Convalescent nursing home," "extended care facility," or "skilled nursing facility" shall not be defined more restrictively than as defined in the Medicare program.

2204.5 "Health care expenses" means, for purposes of Section 2212, expenses of health maintenance organizations associated with the delivery of health care services, which are analogous to incurred losses of insurers.

2204.6 "Hospital" may be defined in relation to its status, facilities and available services or to reflect its accreditation by the Joint Commission on Accreditation of Hospitals, but not more restrictively than as defined in the Medicare Program.

2204.7 "Medicare" shall be defined in the policy and certificate and may be substantially defined as "The Health Insurance for the Aged Act, Title XVIII of the Social Security Amendments of 1965 as Then Constituted or Later Amended," or "Title I, Part I of Public L. No. 89-97, as Enacted by the Eighty-Ninth Congress of the United States of America and popularly known as the Health Insurance for the Aged Act, as then constituted and any later amendments or substitutes thereof," or words of similar import.

2204.8 "Medicare eligible expenses" shall mean expenses of the kinds covered by Medicare Parts A and B, to the extent recognized as reasonable and medically necessary by Medicare.

2204.9 "Physician" shall not be defined more restrictively than as defined in the Medicare program.

2204.10 "Sickness" shall not be defined more restrictively than the following:

An illness or disease of an insured person which first manifests itself after the effective date of insurance and while the insurance is in force; and

The definition may be further modified to exclude sicknesses or diseases for which benefits are provided under any workers' compensation, occupational disease, employer's liability or similar law.

History

• SOURCE: Final Rulemaking published at 46 DCR 10175 (December 17, 1999); as amended by Final Rulemaking published at 50 DCR 4166 (May 30, 2003); as amended by Final Rulemaking published at 50 DCR 5882 (July 25, 2003); as amended by Final Rulemaking published at 53 DCR 2955(April 14, 2006).

26-A DCMR § 2205 POLICY PROVISIONS

2205.1 Except for permitted preexisting condition clauses as described in subsection 2206.4, 2207.4, and 2207a.4 of this chapter, no policy or certificate may be advertised, solicited, or issued for delivery in the District as a Medicare supplement policy if the policy or certificate contains limitations or exclusions on coverage that are more restrictive than those of Medicare.

2205.2 No Medicare supplement policy or certificate may use waivers to exclude, limit or reduce coverage or benefits for specifically named or described preexisting diseases or physical conditions.

2205.3 No Medicare supplement policy or certificate in force in the District shall contain benefits which duplicate benefits provided by Medicare.

2205.4 Subject to subsections 2206.7, 2206.8, 2206.13, 2207.7, and 2207.8, a Medicare supplement insurance policy with benefits for outpatient prescription drugs in existence prior to January 1, 2006, shall be renewed for current policyholders who do not enroll in Part D at the option of the policyholder.

2205.5 A Medicare supplement policy with benefits for outpatient prescription drugs shall not be issued after December 31, 2005.

2205.6 After December 31, 2005, a Medicare supplement policy with benefits for outpatient prescription drugs may not be renewed after the policyholder enrolls in Medicare Part D unless:

(a) The policy is modified to eliminate outpatient prescription coverage for expenses of outpatient prescription drugs incurred after the effective date of the individual's coverage under a Part D plan; and

(b) Premiums are adjusted to reflect the elimination of outpatient prescription drug coverage at the time of Medicare Part D enrollment, accounting for any claims paid, if applicable.

History

• SOURCE: Final Rulemaking published at 46 DCR 10175 (December 17, 1999); as amended by Final Rulemaking published at 50 DCR 4166 (May 30, 2003); as amended by Final Rulemaking published at 50 DCR 5882 (July 25, 2003); as amended by Final Rulemaking published at 53 DCR 2955(April 14, 2006); as amended by Final Rulemaking published at 56 DCR 8840 (November 13, 2009), incorporating text of Proposed Rulemaking published at 56 DCR 7661 (September 25, 2009).

26-A DCMR § 2206 MINIMUM BENEFIT STANDARDS FOR POLICIES OR CERTIFICATES ISSUED FOR DELIVERY PRIOR TO MAY 1, 1999

2206.1 No policy or certificate may be advertised, solicited or issued for delivery in the District as a Medicare supplement policy or certificate unless it meets or exceeds the following minimum standards.

2206.2 The standards contained in subsections 2206.3 through 2206.13 are minimum standards and do not preclude the inclusion of other provisions or benefits which are not inconsistent with these standards.

2206.3 The following General Standards apply to Medicare supplement policies and certificates and are in addition to all other requirements of this chapter.

2206.4 A Medicare supplement policy or certificate shall not:

(a) Exclude or limit benefits. for losses incurred more than six (6) months from the effective date of coverage because it involved a preexisting condition; and

(b) Define a preexisting condition more restrictively than a condition for which medical advice was given or treatment was recommended by or received from a physician within six (6) months before the effective date of coverage.

2206.5 A Medicare supplement policy or certificate shall not indemnify against losses resulting from sickness on a different basis than losses resulting from accidents.

2206.6 A Medicare supplement policy or certificate shall provide that benefits designed to cover cost sharing amounts under Medicare will be changed automatically to coincide with any changes in the applicable Medicare deductible, co-payment, or coinsurance amounts. Premiums may be modified to correspond with such changes.

2206.7 A "noncancellable," "guaranteed renewable," or "noncancellable and guaranteed renewable" Medicare supplement policy shall not:

(a) Provide for termination of coverage of a spouse solely because of the occurrence of an event specified for termination of coverage of the insured, other than the nonpayment of premium; or

(b) Be cancelled or nonrenewed by the issuer solely on the grounds of deterioration of health.

2206.8 Except as authorized by the Commissioner, an issuer shall neither cancel nor nonrenew a Medicare supplement policy or certificate for any reason other than nonpayment of premium or material misrepresentation.

2206.9 If a group Medicare supplement insurance policy is terminated by the group policyholder and not replaced as provided in subsection 2206.3(h), the issuer shall offer certificate holders an individual Medicare supplement policy and shall offer certificate holders at least the following choices:

(a) An individual Medicare supplement policy currently offered by the issuer having comparable benefits to those contained in the terminated group Medicare supplement policy; and

(b) An individual Medicare supplement policy which provides only such benefits as are required to meet the minimum standards as defined in subsection 2207.14 of this chapter.

2206.10 If membership in a group is terminated, the issuer shall:

(a) Offer the certificate holder such conversion opportunities as are described subsection 2206.9; or

(b) At the option of the group policyholder, offer the certificate holder continuation of coverage under the group policy.

2206.11 If a group Medicare supplement policy is replaced by another group Medicare supplement policy purchased by the same policyholder, the issuer of the replacement policy shall offer coverage to all persons covered under the old group policy on its date of termination. Coverage under the new group policy shall not result in any exclusion for preexisting conditions that would have been covered under the group policy being replaced.

2206.12 Termination of a Medicare supplement policy or certificate shall be without prejudice to any continuous loss which commenced while the policy was in force, but the extension of benefits beyond the period during which the policy was in force may be predicated upon the continuous total disability of the insured, limited to the duration of the policy benefit period, if any, or to payment of the maximum benefits. Receipt of Medicare Part D benefits will not be considered in determining a continuous loss.

2206.13 If a Medicare supplement policy eliminates an outpatient prescription drug benefit as a result of requirements imposed by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, approved December 8, 2003 (108 P.L. 173; 117 Stat. 2066), the modified policy shall be deemed to satisfy the guaranteed renewal requirements of this section.

2206.14 The following Minimum Benefit Standards shall apply to Medicare supplement policies or certificates.

(a) Coverage of Part A Medicare eligible expenses for hospitalization to the extent not covered by Medicare from the sixty-first (61st) day through the ninetieth (90th) day in any Medicare benefit period;

(b) Coverage for either all or none of the Medicare Part A inpatient hospital deductible amount;

(c) Coverage of Part A Medicare eligible expenses incurred as daily hospital charges during use of Medicare's lifetime hospital inpatient reserve days;

(d) Upon exhaustion of all Medicare hospital inpatient coverage including the lifetime reserve days, coverage of ninety percent (90%) of all Medicare Part A eligible expenses for hospitalization not covered by Medicare subject to a lifetime maximum benefit of an additional 365 days;

(e) Coverage under Medicare Part A for the reasonable cost of the first three (3) pints of blood (or equivalent quantities of packed red blood cells, as defined under federal regulations) unless replaced in accordance with federal regulations or already paid for under Part B;

(f) Coverage for the coinsurance amount of Medicare eligible expenses under Part B regardless of hospital confinement, or in the case of hospital outpatient department services paid under a prospective payment system, the copayment amount, subject to a maximum calendar year out-of-pocket amount equal to the Medicare Part B deductible ($100); and

(g) Effective January 1, 1990, coverage under Medicare Part B for the reasonable cost of the first three (3) pints of blood (or equivalent quantities of packed red blood cells, as defined under federal regulations), unless replaced in accordance with federal regulations or already paid for under Part A, subject to the Medicare deductible amount.

History

• SOURCE: Final Rulemaking published at 46 DCR 10175 (December 17, 1999); as amended by Final Rulemaking published at 50 DCR 4166 (May 30, 2003); as amended by Final Rulemaking published at 50 DCR 5882 (July 25, 2003); as amended by Final Rulemaking published at 53 DCR 2955(April 14, 2006); as amended by Final Rulemaking published at 56 DCR 8840 (November 13, 2009), incorporating text of Proposed Rulemaking published at 56 DCR 7661 (September 25, 2009).

26-A DCMR § 2207 MINIMUM BENEFIT STANDARDS FOR POLICIES OR CERTIFICATES ISSUED OR DELIVERED ON OR AFTER MAY 1, 1999 AND PRIOR TO JUNE 1, 2010

2207.1 The standards contained in this section are applicable to all Medicare supplement policies or certificates delivered or issued for delivery in the District of Columbia on or after May 1, 1999, and prior to June 1, 2010.

2207.2 No policy or certificate may be advertised, solicited, delivered or issued for delivery in the District as a Medicare supplement policy or certificate unless it complies with these benefit standards.

2207.3 The following General Standards apply to Medicare supplement policies or certificates and are in addition to all other requirements of this chapter:

2207.4 A Medicare supplement policy or certificate shall not:

Exclude or limit benefits for losses incurred more than six (6) months from the effective date of coverage because it involved a preexisting condition; and

Define a preexisting condition more restrictively than a condition for which medical advice was given or treatment was recommended by or received from a physician within six (6) months before the effective date of coverage.

2207.5 A Medicare supplement policy or certificate shall not indemnify against losses resulting from sickness on a different basis than losses resulting from accidents.

2207.6 A Medicare supplement policy or certificate shall provide that benefits designed to cover cost sharing amounts under Medicare will be changed automatically to coincide with any changes in the applicable Medicare deductible, co-payment, or coinsurance amounts. Premiums may be modified to correspond with such changes.

2207.7 No Medicare supplement policy or certificate shall provide for termination of coverage of a spouse solely because of the occurrence of an event specified for termination of coverage of the insured, other than the nonpayment of premium.

2207.8 Each Medicare supplement policy shall be guaranteed renewable.

(a) The issuer shall not cancel or nonrenew the policy solely on the ground of health status of the individual.

(b) The issuer shall not cancel or nonrenew the policy for any reason other than nonpayment of premium or material misrepresentation.

(c) If the Medicare supplement policy is terminated by the group policyholder and is not replaced as provided under subsection 2207.8(e), the issuer shall offer certificate holders an individual Medicare supplement policy which, at the option of the certificate holder,

(1) Provides for continuation of the benefits contained in the group policy, or

(2) Provides for such benefits or otherwise meets the requirements of this subsection.

(d) If an individual is a certificate holder in a group Medicare supplement policy and the individual terminates membership in the group, the issuer shall:

(1) Offer the certificate holder the conversion opportunity described in subsection 2207.8(c); or

(2) At the option of the group policyholder, offer the certificate holder continuation of coverage under the group policy.

(e) If a group Medicare supplement policy is replaced by another group Medicare supplement policy purchased by the same policyholder, the issuer of the replacement policy shall offer coverage to all persons covered under the old group policy on its date of termination. Coverage under the new policy shall not result in any exclusion for preexisting conditions that would have been covered under the group policy being replaced.

(f) If a Medicare supplement policy eliminates an outpatient prescription drug benefit as a result of requirements imposed by the Medicare Prescription Drug, Improvement and Modernization Act of 2003, the modified policy shall be deemed to satisfy the guaranteed renewal requirements of this subsection.

2207.9 Termination of a Medicare supplement policy or certificate shall be without prejudice to any continuous loss which commenced while the policy was in force, but the extension of benefits beyond the period during which the policy was in force may be conditioned upon the continuous total disability of the insured, limited to the duration of the policy benefit period, if any, or payment of the maximum benefits. Receipt of Medicare Part D benefits will not be considered in determining a continuous loss.

2207.10 A Medicare supplement policy or certificate shall provide that benefits and premiums under the policy or certificate shall be suspended at the request of the policyholder or certificate holder for the period, not to exceed twenty-four (24) months, in which the policyholder or certificate holder has applied for and is determined to be entitled to medical assistance under Title XIX of the Social Security Act, but only if the policyholder or certificate holder notifies the issuer of such policy or certificate within ninety (90) days after the date the individual becomes entitled to such assistance.

2207.11 If such suspension occurs pursuant to subsection 2207.10 and if the policyholder or certificate holder loses entitlement to such medical assistance, such policy or certificate shall be automatically reinstituted, effective as of the date of termination of such entitlement, if the policyholder or certificate holder provides notice of loss of such entitlement within ninety (90) days after the date of such loss and pays the premium attributable to the period, effective as of the date of termination of such entitlement.

2207.12 Each Medicare supplement policy shall provide that benefits and premiums under the policy shall be suspended (for the period provided by federal regulation) at the request of the policyholder if the policyholder is entitled to benefits under section 226 (b) of the Social Security Act and is covered under a group health plan (as defined in section 1862 (b)(1)(A)(v) of the Social Security Act). If suspension occurs and if the policyholder or certificate holder loses coverage under the group health plan, the policy shall be automatically reinstituted (effective as of the date of loss of coverage) if the policyholder provides notice of loss of coverage within ninety (90) days after the date of such loss.

2207.13 Reinstitution of coverages:

(a) Shall not provide for any waiting period with respect to treatment of preexisting conditions;

(b) Shall provide for resumption of coverage that is substantially equivalent to coverage in effect before the date of suspension. If the suspended Medicare supplement policy provided coverage for outpatient prescription drugs, reinstitution of the policy for Medicare Part D enrollees shall be without coverage for outpatient prescription drugs and shall otherwise provide substantially equivalent coverage to the coverage in effect before the date of suspension; and

(c) Shall provide for classification of premiums on terms at least as favorable to the policyholder or certificate holder as the premium classification terms that would have applied to the policyholder or certificate holder had the coverage not been suspended.

If an insurer makes a written offer to the Medicare supplement policyholders or certificate holders of one or more of its plans, to exchange during a specified period from his or her 1990 standardized plan as described in Section 2208 of this chapter to a 2010 standardized plan as described in Section 2208a of this chapter, the offer and subsequent exchange shall comply with the following requirements:

An issuer need not provide justification to the Commissioner if the insured replaces a 1990 standardized policy or certificate with an issue age rated 2010 standardized policy or certificate at the insured’s original issue age and duration. If an insured’s policy or certificate to be replaced is priced on an issue age rate schedule at the time of such offer, the rate charged to the insured for the new exchanged policy shall recognize the policy reserve buildup, due to the pre-funding inherent in the use of an issue age rate basis, for the benefit of the insured. The method proposed to be used by an issuer must be filed with the Commissioner according to the District’s rate filing procedure.

The rating class of the new policy or certificate shall be the class closest to the insured’s class of the replaced coverage.

An issuer may not apply new pre-existing condition limitations or a new incontestability period to the new policy for those benefits contained in the exchanged 1990 standardized policy or certificate of the insured, but may apply pre-existing condition limitations of no more than six (6) months to any added benefits contained in the new 2010 standardized policy or certificate not contained in the exchanged policy.

The new policy or certificate shall be offered to all policyholders or certificate holders within a given plan, except where the offer or issue would be in violation of District or federal law.

The following standards for Basic (Core) Benefits common to benefit plans A through J shall apply:

Every issuer shall make available a policy or certificate including only the following basic “core” package of benefits to each prospective insured:

(1) Coverage of Part A Medicare Eligible Expenses for hospitalization to the extent not covered by Medicare from the 61st day through the 90th day in any Medicare benefit period;

(2) Coverage of Part A Medicare Eligible Expenses incurred for hospitalization to the extent not covered by Medicare for each Medicare lifetime inpatient reserve day used;

(3) Upon exhaustion of the Medicare hospital inpatient coverage, including the lifetime reserve days, coverage of 100% of the Medicare Part A eligible expenses for hospitalization paid at the applicable prospective payment system (PPS) rate, or other appropriate Medicare standard of payment, subject to a lifetime maximum benefit of an additional three hundred sixty-five (365) days; provided that the provider shall accept the issuer’s payment as payment in full and may not bill the insured for any balance;.

(4) Coverage under Medicare Parts A and B for the reasonable cost of the first three (3) pints of blood (or equivalent quantities of packed red blood cells, as defined under federal regulations) unless replaced in accordance with federal regulations;

(5) Coverage for the coinsurance amount, or in the case of hospital outpatient department services paid under a prospective payment system, the copayment amount, of Medicare eligible expenses under Part B regardless of hospital confinement, subject to the Medicare Part B deductible;

(b) An issuer may make available to prospective insureds any of the other Medicare Supplement Insurance Benefit Plans in addition to the basic “core” package of benefits, but not in lieu of the basic “core” package of Benefits.

2207.16 The following Additional Benefits shall be included in Medicare Supplement Benefit Plans "B" through "J" only as provided by section 2208 of this chapter:

(a) Medicare Part A Deductible: Coverage for all of the Medicare Part A inpatient hospital deductible amount per benefit period;

(b) Skilled Nursing Facility Care: Coverage for the actual billed charges up to the coinsurance amount from the 21st day through the 100th day in a Medicare benefit period for post-hospital skilled nursing facility care eligible under Medicare Part A;

(c) Medicare Part B Deductible: Coverage for all of the Medicare Part B deductible amount per calendar year regardless of hospital confinement;

(d) Eighty Percent (80%) of the Medicare Part B Excess Charges: Coverage for eighty percent (80%) of the difference between the actual Medicare Part B charge as billed, not to exceed any charge limitation established by the Medicare program or state law, and the Medicare-approved Part B charge;

(e) One Hundred Percent (100%) of the Medicare Part B Excess Charges: Coverage for all of the difference between the actual Medicare Part B charge as billed, not to exceed any charge limitation established by the Medicare program or state law, and the Medicare-approved Part B charge;

(f) Basic Outpatient Prescription Drug Benefit: Coverage for fifty percent (50%) of outpatient prescription drug charges, after a two hundred fifty dollar ($250) calendar year deductible, to a maximum of one thousand two hundred fifty dollars ($1,250) in benefits received by the insured per calendar year, to the extent not covered by Medicare. The outpatient prescription drug benefit may be included for sale or issuance in a Medicare supplement policy until January 1, 2006;

(g) Extended Outpatient Prescription Drug Benefit: Coverage for fifty percent (50%) of outpatient prescription drug charges, after a two hundred fifty dollar ($250) calendar year deductible to a maximum of three thousand dollars ($3,000) in benefits received by the insured per calendar year, to the extent not covered by Medicare. The outpatient prescription drug benefit may be included for sale or issuance in a Medicare supplement policy until January 1, 2006;

(h) Medically Necessary Emergency Care in a Foreign Country: Coverage to the extent not covered by Medicare for eighty percent (80%) of the billed charges for Medicare-eligible expenses for medically necessary emergency hospital, physician and medical care received in a foreign country, which care would have been covered by Medicare if provided in the United States and which began during the first sixty (60) consecutive days of each trip outside the United States, subject to a calendar year deductible of two hundred fifty dollars ($250), and a lifetime maximum benefit of fifty thousand dollars ($50,000). For purposes of paragraph (h), "emergency care" shall mean care needed immediately because of an injury or an illness of sudden and unexpected onset;

(i) Preventive Medical Care Benefit: Coverage for the following preventive health services not covered by Medicare:

(1) An annual clinical preventive medical history and physical examination that may include tests and services from subparagraph (2) and patient education to address preventive health care measures;

(2) Preventive screening tests or preventive services, the selection and frequency of which is determined to be medically appropriate by the attending physician.

(A) Reimbursement under this paragraph shall be for the actual charges up to one hundred percent (100%) of the Medicare- approved amount for each service, as if Medicare were to cover the service as identified in American Medical Association Current Procedural Terminology (AMA CPT) codes, to a maximum of one hundred twenty dollars ($120) annually under this benefit. This benefit shall not include payment for any procedure covered by Medicare;

(j) At-Home Recovery Benefit: Coverage for services to provide short term, at-home assistance with activities of daily living for those recovering from an illness, injury or surgery.

(1) For purposes of this benefit, the following definitions shall apply:

(A) "Activities of daily living" includes, but is not limited to bathing, dressing, personal hygiene, transferring, eating, ambulating, assistance with drugs that are normally self- administered, and changing bandages or other dressings;

(B) "Care provider" means a duly qualified or licensed home health aide/homemaker, personal care aide or nurse provided through a licensed home health care agency or referred by a licensed referral agency or licensed nurses registry;

(C) "Home" means any place used by the insured as a place of residence, provided that such place would qualify as a residence for home health care services covered by Medicare. A hospital or skilled nursing facility shall not be considered the insured's place of residence; and

(D) "At-home recovery visit" means the period of a visit required to provide at home recovery care, without limit on the duration of the visit, except that each consecutive four(4) hours in a twenty-four (24) hour period of services provided by a care provider shall be considered as one visit.

(2) Coverage Requirements and Limitations:

(A) At-home recovery services provided must be primarily services which assist in activities of daily living;

(B) The insured's attending physician must certify that the specific type and frequency of at-home recovery services are necessary because of a condition for which a home care plan of treatment was approved by Medicare;

(C) Coverage is limited to:

(i) No more than the number and type of at-home recovery visits certified as necessary by the insured's attending physician and the total number of at-home recovery visits shall not exceed the number of Medicare approved home health care visits under a Medicare approved home care plan of treatment;

(ii) The actual charges for each visit up to a maximum reimbursement of forty dollars ($40) per visit;

(iii) One thousand six hundred dollars ($1,600) per calendar year;

(iv) Seven (7) visits in any one week;

(v) Care furnished on a visiting basis in the insured's home;

(vi) Services provided by a care provider as defined in this section;

(vii) At-home recovery visits while the insured is covered under the policy or certificate and not otherwise excluded; and

(viii) At-home recovery visits received during the period the insured is receiving Medicare approved home care services or no more than eight (8) weeks after the service date of the last Medicare approved home health care visit; and

(D) Coverage is excluded for:

(i) Home care visits paid for by Medicare or other government programs; and

(ii) Care provided by family members, unpaid volunteers or providers who are not care providers.

2207.17 The following standards shall be included in Plans K and L:

(a) Standardized Medicare supplement benefit plan "K" shall consist of the following:

(1) Coverage of 100% of the Part A hospital coinsurance amount for each day used from the 61st through the 90th day in any Medicare benefit period;

(2) Coverage of 100% of the Part A hospital coinsurance amount for each Medicare lifetime inpatient reserve day used from the 91st through the 150th day in any Medicare benefit period;

(3) Upon exhaustion of the Medicare hospital inpatient coverage, including the lifetime reserve days, coverage of 100% of the Medicare Part A eligible expenses for hospitalization paid at the applicable prospective payment system (PPS) rate, or other appropriate Medicare standard of payment, subject to a lifetime maximum benefit of an additional 365 days. The provider shall accept the issuer's payment as payment in full and may not bill the insured for any balance;

(4) Medicare Part A Deductible: Coverage for 50% of the Medicare Part A inpatient hospital deductible amount per benefit period until the out-of-pocket limitation is met as described in subparagraph (10);

(5) Skilled Nursing Facility Care: Coverage for 50% of the coinsurance amount for each day used from the 21st day through the 100th day in a Medicare benefit period for post-hospital skilled nursing facility care eligible under Medicare Part A until the out-of-pocket limitation is met as described in subparagraph (10);

(6) Hospice Care: Coverage for 50% of cost sharing for all Part A Medicare eligible expenses and respite care until the out-of-pocket limitation is met as described in subparagraph (10);

(7) Coverage for 50%, under Medicare Part A or B, of the reasonable cost of the first three (3) pints of blood (or equivalent quantities of packed red blood cells, as defined under federal regulations) unless replaced in accordance with federal regulations until the out- of-pocket limitation is met as described in subparagraph (10);

(8) Except for coverage provided in subparagraph (9) below, coverage for 50% of the cost sharing otherwise applicable under Medicare Part B after the policyholder pays the Part B deductible until the out-of-pocket limitation is met as described in subparagraph (10) below;

(9) Coverage of 100% of the cost sharing for Medicare part B preventive services after the policyholder pays the Part B deductible; and

(10) Coverage of 100% of all cost sharing under Medicare Parts A and B for the balance of the calendar year after the individual has reached the out-of-pocket limitation on annual expenditures under Medicare Parts A and B of $4000 in 2006, indexed each year by the appropriate inflation adjustment specified by the Secretary of the U.S. Department of Health and Human Services.

(b) Standardized Medicare supplement benefit plan "L" shall consist of the following:

(1) The benefits described in paragraphs (a)(1), (2), (3), and (9);

(2) The benefits described in paragraphs (a)(4), (5), (6), (7) and (8), but substituting 75% for 50%; and

(3) The benefit described in paragraph (a)(10), but substituting $2000 for $4000.

History

• SOURCE: Final Rulemaking published at 46 DCR 10175 (December 17, 1999); as amended by Final Rulemaking published at 50 DCR 4166 (May 30, 2003); as amended by Final Rulemaking published at 50 DCR 5882 (July 25, 2003); as amended by Final Rulemaking published at 53 DCR 2955(April 14, 2006); as amended by Final Rulemaking published at 56 DCR 8840 (November 13, 2009), incorporating text of Proposed Rulemaking published at 56 DCR 7661, 7662 (September 25, 2009). 2207a BENEFIT STANDARDS FOR 2010 STANDARDIZED MEDICARE SUPPLEMENT BENEFIT PLAN POLICIES OR CERTIFICATES ISSUED FOR DELIVERY ON OR AFTER JUNE 1, 2010 2207a-1 The following standards are applicable to all Medicare supplement policies or certificates delivered or issued for delivery in the District on or after June 1, 2010. 2207a-2 No policy or certificate may be advertised, solicited, delivered, or issued for delivery in the District as a Medicare supplement policy or certificate unless it complies with the benefit standards in this section. 2207a-3 No issuer may offer any 1990 standardized plan for sale on or after June 1, 2010. 2207a-4 Benefit standards applicable to Medicare supplement policies and certificates issued before June 1, 2010, remain subject to the requirements of section 2207. 2207a-5 The following general standards in subsection 2207a-6 through 2207a-23 apply to Medicare supplement policies and certificates and are in addition to all other requirements of this chapter. 2207a-6 A Medicare supplement policy or certificate shall not exclude or limit benefits for losses incurred more than six (6) months from the effective date of coverage because it involved a preexisting condition. 2207a-7 A Medicare supplement policy or certificate shall not define a preexisting condition more restrictively than a condition for which medical advice was given or treatment was recommended by or received from a physician within six (6) months before the effective date of coverage. 2207a-8 A Medicare supplement policy or certificate shall not indemnify against losses resulting from sickness on a different basis than losses resulting from accidents. 2207a-9 A Medicare supplement policy or certificate shall provide that benefits designed to cover cost sharing amounts under Medicare will be changed automatically to coincide with any changes in the applicable Medicare deductible, co-payment, or coinsurance amounts. Premiums may be modified to correspond with such changes. 2207a-10 No Medicare supplement policy or certificate shall provide for termination of coverage of a spouse solely because of the occurrence of an event specified for termination of coverage of the insured, other than the nonpayment of premium. 2207a-11 Each Medicare supplement policy shall be guaranteed renewable. 2207a-12 No Medicare supplement policy shall be canceled or non-renewed by the issuer solely on the ground of health status of the individual. 2207a-13 No Medicare supplement policy shall be canceled or non-renewed by the issuer for any reason other than nonpayment of premium or material misrepresentation. 2207a-14 If the Medicare supplement policy is terminated by the group policyholder and is not replaced under subsection 2207a-16 of this chapter, the issuer shall offer certificate holders an individual Medicare supplement policy which, at the option of the certificate holder: Provides for continuation of the benefits contained in the group policy; or Provides for benefits that otherwise meet the requirements of this subsection. 2207a-15 If an individual is a certificate holder in a group Medicare supplement policy and the individual terminates membership in the group, the issuer shall: Offer the certificate holder the conversion opportunity described in subsection 2207a-14; or At the option of the group policyholder, offer the certificate holder continuation of coverage under the group policy. 2207a-16 If a group Medicare supplement policy is replaced by another group Medicare supplement policy purchased by the same policyholder, the issuer of the replacement policy shall offer coverage to all persons covered under the old group policy on its date of termination. Coverage under the new policy shall not result in any exclusion for preexisting conditions that would have been covered under the group policy that is being replaced. 2207a-17 Termination of a Medicare supplement policy or certificate shall be without prejudice to any continuous loss which commenced while the policy was in force, but the extension of benefits beyond the period during which policy was in force may be conditioned upon the continuous total disability of the insured, limited to the duration of the policy benefit period, if any, or payment of the maximum benefits. Receipt of Medicare Part D benefits will not be considered in determining continuous loss. 2207a-18 A Medicare supplement policy or certificate shall provide that benefits and premiums under the policy or certificate shall be suspended at the request of the policyholder or certificate holder for the period (not to exceed twenty-four (24) months) in which the policyholder or certificate holder has applied for and is determined to be entitled to medical assistance under Title XIX of the Social Security Act, but only if the policyholder or certificate holder notifies the issuer of the policy or certificate within ninety (90) days after the date the individual becomes entitled to assistance. 2207a-19 If suspension of benefits and premiums under a Medicare supplement policy or certificate occurs and if the policyholder or certificate holder loses entitlement to medical assistance, the policy or certificate shall be automatically reinstituted (effective as of the date of termination of entitlement) as of the termination of entitlement if the policyholder or certificate holder provides notice of loss or entitlement within ninety (90) days after the date of loss and pays the premium attributable to the period, effective as of the date of termination of entitlement. 2207a-20 Each Medicare supplement policy shall provide that benefits and premiums under the policy shall be suspended (for any period that may be provided by federal regulations) at the request of the policyholder if the policyholder is entitled to benefits under Section 226(b) of the Social Security Act and is covered under a group health plan (as defined in Section 1862(b)(1)(A)(v) of the Social Security Act). 2207a-21 If suspension of benefits and premiums under a Medicare supplement policy or certificate occurs and if the policyholder or certificate holder loses coverage under the group health plan, the policy shall be automatically reinstituted (effective as of the date of loss coverage) if the policyholder provides notice of loss of coverage within ninety (90) days after the date of loss. 2207a-22 Reinstitution of coverages as described in subsections 2207a-19, 2207a-20 and 2207a-21 shall not provide for any waiting period with respect to treatment and preexisting conditions. 2207a-23 Reinstitution of coverages as described in subsections 2207a-19, 2207a-20 and 2207a-21 shall: Provide for resumption of coverage that is substantially equivalent to coverage in effect before the date of suspension; and Provide for classification of premiums on terms at least as favorable to the policyholder or certificate holder as the premium classification terms that would have applied to the policyholder or certificate holder had the coverage not been suspended. 2207a-24 The following standards for Basic (“Core”) Benefits common to Medicare Supplement Insurance Plans A, B, C, D, F, F with High Deductible, G, M, and N shall apply. (a) Every issuer of a Medicare Supplement Insurance Benefits Plan shall make available a policy or certificate including only the following basic “core” package of benefits to each prospective insured: (1) Coverage of Part A Medicare Eligible Expenses for hospitalization to the extent not covered by Medicare from the sixty-first (61st) day through the ninetieth (90th) day in any Medicare benefit period; (2) Coverage of Part A Medicare Eligible Expenses incurred for hospitalization to the extent not covered by Medicare for each Medicare lifetime inpatient reserve day used; (3) Upon exhaustion of the Medicare hospital inpatient coverage, including the lifetime reserve days, coverage of 100% of the Medicare Part A eligible expenses for hospitalization paid at the applicable prospective payment system (PPS) rate, or other appropriate Medicare standard of payment, subject to a lifetime maximum benefit of an additional three hundred sixty-five (365) days; provided that the provider shall accept the issuers payment as payment in full and may not bill the insured for any balance; (4) Coverage under Medicare Parts A and B for the reasonable cost of the first three (3) pints of blood (or equivalent quantities of packed red blood cells, as defined under federal regulations) unless replaced in accordance with federal regulations; (5) Coverage for the coinsurance amount, or in the case of hospital outpatient department services paid under a prospective payment system, the copayment amount, of Medicare eligible expenses under Part B regardless of hospital confinement, subject to the Medicare Part B deductible; (6) Coverage of cost sharing for all Part A Medicare eligible hospice care and respite care expenses. (b) An issuer may make available to prospective insureds any of the other Medicare Supplement Insurance Benefit Plans in addition to the basic “core” package of benefits, but not in lieu of the basic “core” package of benefits. 2207a-25 The following additional benefits shall be included in Medicare Supplement Benefit Plans B, C, D, F, F with High Deductible, G, M, and N as provided by section 2208a of this chapter. Medicare Part A Deductible: Coverage for one hundred percent (100%) of the Medicare Part A inpatient deductible amount per benefit period. Medicare Part A Deductible: Coverage for fifty percent (50%) of the Medicare Part A inpatient hospital deductible amount per benefit period. Skilled Nursing Facility Care: Coverage for the actual billed charges up to the coinsurance amount from the twenty-first (21st) day through the one hundredth (100th) day in a Medicare benefit period for post-hospital skilled nursing facility care eligible under Medicare Part A. Medicare Part B Deductible: Coverage for one hundred percent (100%) of the Medicare Part B deductible amount per calendar year regardless of hospital confinement. One Hundred Percent (100%) of the Medicare Part B Excess Charges: Coverage for all of the difference between the actual Medicare Part B charges as billed, not to exceed any charge limitation established by the Medicare program of District law, and the Medicare-approved Part B charge. Medically Necessary Emergency Care in a Foreign Country: Coverage to the extent not covered by Medicare for eighty percent (80%) of the billed charges for Medicare-eligible expenses for medically necessary emergency hospital, physician and medical care received in a foreign country, which care would have been covered by Medicare if provided in the United States and which care began during the first sixty (60) consecutive days of each trip outside the United States, subject to a calendar year deductible of $250, and a lifetime maximum benefit of $50,000. For purposes of this benefit, “emergency care” shall mean care needed immediately because of an injury or an illness of sudden and unexpected onset.
• SOURCE: Final Rulemaking published at 56 DCR 8840 (November 13, 2009), incorporating text of Proposed Rulemaking published at 56 DCR 7661, 7664 (September 25, 2009).

26-A DCMR § 2208 STANDARD MEDICARE SUPPLEMENT BENEFIT PLANS

2208.1 An issuer shall make available to each prospective policyholder and certificate holder a policy form or certificate form containing only the Basic "Core" Benefits, as defined in subsection 2207.14.

2208.2 No groups, packages or combinations of Medicare supplement benefits other than those listed in this section shall be offered for sale in the District, except as may be permitted in subsection 2208.9 and 2208A.

2208.3 Benefit plans shall be uniform in structure, language, designation and format to the Standard Benefit Plans "A" through "L" listed in this subsection and conform to the definitions in section 2299.

2208.4 Each benefit shall be structured in accordance with the format provided in subsections 2207.14 and 2207.15 or 2207.16 and list the benefits in the order shown in subsection 2208.7.

2208.5 For purposes of section 2208, "structure, language, and format" means style, arrangement and overall content of a benefit.

2208.6 An issuer may use, in addition to the benefit plan designations required in subsection 2208.3, other designations to the extent permitted under District law.

2208.7 Make-up of benefit plans:

(a) Standardized Medicare supplement benefit plan "A" shall be limited to the Basic ("Core") Benefits common to all benefit plans, as defined in subsection 2207.14;

(b) Standardized Medicare supplement benefit plan "B" shall include only the following:

(1) The Core Benefit as defined in subsection 2207.14; plus

(2) The Medicare Part A Deductible as defined in subsection 2207.15(a);

(c) Standardized Medicare supplement benefit plan "C" shall include only the following:

(1) The Core Benefit as defined in subsection 2207.14; and

(2) The Medicare Part A Deductible, Skilled Nursing Facility Care, Medicare Part B Deductible and Medically Necessary Emergency Care in a foreign Country as defined in subsection 2207.15(a), (b), (c), and (h);

(d) Standardized Medicare supplement benefit plan "D" shall include only the following:

(1) The Core Benefit as defined in subsection 2207.14; and

(2) The Medicare Part A Deductible, Skilled Nursing Facility Care, Medically Necessary Emergency Care in an foreign Country and the At-Home Recovery Benefit as defined in subsections 2207.15(a) and (b), (h), and (j);

(e) Standardized Medicare supplement benefit plan "E" shall include only the following:

(1) The Core Benefit as defined in subsection 2207.14; and

(2) The Medicare Part A Deductible, Skilled Nursing Facility Care, Medically Necessary Emergency Care in a foreign Country and Preventive Medical Care as defined in subsection 2207.5(a), (b), (h), and (i);

(f)

(1) Standardized Medicare supplement benefit plan "F" shall include only the following:

(A) The Core Benefit as defined in subsection 2207.14; and

(B) The Medicare Part A Deductible, the Skilled Nursing Facility Care, the Part B Deductible, One Hundred Percent (100%) of the Medicare Part B Excess Charges, and Medically Necessary Emergency Care in a foreign Country as defined in subsections 2207.15(a), (b), (c), (e), and (h);

(2) Standardized Medicare supplement benefit high deductible "F" shall include only the following: one hundred percent (100%) of covered expenses following the payment of the annual high deductible plan "F" deductible. The covered expenses include the core benefit as defined in section 2207.14, plus the Medicare Part A deductible, skilled nursing facility care, the Medicare Part B deductible, one hundred percent (100%) of the Medicare Part B excess charges, and medically necessary emergency care in a foreign country as defined in section 2207.15(a), (b), (c), (e), and (h). The annual high deductible plan "F" deductible shall consist of out-of-pocket expenses, other than premiums, for services covered by the Medicare supplement plan "F" policy, and shall be in addition to any other specific benefit deductibles. The annual high deductible plan "F" deductible shall be $ 1500 for 1998 and 1999 and shall be based on the calendar year. It shall be adjusted annually thereafter by the Secretary to reflect the change in the Consumer Price Index for all urban consumers for the twelve (12)-month period ending with August of the preceding year, and rounded to the nearest multiple of ten dollars ($ 10).

(g) Standardized Medicare supplement benefit plan "G" shall include only the following:

(1) The Core Benefit as defined in subsection 2207.14; and

(2) The Medicare Part A Deductible, the Skilled Nursing Facility Care, Eighty Percent (80%) of the Medicare Part B Excess Charges, Medically Necessary Emergency Care in a Foreign Country, and the At-Home Recovery Benefit as defined in subsections 2207.15(a), (b), (d), (h), and (j);

(h) Standardized Medicare supplement benefit plan "H" shall consist of only the following:

(1) The Core Benefit as defined in subsection 2207.14;

(2) The Medicare Part A Deductible, Skilled Nursing Facility Care, Basic Prescription Drug Benefit and Medically Necessary Emergency Care in a Foreign Country as defined in subsections 2207.15(a), (b), (f), and (h); and

(3) The outpatient prescription drug benefit shall not be included in a Medicare supplement policy sold after December 31, 2005.

(i) Standardized Medicare supplement benefit plan "I" shall consist of only the following:

(1) The Core Benefit as defined in subsection 2207.14;

(2) The Medicare Part A Deductible, Skilled Nursing Facility Care, One Hundred Percent (100%) of the Medicare Part B Excess Charges, Basic Prescription Drug Benefit, Medically Necessary Emergency Care in a Foreign Country and At-Home Recovery Benefit as defined in subsections 2207.15(a), (b), (e), (f), (h), and (j); and

(3) The outpatient prescription drug benefit shall not be included in a Medicare supplement policy sold after December 31, 2005;

(j) Standardized Medicare supplement benefit plan "J" shall consist of only the following:

(1) The Core Benefit as defined in subsection 2207.14; and

(2) The Medicare Part A Deductible, Skilled Nursing Facility Care, Medicare Part B Deductible, One Hundred Percent (100%) of the Medicare Part B Excess Charges, Extended Prescription Drug Benefit, Medically Necessary Emergency Care in a foreign Country, Preventive Medical Care and At-Home Recovery Benefit as defined in subsections 2207.15(a), (b), (c), (e), (g), (h), (i), and (j); and

(3) The outpatient prescription drug benefit shall not be included in a Medicare supplement policy sold after December 31, 2005; and

(k) Deleted;

(l) Standardized Medicare supplement benefit high deductible plan "J" shall consist of only the following: 100% of covered expenses following the payment of the annual high deductible plan "J" deductible. The covered expenses include the core benefit as defined in section 2207 of this regulation, plus the Medicare Part A deductible, skilled nursing facility care, Medicare Part B deductible, one hundred percent (100%) of the Medicare Part B excess charges, extended outpatient prescription drug benefit, medically necessary emergency care in a foreign country, preventive medical care benefit and at-home recovery benefit as defined in sections 2207.15(a), (b), (c), (d), (h), (i) and (j) respectively. The annual high deductible plan "J" deductible shall consist of out-of-pocket expenses other than premiums for services covered by the Medicare supplement "J" policy, and shall be in addition to any other specific benefit deductibles. The annual deductible shall be fifteen hundred dollars ($1500) for 1998 and 1999, and shall be based on the calendar year. It shall include the annual adjustments made thereafter by the Secretary to reflect the change in the Consumer Price Index for all urban consumers for the twelve-month period ending with August of the preceding year, and rounded to the nearest multiple of ten dollars ($10). The outpatient prescription drug benefit shall not be included in a Medicare supplement policy sold after December 31, 2005.

2208.8 Make-up of two Medicare supplement plans mandated by the Medicare Prescription Drug, Improvement and Modernization Act of 2003:

(a) Standardized Medicare supplement benefit plan "K" shall consist of only those benefits described in subsection 2207.16(a).

(b) Standardized Medicare supplement benefit plan "L" shall consist of only those benefits described in subsection 2207.16(b).

2208.9 New or Innovative Benefits: An issuer may, with the prior approval of the Commissioner, offer policies or certificates with new or innovative benefits in addition to the benefits provided in a policy or certificate that otherwise complies with the applicable standards. The new or innovative benefits may include benefits that are appropriate to Medicare supplement insurance, new or innovative, not otherwise available, cost-effective, and offered in a manner which is consistent with the goal of simplification of Medicare supplement policies. After December 31, 2005, the innovative benefit shall not include an outpatient prescription drug benefit.

History

• SOURCE: Final Rulemaking published at 46 DCR 10175 (December 17, 1999); as amended by Final Rulemaking published at 50 DCR 4166 (May 30, 2003); as amended by Final Rulemaking published at 50 DCR 5882 (July 25, 2003); as amended by Final Rulemaking published at 53 DCR 2955(April 14, 2006); as amended by Final Rulemaking published at 53 DCR 8467(October 20, 2006). 2208a STANDARD MEDICARE SUPPLEMENT BENEFIT PLANS FOR 2010 STANDARDIZED MEDICARE SUPPLEMENT BENEFIT PLAN POLICIES OR CERTIFICATES ISSUED FOR DELIVERY ON OR AFTER JUNE 1, 2010 2208a-1 The following standards in subsection 2208a-2 through 2208a-8 are applicable to all Medicare supplement policies or certificates delivered or issued for delivery in the District on or after June 1, 2010. 2208a-2 No policy or certificate may be advertised, solicited, delivered or issued for delivery in the District as a Medicare supplement policy or certificate unless it complies with the benefits standards in this section. 2208a-3 Benefit plan standards applicable to Medicare supplement policies and certificates issued before June 1, 2010, remain subject to the requirements of section 2208 of this chapter. 2208a-4 An issuer shall make available to each prospective policyholder and certificate holder a policy form or certificate form containing only the basic (core) Benefits, as defined in subsection 2207a-24 of this chapter. 2208a-5 If an issuer makes any of the additional benefits described in subsection 2207a-25 or offers standardized benefit Plans K or L (as described in subparagraphs 2208a-9(h) and (i)), then the issuer shall make available to each prospective policyholder and certificate holder, in addition to a policy form or certificate form with only the basic (core) benefits as described in subsection 2208a-4 above, a policy form or certificate form containing either standardized benefit Plan C (as described in subparagraph 2008a-9(c) of this chapter) or standard benefit Plan F (as described in subparagraph 2008a-9(e). 2208a-6 No groups, packages, or combinations of Medicare supplement benefits other than those listed in this section shall be offered for sale in the District, except as may be permitted in subsection 2208a-10. 2208a-7 Benefit plans shall be uniform in structure, language, designation, and format to the standard benefit plans listed in this subsection and conform to the definition in section 2299 of this chapter. Each benefit shall be structured in accordance with the format provided in subsections 2207a-24 and 2207a-25; or, in the case of plans K or L, in subparagraphs 2208a-9(h) or (i) and list the benefits in the order shown. For purposes of this subsection, “structure, language, and format” means style, arrangement and overall content of a benefit. 2208a-8 In addition to the benefit plan designations required in subsection 2208a-7, an issuer may use other designations to the extent permitted by law. 2208a-9 The composition of 2010 Standard Benefit Plans shall be as follows: Standardized Medicare supplement benefit plan A shall include only the basic (core) benefits as defined in subsection 2207a-24. Standardized Medicare supplement benefit plan B shall include only the following: (1) The basic (core) benefit as defined in subsection 2207a-24 of this chapter; and (2) One hundred percent (100%) of the Medicare Part A deductible as defined in subparagraph 2207a-25(a) of this chapter. (c) Standardized Medicare supplement benefit plan C shall include only the following: (1) The basic (core) benefit as defined in subsection 2207a-24 of this chapter; plus (2) One hundred percent (100%) of the Medicare Part A deductible, skilled nursing facility care, one hundred percent (100%) of the Medicare Part B deductible, and medically necessary emergency care in a foreign country as defined in subparagraphs 2207a-25 (a), (c), (d), and (f), of this chapter, respectively. (d) Standardized Medicare supplement benefit plan D shall include the following: (1) The basic (core) benefit (as defined in the subsection 2207a-24 of this chapter); and (2) One hundred percent (100%) of the Medicare Part A deductible, Skilled Nursing Facility Care, and Medically Necessary Emergency Care in a foreign country as defined in subparagraphs 2207a-25 (a), (c), and (f) of this chapter. (e) Standardized Medicare supplement plan F shall include only the following: (1) The basic (core) benefit as defined in subsection 2207a-24 of this chapter; and (2) One hundred percent (100%) of the Medicare part A deductible, the Skilled Nursing Facility Care, one hundred percent (100%) of the Medicare Part B deductible, one hundred percent (100%) of the Medicare Part B excess charges, and Medically Necessary Emergency Care in a foreign country as defined in subparagraphs 2207a-25(a), (c), (d), (e), and (f) of this chapter. (f) Standardized Medicare supplement plan F with High Deductible shall include only the following: (1) One hundred percent (100%) of covered expenses following the payment of the annual deductible set forth in subparagraph (3); (2) The basic (core) benefit as defined in subsection 2207a-24 and: (A) One hundred percent (100%) of the Medicare Part A deductible, Skilled Nursing Facility Care; (B) One hundred percent (100%) of the Medicare part “B” deductible; (C) One hundred percent (100%) of the Medicare Part “B” excess charges; and (D) Medically necessary emergency care in a foreign country as defined in subparagraphs 2207a-25(a), (c), (d), (e) and (f) of this chapter, respectively. (3) The annual deductible in plan F with High Deductible shall consist of out-of-pocket expense, other than premiums, for services covered by [regular] plan F and shall be in addition to other specific benefit deductibles. The basis for the deductible shall be $1,500 and shall be adjusted annually from 1999 by the Secretary of the U.S. Department of Health and Human Services to reflect the change in the Consumer Price Index for all urban consumers for the twelve-month period ending with August of the preceding year, and rounded to the nearest multiple of ten dollars ($10). (g) Standardized Medicare supplement benefit plan G shall include only the following: (1) The basic (core) benefit as described in 2207a-24 of this chapter; and (2) One hundred percent (100%) of the Medicare Part A deductible, Skilled Nursing Facility Care, one hundred percent (100%) of the Medicare Part B excess charges, and Medically Necessary Emergency Care in a foreign country as defined in subparagraphs 2207a-25(a),(c), (e), and (f), respectively. (h) Standardized Medicare supplement plan “K” is mandated by the Medicare Prescription Drug Improvement and Modernization Act of 2003, and shall have the following: (1) Part A Hospital Coinsurance 61st through 90th days: Coverage of one hundred percent (100%) of the Part A coinsurance amount for each day used from the 61st through the 90th day in any Medicare benefit period; (2) Part A Hospital Coinsurance 91st through 150th days: Coverage of one hundred percent (100%) of the Part A hospital coinsurance amount for each Medicare lifetime inpatient reserve day used from the 91st through 150th day in any Medicare benefit period; (3) Part A Hospitalization After 150 days: Upon exhaustion of the Medicare hospital inpatient coverage, including the lifetime reserve days, coverage of one hundred percent (100%) of the Medicare Part A eligible expenses for hospitalization paid at the applicable prospective payment system (PPS) rate, or other appropriate Medicare standard of payment, subject to a lifetime maximum benefit of an additional 365 days. The provider shall accept the issuer’s payment as payment in full and may not bill the insured for any balance; (4) Medicare Part A Deductible: Coverage for fifty percent (50%) of the Medicare Part A inpatient hospital deductible amount per benefit period until the out-of-pocket limitation is met as described in subparagraph 10; (5) Skilled Nursing Facility Care: Coverage for fifty percent (50%) of the coinsurance amount for each day used from the 21st day through the 100th day in a Medicare benefit period for Post-hospital Skilled Nursing Facility Care eligible under Medicare Part A until the out-of-pocket limitation is met as described in subparagraph 10; (6) Hospice Care: Coverage for fifty percent (50%) of cost sharing for all Part A Medicare eligible expenses and Respite Care until the out-of-pocket limitation is met as described in subparagraph 10; (7) Blood: Coverage for fifty percent (50%) , under Medicare Part A or B, of the reasonable cost of the first three (3) pints of blood (or equivalent quantities of packed red blood cells, as defined under federal regulations) unless replaced in accordance with federal regulations until the out-of-pocket limitation is met as described in subparagraph 10; (8) Part B Cost Sharing: Except for coverage provided in subparagraph 9, coverage for fifty percent (50%) of the cost sharing otherwise applicable under Medicare Part B after the policyholder pays the Part B deductible until the out-of-pocket limitation is met as described in subparagraph 10; (9) Part B Preventive Services: Coverage of one hundred percent (100%) of the cost sharing for Medicare Part B preventive services after the policyholder pays the Part B deductible; and (10) Cost Sharing After Out-of-Pocket Limits: Coverage of one hundred percent (100%) of all cost sharing under Medicare Parts A and B for the balance of the calendar year after the individual has reached the out-of-pocket limitation of annual expenditures under Medicare Parts A and B of $4000 in 2006, indexed each year by the appropriate inflation adjustment specified by the Secretary of the U.S. Department of Health and Human Services. Standardized Medicare supplement plan L is mandated by the Medicare Prescription Drug, Improvement and Modernization Act of 2003, and shall include only the following: The benefits described in subparagraphs 2208a-h(1), (2), (3), and (9); The benefit described in subparagraphs 2208a-h(4), (5), (6), (7), and (8), but substituting seventy-five percent (75%) for fifty percent (50%); and The benefit described in subparagraph 2208a-h(10), but substituting $2000 for $4000. Standardized Medicare supplement plan M shall include only the following: (1) The basic (core) benefit as defined ins subsection 2207a-14; and (2) Fifty percent (50%) of the Medicare Part A deductible, Skilled Nursing Facility Care; and Medically Necessary Emergency Care in a foreign country as defined in subparagraphs 2207a-25(b), (c), and (f), respectively. (k) Standardized Medicare supplement plan N shall include only the following: (1) The basic (core) benefit as defined in subsection 2207a-14 of this chapter; and (2) One hundred percent (100%) of the Medicare Part A deductible, Skilled Nursing Facility Care, and Medically Necessary Emergency Care in a Foreign Country as defined in subparagraphs 2207a-15(a), (c), and (f) of this chapter, respectively, with co-payments in the following amounts: The lesser of twenty dollars ($20) or the Medicare part B coinsurance or co-payment for each covered health care provider office visit (including visits to medical specialists); and The lesser of fifty dollars ($50) or the Medicare part B coinsurance or co-payment for each covered emergency room visit, however, this co-payment shall be waived if the insured is admitted to any hospital and the emergency visit is subsequently covered as a Medicare part A expense. 2208a-10 New or Innovative Benefits: An issuer may, with the prior approval of the Commissioner, offer policies or certificates with new or innovative benefits, in addition to the standardized benefits provided in a policy or certificate that otherwise complies with the applicable standards subject to the following conditions: The new or innovative benefits shall include only benefits that are appropriate to Medicare supplement insurance, are new or innovative, are not otherwise available, and are cost-effective. Approval of new or innovative benefits must not adversely impact the goal of Medicare supplement simplification; New or innovative benefits shall not include an outpatient prescription drug benefit; and New or innovative benefits shall not be used to change or reduce benefits, including change of any cost-sharing provision, in any standardized plan.
• SOURCE: Final Rulemaking published at 56 DCR 8840, incorporating text of Emergency and Proposed Rulemaking published at 56 DCR 7661, 7669 (September 25, 2009).

26-A DCMR § 2209 GUARANTEED ISSUE FOR ELIGIBLE PERSONS

2209.1 An eligible person shall be any of the individuals described in subsection 2209.3 who apply to enroll under the policy not later than sixty-three (63) days after the date of the termination of enrollment described in subsection 2209.3, and who submit evidence of the date of termination, disenrollment or Medicare Part D enrollment with the application for a Medicare supplement policy.

2209.2 With respect to eligible persons, an issuer shall not deny or condition the issuance or effectiveness of a Medicare supplement policy described in subsection 2209.4 that is offered and is available for issuance to new enrollees by the issuer, shall not discriminate in the pricing of such a Medicare supplement policy because of health status, claims experience, receipt of health care, or medical condition, and shall not impose an exclusion of benefits based on a preexisting condition under such a Medicare supplement policy.

2209.3 An eligible person is an individual described in any of the following:

(a) The individual is enrolled under an employee welfare benefit plan providing health benefits which supplement the benefits under Medicare, and the plan terminates, or the plan ceases to provide all such supplemental health benefits to the individual;

(b) The individual is enrolled with a Medicare Advantage organization under a Medicare Advantage plan under Part C of Medicare, and any of the following circumstances apply, or the individual is 65 years of age or older and is enrolled with a Program of All-Inclusive Care for the Elderly (PACE) provider under Section 1894 of the Social Security Act, and there are circumstances similar to those described below that would permit discontinuance of the individual's enrollment with such provider if such individual were enrolled in a Medicare Advantage plan:

(1) The organization's or plan's certification has been terminated or otherwise discontinued providing the plan in the area in which the individual resides;

(2) The individual is no longer eligible to elect the plan because of a change in the individual's place of residence or other change in circumstances specified by the Secretary, but not including termination of the individual's enrollment on the basis described in section 1851(g) (3) (B) of the Social Security Act (where the individual has not paid premiums on a timely basis or has engaged in disruptive behavior as specified in standards under section 1856), or the plan is terminated for all individuals within a residence area;

(3) The individual demonstrates, in accordance with guidelines established by the Secretary, that:

(A) The organization offering the plan substantially violated a material provision of the organization's contract under, this part in relation to the individual, including the failure to provide an enrollee on a timely basis medically necessary care for which benefits are available under the plan or the failure to provide such covered care in accordance with applicable quality standards; or

(B) The organization, or agent or other entity acting on the organization's behalf, materially misrepresented the plan's provisions in marketing the plan to the individual; or

(4) The individual meets such other exceptional conditions as the Secretary may provide;

(c) The individual is:

(1) Enrolled with one of the following:

(A) An eligible organization under a contract under section 1876 of the Social Security Act (Medicare cost);

(B) A similar organization operating under demonstration project authority, effective for periods beginning prior to April 1, 1999;

(C) An organization under an agreement under section 1833 (a) (1) (A) of the Social Security Act (Health care prepayment plan); or

(D) An organization under a Medicare Select policy; and

(2) The enrollment ceases under the same circumstances that would permit discontinuance of an individual's election of coverage under subsection 2209.3(b) of this chapter;

(d) The individual is enrolled under a Medicare supplement policy and the enrollment ceases because:

(1) Of the insolvency of the issuer or bankruptcy of the nonissuer organization, or of other involuntary termination of coverage of enrollment under the policy;

(2) The issuer of the policy substantially violated a material provision of the policy; or

(3) The issuer, or an agent or other entity acting on the issuer's behalf, materially misrepresented the policy's provisions in marketing the policy to the individual;

(e) The individual:

(1) Was enrolled under a Medicare supplement policy and terminates enrollment and subsequently enrolls for the first time with any Medicare Advantage organization under a Medicare Advantage plan under Part C of Medicare, any eligible organization under a contract under section 1876 (Medicare cost), any similar organization operating under demonstration project authority, an organization under an agreement under section 1833 (a) (1) (A) of the Social Security Act (health care prepayment plan), or a Medicare Select policy; and

(2) The subsequent enrollment under subparagraph (1) of this paragraph is terminated by the enrollee during any period within the first twelve (12) months of such subsequent enrollment (during which the enrollee is permitted to terminate such subsequent enrollment under section 1851(e) of the Social Security Act);

(f) The individual, upon first becoming eligible for benefits under Part A of Medicare at age 65, enrolls in a Medicare Advantage plan under Part C of Medicare, and disenrolls from the plan by not later than twelve (12) months after the effective date of enrollment;or

(g) The individual enrolls in a Medicare Part D plan during the initial enrollment period and, at the time of enrollment in Part D, was enrolled under a Medicare supplement policy that covers outpatient prescription drugs and the individual terminates enrollment in the Medicare supplement policy and submits evidence of enrollment in Medicare Part D along with the application for a policy described in subsection 2209.4(d).

2209.4 The Medicare supplement policy to which an eligible person is entitled under:

(a) Subsections 2209.3(a), (b), (c), and (d) is a Medicare supplement policy which has a benefit package classified as Plan A, B, C, F (including F with a high deductible), K or L offered by any issuer;

(b)

(1) Subject to subparagraph (2), subsection 2209.3(e) is the same Medicare supplement policy in which the individual was most recently previously enrolled, if available from the same issuer, or, if not so available, a policy described in paragraph (a) of this subsection;

(2) After December 31, 2005, if the individual was most recently enrolled in a Medicare supplement policy with an outpatient prescription drug benefit, a Medicare supplement policy described in this subparagraph is:

(A) The policy available from the same issuer but modified to remove outpatient prescription drug coverage; or

(B) At the election of the policyholder, an A, B, C, F (including F with a high deductible), K or L policy that if offered by any issuer;

(c) Subsection 2209.3(f) shall include any Medicare supplement policy offered by any issuer; and

(d) Subsection 2209.3(g) is a Medicare supplement policy that has a benefit package classified as Plan A, B, C, F (including F with a high deductible), K or L, and is offered and is available for issuance to new enrollees by the same issuer that issued the individual's Medicare supplement policy with outpatient prescription drug coverage.

2209.5 Notification shall be provided as follows:

(a) At the time of an event described in subsection 2209.3 because of which an individual loses coverage or benefits due to the termination of a contract or agreement, policy, or plan, the organization that terminates the contract or agreement, the issuer terminating the policy, or the administrator of the plan being terminated, respectively, shall notify the individual of his or her rights under this section, and of the obligations of issuers of Medicare supplement policies under subsection 2209.2. Such notice shall be communicated contemporaneously with the notification of termination.

(b) At the time of an event described in subsection 2209.3 because of which an individual ceases enrollment under a contract or agreement, policy, or plan, the organization that offers the contract or agreement, regardless of the basis for the cessation of enrollment, the issuer offering the policy, or the administrator of the plan, respectively, shall notify the individual of his or her rights under this section, and of the obligations of issuers of Medicare supplement policies under subsection 2209.2. Such notice shall be communicated within ten (10) working days of the issuer receiving notification of disenrollment.

2209.6 Guaranteed issue time periods shall be as follows:

(a) In the case of an individual described in subsection 2209.3(b), the guaranteed issue period begins on the later of: (i) the date the individual receives a notice of termination or cessation of all supplemental health benefits (or, if a notice is not received, notice that a claim has been denied because of such a termination or cessation) or (ii) the date that the applicable coverage terminates or ceases; and ends sixty-three (63) days thereafter;

(b) In the case of an individual described in subsection 2209.3(b), 2209.3(c) 2209.3(e) or 2209.3(f) whose enrollment is terminated involuntarily, the guaranteed issue period begins on the date that the individual receives a notice of termination and ends sixty-three (63) days after the date the applicable coverage is terminated;

(c) In the case of an individual described in subsection 2209.3(d), the guaranteed issue period begins on the earlier of: (i) the date that the individual receives a notice of termination, a notice of the issuers's bankruptcy or insolvency, or other such similar notice if any, and (ii) the date that the applicable coverage is terminated, and ends on the date that is sixty-three (63) days after the date the coverage is terminated;

(d) In the case of an individual described in subsections 2209.3(b), 2209.3(d)(2), 2209.3(d)(3), 2209.3(e), or 2209.3(f) who disenrolls voluntarily, the guaranteed issue period begins on the date that is sixty (60) days before the effective date of the disenrollment and ends on the date that is sixty-three (63) days after the effective date; and

(e) In the case of an individual described in subsection 2209.3 but not described in the preceding provisions of this subsection, the guaranteed issue period begins on the effective date of disenrollment and ends on the date that is sixty-three (63) days after the effective date.

2209.7 Extended Medigap access for interrupted trial periods shall be as follows:

(a) In the case of an individual described in subsection 2209.3(e) (or deemed to be so described, pursuant to this paragraph) whose enrollment with an organization or provider described in subsection 2209(e)(1) is involuntarily terminated within the first twelve (12) months of enrollment, and who, without an intervening enrollment, enrolls with another such organization or provider, the subsequent enrollment shall be deemed to be an initial enrollment described in section 2209.3(e);

(b) In the case of an individual described in subsection 2209.3(f) (or deemed to be so described, pursuant to this paragraph) whose enrollment with a plan or in a program described in subsection 2209.3(f) is involuntarily terminated within the first twelve (12) months of enrollment, and who, without an intervening enrollment, enrolls in another such plan or program, the subsequent enrollment shall be deemed to be an initial enrollment described in subsection 2209.3(f); and

(c) For purposes of subsections 2209.3(e) and 2209.3(f), no enrollment of an individual with an organization or provider described in subsection 2209.3(e)(1), or with a plan or in a program described in subsection 2209.3(f), may be deemed to be an initial enrollment under this paragraph after the two-year period beginning on the date on which the individual first enrolled with such an organization, provider, plan or program.

History

• SOURCE: Final Rulemaking published at 46 DCR 10175 (December 17, 1999); as amended by Final Rulemaking published at 50 DCR 4166 (May 30, 2003); as amended by Final Rulemaking published at 50 DCR 5882 (July 25, 2003); as amended by Final Rulemaking published at 53 DCR 2955(April 14, 2006); as amended by Final Rulemaking published at 53 DCR 8467(October 20, 2006).

26-A DCMR § 2210 OPEN ENROLLMENT

2210.1 No issuer shall deny or condition the issuance or effectiveness of any Medicare supplement policy or certificate available for sale in the District, nor discriminate in the pricing of a policy or certificate because of the health status, claims experience, receipt of health care, or medical condition of an applicant in the case of an application for a policy or certificate that is submitted prior to or during the six (6) month period beginning with the first day of the first month in which an individual is both 65 years of age or older and is enrolled for benefits under Medicare Part B.

2210.2 Each Medicare supplement policy and certificate currently available from an insurer shall be made available to all applicants who qualify under subsection 2210.1 without regard to age.

2210.3 If an applicant qualifies under subsection 2210.1 and submits an application during the time period referenced in subsection 2210.1 and, as of the date of application, has had a continuous period of creditable coverage of at least six (6) months, the issuer shall not exclude benefits based on a preexisting condition.

2210.4 If an applicant qualifies under subsection 2210.1 and submits an application during the time period referenced in subsection 2210.1 and, as of the date of application has had a continuous period of creditable coverage of at least six (6) months, the issuer shall reduce the period of any preexisting condition exclusion by the aggregate of the period of creditable coverage applicable to the applicant as of the enrollment date. The manner of the reduction under this section shall be that specified by the Secretary.

2210.5 Except as provided in subsections 2210.3 and 2210.4, and sections 2209 and 2227, subsection 2210.1 shall not be construed as preventing the exclusion of benefits under a policy, during the first six (6) months, based on a preexisting condition for which the policyholder or certificate holder received treatment or was otherwise diagnosed during the six (6) months before the coverage became effective.

History

• SOURCE: Final Rulemaking published at 46 DCR 10175 (December 17, 1999); as amended by Final Rulemaking published at 50 DCR 4166 (May 30, 2003); as amended by Final Rulemaking published at 50 DCR 5882 (July 25, 2003); as amended by Final Rulemaking published at 53 DCR 2955(April 14, 2006).

26-A DCMR § 2211 STANDARDS FOR CLAIMS PAYMENT

2211.1 An issuer shall comply with section 1882(c) (3) of the Social Security Act (as enacted by section 4081(b) (2) (C) of the Omnibus Budget Reconciliation Act of 1987, Pub. L. No. 100-203) by:

(a) Accepting a notice from a Medicare carrier on duly assigned claims submitted by participating physicians and suppliers as a claim for benefits in place of any other claim form otherwise required and making a payment determination on the basis of the information contained in that notice;

(b) Notifying the participating physician or supplier and the beneficiary of the payment determination;

(c) Paying the participating physician or supplier directly;

(d) Furnishing, at the time of enrollment, each enrollee with a card listing the policy name, number and a central mailing address to which notices from a Medicare carrier may be sent;

(e) Paying user fees for claim notices that are transmitted electronically or otherwise; and

(f) Providing to the Secretary, at least annually, a central mailing address to which all claims may be sent by Medicare carriers.

2211.2 Compliance with the requirements set forth in subsection 2211.1 shall be certified on the Medicare supplement insurance experience reporting form.

History

• SOURCE: Final Rulemaking published at 46 DCR 10175 (December 17, 1999); as amended by Final Rulemaking published at 50 DCR 4166 (May 30, 2003); as amended by Final Rulemaking published at 50 DCR 5882 (July 25, 2003); as amended by Final Rulemaking published at 53 DCR 2955(April 14, 2006).

26-A DCMR § 2212 LOSS RATIO STANDARDS

2212.1 A Medicare supplement insurance policy form or certificate form shall not be delivered or issued for a delivery in the District unless the policy form or certificate form can be expected, as estimated for the entire period for which rates are computed to provide coverage, to return to policyholders and certificate holders in the form of aggregate benefits, (not including anticipated refunds or credits) provided under the policy form or certificate form:

(a) At least seventy-five percent (75%) of the aggregate amount of premiums earned in the case of group policies; or

(b) At least sixty-five percent (65%) of the aggregate amount of premiums earned in the case of individual policies.

2212.2 The loss ratios set forth in subsection 2212.1 shall be calculated on the basis of incurred claims experience, or incurred health care expenses where coverage is provided by a health maintenance organization on a service rather than reimbursement basis, and earned premiums for the period and in accordance with accepted actuarial principles and practices. Incurred health care expenses where coverage is provided by a health maintenance organization shall not include:

(a) Home office and overhead costs;

(b) Advertising costs;

(c) Commissions and other acquisition costs;

(d) Taxes;

(e) Capital costs;

(f) Administrative costs; and

(g) Claims processing costs.

2212.3 All filings of rates and rating schedules shall demonstrate that expected claims in relation to premiums comply with the requirements of this section 2212 when combined with actual experience to date.

2212.4 Filings of rate revisions shall also demonstrate that the anticipated loss ratio over the entire future period for which the revised rates are computed to provide coverage can be expected to meet the appropriate loss ratio standards.

2212.5 For purposes of applying subsections 2212.1, 2212.2, and section 2216 only, policies issued as a result of solicitations of individuals through the mails or by mass media advertising, including both print and broadcast advertising, shall be deemed to be individual policies.

2212.6 For policies issued prior to October 1, 1992 expected claims in relation to premiums shall meet:

(a) The originally filed anticipated loss ratio when combined with the actual experience since inception;

(b) The appropriate loss ratio requirement from subsection 2212.1(a) and (b) when combined with actual experience beginning with May 1, 1999 to date; and

(c) The appropriate loss ratio requirement from subsection 2212.1(a) and (b) over the entire future period for which the rates are computed to provide coverage.

History

• SOURCE: Final Rulemaking published at 46 DCR 10175 (December 17, 1999); as amended by Final Rulemaking published at 50 DCR 4166 (May 30, 2003); as amended by Final Rulemaking published at 50 DCR 5882 (July 25, 2003); as amended by Final Rulemaking published at 53 DCR 2955(April 14, 2006).

26-A DCMR § 2213 REFUND OR CREDIT OF PREMIUM

2213.1 An issuer shall collect and file with the Commissioner by May 31 of each year the data contained in the reporting form contained in Appendix A for each type in a Standard Medicare Supplement Benefit Plan, described in section 2208.

2213.2 If on the basis of the experience as reported the benchmark loss ratio since inception (ratio 1) exceeds the adjusted experience loss ratio since inception (ratio 3), then a refund or credit calculation is required.

(a) The refund calculation shall be done on a District-wide basis for each type in a standard Medicare supplement benefit plan.

(b) For purposes of the refund or credit calculation, experience on policies issued within the reporting year shall be excluded.

(c) For purposes of this section, with regard to policies or certificates issued prior to July 22, 1992 the issuer shall make the refund or credit calculation separately for all individual policies (including all group policies subject to an individual loss ratio standard when issued) combined, and all group policies combined for experience after May 1, 1999. The first such report shall be due by May 31, 2001.

2213.4 A refund or credit shall be made only when:

(a) The benchmark loss ratio exceeds the adjusted experience loss ratio; and

(b) The amount to be refunded or credited exceeds a de minimis level.

2213.5 The refund or credit described in subsection 2213.4 shall include interest from the end of the calendar year to the date of the refund or credit at a rate specified by the Secretary, but in no event shall it be less than the average rate of interest of thirteen (13) week Treasury notes.

2213.6 A refund or credit against premiums due shall be made by September 30 following the experience year upon which the refund or credit is based.

History

• SOURCE: Final Rulemaking published at 46 DCR 10175 (December 17, 1999); as amended by Final Rulemaking published at 50 DCR 4166 (May 30, 2003); as amended by Final Rulemaking published at 50 DCR 5882 (July 25, 2003); as amended by Final Rulemaking published at 53 DCR 2955(April 14, 2006).

26-A DCMR § 2214 ANNUAL FILING OF PREMIUM RATES

2214.1 An issuer of Medicare supplement policies and certificates issued in the District before or after the effective date of this chapter shall file annually its rates, rating schedule and supporting documentation, including ratios of incurred losses to earned premiums by policy duration, for approval by the Commissioner of the Department of Insurance and Securities Regulation in accordance with the filing requirements and procedures prescribed by the Commissioner.

2214.2 The supporting documentation shall also demonstrate, in accordance with actuarial standards of practice using reasonable assumptions, that the appropriate loss ratio standards can be expected to be met over the entire period for which rates are computed and such demonstration shall exclude active life reserves.

2214.3 An expected third-year loss ratio which is greater than or equal to the applicable percentage shall be demonstrated for policies or certificates in force less than three (3) years.

2214.4 As soon as practicable, but prior to the effective date of enhancements in Medicare benefits, every issuer of Medicare supplement policies or certificates in the District shall file with the Commissioner:

(a) Appropriate premium adjustments necessary, to produce loss ratios as anticipated for the current premium for the applicable policies or certificates; and

(b) Supporting documents as necessary to justify the adjustment.

2214.5 An issuer shall make premium adjustments as are necessary to produce an expected loss ratio under such policy or certificate as will conform with minimum loss ratio standards for Medicare supplement policies and which are expected to result in a loss ratio at least as great as that originally anticipated in the rates used to produce current premiums by the issuer for such Medicare supplement policies and certificates.

2214.6 No premium adjustment which would modify the loss ratio experience under the policy other than the adjustments described herein shall be made with respect to a policy at any time other than upon its renewal date or anniversary date.

2214.7 If an issuer fails to make acceptable premium adjustments, the Commissioner may order premium adjustments, refunds or premium credits deemed necessary to achieve the loss ratio required by section 2212.

2214.8 Any appropriate riders, endorsements or policy forms needed to accomplish the Medicare supplement policy or certificate modifications necessary to eliminate benefit duplications with Medicare and the riders, endorsements or policy forms. shall provide a clear description of the Medicare supplement benefits provided by the policy or certificate.

History

• SOURCE: Final Rulemaking published at 46 DCR 10175 (December 17, 1999); as amended by Final Rulemaking published at 50 DCR 4166 (May 30, 2003); as amended by Final Rulemaking published at 50 DCR 5882 (July 25, 2003); as amended by Final Rulemaking published at 53 DCR 2955(April 14, 2006).

26-A DCMR § 2215 PUBLIC HEARINGS

2215.1 The Commissioner may conduct a public hearing to gather information concerning a request by an issuer for an increase in a rate for a policy form or certificate form issued before or after July 22, 1992, if the experience of the form for the previous reporting period is not in compliance with the applicable loss ratio standard.

2215.2 The determination of compliance shall be made without consideration of any refund or credit for such reporting period.

2215.3 Public notice of such hearing shall be furnished in a manner deemed appropriate by the Commissioner.

History

• SOURCE: Final Rulemaking published at 46 DCR 10175 (December 17, 1999); as amended by Final Rulemaking published at 50 DCR 4166 (May 30, 2003); as amended by Final Rulemaking published at 50 DCR 5882 (July 25, 2003); as amended by Final Rulemaking published at 53 DCR 2955(April 14, 2006).

26-A DCMR § 2216 FILING AND APPROVAL OF POLICIES AND CERTIFICATES AND PREMIUM RATES

2216.1 An issuer shall not:

(a) Deliver or issue for delivery a policy or certificate to a resident of the District unless the policy form or certificate form has been filed with and approved by the Commissioner; and

(b) Use or change premium rates for a Medicare supplement policy or certificate unless the rates, rating schedule and supporting documentation have been filed with and approved by the Commissioner.

2216.2 Except as provided in subsection 2216.3, an issuer shall not file for approval more than one form of a policy or certificate of each type for each Standard Medicare Supplement Benefit Plan described in section 2208.

2216.3 An issuer may offer, with the approval of the Commissioner, up to four (4) additional policy forms or certificate forms of the same type for the same Standard Medicare Supplement Benefit Plan, one for each of the following cases:

(a) The inclusion of new or innovative benefits;

(b) The addition of either direct response or agent marketing methods;

(c) The addition of either guaranteed issue or underwritten coverage; and

(d) The offering of coverage to individuals eligible for Medicare by reason of disability.

2216.4 For the purposes of this section 2216, a type means an individual policy or a group policy.

2216.5 Except as provided in subsections 2216.7 and 2216.8, an issuer shall continue to make available for purchase any policy form or certificate form issued after May 1, 1999 that has been approved by the Commissioner.

2216.6 A policy form or certificate form shall not be considered to be available for purchase unless the issuer has actively offered it for sale in the previous twelve (12) months.

2216.7 An issuer may discontinue the availability of a policy form or certificate form if the issuer provides to the Commissioner in writing its decision at least thirty (30) days prior to discontinuing the availability of the form of the policy or certificate.

2216.8 After receipt of the notice by the Commissioner, the issuer shall no longer offer for sale the policy form or certificate form in the District.

2216.9 An issuer that discontinues the availability of a policy form or certificate form pursuant to subsections 2216.7 and 2216.8 shall not file for approval a new policy form or certificate form of the same type for the same Standard Medicare Supplement Benefit Plan as the discontinued form for a period of five (5) years after the issuer provides notice to the Commissioner of the discontinuance.

2216.10.1 The period of discontinuance may be reduced if the Commissioner determines that a shorter period is appropriate.

2216.11 The sale or other transfer of Medicare supplement business to another issuer shall be considered a discontinuance for the purposes of subsections 2216.5, 2216.6, 2216.7, 2216.8, 2216.9, and 2216.10.

2216.12 A change in the rating structure or methodology shall be considered a discontinuance under subsections 2216.5, 2216.6, 2216.7, 2216.8, and 2216.9, and 2216.10, unless the issuer complies with the following requirements:

(a) The issuer provides an actuarial memorandum, in a form and manner prescribed by the Commissioner, describing the manner in which the revised rating methodology and resultant rates differ from the existing rating methodology and existing rates.

(b) The issuer does not subsequently put into effect a change of rates or rating factors- that would cause the percentage differential between the discontinued and subsequent rates as described in the actuarial memorandum to change; and

(c) The Commissioner may approve a change to the differential that is in the public interest.

2216.13 Except as provided in subsection 2216.11;

(a) The experience of all policy forms or certificate forms of the same type in a Standard Medicare Supplement Benefit Plan shall be combined for purposes of the refund or credit calculation prescribed in section 2213;

(b) Forms-assumed under an assumption reinsurance agreement shall not be combined with the experience of other forms for purposes of the refund or credit calculation;

(c) An issuer shall not present for filing or approval a rate structure for its Medicare supplement policies or certificates issued after May 1, 1999 based upon a structure or methodology with any groupings of attained ages greater than one year. The ratio between rates for successive ages shall increase smoothly as age increases.

2216.14 An issuer shall file any riders or amendments to policy or certificate forms to delete outpatient prescription drug benefits as required by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 only with the commissioner in the state in which the policy or certificate was issued.

History

• SOURCE: Final Rulemaking published at 46 DCR 10175 (December 17, 1999); as amended by Final Rulemaking published at 50 DCR 4166 (May 30, 2003); as amended by Final Rulemaking published at 50 DCR 5882 (July 25, 2003); as amended by Final Rulemaking published at 53 DCR 2955(April 14, 2006).

26-A DCMR § 2217 PERMITTED COMPENSATION ARRANGEMENTS

2217.1 An issuer or other entity may provide a commission or other compensation to an agent or other representative for the sale of a Medicare supplement policy or certificate only if the first year commission or other first year compensation is no more than two hundred percent (200%) of the commission or other compensation paid for selling or servicing the policy or certificate in the second year or period.

2217.2 The commission or other compensation provided in subsequent (renewal) years must be the same as that provided in the second year or period and must be provided for no fewer than five (5) renewal years.

2217.3 No issuer or other entity shall provide compensation to its agents or other producers, and no agent or producer shall receive compensation, greater than the renewal compensation payable by the replacing issuer on renewal policies or certificates if an existing policy or certificate is replaced.

2217.4 For purposes of section 2217, "compensation" includes pecuniary or non- pecuniary remuneration of any kind relating to the sale or renewal of the policy or certificate including but not limited to bonuses, gifts, prizes, awards and finders fees.

History

• SOURCE: Final Rulemaking published at 46 DCR 10175 (December 17, 1999); as amended by Final Rulemaking published at 50 DCR 4166 (May 30, 2003); as amended by Final Rulemaking published at 50 DCR 5882 (July 25, 2003); as amended by Final Rulemaking published at 53 DCR 2955(April 14, 2006).

26-A DCMR § 2218 REQUIRED DISCLOSURE PROVISIONS - GENERAL RULES

2218.1 Medicare supplement policies and certificates shall include a renewal or continuation provision and the language or specifications of such provision shall be consistent with the type of contract issued.

2218.2 The renewal or continuation provision shall:

(a) Be appropriately captioned;

(b) Appear on the first page of the policy; and

(c) Include any reservation by the issuer of the right to change premiums and any automatic renewal premium increases based on the policyholder's age.

2218.3 Except for riders or endorsements by which the issuer effectuates a request made in writing by the insured, exercises a specifically reserved right under a Medicare supplement policy, or is required to reduce or eliminate benefits to avoid duplication of Medicare benefits, all riders or endorsements added to a Medicare supplement policy after date of issue or at reinstatement or renewal which reduce or eliminate benefits or coverage in the policy shall require a signed acceptance by the insured.

2218.4 After the date of policy or certificate issue, any rider or endorsement which increases benefits or coverage with a concomitant increase in premium during the policy term shall be agreed to in writing signed by the insured, unless the benefits are required by the Minimum Standards for Medicare Supplement Policies, or if the increased benefits or coverage is required by law.

2218.5 Where a separate additional premium is charged for benefits provided in connection with riders or endorsements, such premium charge shall be set forth in the policy.

2218.6 Medicare supplement policies or certificates shall not provide for the payment of benefits based on standards described as "usual and customary," "reasonable and customary" or words of similar import.

2218.7 If a Medicare supplement policy or certificate contains any limitations with respect to preexisting conditions, such limitations shall appear as a separate paragraph of the policy and be labeled as "Preexisting Condition Limitations."

2218.8 Medicare supplement policies and certificates shall have a notice prominently printed on the first page of the policy or certificate, or attached thereto stating in substance that the policyholder or certificate holder shall have the right to return the policy or certificate within thirty (30) days of its delivery and to have the premium refunded if, after examination of the policy or certificate, the insured person is not satisfied for any reason.

2218.9 Issuers of accident and sickness policies or certificates which provide hospital or medical expense coverage on an expense incurred or indemnity basis, to a person or persons eligible for Medicare shall provide to those applicants a Guide to Health Insurance for People with Medicare in the form developed jointly by the National Association of Insurance Commissioners and the Centers for Medicare and Medicaid Services, and in a type size no smaller than twelve (12) point type. Delivery of the Guide shall be made whether or not such policies or certificates are advertised, solicited or issued as Medicare supplement policies or certificates as defined in this chapter:

(a) Except in the case of direct response issuers, delivery of the Guide shall be made to the applicant at the time of application and acknowledgment of receipt of the Guide shall be obtained by the issuer;

(b) Direct response issuers shall deliver the Guide to the applicant upon request but not later than at the time the policy is delivered; and

(c) For the purpose of this section "form" means the language, format, type, size, type proportional spacing, bold character, and line spacing.

History

• SOURCE: Final Rulemaking published at 46 DCR 10175 (December 17, 1999); as amended by Final Rulemaking published at 50 DCR 4166 (May 30, 2003); as amended by Final Rulemaking published at 50 DCR 5882 (July 25, 2003); as amended by Final Rulemaking published at 53 DCR 2955(April 14, 2006).

26-A DCMR § 2219 REQUIRED DISCLOSURE PROVISIONS - NOTICE REQUIREMENT

2219.1 As soon as practicable, but no later than thirty (30) days prior to the annual effective date of any Medicare benefit changes, an issuer shall notify its policyholders and certificate holders of modifications it has made to Medicare supplement insurance policies or certificates in a format acceptable to the Commissioner.

2219.2 Notice shall:

(a) Include a description of revisions to the Medicare program and a description of each modification made to the coverage provided under the Medicare supplement policy or certificate; and

(b) Inform each policyholder or certificate holder as to when any premium adjustment is to be made due to changes in Medicare.

2219.3 The notice of benefit modifications and any premium adjustments shall be in outline form and in clear and simple terms so as to facilitate comprehension.

2219.4 Such notices shall not contain or be accompanied by any solicitation.

2219.5 Issuers shall comply with notice requirements of the Medicare Prescription Drug, Improvement and Modernization Act of 2003.

2219.6 Issuers of accident and sickness policies or certificates that provide hospital or medical expense coverage on an expense incurred or indemnity basis to persons eligible for Medicare shall provide to those applicants A Guide to Health Insurance for People with Medicare in the form developed jointly by the National Association of Insurance Commissioners and the Health Care Financing Administration of the United States Department of Health and Human Services, and in a type size no smaller than twelve (12) point type. Delivery of the Guide shall be made whether or not the policies or certificates are advertised, solicited or issued as Medicare supplement policies or certificates as defined in this chapter.

(a) Except in the case of direct response issuers, delivery of the Guide shall be made to the applicant at the time of application and acknowledgement of receipt of the Guide shall be obtained by the issuer.

(b) Direct response issuers shall deliver the Guide to the applicant upon request but not later than at the time the policy is delivered.

History

• SOURCE: Final Rulemaking published at 46 DCR 10175 (December 17, 1999); as amended by Final Rulemaking published at 50 DCR 4166 (May 30, 2003); as amended by Final Rulemaking published at 50 DCR 5882 (July 25, 2003); as amended by Final Rulemaking published at 53 DCR 2955(April 14, 2006).

26-A DCMR § 2220 REQUIRED DISCLOSURE PROVISIONS - OUTLINE OF COVERAGE REOUIREMENTS FOR MEDICARE SUPPLEMENT POLICIES

2220.1 Issuers shall:

(a) Provide an outline of coverage to all applicants at the time the application is presented to the prospective applicant; and

(b) Except for direct response policies, obtain an acknowledgment of receipt of such outline from the applicant.

2220.2 If an outline of coverage is provided at the time of application and the Medicare supplement policy or certificate is issued on a basis which would require revision of the outline, a substitute outline of coverage properly describing the policy or certificate shall:

(a) Accompany such policy or certificate when it is delivered; and

(b) Contain the following statement, in no less than twelve (12) point type, immediately above the company name:

"NOTICE: Read this outline of coverage carefully. It is not identical to the outline of coverage provided upon application and the coverage originally applied for has not been issued."

2220.3 The outline of coverage provided to applicants pursuant to section 2220 consists of four parts:

(a) A cover page;

(b) Premium information;

(c) Disclosure pages; and

(d) Charts displaying the features of each benefit plan offered by the issuer.

2220.4 The outline of coverage shall be in the language and format prescribed in subsection 2220.9, in no less than twelve (12) point type.

2220.5 All plans A through L shall be shown on the cover page, and the plan(s) offered by the issuer shall be prominently identified.

2220.6 Premium information for plans offered shall be:

(a) Shown on the cover page or immediately following the cover page; and

(b) Prominently displayed.

2220.7 The premium and mode shall be stated for all plans that are offered to the prospective applicant.

2220.8 All possible premiums for the prospective applicant shall be illustrated.

2220.9 The following items shall be included in the outline of coverage in the order prescribed below:

Benefit Chart of Medicare Supplement Plans Sold on or After June 1, 2010

This chart shows the benefits included in each of the standard Medicare supplement plans. Every company must make Plan “A” available. Some plans may not be available in the District of Columbia.

Plans E, H, I, and J are no longer available for sale. [This sentence shall not appear after June 1, 2011.]

Basic Benefits:

Hospitalization –Part A coinsurance plus coverage for 365 additional days after Medicare benefits end.

Medical Expenses –Part B coinsurance (generally 20% of Medicare-approved expenses) or co-payments for hospital outpatient services. Plans K, L and N require insureds to pay a portion of Part B coinsurance or co-payments.

Blood –First three pints of blood each year.

Hospice— Part A coinsurance

A

B

C

D

F

F*

G

K

L

M

N

Basic, including 100% Part B coinsurance

Basic, including 100% Part B coinsurance

Basic, including 100% Part B coinsurance

Basic, including 100% Part B coinsurance

Basic, including 100% Part B coinsurance*

Basic, including 100% Part B coinsurance

Hospitalization and preventive care paid at 100%; other basic benefits paid at 50%

Hospitalization and preventive care paid at 100%; other basic benefits paid at 75%

Basic,

including

100% Part B coinsurance

Basic,

including

100% Part B coinsurance, except up to $20 copayment for office visit, and up to $50 copayment for ER

Skilled Nursing Facility

Coinsurance

Skilled

Nursing

Facility

Coinsurance

Skilled Nursing Facility

Coinsurance

Skilled Nursing Facility

Coinsurance

50% Skilled Nursing

Facility

Coinsurance

75% Skilled

Nursing

Facility

Coinsurance

Skilled

Nursing

Facility

Coinsurance

Skilled

Nursing

Facility

Coinsurance

Part A Deductible

Part A Deductible

Part A Deductible

Part A Deductible

Part A Deductible

50% Part A Deductible

75% Part A Deductible

50% Part A Deductible

Part A

Deductible

Part B Deductible

Part B Deductible

Part B Excess (100%)

Part B Excess (100%)

Foreign Travel Emergency

Foreign Travel Emergency

Foreign

Travel Emergency

Foreign

Travel Emergency

Foreign

Travel Emergency

Foreign

Travel

Emergency

*Plan F also has an option called a high deductible plan F. This high deductible plan pays the same benefits as Plan F after one has paid a calendar year $2000 deductible. Benefits from high deductible plan F will not begin until out-of-pocket expenses exceed $2000. Out-of-pocket expenses for this deductible are expenses that would ordinarily be paid by the policy. These expenses include the Medicare deductibles for Part A and Part B, but do not include the plan’s separate foreign travel emergency deductible.

Out-of-pocket limit $[4620];

paid at 100%

after limit

reached

Out-of-pocket limit $[2310]; paid at 100% after limit reached

PREMIUM INFORMATION [Boldface Type]

We [insert issuer’s name] can only raise your premium if we raise the premium for all policies like yours in this State. [If the premium is based on the increasing age of the insured, include information specifying when premiums will change.]

DISCLOSURES [Boldface Type]

Use this outline to compare benefits and premiums among policies.

This outline shows benefits and premiums of policies sold for effective dates on or after June 1, 2010. Policies sold for effective dates prior to June 1, 2010 have different benefits and premiums. Plans E, H, I, and J are no longer available for sale. [This paragraph shall not appear after June 1, 2011.]

READ YOUR POLICY VERY CAREFULLY [Boldface Type]

This is only an outline describing your policy’s most important features. The policy is your insurance contract. You must read the policy itself to understand all of the rights and duties of both you and your insurance company.

RIGHT TO RETURN POLICY [Boldface Type]

If you find that you are not satisfied with your policy, you may return it to [insert issuer’s address]. If you send the policy back to us within 30 days after you receive it, we will treat the policy as if it had never been issued and return all of your payments.

POLICY REPLACEMENT [Boldface Type]

If you are replacing another health insurance policy, do NOT cancel it until you have actually received your new policy and are sure you want to keep it.

NOTICE [Boldface Type]

This policy may not fully cover all of your medical costs.

[for agents:]

Neither [insert company’s name] nor its agents are connected with Medicare.

[for direct response:]

[insert company’s name] is not connected with Medicare.

This outline of coverage does not give all the details of Medicare coverage. Contact your local Social Security Office or consult Medicare and You for more details.

COMPLETE ANSWERS ARE VERY IMPORTANT [Boldface Type]

When you fill out the application for the new policy, be sure to answer truthfully and completely all questions about your medical and health history. The company may cancel your policy and refuse to pay any claims if you leave out or falsify important medical information. [If the policy or certificate is guaranteed issue, this paragraph need not appear.]

Review the application carefully before you sign it. Be certain that all information has been properly recorded.

[Include for each plan prominently identified in the cover page, a chart showing the services, Medicare payments, plan payments and insured payments for each plan, using the same language, in the same order, using uniform layout and format as shown in the charts below. No more than four plans may be shown on one chart. For purposes of illustration, charts for each plan are included in this regulation. An issuer may use additional benefit plan designations on these charts pursuant to section 2208a-8 of this regulation.]

[Include an explanation of any innovative benefits on the cover page and in the chart, in a manner approved by the commissioner.]

This page is intentionally left blank

PLAN A

MEDICARE (PART A)—HOSPITAL SERVICES—PER BENEFIT PERIOD

A benefit period begins on the first day you receive service as an inpatient in a hospital and ends after you have been out of the hospital and have not received skilled care in any other facility for 60 days in a row.

SERVICES

MEDICARE PAYS

PLAN PAYS

YOU PAY

HOSPITALIZATION*

Semiprivate room and board, general nursing and miscellaneous services and supplies

First 60 days

61st thru 90th day

91st day and after:

—While using 60 lifetime reserve days

—Once lifetime reserve days are used:

—Additional 365 days

—Beyond the additional 365 days

All but $1068

All but $267 a day

All but $534 a day

$0

$0

$0

$267 a day

$534 a day

100% of Medicare eligible expenses

$0

$1068(Part A deductible)

$0

$0

$0**

All costs

SKILLED NURSING FACILITY CARE*

You must meet Medicare’s requirements, including having been in a hospital for at least 3 days and entered a Medicare-approved facility

Within 30 days after leaving the hospital

First 20 days

21st thru 100th day

101st day and after

All approved amounts

All but $133.50 a day

$0

$0

$0

$0

$0

Up to $133.50 a day

All costs

SERVICES

MEDICARE PAYS

PLAN PAYS

YOU PAY

BLOOD

First 3 pints

Additional amounts

$0

100%

3 pints

$0

$0

$0

HOSPICE CARE

You must meet Medicare's requirements, including a doctor's certification of terminal illness.

All but very limited co-payment/

coinsurance for out-patient drugs and inpatient respite care

Medicare

co-payment/

coinsurance

$0

** NOTICE: When your Medicare Part A hospital benefits are exhausted, the insurer stands in the place of Medicare and will pay whatever amount Medicare would have paid for up to an additional 365 days as provided in the policy’s “Core Benefits.” During this time the hospital is prohibited from billing you for the balance based on any difference between its billed charges and the amount Medicare would have paid.

PLAN A

MEDICARE (PART B)—MEDICAL SERVICES—PER CALENDAR YEAR

• Once you have been billed $135 of Medicare-approved amounts for covered services (which are noted with an asterisk), your Part B deductible will have been met for the calendar year.

SERVICES

MEDICARE PAYS

PLAN PAYS

YOU PAY

MEDICAL EXPENSES—

IN OR OUT OF THE HOSPITAL AND OUTPATIENT HOSPITAL TREATMENT, such as Physician’s services, inpatient and outpatient medical and surgical services and supplies, physical and speech therapy, diagnostic tests, durable medical equipment,

First $135 of Medicare

Approved Amounts*

Remainder of Medicare

Approved Amounts

$0

Generally 80%

$0

Generally 20%

$135 (Part B deductible)

$0

Part B Excess Charges

(Above Medicare Approved Amounts)

$0

$0

All costs

BLOOD

First 3 pints

Next $135 of Medicare

Approved Amounts*

Remainder of Medicare

Approved Amounts

$0

$0

80%

All costs

$0

20%

$0

$135 (Part B deductible)

$0

CLINICAL LABORATORY

SERVICES—TESTS FOR DIAGNOSTIC SERVICES

100%

$0

$0

PARTS A & B

SERVICES

MEDICARE PAYS

PLAN PAYS

YOU PAY

HOME HEALTH CARE

MEDICARE APPROVED SERVICES

Medically necessary skilled

care services and medical

supplies

Durable medical equipment

First $135 of Medicare

Approved Amounts*

Remainder of Medicare

Approved Amounts

100%

$0

80%

$0

$0

20%

$0

$135 (Part B deductible)

$0

PLAN B

MEDICARE (PART A)—HOSPITAL SERVICES—PER BENEFIT PERIOD

• A benefit period begins on the first day you receive service as an inpatient in a hospital and ends after you have been out of the hospital and have not received skilled care in any other facility for 60 days in a row.

SERVICES

MEDICARE PAYS

PLAN PAYS

YOU PAY

HOSPITALIZATION*

Semiprivate room and board, general nursing and miscellaneous services and supplies

First 60 days

61st thru 90th day

91st day and after:

—While using 60 lifetime reserve days

—Once lifetime reserve days are used:

—Additional 365 days

—Beyond the additional 365 days

All but $1068

All but $267 a day

All but $534 a day

$0

$0

$1068(Part A deductible)

$267 a day

$534 a day

100% of Medicare eligible expenses

$0

$0

$0

$0

$0**

All costs

SKILLED NURSING FACILITY CARE*

You must meet Medicare’s requirements, including having been in a hospital for at least 3 days and entered a Medicare-approved facility within 30 days after leaving the hospital

First 20 days

21st thru 100th day

101st day and after

All approved amounts

All but $133.50 a day

$0

$0

$0

$0

$0

Up to $133.50 a day

All costs

SERVICES

MEDICARE PAYS

PLAN PAYS

YOU PAY

BLOOD

First 3 pints

Additional amounts

$0

100%

3 pints

$0

$0

$0

HOSPICE CARE

You must meet Medicare's requirements, including a doctor's certification of terminal illness

All but very limited co-payment/

coinsurance for out-patient drugs and inpatient respite care

Medicare co-payment/

coinsurance

$0

** NOTICE: When your Medicare Part A hospital benefits are exhausted, the insurer stands in the place of Medicare and will pay whatever amount Medicare would have paid for up to an additional 365 days as provided in the policy’s “Core Benefits.” During this time the hospital is prohibited from billing you for the balance based on any difference between its billed charges and the amount Medicare would have paid.

PLAN B

MEDICARE (PART B)—MEDICAL SERVICES—PER CALENDAR YEAR

• Once you have been billed $135 of Medicare-approved amounts for covered services (which are noted with an asterisk), your Part B deductible will have been met for the calendar year.

SERVICES

MEDICARE PAYS

PLAN PAYS

YOU PAY

MEDICAL EXPENSES—

IN OR OUT OF THE HOSPITAL AND OUTPATIENT HOSPITAL TREATMENT, such as physician’s services, inpatient and outpatient medical and surgical services and supplies, physical and speech therapy, diagnostic tests, durable medical equipment, F

First $135 of Medicare

Approved Amounts*

Remainder of Medicare

Approved Amounts

$0

Generally 80%

$0

Generally 20%

$135 (Part B deductible)

$0

Part B Excess Charges

(Above Medicare Approved Amounts)

$0

$0

All costs

BLOOD

First 3 pints

Next $135 of Medicare

Approved Amounts*

Remainder of Medicare

Approved Amounts

$0

$0

80%

All costs

$0

20%

$0

$135 (Part B deductible)

$0

CLINICAL LABORATORY

SERVICES—TESTS FOR DIAGNOSTIC SERVICES

100%

$0

$0

PARTS A & B

SERVICES

MEDICARE PAYS

PLAN PAYS

YOU PAY

HOME HEALTH CARE

MEDICARE APPROVED SERVICES

Medically necessary skilled

care services and medical

supplies

Durable medical equipment

First $135 of Medicare

Approved Amounts*

Remainder of Medicare

Approved Amounts

100%

$0

80%

$0

$0

20%

$0

$135 (Part B deductible)

$0

PLAN C

MEDICARE (PART A)—HOSPITAL SERVICES—PER BENEFIT PERIOD

• A benefit period begins on the first day you receive service as an inpatient in a hospital and ends after you have been out of the hospital and have not received skilled care in any other facility for 60 days in a row.

SERVICES

MEDICARE PAYS

PLAN PAYS

YOU PAY

HOSPITALIZATION*

Semiprivate room and board, general nursing and miscellaneous services and supplies

First 60 days

61st thru 90th day

91st day and after:

—While using 60 lifetime reserve days

—Once lifetime reserve days are used:

Additional 365 days

—Beyond the additional 365 days

All but $1068

All but $267 a day

All but $534 a day

$0

$0

$1068(Part A deductible)

$267 a day

$534 a day

100% of Medicare eligible expenses

$0

$0

$0

$0

$0**

All costs

SKILLED NURSING FACILITY CARE*

You must meet Medicare’s requirements, including having been in a hospital for at least 3 days and entered a Medicare-approved facility within 30 days after leaving the hospital

First 20 days

21st thru 100th day

101st day and after

All approved amounts

All but $133.50 a day

$0

$0

Up to $133.50 a day

$0

$0

$0

All costs

SERVICES

MEDICARE PAYS

PLAN PAYS

YOU PAY

BLOOD

First 3 pints

Additional amounts

$0

100%

3 pints

$0

$0

$0

HOSPICE CARE

You must meet Medicare's requirements, including a doctor's certification of terminal illness.

All but very limited co-payment/

coinsurance for out-patient drugs and inpatient respite care

Medicare co-payment/

coinsurance

$0

** NOTICE: When your Medicare Part A hospital benefits are exhausted, the insurer stands in the place of Medicare and will pay whatever amount Medicare would have paid for up to an additional 365 days as provided in the policy’s “Core Benefits.” During this time the hospital is prohibited from billing you for the balance based on any difference between its billed charges and the amount Medicare would have paid.

PLAN C

MEDICARE (PART B)—MEDICAL SERVICES—PER CALENDAR YEAR

• Once you have been billed $[135] of Medicare-approved amounts for covered services (which are noted with an asterisk), your Part B deductible will have been met for the calendar year.

SERVICES

MEDICARE PAYS

PLAN PAYS

YOU PAY

MEDICAL EXPENSES—

IN OR OUT OF THE HOSPITAL AND OUTPATIENT HOSPITAL TREATMENT, such as physician’s services, inpatient and outpatient medical and surgical services and supplies, physical and speech therapy, diagnostic tests, durable medical equipment,

First $135 of Medicare

Approved Amounts*

Remainder of Medicare

Approved Amounts

$0

Generally 80%

$135 (Part B deductible)

Generally 20%

$0

$0

Part B Excess Charges

(Above Medicare Approved Amounts)

$0

$0

All costs

BLOOD

First 3 pints

Next $135 of Medicare

Approved Amounts*

Remainder of Medicare

Approved Amounts

$0

$0

80%

All costs

$135 (Part B deductible)

20%

$0

$0

$0

CLINICAL LABORATORY

SERVICES—TESTS FOR DIAGNOSTIC SERVICES

100%

$0

$0

PARTS A & B

SERVICES

MEDICARE PAYS

PLAN PAYS

YOU PAY

HOME HEALTH CARE

MEDICARE APPROVED

SERVICES

Medically necessary skilled care services and medical supplies

Durable medical equipment

First $135 of Medicare

Approved Amounts*

Remainder of Medicare

Approved Amounts

100%

$0

80%

$0

$135(Part B deductible)

20%

$0

$0

$0

OTHER BENEFITS—NOT COVERED BY MEDICARE

SERVICES

MEDICARE PAYS

PLAN PAYS

YOU PAY

FOREIGN TRAVEL

NOT COVERED BY MEDICARE

Medically necessary emergency care services beginning during the first 60 days of each trip outside the USA

First $250 each calendar year

Remainder of Charges

$0

$0

$0

80% to a lifetime maxi-mum benefit of $50,000

$250

20% and amounts over the $50,000 lifetime maximum

PLAN D

MEDICARE (PART A)—HOSPITAL SERVICES—PER BENEFIT PERIOD

• A benefit period begins on the first day you receive service as an inpatient in a hospital and ends after you have been out of the hospital and have not received skilled care in any other facility for 60 days in a row.

SERVICES

MEDICARE PAYS

PLAN PAYS

YOU PAY

HOSPITALIZATION*

Semiprivate room and board, general nursing and miscellaneous services and supplies

First 60 days

61st thru 90th day

91st day and after:

—While using 60 lifetime reserve days

—Once lifetime reserve days are used:

Additional 365 days

—Beyond the additional 365 days

All but $1068

All but $267 a day

All but $534 a day

$0

$0

$1068 (Part A deductible)

$267 a day

$534 a day $0

100% of Medicare eligible expenses

$0

$0

$0

$0

$0**

All costs

SKILLED NURSING FACILITY CARE*

You must meet Medicare’s requirements, including having been in a hospital for at least 3 days and entered a Medicare-approved facility within 30 days after leaving the hospital

First 20 days

21st thru 100th day

101st day and after

All approved amounts

All but $133.50 a day

$0

$0

Up to $133.50 a day

$0

$0

$0

All costs

SERVICES

MEDICARE PAYS

PLAN PAYS

YOU PAY

BLOOD

First 3 pints

Additional amounts

$0

100%

3 pints

$0

$0

$0

HOSPICE CARE

You must meet Medicare's requirements, including a doctor's certification of terminal illness

All but very limited co-payment/

coinsurance for out-patient drugs and inpatient respite care

Medicare co-payment/

coinsurance

$0

** NOTICE: When your Medicare Part A hospital benefits are exhausted, the insurer stands in the place of Medicare and will pay whatever amount Medicare would have paid for up to an additional 365 days as provided in the policy’s “Core Benefits.” During this time the hospital is prohibited from billing you for the balance based on any difference between its billed charges and the amount Medicare would have paid.

PLAN D

MEDICARE (PART B)—MEDICAL SERVICES—PER CALENDAR YEAR

• Once you have been billed $135 of Medicare-approved amounts for covered services (which are noted with an asterisk), your Part B deductible will have been met for the calendar year.

SERVICES

MEDICARE PAYS

PLAN PAYS

YOU PAY

MEDICAL EXPENSES—

IN OR OUT OF THE HOSPITAL AND OUTPATIENT HOSPITAL TREATMENT, such as physician’s services, inpatient and outpatient medical and surgical services and supplies, physical and speech therapy, diagnostic tests, durable medical equipment,

First $135 of Medicare

Approved Amounts*

Remainder of Medicare

Approved Amounts

$0

Generally 80%

$0

Generally 20%

$135 (Part B deductible)

$0

Part B Excess Charges

(Above Medicare Approved Amounts)

$0

$0

All costs

BLOOD

First 3 pints

Next $135 of Medicare

Approved Amounts*

Remainder of Medicare

Approved Amounts

$0

$0

80%

All costs

$0

20%

$0

$135 (Part B deductible)

$0

CLINICAL LABORATORY

SERVICES—TESTS FOR DIAGNOSTIC SERVICES

100%

$0

$0

PLAN D

PARTS A & B

SERVICES

MEDICARE PAYS

PLAN PAYS

YOU PAY

HOME HEALTH CARE

MEDICARE APPROVED

SERVICES

Medically necessary skilled care services and medical supplies

Durable medical equipment

First $135 of Medicare

Approved Amounts*

Remainder of Medicare

Approved Amounts

100%

$0

80%

$0

$0

20%

$0

$135 (Part B deductible)

$0

OTHER BENEFITS—NOT COVERED BY MEDICARE

SERVICES

MEDICARE PAYS

PLAN PAYS

YOU PAY

FOREIGN TRAVEL—NOT COVERED BY MEDICARE

Medically necessary emergency care services beginning during the first 60 days of each trip outside the USA

First $250 each calendar year

Remainder of charges

$0

$0

$0

80% to a lifetime maxi-mum benefit of $50,000

$250

20% and amounts over the $50,000 lifetime maximum

PLAN F or HIGH DEDUCTIBLE PLAN F

MEDICARE (PART A) – HOSPITAL SERVICES – PER BENEFIT PERIOD

A benefit period begins on the first day you receive service as an inpatient in a hospital and ends after you have been out of the hospital and have not received skilled care in any other facility for 60 days in a row.

**This high deductible plan pays the same benefits as Plan F after one has paid a calendar year $2000 deductible. Benefits from the high deductible plan F will not begin until out-of-pocket expenses are $2000. Out-of-pocket expenses for this deductible are expenses that would ordinarily be paid by the policy. This includes the Medicare deductibles for Part A and Part B, but does not include the plan’s separate foreign travel emergency deductible.]

SERVICES

MEDICARE PAYS

AFTER YOU PAY

$2000 DEDUCTIBLE,**

PLAN PAYS

IN ADDITION

TO $2000 DEDUCTIBLE,**

YOU PAY

HOSPITALIZATION*

Semiprivate room and board, general nursing and miscellaneous services and supplies

First 60 days

61st thru 90th day

91st day and after:

—While using 60 Lifetime reserve days

Once lifetime reserve days are used:

—Additional 365 days

Beyond the additional

365 days

All but $1068

All but $267 a day

All but $534 a day

$0

$0

$1068 (Part A deductible)

$267 a day

$534 a day

100% of Medicare

eligible expenses

$0

$0

$0

$0

$0***

All costs

SERVICES

MEDICARE PAYS

AFTER YOU PAY

$2000 DEDUCTIBLE,**

PLAN PAYS

IN ADDITION

TO $2000 DEDUCTIBLE,**

YOU PAY

SKILLED NURSING

FACILITY CARE*

You must meet Medicare’s requirements, including having been in a hospital for at least 3 days and entered a Medicare-approved facility within 30 days after leaving the hospital

First 20 days

21st thru 100th day

101st day and after

All approved amounts

All but $[133.50] a day

$0

$0

Up to $133.50 a day

$0

$0

$0

All costs

BLOOD

First 3 pints

Additional amounts

$0

100%

3 pints

$0

$0

$0

HOSPICE CARE

You must meet Medicare's requirements, including a doctor's certification of terminal illness.

All but very limited co-payment/

coinsurance for out-patient drugs and inpatient respite care

Medicare co-payment/coinsurance

$0

*** NOTICE: When your Medicare Part A hospital benefits are exhausted, the insurer stands in the place of Medicare and will pay whatever amount Medicare would have paid for up to an additional 365 days as provided in the policy’s “Core Benefits.” During this time the hospital is prohibited from billing you for the balance based on any difference between its billed charges and the amount Medicare would have paid.

PLAN F or HIGH DEDUCTIBLE PLAN F

MEDICARE (PART B) - MEDICAL SERVICES - PER CALENDAR YEAR

*Once you have been billed $135 of Medicare-approved amounts for covered services (which are noted with an asterisk), your Part B deductible will have been met for the calendar year.

**This high deductible plan pays the same benefits as Plan F after one has paid a calendar year $2000 deductible. Benefits from the high deductible plan F will not begin until out-of-pocket expenses are $2000. Out-of-pocket expenses for this deductible are expenses that would ordinarily be paid by the policy. This includes the Medicare deductibles for Part A and Part B, but does not include the plan’s separate foreign travel emergency deductible.

SERVICES

MEDICARE PAYS

AFTER YOU PAY

$2000 DEDUCTIBLE,**

PLAN PAYS

IN ADDITION TO $2000 DEDUCTIBLE,**

YOU PAY

MEDICAL EXPENSES -

IN OR OUT OF THE

HOSPITAL AND OUTPATIENT

HOSPITAL TREATMENT,

Such as physician’s

Services, inpatient and

Outpatient medical and

Surgical services and

Supplies, physical and

Speech therapy,

Diagnostic tests,

Durable medical

Equipment,

First $135 of Medicare

Approved amounts*

Remainder of Medicare

Approved amounts

$0

Generally 80%

$135 (Part B

deductible)

Generally 20%

$0

$0

Part B excess charges

(Above Medicare Approved Amounts)

$0

100%

$0

BLOOD

First 3 pints

Next $135 of Medicare

Approved amounts*

Remainder of Medicare

Approved amounts

$0

$0

80%

All costs

$135 (Part B

deductible)

20%

$0

$0

$0

SERVICES

MEDICARE PAYS

AFTER YOU PAY

$2000 DEDUCTIBLE,

PLAN PAYS

IN ADDITION TO $2000 DEDUCTIBLE,**

YOU PAY

CLINICAL LABORATORY

SERVICES—-TESTS

FOR DIAGNOSTIC SERVICES

100%

$0

$0

PLAN F or HIGH DEDUCTIBLE PLAN F

PARTS A & B

SERVICES

MEDICARE PAYS

AFTER YOU PAY

$2000 DEDUCTIBLE,**

PLAN PAYS

IN ADDITION TO $2000 DEDUCTIBLE,**

YOU PAY

HOME HEALTH CARE

MEDICARE APPROVED

SERVICES

Medically necessary skilled care services and medical supplies

—Durable medical equipment

First $135 of Medicare Approved Amounts*

Remainder of Medicare —

Approved Amounts

100%

$0

80%

$0

$135 (Part B

deductible)

20%

$0

$0

$0

OTHER BENEFITS - NOT COVERED BY MEDICARE

SERVICES

MEDICARE PAYS

AFTER YOU PAY

$2000 DEDUCTIBLE,**

PLAN PAYS

IN ADDITION TO $2000 DEDUCTIBLE,**

YOU PAY

FOREIGN TRAVEL -

NOT COVERED BY MEDICARE

Medically necessary

Emergency care services

Beginning during the

first 60 days of each

trip outside the USA

First $250 each calendar year

Remainder of charges

$0

$0

$0

80% to a lifetime

maximum benefit

of $50,000

$250

20% and amounts

over the $50,000 lifetime maximum

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PLAN G

MEDICARE (PART A)—HOSPITAL SERVICES—PER BENEFIT PERIOD

• A benefit period begins on the first day you receive service as an inpatient in a hospital and ends after you have been out of the hospital and have not received skilled care in any other facility for 60 days in a row.

SERVICES

MEDICARE PAYS

PLAN PAYS

YOU PAY

HOSPITALIZATION*

Semiprivate room and board, general nursing and miscellaneous services and supplies

First 60 days

61st thru 90th day

91st day and after:

—While using 60 lifetime reserve days

—Once lifetime reserve days are used:

—Additional 365 days

—Beyond the additional 365 days

All but $1068

All but $267 a day

All but $534 a day

$0

$0

$1068 (Part A deductible)

$267 a day

$534 a day

100% of Medicare eligible expenses

$0

$0

$0

$0

$0**

All costs

SKILLED NURSING FACILITY CARE*

You must meet Medicare’s requirements, including having been in a hospital for at least 3 days and entered a Medicare-approved facility within 30 days after leaving the hospital

First 20 days

21st thru 100th day

101st day and after

All approved amounts

All but $133.50 a day

$0

$0

Up to $133.50 a day

$0

$0

$0

All costs

BLOOD

First 3 pints

Additional amounts

$0

100%

3 pints

$0

$0

$0

SERVICES

MEDICARE PAYS

PLAN PAYS

YOU PAY

HOSPICE CARE

You must meet Medicare's requirements, including a doctor's certification of terminal illness

All but very limited co-payment/ coinsurance for out-patient drugs and inpatient respite care

Medicare co-payment/

coinsurance

$0

** NOTICE: When your Medicare Part A hospital benefits are exhausted, the insurer stands in the place of Medicare and will pay whatever amount Medicare would have paid for up to an additional 365 days as provided in the policy’s “Core Benefits.” During this time, the hospital is prohibited from billing you for the balance based on any difference between its billed charges and the amount Medicare would have paid.

PLAN G

MEDICARE (PART B)—MEDICAL SERVICES—PER CALENDAR YEAR

• Once you have been billed $133.50 of Medicare-approved amounts for covered services (which are noted with an asterisk), your Part B deductible will have been met for the calendar year.

SERVICES

MEDICARE PAYS

PLAN PAYS

YOU PAY

MEDICAL EXPENSES—IN OR OUT OF THE HOSPITAL AND OUTPATIENT HOSPITAL TREATMENT, such as physician’s services, inpatient and outpatient medical and surgical services and supplies, physical and speech therapy, diagnostic tests, durable medical equipment,

First $135 of Medicare

Approved Amounts*

Remainder of Medicare

Approved Amounts

$0

Generally 80%

$0

Generally 20%

$135 (Part B deductible)

$0

Part B Excess Charges

(Above Medicare Approved Amounts)

$0

100%

$0

BLOOD

First 3 pints

Next $135 of Medicare

Approved Amounts*

Remainder of Medicare

Approved Amounts

$0

$0

80%

All costs

$0

20%

$0

$135 (Part B deductible)

$0

CLINICAL LABORATORY

SERVICES—TESTS FOR DIAGNOSTIC SERVICES

100%

$0

$0

PLAN G

PARTS A & B

SERVICES

MEDICARE PAYS

PLAN PAYS

YOU PAY

HOME HEALTH CARE

MEDICARE APPROVED SERVICES

Medically necessary skilled

care services and medical

supplies

—Durable medical equipment

First $135 of Medicare

Approved Amounts*

Remainder of Medicare

Approved Amounts

100%

$0

80%

$0

$0

20%

$0

$135 (Part B deductible)

$0

OTHER BENEFITS—NOT COVERED BY MEDICARE

SERVICES

MEDICARE PAYS

PLAN PAYS

YOU PAY

FOREIGN TRAVEL—

NOT COVERED BY MEDICARE

Medically necessary emergency care services beginning during the first 60 days of each trip outside the USA

First $250 each calendar year

Remainder of Charges

$0

$0

$0

80% to a lifetime maxi-mum benefit of $50,000

$250

20% and amounts over the $50,000 lifetime maximum

PLAN K

• You will pay half the cost-sharing of some covered services until you reach the annual out-of-pocket limit of $[4620] each calendar year. The amounts that count toward your annual limit are noted with diamonds (♦) in the chart below. Once you reach the annual limit, the plan pays 100% of your Medicare co-payment and coinsurance for the rest of the calendar year. However, this limit does NOT include charges from your provider that exceed Medicare-approved amounts (these are called “Excess Charges”) and you will be responsible for paying this difference in the amount charged by your provider and the amount paid by Medicare for the item or service.

MEDICARE (PART A)—HOSPITAL SERVICES—PER BENEFIT PERIOD

** A benefit period begins on the first day you receive service as an inpatient in a hospital and ends after you have been out of the hospital and have not received skilled care in any other facility for 60 days in a row.

SERVICES

MEDICARE PAYS

PLAN PAYS

YOU PAY*

HOSPITALIZATION**

Semiprivate room and board, general nursing and miscellaneous services and supplies

First 60 days

61st thru 90th day

91st day and after:

—While using

60 lifetime reserve days

—Once lifetime reserve days are used:

—Additional 365 days

—Beyond the additional 365 days

All but $1068

All but $267 a day

All but $534 a day

$0

$0

$534(50% of Part A deductible)

$267 a day

$534 a day

100% of Medicare eligible expenses

$0

$534(50% of Part A deductible)♦

$0

$0

$0***

All costs

*** NOTICE: When your Medicare Part A hospital benefits are exhausted, the insurer stands in the place of Medicare and will pay whatever amount Medicare would have paid for up to an additional 365 days as provided in the policy’s “Core Benefits.” During this time, the hospital is prohibited from billing you for the balance based on any difference between its billed charges and the amount Medicare would have paid.

SERVICES

MEDICARE PAYS

PLAN PAYS

YOU PAY*

SKILLED NURSING FACILITY CARE**

You must meet Medicare’s requirements, including having been in a hospital for at least 3 days and entered a Medicare-approved facility

Within 30 days after leaving the hospital

First 20 days

21st thru 100th day

101st day and after

All approved amounts.

All but $133.50 a day

$0

$0

Up to $66.75 a day

$0

$0

Up to $66.75 a day ♦

All costs

BLOOD

First 3 pints

Additional amounts

$0

100%

50%

$0

50%♦

$0

HOSPICE CARE

You must meet Medicare's requirements, including a doctor's certification of terminal illness.

All but very limited co-payment/

coinsurance for outpatient drugs and inpatient respite care

50% of co-payment/

coinsurance

50% of Medicare co-payment/coinsurance♦

PLAN K

MEDICARE (PART B)—MEDICAL SERVICES—PER CALENDAR YEAR

**** Once you have been billed $135 of Medicare-approved amounts for covered services (which are noted with an asterisk), your Part B deductible will have been met for the calendar year.

SERVICES

MEDICARE PAYS

PLAN PAYS

YOU PAY*

MEDICAL EXPENSES—

IN OR OUT OF THE HOSPITAL AND OUTPATIENT HOSPITAL TREATMENT, such as Physician’s services, inpatient and outpatient medical and surgical services and supplies, physical and speech therapy, diagnostic tests, durable medical equipment,

First $135 of Medicare

Approved Amounts****

Preventive Benefits for

Medicare covered services

Remainder of Medicare

Approved Amounts

$0

Generally 75% or more of Medicare approved amounts

Generally 80%

$0

Remainder of Medicare approved amounts

Generally 10%

$135 (Part B deductible)**** ♦

All costs above Medicare approved amounts

Generally 10% ♦

Part B Excess Charges

(Above Medicare Approved Amounts)

$0

$0

All costs (and they do not count toward annual out-of-pocket limit of $4620)*

BLOOD

First 3 pints

Next $135 of Medicare Approved Amounts****

Remainder of Medicare Approved Amounts

$0

$0

Generally 80%

50%

$0

Generally 10%

50%♦

$135 (Part B deductible)**** ♦

Generally 10% ♦

CLINICAL LABORATORY

SERVICES—TESTS FOR DIAGNOSTIC SERVICES

100%

$0

$0

• This plan limits your annual out-of-pocket payments for Medicare-approved amounts to $4620 per year. However, this limit does NOT include charges from your provider that exceed Medicare-approved amounts (these are called “Excess Charges”) and you will be responsible for paying this difference in the amount charged by your provider and the amount paid by Medicare for the item or service.

PLAN K

PARTS A & B

SERVICES

MEDICARE PAYS

PLAN PAYS

YOU PAY*

HOME HEALTH CARE

MEDICARE APPROVED SERVICES

Medically necessary skilled

care services and medical

supplies

—Durable medical equipment

First $135 of Medicare

Approved Amounts*****

Remainder of Medicare

Approved Amounts

100%

$0

80%

$0

$0

10%

$0

$135 (Part B deductible) ♦

10%♦

*****Medicare benefits are subject to change. Please consult the latest Guide to Health Insurance for People with Medicare. http://www.medicare.gov/Publications/Pubs/pdf/02110.pdf

PLAN L

• You will pay one-fourth of the cost-sharing of some covered services until you reach the annual out-of-pocket limit of $2310 each calendar year. The amounts that count toward your annual limit are noted with diamonds (♦) in the chart below. Once you reach the annual limit, the plan pays 100% of your Medicare copayment and coinsurance for the rest of the calendar year. However, this limit does NOT include charges from your provider that exceed Medicare-approved amounts (these are called “Excess Charges”) and you will be responsible for paying this difference in the amount charged by your provider and the amount paid by Medicare for the item or service.

MEDICARE (PART A)—HOSPITAL SERVICES—PER BENEFIT PERIOD

** A benefit period begins on the first day you receive service as an inpatient in a hospital and ends after you have been out of the hospital and have not received skilled care in any other facility for 60 days in a row.

SERVICES

MEDICARE PAYS

PLAN PAYS

YOU PAY*

HOSPITALIZATION**

Semiprivate room and board, general nursing and miscellaneous services and supplies

First 60 days

61st thru 90th day

91st day and after:

—While using 60 lifetime reserve days

—Once lifetime reserve days are used:

—Additional 365 days

—Beyond the additional 365

days

All but $1068

All but $267 a day

All but $534 a day

$0

$0

$808.50 (75% of Part A deductible)

$267 a day

$534 a day

100% of Medicare eligible expenses

$0

$[267] (25% of Part A deductible)♦

$0

$0

$0***

All costs

SKILLED NURSING FACILITY CARE**

You must meet Medicare’s requirements, including having been in a hospital for at least 3 days and entered a Medicare-approved facility

Within 30 days after leaving the hospital

First 20 days

21st thru 100th day

101st day and after

All approved amounts

All but $133.50 a day

$0

$0

Up to $100.13 a day

$0

$0

Up to $33.38 a day♦

All costs

SERVICES

MEDICARE PAYS

PLAN PAYS

YOU PAY*

BLOOD

First 3 pints

Additional amounts

$0

100%

75%

$0

25%♦

$0

HOSPICE CARE

You must meet Medicare's requirements, including a doctor's certification of terminal illness.

All but very limited co-payment/

coinsurance for outpatient drugs and inpatient respite care

75% of co-payment/

coinsurance

25% of co-payment/

coinsurance ♦

*** NOTICE: When your Medicare Part A hospital benefits are exhausted, the insurer stands in the place of Medicare and will pay whatever amount Medicare would have paid for up to an additional 365 days as provided in the policy’s “Core Benefits.” During this time, the hospital is prohibited from billing you for the balance based on any difference between its billed charges and the amount Medicare would have paid.

PLAN L

MEDICARE (PART B)—MEDICAL SERVICES—PER CALENDAR YEAR

**** Once you have been billed $135 of Medicare-approved amounts for covered services (which are noted with an asterisk), your Part B deductible will have been met for the calendar year.

SERVICES

MEDICARE PAYS

PLAN PAYS

YOU PAY*

MEDICAL EXPENSES—

IN OR OUT OF THE HOSPITAL AND OUTPATIENT HOSPITAL TREATMENT, such as Physi-cian’s services, inpatient and outpatient medical and surgical services and supplies, physical and speech therapy, diagnostic tests, durable medical equipment,

First $135 of Medicare Approved Amounts****

Preventive Benefits for Medicare covered services

Remainder of Medicare Approved Amounts

$0

Generally 75% or more of Medicare approved amounts

Generally 80%

$0

Remainder of Medicare approved amounts

Generally 15%

$135 (Part B deductible)**** ♦

All costs above Medicare approved amounts

Generally 5% ♦

Part B Excess Charges

(Above Medicare Approved Amounts)

$0

$0

All costs (and they do not count toward annual out-of-pocket limit of $2310)*

BLOOD

First 3 pints

Next $135 of Medicare Approved Amounts****

Remainder of Medicare Approved Amounts

$0

$0

Generally 80%

75%

$0

Generally 15%

25%♦

$135 (Part B deductible) ♦

Generally 5%♦

CLINICAL LABORATORY

SERVICES—TESTS FOR DIAGNOSTIC SERVICES

100%

$0

$0

• This plan limits your annual out-of-pocket payments for Medicare-approved amounts to $2310 per year. However, this limit does NOT include charges from your provider that exceed Medicare-approved amounts (these are called “Excess Charges”) and you will be responsible for paying this difference in the amount charged by your provider and the amount paid by Medicare for the item or service.

PLAN L

PARTS A & B

SERVICES

MEDICARE PAYS

PLAN PAYS

YOU PAY*

HOME HEALTH CARE

MEDICARE APPROVED SERVICES

Medically necessary skilled

care services and medical

supplies

—Durable medical equipment

First $135 of Medicare

Approved Amounts*****

Remainder of Medicare Approved Amounts

100%

$0

80%

$0

$0

15%

$0

$135 (Part B deductible) ♦

5% ♦

*****Medicare benefits are subject to change. Please consult the latest Guide to Health Insurance for People with Medicare. http://www.medicare.gov/Publications/Pubs/pdf/02110.pdf

PLAN M

MEDICARE (PART A)—HOSPITAL SERVICES—PER BENEFIT PERIOD

• A benefit period begins on the first day you receive service as an inpatient in a hospital and ends after you have been out of the hospital and have not received skilled care in any other facility for 60 days in a row.

SERVICES

MEDICARE PAYS

PLAN PAYS

YOU PAY

HOSPITALIZATION*

Semiprivate room and board, general nursing and miscellaneous services and supplies

First 60 days

61st thru 90th day

91st day and after:

—While using 60 lifetime reserve days

—Once lifetime reserve days are used:

—Additional 365 days

—Beyond the additional 365 days

All but $1068

All but $267 a day

All but $534 a day

$0

$0

$534(50% of Part A deductible)

$267 a day

$534 a day

100% of Medicare eligible expenses

$0

$[534](50% of Part A deductible)

$0

$0

$0**

All costs

SKILLED NURSING FACILITY CARE*

You must meet Medicare’s requirements, including having been in a hospital for at least 3 days and entered a Medicare-approved facility within 30 days after leaving the hospital

First 20 days

21st thru 100th day

101st day and after

All approved amounts

All but $133.50 a day

$0

$0

Up to $133.50 a day

$0

$0

$0

All costs

BLOOD

First 3 pints

Additional amounts

$0

100%

3 pints

$0

$0

$0

SERVICES

MEDICARE PAYS

PLAN PAYS

YOU PAY

HOSPICE CARE

You must meet Medicare’s requirements, including a doctor’s certification of terminal illness

All but very limited co-payment/

coinsurance for outpatient drugs and inpatient respite care

Medicare co-payment/

coinsurance

$0

** NOTICE: When your Medicare Part A hospital benefits are exhausted, the insurer stands in the place of Medicare and will pay whatever amount Medicare would have paid for up to an additional 365 days as provided in the policy’s “Core Benefits.” During this time the hospital is prohibited from billing you for the balance based on any difference between its billed charges and the amount Medicare would have paid.

PLAN M

MEDICARE (PART B)—MEDICAL SERVICES—PER CALENDAR YEAR

• Once you have been billed $135 of Medicare-approved amounts for covered services (which are noted with an asterisk), your Part B deductible will have been met for the calendar year.

SERVICES

MEDICARE PAYS

PLAN PAYS

YOU PAY

MEDICAL EXPENSES—

IN OR OUT OF THE HOSPITAL AND OUTPATIENT HOSPITAL TREATMENT, such as physician’s services, inpatient and outpatient medical and surgical services and supplies, physical and speech therapy, diagnostic tests, durable medical equipment

—First $135 of Medicare Approved Amounts*

Remainder of Medicare

Approved Amounts

$0

Generally 80%

$0

Generally 20%

$135 (Part B deductible)

$0

Part B Excess Charges

(Above Medicare Approved Amounts)

$0

$0

All costs

BLOOD

First 3 pints

Next $135 of Medicare Approved Amounts*

Remainder of Medicare Approved Amounts

$0

$0

80%

All costs

$0

20%

$0

$135 (Part B deductible)

$0

CLINICAL LABORATORY

SERVICES—TESTS FOR DIAGNOSTIC SERVICES

100%

$0

$0

PARTS A & B

SERVICES

MEDICARE PAYS

PLAN PAYS

YOU PAY

HOME HEALTH CARE

MEDICARE APPROVED

SERVICES

Medically necessary skilled

care services and medical

supplies

—Durable medical equipment

First $135 of Medicare

Approved Amounts*

Remainder of Medicare

Approved Amounts

100%

$0

80%

$0

$0

20%

$0

$135(Part B deductible)

$0

OTHER BENEFITS—NOT COVERED BY MEDICARE

SERVICES

MEDICARE PAYS

PLAN PAYS

YOU PAY

FOREIGN TRAVEL—

NOT COVERED BY MEDICARE

Medically necessary emergency care services beginning during the first 60 days of each trip outside the USA

First $250 each calendar year

Remainder of Charges

$0

$0

$0

80% to a lifetime maxi-mum benefit of $50,000

$250

20% and amounts over the $50,000 lifetime maximum

PLAN N

MEDICARE (PART A)—HOSPITAL SERVICES—PER BENEFIT PERIOD

• A benefit period begins on the first day you receive service as an inpatient in a hospital and ends after you have been out of the hospital and have not received skilled care in any other facility for 60 days in a row.

SERVICES

MEDICARE PAYS

PLAN PAYS

YOU PAY

HOSPITALIZATION*

Semiprivate room and board, general nursing and miscellaneous services and supplies

First 60 days

61st thru 90th day

91st day and after:

—While using 60 lifetime reserve days

—Once lifetime reserve days are used:

—Additional 365 days

—Beyond the additional 365 days

All but $1068

All but $267 a day

All but $534 a day

$0

$0

$1068(Part A deductible)

$267 a day

$534 a day

100% of Medicare eligible expenses

$0

$0

$0

$0

$0**

All costs

SKILLED NURSING FACILITY CARE*

You must meet Medicare’s requirements, including having been in a hospital for at least 3 days and entered a Medicare-approved facility within 30 days after leaving the hospital

First 20 days

21st thru 100th day

101st day and after

All approved amounts

All but $133.50 a day

$0

$0

Up to $133.50 a day

$0

$0

$0

All costs

BLOOD

First 3 pints

Additional amounts

$0

100%

3 pints

$0

$0

$0

SERVICES

MEDICARE PAYS

PLAN PAYS

YOU PAY

HOSPICE CARE

You must meet Medicare’s requirements, including a doctor’s certification of terminal illness

All but very limited co-payment/

coinsurance for outpatient drugs and inpatient respite care

Medicare co-payment/

coinsurance

$0

** NOTICE: When your Medicare Part A hospital benefits are exhausted, the insurer stands in the place of Medicare and will pay whatever amount Medicare would have paid for up to an additional 365 days as provided in the policy’s “Core Benefits.” During this time the hospital is prohibited from billing you for the balance based on any difference between its billed charges and the amount Medicare would have paid.

PLAN N

MEDICARE (PART B)—MEDICAL SERVICES—PER CALENDAR YEAR

• Once you have been billed $135 of Medicare-approved amounts for covered services (which are noted with an asterisk), your Part B deductible will have been met for the calendar year.

SERVICES

MEDICARE PAYS

PLAN PAYS

YOU PAY

MEDICAL EXPENSES—

IN OR OUT OF THE HOSPITAL AND OUTPATIENT HOSPITAL TREATMENT, such as physician’s services, inpatient and outpatient medical and surgical services and supplies, physical and speech therapy, diagnostic tests, durable medical equipment

First $135 of Medicare

Approved Amounts*

Remainder of Medicare

Approved Amounts

$0

Generally 80%

$0

Balance, other than up to $20 per office visit and up to $50 per emergency room visit. The co-payment of up to $50 is waived if the insured is admitted to any hospital and the emergency visit is covered as a Medicare Part A expense.

$135 (Part B deductible)

up to $20 per office visit and up to $50 per emergency room visit. The co-payment of up to $50 is waived if the insured is admitted to any hospital and the emergency visit is covered as a Medicare Part A expense.

Part B Excess Charges

(Above Medicare Approved Amounts)

$0

$0

All costs

BLOOD

First 3 pints

Next $135 of Medicare Approved Amounts*

Remainder of Medicare Approved Amounts

$0

$0

80%

All costs

$0

20%

$0

$135 (Part B deductible)

$0

CLINICAL LABORATORY

SERVICES—TESTS FOR DIAGNOSTIC SERVICES

100%

$0

$0

PARTS A & B

SERVICES

MEDICARE PAYS

PLAN PAYS

YOU PAY

HOME HEALTH CARE

MEDICARE APPROVED

SERVICES

Medically necessary skilled

care services and medical

supplies

—Durable medical equipment

First $135 of Medicare

Approved Amounts*

Remainder of Medicare

Approved Amounts

100%

$0

80%

$0

$0

20%

$0

$135 (Part B deductible)

$0

OTHER BENEFITS—NOT COVERED BY MEDICARE

SERVICES

MEDICARE PAYS

PLAN PAYS

YOU PAY

FOREIGN TRAVEL—

NOT COVERED BY MEDICARE

Medically necessary emergency care services beginning during the first 60 days of each trip outside the USA

First $250 each calendar year

Remainder of Charges

$0

$0

$0

80% to a lifetime maximum benefit of $50,000

$250

20% and amounts over the $50,000 lifetime maximum

History

• SOURCE: Final Rulemaking published at 46 DCR 10175 (December 17, 1999); as amended by Final Rulemaking published at 50 DCR 4166 (May 30, 2003); as amended by Final Rulemaking published at 50 DCR 5882 (July 25, 2003); as amended by Final Rulemaking published at 53 DCR 2955(April 14, 2006); as amended by Final Rulemaking published at 53 DCR 8467(October 20, 2006); as amended by Final Rulemaking published at 56 DCR 8840 (November 13, 2009), incorporating text of Emergency and Proposed Rulemaking published at 56 DCR 7661, 7675 (September 25, 2009). 48 © 2004 National Association of Insurance Commissioners © 2004 National Association of Insurance Commissioners © 2004 National Association of Insurance Commissioners

26-A DCMR § 2221 REQUIRED DISCLOSURE PROVISIONS - NOTICE REGARDING POLICIES OR CERTIFICATES WHICH ARE NOT MEDICARE SUPPLEMENT POLICIES

2221.1 Any accident and sickness insurance policy or certificate other than a Medicare supplement policy, any policy issued pursuant to a contract under section 1876 of the Social Security Act, any disability income policy; or any other policy identified in subsection 2202.2, that is issued for delivery in the District to persons eligible for Medicare shall notify insureds under the policy that the policy is not a Medicare supplement policy or certificate.

2221.2 The notice shall either be printed or attached to the first page of the outline of coverage delivered to insureds under the policy, or if no outline of coverage is delivered, to the first page of the policy or certificate delivered to insureds and the notice shall be in no less than twelve (12) point type and shall contain the following language:

"THIS [POLICY OR CERTIFICATE] IS NOT A MEDICARE SUPPLEMENT [POLICY OR CONTRACT]. IF YOU ARE ELIGIBLE FOR MEDICARE, REVIEW THE GUIDE TO HEALTH INSURANCE FOR PEOPLE WITH MEDICARE AVAILABLE FROM THE COMPANY."

2221.3 Applications provided to persons eligible for Medicare for the health insurance policies or certificates described in subsection 2221.1 shall disclose using the applicable statement in Appendix C, the extent to which the policy duplicates Medicare. The disclosure statement shall be provided as a part of, or together with the application for the policy or certificate.

History

• SOURCE: Final Rulemaking published at 46 DCR 10175 (December 17, 1999); as amended by Final Rulemaking published at 50 DCR 4166 (May 30, 2003); as amended by Final Rulemaking published at 50 DCR 5882 (July 25, 2003); as amended by Final Rulemaking published at 53 DCR 2955(April 14, 2006).

26-A DCMR § 2222 REQUIREMENTS FOR APPLICATION FORMS AND REPLACEMENT COVERAGE

2222.1 Application forms shall include the following statements and questions designed to elicit information as to whether, as of the date of the application, the applicant currently has Medicare supplement, Medicare Advantage, Medicaid coverage, or another health insurance policy or certificate in force or whether a Medicare supplement policy or certificate is intended to replace any other accident and sickness policy or certificate presently in force.

2222.2 A supplementary application or other form to be signed by the applicant and agent containing such questions and statements may be used.

(a) Required Statements

(1) You do not need more than one Medicare supplement policy. If you purchase this policy, you may want to evaluate your existing health coverage and decide if you need multiple coverage;

(2) You may be eligible for benefits under Medicaid and may not need a Medicare supplement policy;

(3) If, after purchasing the policy, you become eligible for Medicaid, the benefits and premiums under the Medicare supplement policy can be suspended if requested during your entitlement to benefits under Medicaid for twenty-four (24) months. You must request this suspension within ninety (90) days of becoming eligible for Medicaid. If you are no longer entitled to Medicaid, your suspended Medicare supplement policy (or, if that is no longer available, a substantially equivalent policy) will be reinstated if requested within ninety (90) days of losing Medicaid eligibility. If the Medicare supplement policy provided coverage for outpatient prescription drugs and you enrolled in Medicare Part D while your policy was suspended, the reinstituted policy will not have outpatient prescription drug coverage, but will otherwise be substantially equivalent to your coverage before the date of the suspension.

(4) If you are eligible for, and have enrolled in a Medicare supplement policy by reason of disability and you later become covered by an employer or union-based group health plan, the benefits and premiums under your Medicare supplement policy can be suspended, if requested, while you are covered under the employer or union-based group health plan. If you suspend your Medicare supplement policy under these circumstances, and later lose your employer or union-based health plan, your suspended Medicare supplement policy (or, if that is no longer available, a substantially equivalent policy) will be reinstituted if requested within 90 days of losing your employer or union-based group health plan. If the Medicare supplement policy provided coverage for outpatient prescription drugs and your enrolled in Medicare Part D while your policy was suspended, the reinstituted policy will not have outpatient prescription drug coverage, but will otherwise be substantially equivalent to your coverage before the date of the suspension.

(5) Counseling services may be available in the District to provide advice concerning your purchase of Medicare supplement insurance and concerning medical assistance through the District's Medicaid program, including benefits as a Qualified Medicare Beneficiary (QMB) and a Specified Low Income Medicare Beneficiary (SLMB).

(b) Required Questions. If you lost or are losing other health insurance coverage and received a notice from your prior insurer saying you were eligible for guaranteed issue of a Medicare supplement insurance policy, or that you had certain rights to buy such a policy, you may be guaranteed acceptance in one or more of our Medicare supplement plans. Please include a copy of the notice from your prior insurer with your application. PLEASE ANSWER ALL QUESTIONS.

[Please mark Yes or No below with an "X"]

To the best of your knowledge:

(1) (a) Did you turn 65 in the last 6 months?

Yes No

(b) Did you enroll in Medicare Part B in the last 6 months?

Yes No

(c) If yes, what is the effective date?

(2) Are you covered for medical assistance through the District's Medicaid program?

[NOTE TO APPLICANT: If you are participating in a "Spend-Down Program" and have not met your "Share of Cost", please answer NO to this question.]

Yes No

If yes,

(a) Will Medicaid pay your premiums for this Medicare Supplement policy?

Yes No

(b) Do you receive any benefits from Medicaid OTHER THAN payments toward your Medicare Part B premium?

Yes No

(3) (a) If you had coverage from any Medicare plan other than original Medicare within the past 63 days (for example, a Medicare Advantage plan, or a Medicare HMO or PPO), fill in your start and end dates below. If you are still covered under this plan, leave "END" blank.

START / / END / /

(b) If you are still covered under the Medicare plan, do you intend to replace your current coverage with this new Medicare supplement policy?

Yes No

(c) Was this your first time in this type of Medicare plan?

Yes No

(d) Did you drop a Medicare supplement policy to enroll in the Medicare plan?

Yes No

(4) (a) Do you have another Medicare supplement policy in force?

Yes No

(b) If so, with what company, and what plan do you have [optional for Direct Mailers]?

(c) If so, do you intend to replace your current Medicare supplement policy with this policy?

Yes No

(5) Have you had coverage under any other health insurance within the past 63 days? (For example, an employer, union, or individual plan)

Yes No

(a) If so, with what company and what kind of policy?

(b) What are your dates of coverage under the other policy?

START / / END / /

(If you are still covered under the other policy, leave "END" blank.)

2222.3 Agents shall list any other health insurance policies they have sold to the applicant as follows:

(a) Policies sold which are still in force; and

(b) Policies sold in the past five (5) years which are no longer in force.

2222.4 In the case of a direct response issuer, a copy of the application or supplemental form, signed by the applicant, and acknowledged by the insurer, shall be returned to the applicant by the insurer upon delivery of the policy.

2222.5 Upon determining that a sale will involve replacement of Medicare supplement coverage, any issuer, other than a direct response issuer, or its agent, shall furnish the applicant, prior to issuance or delivery of the Medicare supplement policy or certificate, a notice regarding replacement of Medicare supplement coverage;

(a) One copy of the notice signed by the applicant and the agent, except where the coverage is sold without an agent, shall be provided to the applicant and an additional signed copy shall be retained by the issuer; and

(b) A direct response issuer shall deliver to the applicant at the time of the issuance of the policy the notice regarding replacement of Medicare supplement coverage.

2222.6 The notice required by subsection 2222.5 for an issuer shall be provided in substantially the following form in no less than twelve (12) point type:

NOTICE TO APPLICANT REGARDING REPLACEMENT

OF MEDICARE SUPPLEMENT INSURANCE

OR MEDICARE ADVANTAGE

[Insurance company's name and address]

SAVE THIS NOTICE! IT MAY BE IMPORTANT TO YOU IN THE

FUTURE.

According to [your application] [information you have furnished], you intend to terminate existing Medicare supplement or Medicare Advantage insurance and replace it with a policy to be issued by [Company Name] Insurance Company. Your new policy will provide thirty (30) days within which you may decide without cost whether you desire to keep the policy. You should review this new coverage carefully. Compare it with all accident and sickness coverage you now have. If after due consideration, you find that purchase of Medicare supplement coverage is a wise decision, you should terminate your present Medicare supplement or Medicare Advantage coverage. You should evaluate the need for other accident and sickness coverage you have that may duplicate this policy.

STATEMENT TO APPLICANT BY ISSUER, AGENT [BROKER OR OTHER REPRESENTATIVE]:

I have reviewed your current medical or health insurance coverage. To the best of my knowledge, this Medicare supplement policy will not duplicate your existing Medicare supplement or, if applicable, Medicare Advantage coverage because you intend to terminate your existing Medicare supplement coverage or leave your Medicare Advantage plan. The replacement policy is being purchased for the following reason(s) (check one):

Additional benefits.

No change in benefits, but lower premiums.

Fewer benefits and lower premiums.

My plan has outpatient drug coverage and I am enrolling in Part D.

Disenrollment from a Medicare Advantage plan. Please explain reason for disenrollment [optional only for Direct Mailers].

Other. (please specify)

1. Note: If the issuer of the Medicare supplement policy being applied for does not, or is otherwise prohibited from imposing pre-existing condition limitations, please skip to statement 2 below. Health conditions which you may presently have (preexisting conditions) may not be immediately or fully covered under the new policy. This could result in denial or delay of a claim for benefits under the new policy, whereas a similar claim might have been payable under your present policy.

2. District of Columbia law provides that your replacement policy or certificate may not contain new preexisting conditions, waiting periods, elimination periods or probationary periods. The insurer will waive any time periods applicable to preexisting conditions, waiting periods, elimination periods, or probationary periods in the new policy (or coverage) for similar benefits to the extent such time was spent (depleted) under the original policy.

3. If you still wish to terminate your present policy and replace it with new coverage, be certain to truthfully and completely answer all questions on the application concerning your medical and health history. Failure to include all material medical information on an application may provide a basis for the company to deny any future claims and to refund your premium as though your policy had never been in force. After the application has been completed and before you sign it, review it carefully to be certain that all information has been properly recorded. [If the policy or certificate is guaranteed issue, this paragraph need not appear.] Do not cancel your present policy until you have received your new policy and are sure that you want to keep it.

(Signature of Agent, Broker or Other Representative)*

[Typed Name and Address of Issuer, Agent or Broker]

(Applicant's Signature)

(Date)

*Signature not required for direct response sales.

2222.7 Paragraphs 1 and 2 of the replacement notice (applicable to preexisting conditions) may be deleted by an issuer if the replacement does not involve application of a new preexisting condition limitation.

History

• SOURCE: Final Rulemaking published at 46 DCR 10175 (December 17, 1999); as amended by Final Rulemaking published at 50 DCR 4166 (May 30, 2003); as amended by Final Rulemaking published at 50 DCR 5882 (July 25, 2003); as amended by Final Rulemaking published at 53 DCR 2955(April 14, 2006).

26-A DCMR § 2223 FILING REQUIREMENTS FOR ADVERTISING

2223.1 An issuer shall provide a copy of any Medicare supplement advertisement intended for use in the District of Columbia, whether through written, radio or television media to the Commissioner for review or approval by the Commissioner to the extent it may be required under the laws of the District of Columbia.

History

• SOURCE: Final Rulemaking published at 46 DCR 10175 (December 17, 1999); as amended by Final Rulemaking published at 50 DCR 4166 (May 30, 2003); as amended by Final Rulemaking published at 50 DCR 5882 (July 25, 2003); as amended by Final Rulemaking published at 53 DCR 2955(April 14, 2006).

26-A DCMR § 2224 STANDARDS FOR MARKETING

2224.1 An issuer, directly or through its producers, shall:

(a) Establish marketing procedures to assure that any comparison of policies by its agents or other producers will be fair and accurate;

(b) Establish marketing procedures to assure excessive insurance is not sold or issued;

(c) Display prominently by type, stamp or other appropriate means, on the first page of the policy the following:

"Notice to buyer: This policy may not cover all of your medical expenses."

(d) Inquire and otherwise make every reasonable effort to identify whether a prospective applicant or enrollee for Medicare supplement insurance already has accident and sickness insurance and the types and amounts of any such insurance; and

(e) Establish audit procedures for verifying compliance with this subsection.

2224.2 The following acts and practices are prohibited:

(a) "Twisting," which means knowingly making or misleading eading representation or incomplete or fraudulent comparison of any insurance policies or insurers for the purpose of inducing, or tending to induce, any person to lapse, forfeit, surrender, terminate, retain, pledge, assign, borrow on, or convert any insurance policy or to take out a policy of insurance with another insurer.

(b) "High pressure tactics," which means employing any method of marketing having the effect of or tending to induce the purchase of insurance through force, fright, threat, whether explicit or implied, or undue pressure to purchase or recommend the purchase of insurance.

(c) "Cold lead advertising," which means making use directly or indirectly of any method of marketing which fails to disclose in a conspicuous manner that a purpose of the method of marketing is solicitation of insurance and that contact will be made by an insurance agent or insurance company.

2224.3 The terms "Medicare Supplement," "Medigap," "Medicare Wrap-Around" and words of similar import shall not be used unless the policy is issued in compliance with this chapter.

History

• SOURCE: Final Rulemaking published at 46 DCR 10175 (December 17, 1999); as amended by Final Rulemaking published at 50 DCR 4166 (May 30, 2003); as amended by Final Rulemaking published at 50 DCR 5882 (July 25, 2003); as amended by Final Rulemaking published at 53 DCR 2955(April 14, 2006).

26-A DCMR § 2225 APPROPRIATENESS OF RECOMMENDED PURCHASE AND EXCESSIVE INSURANCE

2225.1 In recommending the purchase or replacement of any Medicare supplement policy or certificate an agent shall make reasonable efforts to determine the appropriateness of a recommended purchase or replacement.

2225.2 Any sale of a Medicare supplement policy or certificate that will provide an individual more than one Medicare supplement policy or certificate is prohibited.

2225.3 An issuer shall not issue a Medicare supplement policy or certificate to an individual enrolled in Medicare Part C unless the effective date of the coverage is after the termination date of the individual's Part C coverage.

History

• SOURCE: Final Rulemaking published at 46 DCR 10175 (December 17, 1999); as amended by Final Rulemaking published at 50 DCR 4166 (May 30, 2003); as amended by Final Rulemaking published at 50 DCR 5882 (July 25, 2003); as amended by Final Rulemaking published at 53 DCR 2955(April 14, 2006).

26-A DCMR § 2226 REPORTING OF MULTIPLE POLICIES

2226.1 On or before March 1 of each year, an issuer shall report the following information for every individual resident of the District of Columbia for which the issuer has in force more than one Medicare supplement policy or certificate:

(a) Policy and certificate number; and

(b) Date of issuance.

2226.2 The items set forth above must be grouped by individual policyholder.

2226.3 Appendix B contains a reporting form for compliance with this section.

History

• SOURCE: Final Rulemaking published at 46 DCR 10175 (December 17, 1999); as amended by Final Rulemaking published at 50 DCR 4166 (May 30, 2003); as amended by Final Rulemaking published at 50 DCR 5882 (July 25, 2003); as amended by Final Rulemaking published at 53 DCR 2955(April 14, 2006).

26-A DCMR § 2227 PROHIBITION AGAINST PREEXISTING CONDITIONS, WAITING PERIODS, ELIMINATION PERIODS AND PROBATIONARY PERIODS IN REPLACEMENT POLICIES OR CERTIFICATES

2227.1 If a Medicare supplement policy or certificate replaces another Medicare supplement policy or certificate, the replacing issuer shall waive any time periods applicable to preexisting conditions, waiting periods, elimination periods and probationary periods in the new Medicare supplement policy or certificate for similar benefits to the extent such time was spent under the original policy.

2227.2 If a Medicare supplement policy or certificate replaces another Medicare supplement policy or certificate which has been in effect for at least six (6) months, the replacing policy shall not provide any time period applicable to preexisting conditions, waiting periods, elimination periods and probationary periods for benefits its similar to those contained in the original policy or certificate.

History

• SOURCE: Final Rulemaking published at 46 DCR 10175 (December 17, 1999); as amended by Final Rulemaking published at 50 DCR 4166 (May 30, 2003); as amended by Final Rulemaking published at 50 DCR 5882 (July 25, 2003); as amended by Final Rulemaking published at 53 DCR 2955(April 14, 2006).

26-A DCMR § 2228 PROHIBITION AGAINST USE OF GENETIC INFORMATION AND REQUESTS FOR GENETIC TESTING

This section applies to all policies with policy years beginning on or after May 21, 2009.

An issuer of a Medicare supplement policy or certificate shall not:

Deny or condition the issuance or effectiveness of the policy or certificate (including the imposition of any exclusion of benefits under the policy based on a pre-existing condition) on the basis of the genetic information with respect to such individual; or

Discriminate in the pricing of the policy or certificate (including the adjustment of premium rates) of an individual on the basis of the genetic information with respect to such individual.

Nothing in subsection 2228.2 shall be construed to limit the ability of an issuer, to the extent otherwise permitted by law, from doing the following:

Denying or conditioning the issuance or effectiveness of the policy or certificate or increasing the premium for a group based on the manifestation of a disease or disorder of an insured or applicant; or

Increasing the premium for any policy issued to an individual based on the manifestation of a disease or disorder of an individual who is covered under the policy (in such case, the manifestation of a disease or disorder in one individual shall not be used as genetic information about other group members or to further increase the premium for the group).

An issuer of a Medicare supplement policy or certificate shall not request or require an individual or family member of such individual to undergo a genetic test.

Subsection 2228.4 shall not be construed to preclude an issuer of a Medicare supplement policy or certificate from obtaining and using the results of a genetic test in making a determination regarding payment (as defined for the purposes of applying the regulations promulgated under part C of title XI and section 264 of the Health Insurance Portability Accountability Act of 1996, as may be revised from time to time) and consistent with subsection 2228.2.

For purposes of carrying out subsection 2228.5, an issuer of a Medicare supplement policy or certificate may request only the minimum amount of information necessary to accomplish the intended purpose.

Notwithstanding subsection 2228.4, an issuer of a Medicare supplement policy may request, but not require, that an individual or a family member of such individual, undergo a genetic test if each of the following conditions is met:

The request is made pursuant to research that complies with part 46 of title 45 of the Code of Federal Regulations, or equivalent federal regulations, and any applicable District of local law or regulations for the protection of human subjects in research;

The issuer clearly indicates to each individual, or in the case of a minor child, to the legal guardian of such child, to whom the request is made that:

Compliance with the request is voluntary; and

Non-compliance will have no effect on enrollment status or premium or contribution amounts.

No genetic information collected or acquired under this subsection shall be used for underwriting, determination of eligibility to enroll or maintain enrollment status, premium rates, or the issuance, renewal, or replacement of a policy or certificate;

The issuer notifies the Secretary in writing that the issuer is conducting activities pursuant to the exception provided for under this subsection, including a description of the activities conducted; and

The issuer complies with such other conditions as the Secretary may by rule or regulation require for activities conducted under this subsection.

An issuer of a Medicare supplement policy or certificate shall not request,

require, or purchase genetic information for underwriting purposes.

An issuer of a Medicare supplement policy or certificate shall not request, require, or purchase genetic information with respect to any individual prior to such individual’s enrollment under the policy in connection with such enrollment.

If an insurer of a Medicare supplement policy or certificate obtains genetic information incidental to requesting, requiring, or purchasing of other information concerning any individual, such request, requirement, or purchase shall not be considered a violation of subsection 2228.9 if such request, requirement, or purchase is not in violation of subsection 2228.8.

For the purposes of this section only, the following words and phrases shall have the meaning ascribed:

“Issuer of a Medicare supplement policy or certificate” includes third-party administrator, or other person acting for or on behalf of such issuer.

“Family member” means, with respect to an individual, any other individual who is a first-degree, second-degree, third-degree, or fourth-degree relative of such individual.

“Genetic information” means, with respect to any individual, information about an individual’s genetic tests, the genetic tests of family members of such individual, and the manifestation of a disease or disorder in family members of such individual. Such term includes, with respect to any individual, any request for, or receipt of, genetic services, or participation in clinical research which includes genetic services, by such individual or any family member of such individual. Any reference to genetic information concerning an individual or family member of an individual who is a pregnant woman, includes genetic information of any fetus carried by such pregnant woman, or with respect to an individual or family member utilizing reproductive technology, includes genetic information of any embryo legally held by an individual or family member. The term “genetic information” does not include information about the sex or age of any individual.

“Genetic Services” means a genetic test, genetic counseling (including obtaining, interpreting, or assessing genetic information), or genetic education.

“Genetic test” means an analysis of human DNA, RNA, chromosomes, proteins, or metabolites, that detect genotypes, mutations, or chromosomal changes. The term “genetic test” does not mean an analysis of proteins or metabolites that does not detect genotypes, mutations, or chromosomal changes; or an analysis of proteins or metabolites that is directly related to a manifested disease, disorder, or pathological condition that could reasonably be detected by a health care professional with appropriate training and expertise in the field of medicine involved.

“Underwriting purpose” means as follows:

Rules for, or determination of, eligibility (including enrollment and continued eligibility) for benefits under the policy;

The computation of premium or contribution amounts under the policy;

The application of any pre-existing condition exclusion under the policy; and

Other activities related to the creation, renewal, or replacement of a contract of health insurance or health benefits.

History

• SOURCE: Final Rulemaking published at 46 DCR 10175 (December 17, 1999); as amended by Final Rulemaking published at 50 DCR 4166 (May 30, 2003); as amended by Final Rulemaking published at 50 DCR 5882 (July 25, 2003); as amended by Final Rulemaking published at 53 DCR 2955(April 14, 2006); as amended by Final Rulemaking published at 53 DCR 8467(October 20, 2006); as amended by Notice of Emergency and Proposed Rulemaking published at 56 DCR 7661 (September 25, 2009)[EXPIRED]; as amended by Notice of Final Rulemaking published at 56 DCR 8840 (November 13, 2009).

26-A DCMR § 2229 MEDICARE SELECT POLICIES AND CERTIFICATES

2229.1

(a) This section shall apply to Medicare Select policies and certificates, as defined in this section.

(b) No policy or certificate may be advertised as a Medicare Select policy or certificate unless it meets the requirements of this section.

2229.2 For the purposes of this section, the following words and phrases shall have the meanings ascribed:

(a) Complaint - any dissatisfaction expressed by an individual concerning a Medicare Select issuer or its network providers.

(b) Grievance - dissatisfaction expressed in writing by an individual insured under a Medicare Select policy or certificate with the administration, claims practices, or provision of services concerning a Medicare Select issuer or its network providers.

(3) Medicare Select issuer - an issuer offering, or seeking to offer, a Medicare Select policy or certificate.

(4) Medicare Select policy or Medicare Select certificate - respectively a Medicare supplement policy or certificate that contains restricted network provisions.

(5) Network provider - a provider of health care, or a group of providers of health care, which has entered into a written agreement with the issuer to provide benefits insured under a Medicare Select policy.

(6) Restricted network provision - any provision which conditions the payment of benefits, in whole or in part, on the use of network providers.

(7) Service area - the geographic area approved by the Commissioner within which an issuer is authorized to offer a Medicare Select policy.

2229.3 The Commissioner may authorize an issuer to offer a Medicare Select policy or certificate, pursuant to this section and section 4358 of the Omnibus Budget Reconciliation Act of 1990, approved November 5, 1990 (104 Stat. 1388-135; 42 U.S.C. § 1395), if the Commissioner finds that the issuer has satisfied all of the requirements of this section.

2229.4 A Medicare Select issuer shall not issue a Medicare Select policy or certificate in the District until its plan of operation has been approved by the Commissioner.

2229.5 A Medicare Select issuer shall file a proposed plan of operation with the Commissioner in a format prescribed by the Commissioner. The plan of operation shall contain at least the following information:

(a) Evidence that all covered services that are subject to restricted network provisions are available and accessible through network providers, including a demonstration that:

(1) Services can be provided by network providers with reasonable promptness with respect to geographic location, hours of operation, and after-hour care. The hours of operation and availability of after-hour care shall reflect usual practice in the local area. Geographic availability shall reflect the usual travel times within the community;

(2) The number of network providers in the service area is sufficient, with respect to current and expected policyholders, either to:

(A) Deliver adequately all services that are subject to a restricted network provision; or

(B) Make appropriate referrals;

(3) There are written agreements with network providers describing specific responsibilities;

(4) Emergency care is available twenty-four (24) hours per day and seven (7) days per week; and

(5) In the case of covered services that are subject to a restricted network provision and are provided on a prepaid basis, there are written agreements with network providers prohibiting the providers from billing or otherwise seeking reimbursement from or recourse against any individual insured under a Medicare Select policy or certificate. This sub-paragraph shall not apply to supplemental charges or coinsurance amounts as stated in the Medicare Select policy or certificate;

(b) A statement or map providing a clear description of the service area;

(c) A description of the grievance procedure to be utilized;

(d) A description of the quality assurance program, including:

(1) The formal organizational structure;

(2) The written criteria for selection, retention and removal of network providers; and

(3) The procedures for evaluating quality of care provided by network providers, and the process to initiate corrective action when warranted;

(e) A list and description, by specialty, of the network providers;

(f) Copies of the written information proposed to be used by the issuer to comply with subsection 2209.9; and

(g) Any other information requested by the Commissioner.

2229.6

(a) A Medicare Select issuer shall file any proposed changes to the plan of operation, except for changes to the list of network providers, with the Commissioner prior to implementing the changes. Changes shall be considered approved by the Commissioner after thirty (30) days unless specifically disapproved.

(b) An updated list of network providers shall be filed with the Commissioner at least quarterly.

2229.7 A Medicare Select policy or certificate shall not restrict payment for covered services provided by non-network providers if:

(a) The services are for symptoms requiring emergency care or are immediately required for an unforeseen illness, injury or a condition; and

(b) It is not reasonable to obtain services through a network provider.

2229.8 A Medicare Select policy or certificate shall provide payment for full coverage under the policy for covered services that are not available through network providers.

2229.9 A Medicare Select issuer shall make full and fair disclosure in writing of the provisions, restrictions, and limitations of the Medicare Select policy or certificate to each applicant. This disclosure shall include at least the following:

(a) An outline of coverage sufficient to permit the applicant to compare the coverage and premiums of the Medicare Select policy or certificate with:

(1) Other Medicare supplement policies or certificates offered by the issuer; and

(2) Other Medicare Select policies or certificates;

(b) A description (including address, phone number, and hours of operation) of the network providers, including primary care physicians, specialty physicians, hospitals, and other providers;

(c) A description of the restricted network provisions, including payments for coinsurance and deductibles when providers other than network providers are utilized. Except to the extent specified in the policy or certificate, expenses incurred when using out-of-network providers do not count toward the out-of-pocket annual limit contained in plans K and L;

(d) A description of coverage for emergency and urgently needed care and other out-of-service area coverage;

(e) A description of limitations on referrals to restricted network providers and to other providers;

(f) A description of the policyholder's rights to purchase any other Medicare supplement policy or certificate otherwise offered by the issuer; and

(g) A description of the Medicare Select issuer's quality assurance program and grievance procedure.

2229.10 Prior to the sale of a Medicare Select policy or certificate, a Medicare Select issuer shall obtain from the applicant a signed and dated form stating that the applicant has received the information provided pursuant to Subsection I of this section and that the applicant understands the restrictions of the Medicare Select policy or certificate.

2229.11

(a) A Medicare Select issuer shall have and use procedures for hearing complaints and resolving written grievances from the subscribers. The procedures shall be aimed at mutual agreement for settlement and may include arbitration procedures.

(b) The grievance procedure shall be described in the policy and, certificates and in the outline of coverage.

(c) At the time the policy or certificate is issued, the issuer shall provide detailed information to the policyholder describing how a grievance may be registered with the issuer.

(d) Grievances shall be considered in a timely manner and shall be transmitted to appropriate decision-makers who have authority to fully investigate the issue and take corrective action.

(e) If a grievance is found to be valid, corrective action shall be taken promptly.

(f) All concerned parties shall be notified about the results of a grievance.

(g) The issuer shall report no later than each March 31st to the Commissioner regarding its grievance procedure. The report shall be in a format prescribed by the Commissioner and shall contain the number of grievances filed in the past year and a summary of the subject, nature, and resolution of such grievances.

2229.12 At the time of initial purchase, a Medicare Select issuer shall make available to each applicant for a Medicare Select policy or certificate the opportunity to purchase any Medicare supplement policy or certificate otherwise offered by the issuer.

2229.13

(a) At the request of an individual insured under a Medicare Select policy or certificate, a Medicare Select issuer shall make available to the individual insured the opportunity to purchase a Medicare supplement policy or certificate offered by the issuer which has comparable or lesser benefits and which does not contain a restricted network provision. The issuer shall make the policies or certificates available without requiring evidence of insurability after the Medicare Select policy or certificate has been in force for six (6) months.

(b) For the purposes of this subsection, a Medicare supplement policy or certificate will be considered to have comparable or lesser benefits unless it contains one or more significant benefits not included in the Medicare Select policy or certificate being replaced. For the purposes of this paragraph, a significant benefit means coverage for the Medicare Part A deductible, coverage for at-home recovery services, or coverage for Part B excess charges.

2229.14

(a) Medicare Select policies and certificates shall provide for continuation of coverage in the event the Secretary determines that Medicare Select policies and certificates issued pursuant to this section should be discontinued due to either the failure of the Medicare Select Program to be reauthorized under law or its substantial amendment.

(b) Each Medicare Select issuer shall make available to each individual insured under a Medicare Select policy or certificate the opportunity to purchase any Medicare supplement policy or certificate offered by the issuer which has comparable or lesser benefits and which does not contain a restricted network provision. The issuer shall make the policies and certificates available without requiring evidence of insurability.

(c) For the purposes of this subsection, a Medicare supplement policy or certificate will be considered to have comparable or lesser benefits unless it contains one or more significant benefits not included in the Medicare Select policy or certificate being replaced. For the purposes of this paragraph, a significant benefit means coverage for the Medicare Part A deductible, coverage for at-home recovery services or coverage for Part B excess charges.

2229.15 A Medicare Select issuer shall comply with reasonable requests for data made by state or federal agencies, including the United States Department of Health and Human Services, for the purpose of evaluating the Medicare Select Program.

History

• SOURCE: Final Rulemaking published at 46 DCR 10175 (December 17, 1999); as amended by Final Rulemaking published at 50 DCR 4166 (May 30, 2003); as amended by Final Rulemaking published at 50 DCR 5882 (July 25, 2003); as amended by Final Rulemaking published at 53 DCR 2955(April 14, 2006); as amended by Final Rulemaking published at 53 DCR 8467(October 20, 2006); as amended by Notice of Emergency and Proposed Rulemaking published at 56 DCR 7661 (September 25, 2009)[EXPIRED]; as amended by Notice of Final Rulemaking published at 56 DCR 8840 (November 13, 2009).

26-A DCMR § 2230 SEVERABILITY

SEPARABILITY

If any provision of this rule or the application thereof to any person

or circumstance is for any reason held to be invalid, the remainder of the rule and the application of such provision to other persons or circumstances shall not be affected thereby.

History

• SOURCE: Final Rulemaking published at 53 DCR 8467(October 20, 2006); as amended by Notice of Emergency and Proposed Rulemaking published at 56 DCR 7661 (September 25, 2009)[EXPIRED]; as amended by Notice of Final Rulemaking published at 56 DCR 8840 (November 13, 2009); as corrected by Errata Notice published at 59 DCR 2128 (March 16, 2012).

26-A DCMR § 2299 DEFINITIONS

2299.1 For purposes of this chapter, the words and phrases set forth in this section shall have the meanings ascribed.

1990 Standardized Medicare supplement benefit plan, 1990 Standardized benefit plan, or 1990 plan means a group or individual policy of Medicare supplement insurance issued on or after May 1, 1999 and prior to June 1, 2010 and includes Medicare supplement insurance policies and certificates renewed on or after that date which are not replaced by the issuer at the request of the insured.

2010 Standardized Medicare supplement plan, 2010 Standardized benefit plan, or 2010 plan means a group or individual policy of Medicare supplement insurance issued on or after June 1, 2010.

Applicant - means:

(a) In the case of an individual Medicare supplement policy, the person who seeks to contract for insurance benefits; and

(b) In the case of a group Medicare supplement policy, the proposed certificateholder.

Bankruptcy - means a Medicare Advantage organization which is not an issuer has filed, or has had filed against it, a petition for declaration of bankruptcy and has ceased doing business in the District.

Certificate - means any certificate delivered or issued for delivery in the District of Columbia under a group Medicare supplement policy.

Certificate form - means the form on which the certificate is delivered or issued for delivery by the issuer.

Continuous period of creditable coverage - means the period during which an individual was covered by creditable coverage, if during the period of the coverage the individual had no breaks in coverage greater than sixty-three (63) days.

Creditable coverage - means with respect to an individual, coverage of the individual provided under any of the following:

(a) A group health plan;

(b) Health insurance coverage;

(c) Part A or Part B of Title XVII of the Social Security Act (Medicare);

(d) Title XIX of the Social Security Act (Medicaid), other than coverage consisting solely of benefits under section 1928;

(e) Chapter 55 of Title 10 of the United States Code (CHAMPUS);

(f) A medical care program of the Indian Health Service or of a tribal organization;

(g) A District health benefits risk pool;

(h) A health plan offered under chapter 89 of Title 5 of the United States Code (Federal Employees Health Benefits Program);

(i) A public health plan as defined in federal regulation; and

(j) A health benefit plan under section 5(e) of the Peace Corps Act, 22 U.S.C. 2504(e).

Creditable coverage - means insurance coverage that does not include one or more, or any combination of, the following:

(a) Coverage only for accident or disability income insurance, or any combination thereof;

(b) Coverage issued as a supplement to liability insurance;

(c) Liability insurance, including general liability insurance and. automobile liability insurance;

(d) Workers' compensation or similar insurance;

(e) Automobile medical payment insurance;

(f) Credit-only insurance;

(g) Coverage for on-site medical clinics; and

(h) Other similar insurance coverage, specified in federal regulations, under which benefits for medical care are secondary or incidental to other insurance benefits.

Creditable coverage - means insurance coverage that does not include the following if it is offered as a separate policy, certificate or contract of insurance:

(a) Medicare supplemental health insurance as defined under section 1882 (g) (1) of the Social Security Act;

(b) Coverage supplemental to the coverage provided under chapter 55 of Title 10, United States Code; and

(c) Similar supplemental coverage provided to coverage under a group health plan.

District - means the District of Columbia.

Employer welfare benefit plan - means a plan, fund or program of employee benefits as defined in the Employee Retirement Income Security Act, 29 U.S.C. § 1002.

Insolvency - means an issuer, licensed to transact the business of insurance in the District, has had a final order of liquidation entered against it with a finding of insolvency by a court of competent jurisdiction in the issuer's state of domicile.

Issuer - means an insurance company, fraternal benefit society, health care service plan, health maintenance organization, and any other entity delivering or issuing, for delivery in the District of Columbia, Medicare supplement policies or certificates.

Medicare - means the "Health Insurance for the Aged Act," Title XVIII of the Social Security Amendments of 1965, as then constituted or later amended.

Medicare Advantage plan - means a plan of coverage for health benefits under Medicare Part C as defined in 42 U.S.C. 1395w-28(b)(1), and includes:

(1) Coordinated care plans which provide health care services, including but not limited to health maintenance organization plans (with or without a point-of-service option), plans offered by provider-sponsored organizations, and preferred provider organization plans;

(2) Medical savings account plans coupled with a contribution into a Medicare Advantage plan medical savings account; and

(3) Medicare Advantage private fee-for-service plans. Medicare supplement policy - means a group or individual policy of accident and sickness insurance or a subscriber contract of hospital and medical services associations or health maintenance organizations, other than a policy issued pursuant to a contract under Section 1876 of the Social Security Act or an issued policy under a demonstration project specified in 42 U.S.C. §1395ss(g) (1), which is advertised, marketed or designed primarily as a supplement to reimbursements under Medicare for the hospital, medical or surgical expenses of persons eligible for Medicare. "Medicare supplement policy" does not include Medicare Advantage plans established under Medicare Part C, Outpatient Prescription Drug plans established under Medicare Part D, or any Health Care Prepayment Plan (HCPP) that provides benefits pursuant to an agreement under §1833(a)(1)(A) of the Social Security Act.

Policy form - means the form on which the policy is delivered or issued for delivery by the issuer.

Pre-Standardized Medicare supplement benefit plan, Pre-Standardized benefit plan, or Pre-Standardized plan means a group or individual policy of Medicare supplement insurance issued prior to May 1, 1999.

Secretary - means the Secretary of the United States Department of Health and Human Services.

APPENDIX A

MEDICARE SUPPLEMENT REFUND CALCULATION FORM

FOR CALENDAR YEAR

TYPE1

SMSBP2

For the State of

Company Name

NAIC Group Code

NAIC Company Exhibit

Address

Person Completing Exhibit

Title

Telephone Number

Line

(a)

Earned Premium3

(b)

Incurred Claims4

Current Year's Experience

a. Total (all policy years)

b. Current year's issues5

c. Net (for reporting purposes = la - lb

Past Years' Experience (all policy years)

Total Experience

(Net Current Year + Past Year)

Refunds Last Year (Excluding Interest)

Previous Since Inception (Excluding Interest)

Refunds Since Inception (Excluding Interest)

Benchmark Ratio Since Inception (see worksheet for Ratio 1)

Experienced Ratio Since Inception (Ratio 2)

Total Actual Incurred Claims (line 3, col. b)

Total Earned Prem. (line 3, col. a)-Refunds Since Inception

(line 6)

Life Years Exposed Since Inception

If the Experienced Ratio is less than the Benchmark Ratio, and there are more than 500 life years exposure, then proceed to calculation of refund.

Tolerance Permitted (obtained from credibility table)

Medicare Supplement Credibility Table

Life Years Exposed

Since Inception

Tolerance

10,000 +

0.0%

5,000 -9,999

5.0%

2,500 -4,999

7.5%

1,000 -2,499

10.0%

500 - 999

15.0%

If less than 500 no credibility.

1 Individual, Group, Individual Medicare Select, or Group Medicare Select Only.

2 "SMSBP" = Standardized Medicare Supplement Benefit Plan - Use "P" for prestandardized plans.

3 Includes Modal Loadings and Fees Charged

4 Excludes Active Life Reserves

5 This is to be used as "Issue Year Earned Premium" for Year 1 of next year's "Worksheet for Calculation of Benchmark Ratios"

MEDICARE SUPPLEMENT REFUND CALCULATION FORM

FOR CALENDAR YEAR

TYPE1

SMSBP2

For the State of

Company Name

NAIC Group Code

NAIC Company Code

Address

Person Completing Exhibit

Title

Telephone Number

Adjustment to Incurred Claims for Credibility

Ratio 3 = Ratio 2 + Tolerance

If Ratio 3 is more than Benchmark Ratio (Ratio 1), a refund or credit to premium is not required.

If Ratio 3 is less than the Benchmark Ratio, then proceed.

Adjusted Incurred Claims

[Total Earned Premiums (line 3, col. a) - Refunds Since Inception (line 6)] x

Ratio 3 (line 11)

Refund =

Total Earned Premiums (line 3, col. a)-Refunds Since Inception (line 6)

-[Adjusted Incurred Claims (line 12)/Benchmark Ratio (Ratio 1)]

If the amount on line 13 is less than 005 times the annualized premium in force as of December 31 of the reporting year, then no refund is made. Otherwise, the amount on line 13 is to be refunded or credited, and a description of the refund or credit against premiums to be used must be attached to this form.

I certify that the above information and calculations are true and accurate to the best of my knowledge and belief.

Signature

Name - Please Type

Title - Please Type

Date

REPORTING FORM FOR THE CALCULATION OF BENCHMARK

RATIO SINCE INCEPTION FOR GROUP POLICIES

FOR CALENDAR YEAR

TYPE1

SMSBP2

For the State of

Company Name

NAIC Group Code

NAIC Company Code

Address

Person Completing Exhibit

Title

Telephone Number

(a)3

(b)4

(c)

(d)

(e)

(f)

(g)

(h)

(i)

(i)

(o)5

Year

Earned Premium

Factor

(b)x(c)

Cumulative Loss Ratio

(d)x(e)

Factor

(b)x(g)

Cumulative Loss Ratio

(h)x(i)

Policy Year Loss Ratio

1

2.770

0.507

0.000

0.000

0.46

2

4.175

0.567

0.000

0.000

0.63

3

4.175

0.567

1.194

0.759

0.75

4

4.175

0.567

2.245

0.771

0.77

5

4.175

0.567

3.170

0.782

0.80

6

4.175

0.567

3.998

0.792

0.82

7

4.175

0.567

4.754

0.802

0.84

8

4.175

0.567

5.445

0.811

0.87

9

4.175

0.567

6.075

0.818

0.88

10

4.175

0.567

6.650

0.824

0.88

11

4.175

0.567

7.176

0.828

0.88

12

4.175

0.567

7.655

0.831

0.88

13

4.175

0.567

8.093

0.834

0.89

14

4.175

0.567

8.493

0.837

0.89

15+6

4.175

0.567

8.684

0.838

0.89

Total:

(k):

(l):

(m):

(n):

Benchmark Ratio Since Inception: (1 + n)/(k + m):

1 Individual, Group, Individual Medicare Select, or Group Medicare Select Only.

2 "SMSBP" = Standardized Medicare Supplement Benefit Plan - Use "P" for pre-standardized plans

3 Year 1 is the current calendar year - 1. Year 2 is the current calendar year - 2 (etc.) (Example: If the current year is 1991, then: Year 1 is 1990; Year 2 is 1989, etc.)

4 For the calendar year on the appropriate line in column (a), the premium earned during that year for policies issued in that year.

5 These loss ratios are not explicitly used in computing the benchmark loss ratios. They are the loss ratios, on a policy year basis, which result in the cumulative loss ratios displayed on this worksheet. They are shown here for informational purposes only.

6 To include the earned premium for all years prior to as well as the 15th year prior to the current year.

REPORTING FORM FOR THE CALCULATION OF BENCHMARK

RATIO SINCE INCEPTION FOR INDIVIDUAL POLICIES

FOR CALENDAR YEAR

TYPE1

SMSBP2

For the State-of

Company Name

NAIC Group Code

NAIC Company Code,

Address

Person Completing Exhibit

Title

Telephone Number

(a)3

(b)4

(c)

(d)

(e)

(1)

(g)

(i)

(i)

(i)

(o)5

Year

Earned Premium

Factor

(b)x(c)

Cumulative Loss Ratio

(d)x(e)

Factor

(b)x(g)

Cumulative Loss Ratio

(h)x(i)

Policy Year Loss Ratio

1

2.770

0.442

0.000

0.000

0.40

2

4.175

0.493

0.000

0.000

0.55

3

4.175

0.493

1.194

0.659

0.65

4

4.175

0.493

2.245

0.669

0.67

5

4.175

0.493

3.170

0.678

0.69

6

4.175

0.493

3.998

0.686

0.71

7

4.175

0.493

4.754

0.695

0.73

8

4.175

0.493

5.445

0.702

0.75

9

4.175

0.493

6.075

0.708

0.76

10

4.175

0.493

6.650

0.713

0.76

11

4.175

0.493

7.176

0.717

0.76

12

4.175

0.493

7.655

0.720

0.77

13

4.175

0.493

8.093

0.723

0.77

14

4.175

0.493

8.493

0.725

0.77

15+6

4.175

0.493

8.684

0.725

0.77

Total:

(k):

(l):

(m):

(n):

Benchmark Ratio Since Incept on: (1 + n)/(k + m):

1 Individual, Group, Individual Medicare Select, or Group Medicare Select Only.

2 "SMSBP" = Standardized Medicare Supplement Benefit Plan. Use "P" for pre-standardized plans

3 Year 1 is the current calendar year - 1. Year 2 is the current calendar year - 2 (etc.) (Example: If the current year is 1991, then: Year 1 is 1990; Year 2 is 1989, etc.)

4 For the calendar year on the appropriate line in column (a), the premium earned during that year for policies issued in that year.

5These loss ratios are not explicitly used in computing the benchmark loss ratios. They are the loss ratios, on a policy year basis, which result in the cumulative loss ratios displayed on this worksheet. They are shown here for informational purposes only.

6 To include the earned premium for all years prior to as well as the 15th year prior to the current year.

APPENDIX B

FORM FOR REPORTING

MEDICARE SUPPLEMENT POLICIES

Company Name: Address:

Address:

Phone Number:

Due March 1, annually

The purpose of this form is to report the following information on each resident of this state who has in force more than one Medicare supplement policy or certificate. The information is to be grouped by individual policyholder.

Policy and

Certificate #

Date of

Issuance

Signature

Name and Title (please type)

Date

APPENDIX C

DISCLOSURE STATEMENTS

Instructions for Use of the Disclosure Statements for

Health Insurance Policies Sold to Medicare Beneficiaries

that Duplicate Medicare

1. Section 1882 (d) of the federal Social Security Act [42 U.S.C. 1395ss] prohibits the sale of a health insurance policy (the term policy includes certificate) to Medicare beneficiaries that duplicates Medicare benefits unless it will pay benefits without regard to a beneficiary's other health coverage and it includes the prescribed disclosure statement on or together with the application for the policy.

2. All types of health insurance policies that duplicate Medicare shall-include one of the attached disclosure statements, according to the particular policy type involved, on the application or together with the application. The disclosure statement may not vary from the attached statements in terms of language or format (type size, type proportional spacing, bold character, line spacing, and usage of boxes around text).

3. State and federal law prohibits insurers from selling a Medicare supplement policy to a person that already has a Medicare supplement policy except as a replacement policy.

4. Property/casualty and life insurance policies are not considered health insurance.

5. Disability income policies are not considered to provide benefits that duplicate Medicare.

6. Long-term care insurance policies that coordinate with Medicare and other health insurance are not considered to provide benefits that duplicate Medicare.

7. The federal law does not preempt state laws that are more stringent than the federal requirements.

8. The federal law does not preempt existing state form filing requirements.

9. Section 1882 of the federal Social Security Act was amended in Subsection (d)(3)(A) to allow for alternative disclosure statements. The disclosure statements already in Appendix C remain. Carriers may use either disclosure statement with the requisite insurance product. However, carriers should use either the original disclosure statements or the alternative disclosure statements and not use both simultaneously.

[Original disclosure statement for policies that provide benefits for expenses incurred for an accidental injury only.]

IMPORTANT NOTICE TO PERSONS ON MEDICARE

THIS INSURANCE DUPLICATES SOME MEDICARE BENEFITS

This is not Medicare Supplement Insurance

This insurance provides limited benefits, if you meet the policy conditions, for hospital or medical expenses that result from accidental injury. It does not pay your Medicare deductibles or coinsurance and is not a substitute for Medicare Supplement insurance.

This insurance duplicates Medicare benefits when it pays:

● hospital or medical expenses up to the maximum stated in the policy

Medicare generally pays for most or all of these expenses.

Medicare pays extensive benefits for medically necessary services regardless of the reason you need them. These include:

● hospitalization

● physician services

● [outpatient prescription drugs if you are enrolled in Medicare Part D]

● other approved items and services

Before You Buy This Insurance

√ Check the coverage in all health insurance policies you already have.

√ For more information about Medicare and Medicare Supplement insurance, review the Guide to Health Insurance for People with Medicare, available from the insurance company.

√ For help in understanding your health insurance, contact your state insurance department or state [health] insurance [assistance] program [SHIP].

[Original disclosure statement for policies that provide benefits for specified limited services.]

IMPORTANT NOTICE TO PERSONS ON MEDICARE

THIS INSURANCE DUPLICATES SOME MEDICARE BENEFITS

This is not Medicare Supplement Insurance

This insurance provides limited benefits, if you meet the policy conditions, for expenses relating to the specific services listed in the policy. It does not pay your Medicare deductibles or coinsurance and is not a substitute for Medicare Supplement insurance.

This insurance duplicates Medicare benefits when:

● any of the services covered by the policy are also covered by Medicare

Medicare pays extensive benefits for medically necessary services regardless of the reason you need them. These include:

● hospitalization

● physician services

● [outpatient prescription drugs if you are enrolled in Medicare Part D]

● other approved items and services

Before You Buy This Insurance

√ Check the coverage in all health insurance policies you already have.

√ For more information about Medicare and Medicare Supplement insurance, review the Guide to Health Insurance for People with Medicare, available from the insurance company.

√ For help in understanding your health insurance, contact your state insurance department or state [health] insurance [assistance] program [SHIP].

[Original disclosure statement for policies that reimburse expenses incurred for specified diseases or other specified impairments. This includes expense-incurred cancer, specified disease and other types of health insurance policies that limit reimbursement to named medical conditions.]

IMPORTANT NOTICE TO PERSONS ON MEDICARE

THIS INSURANCE DUPLICATES SOME MEDICARE BENEFITS

This is not Medicare Supplement Insurance

This insurance provides limited benefits, if you meet the policy conditions, for hospital or medical expenses only when you are treated for one of the specific diseases or health conditions listed in the policy. It does not pay your Medicare deductibles or coinsurance and is not a substitute for Medicare Supplement insurance.

This insurance duplicates Medicare benefits when it pays:

● hospital or medical expenses up to the maximum stated in the policy Medicare generally pays for most or all of these expenses.

Medicare pays extensive benefits for medically necessary services regardless of the reason you need them. These include:

● hospitalization

● physician services

● hospice

● [outpatient prescription drugs if you are enrolled in Medicare Part D]

● other approved items and services

Before You Buy This Insurance

√ Check the coverage in all health insurance policies you already have.

√ For more information about Medicare and Medicare Supplement insurance, review the Guide to Health Insurance for People with Medicare, available from the insurance company.

√ For help in understanding your health insurance, contact your state insurance department or state [health] insurance [assistance] program [SHIP].

[Original disclosure statement for policies that pay fixed dollar amounts for specified diseases or other specified impairments. This includes cancer, specified disease, and other health insurance policies that pay a scheduled benefit or specific payment based on diagnosis of the conditions named in the policy.]

IMPORTANT NOTICE TO PERSONS ON MEDICARE

THIS INSURANCE DUPLICATES SOME MEDICARE BENEFIT'S

This is not Medicare Supplement Insurance

This insurance pays a fixed amount, regardless of your expenses, if you meet the policy conditions, for one of the specific diseases or health conditions named in the policy. It does not pay your Medicare deductibles or coinsurance and is not a substitute for Medicare Supplement insurance.

This insurance duplicates Medicare benefits because Medicare generally pays for most of the expenses for the diagnosis and treatment of the specific conditions or diagnoses named in the policy.

Medicare pays extensive benefits for medically necessary services regardless of the reason you need them. These include:

● hospitalization

● physician services

● hospice

● [outpatient prescription drugs if you are enrolled in Medicare Part D]

● other approved items and services

Before You Buy This Insurance

√ Check the coverage in all health insurance policies you already have.

√ For more information about Medicare and Medicare Supplement insurance, review the Guide to Health Insurance for People with Medicare, available from the insurance company.

√ For help in understanding your health insurance, contact your state insurance department or state [health] insurance [assistance] program [SHIP].

[Original disclosure statement for indemnity policies and other policies that pay a fixed dollar amount per day, excluding long-term care policies.]

IMPORTANT NOTICE TO PERSONS ON MEDICARE

THIS INSURANCE DUPLICATES SOME MEDICARE BENEFITS

This is not Medicare Supplement Insurance

This insurance pays a fixed dollar amount, regardless of your expenses, for each day you meet the policy conditions. It does not pay your Medicare deductibles or coinsurance and is not a substitute for Medicare Supplement insurance.

This insurance duplicates Medicare benefits when:

● any expenses or services covered by the policy are also covered by Medicare Medicare generally pays for most or all of these expenses.

Medicare pays extensive benefits for medically necessary services regardless of the reason you need them. These include:

● hospitalization

● physician services

● hospice

● [outpatient prescription drugs if you are enrolled in Medicare Part D]

● other approved items and services

Before You Buy This Insurance

√ Check the coverage in all health insurance policies you already have.

√ For more information about Medicare and Medicare Supplement insurance, review the Guide to Health Insurance for People with Medicare, available from the insurance company.

√ For help in understanding your health insurance, contact your state insurance department or state [health] insurance [assistance] program [SHIP].

[Original disclosure statement for policies that provide benefits upon both an expense-incurred and fixed indemnity basis.]

IMPORTANT NOTICE TO PERSONS ON MEDICARE

THIS INSURANCE DUPLICATES SOME MEDICARE BENEFITS

This is not Medicare Supplement Insurance

This insurance pays limited reimbursement for expenses if you meet the conditions listed in the policy. It also pays a fixed amount, regardless of your expenses, if you meet other policy conditions. It does not pay your Medicare deductibles or coinsurance and is not a substitute for Medicare Supplement insurance.

This insurance duplicates Medicare benefits when:

● any expenses or services covered by the policy are also covered by Medicare; or

● it pays the fixed dollar amount stated in the policy and Medicare covers the same event

Medicare generally pays for most or all of these expenses.

Medicare pays extensive benefits for medically necessary services regardless of the reason you need them. These include:

● hospitalization

● physician services

● hospice care

● [outpatient prescription drugs if you are enrolled in Medicare Part D]

● other approved items & services

Before You Buy This Insurance

√ Check the coverage in all health insurance policies you already have.

√ For more information about Medicare and Medicare Supplement insurance, review the Guide to Health Insurance for People with Medicare, available from the insurance company.

√ For help in understanding your health insurance, contact your state insurance department or state [health] insurance [assistance] program [SHIP].

[Original disclosure statement for other health insurance policies not specifically identified in the preceding statements.]

IMPORTANT NOTICE TO PERSONS ON MEDICARE

THIS INSURANCE DUPLICATES SOME MEDICARE BENEFITS

This is not Medicare Supplement Insurance

This insurance provides limited benefits if you meet the conditions listed in the policy. It does not pay your Medicare deductibles or coinsurance and is not a substitute for Medicare Supplement insurance.

This insurance duplicates Medicare benefits when it pays:

● the benefits stated in the policy and coverage for the same event is provided by Medicare

Medicare generally pays for most or all of these expenses.

Medicare pays extensive benefits for medically necessary services regardless of the reason you need them. These include:

● hospitalization

● physician services

● hospice

● [outpatient prescription drugs if you are enrolled in Medicare Part D]

● other approved items and services

Before You Buy This Insurance

√ Check the coverage in all health insurance policies you already have.

√ For more information about Medicare and Medicare Supplement insurance, review the Guide to Health Insurance for People with Medicare, available from the insurance company.

√ For help in understanding your health insurance, contact your state insurance department or state [health] insurance [assistance] program [SHIP].

[Alternative disclosure statement for policies that provide benefits for expenses incurred for an accidental injury only.]

IMPORTANT NOTICE TO PERSONS ON MEDICARE

THIS IS NOT MEDICARE SUPPLEMENT INSURANCE

Some health care services paid for by Medicare may also trigger the payment of benefits from this policy.

This insurance provides limited benefits, if you meet the policy conditions, for hospital or medical expenses that result from accidental injury. It does not pay your Medicare deductibles or coinsurance and is not a substitute for Medicare Supplement insurance.

Medicare generally pays for most or all of these expenses.

Medicare pays extensive benefits for medically necessary services regardless of the reason you need them. These include:

● hospitalization

● physician services

● [outpatient prescription drugs if you are enrolled in Medicare Part D]

● other approved items and services

This policy must pay benefits without regard to other health benefit coverage to which you may be entitled under Medicare or other insurance.

Before You Buy This Insurance

√ Check the coverage in all health insurance policies you already have.

√ For more information about Medicare and Medicare Supplement insurance, review the Guide to Health Insurance for People with Medicare, available from the insurance company.

√ For help in understanding your health insurance, contact your state insurance department or state [health] insurance [assistance] program [SHIP].

[Alternative disclosure statement for policies that provide benefits for specified limited services.]

IMPORTANT NOTICE TO PERSONS ON MEDICARE

THIS IS NOT MEDICARE SUPPLEMENT INSURANCE

Some health care services paid for by Medicare may also trigger the payment of benefits under this policy.

This insurance provides limited benefits, if you meet the policy conditions, for expenses relating to the specific services listed in the policy. It does not pay your Medicare deductibles or coinsurance and is not a substitute for Medicare Supplement insurance.

Medicare pays extensive benefits for medically necessary services regardless of the reason you need them. These include:

● hospitalization

● physician services

● [outpatient prescription drugs if you are enrolled in Medicare Part D]

● other approved items and services

This policy must pay benefits without regard to other health benefit coverage to which you may be entitled under Medicare or other insurance.

Before You Buy This Insurance

√ Check the coverage in all health insurance policies you already have.

√ For more information about Medicare and Medicare Supplement insurance, review the Guide to Health Insurance for People with Medicare, available from the insurance company.

√ For help in understanding your health insurance, contact your state insurance department or state [health] insurance [assistance] program [SHIP].

[Alternative disclosure statement for policies that reimburse expenses incurred for specified diseases or other specified impairments. This includes expense-incurred cancer, specified disease and other types of health insurance policies that limit reimbursement to named medical conditions.]

IMPORTANT NOTICE TO PERSONS ON MEDICARE

THIS IS NOT MEDICARE SUPPLEMENT INSURANCE

Some health care services paid for by Medicare may also trigger the payment of benefits from this policy. Medicare generally pays for most or all of these expenses.

This insurance provides limited benefits, if you meet the policy conditions, for hospital or medical expenses only when you are treated for one of the specific diseases or health conditions listed in the policy. It does not pay your Medicare deductibles or coinsurance and is not a substitute for Medicare Supplement insurance.

Medicare generally pays for most or all of these expenses.

Medicare pays extensive benefits for medically necessary services regardless of the reason you need them. These include:

● hospitalization

● physician services

● hospice

● [outpatient prescription drugs if you are enrolled in Medicare Part D]

● other approved items and services

This policy must pay benefits without regard to other health benefit coverage to which you may be entitled under Medicare or other insurance.

Before You Buy This Insurance

√ Check the coverage in all health insurance policies you already have.

√ For more information about Medicare and Medicare Supplement insurance, review the Guide to Health Insurance for People with Medicare, available from the insurance company.

√ For help in understanding your health insurance, contact your state insurance department or state [health] insurance [assistance] program [SHIP].

[Alternative disclosure statement for policies that pay fixed dollar amounts for specified diseases or other specified impairments. This includes cancer, specified disease, and other health insurance policies that pay a scheduled benefit or specific payment based on diagnosis of the conditions named in the policy.]

IMPORTANT NOTICE TO PERSONS ON MEDICARE

THIS IS NOT MEDICARE SUPPLEMENT INSURANCE

Some health care services paid for by Medicare may also trigger the payment of benefits from this policy.

This insurance pays a fixed amount, regardless of your expenses, if you meet the policy conditions, for one of the specific diseases or health conditions named in the policy. It does not pay your Medicare deductibles or coinsurance and is not a substitute for Medicare Supplement insurance.

Medicare pays extensive benefits for medically necessary services regardless of the reason you need them. These include:

● hospitalization

● physician services

● hospice

● [outpatient prescription drugs if you are enrolled in Medicare Part D]

● other approved items and services

This policy must pay benefits without regard to other health benefit coverage to which you may be entitled under Medicare or other insurance.

Before You Buy This Insurance

√ Check the coverage in all health insurance policies you already have.

√ For more information about Medicare and Medicare Supplement insurance, review the Guide to Health Insurance for People with Medicare, available from the insurance company.

√ For help in understanding your health insurance, contact your state insurance department or state [health] insurance [assistance] program [SHIP].

[Alternative disclosure statement for indemnity policies and other policies that pay a fixed dollar amount per day, excluding long-term care policies.]

IMPORTANT NOTICE TO PERSONS ON MEDICARE

THIS IS NOT MEDICARE SUPPLEMENT INSURANCE

Some health care services paid for by Medicare may also trigger the payment of benefits from this policy.

This insurance pays a fixed dollar amount, regardless of your expenses, for each day you meet the policy conditions. It does not pay your Medicare deductibles or coinsurance and is not a substitute for Medicare Supplement insurance.

Medicare generally pays for most or all of these expenses.

Medicare pays extensive benefits for medically necessary services regardless of the reason you need them. These include:

● hospitalization

● physician services

● hospice

● [outpatient prescription drugs if you are enrolled in Medicare Part D]

● other approved items and services

This policy must pay benefits without regard to other health benefit coverage to which you may be entitled under Medicare or other insurance.

Before You Buy This Insurance

√ Check the coverage in all health insurance policies you already have.

√ For more information about Medicare and Medicare Supplement insurance, review the Guide to Health Insurance for People with Medicare, available from the insurance company.

√ For help in understanding your health insurance, contact your state insurance department or state [health] insurance [assistance] program [SHIP].

[Alternative disclosure statement for policies that provide benefits upon both an expense-incurred and fixed indemnity basis.]

IMPORTANT NOTICE TO PERSONS ON MEDICARE

THIS IS NOT MEDICARE SUPPLEMENT INSURANCE

Some health care services paid for by Medicare may also trigger the payment of benefits from this policy.

This insurance pays limited reimbursement for expenses if you meet the conditions listed in the policy. It also pays a fixed amount, regardless of your expenses, if you meet other policy conditions. It does not pay your Medicare deductibles or coinsurance and is not a substitute for Medicare Supplement insurance.

Medicare generally pays for most or all of these expenses.

Medicare pays extensive benefits for medically necessary services regardless of the reason you need them. These include:

● hospitalization

● physician services

● hospice care

● [outpatient prescription drugs if you are enrolled in Medicare Part D]

● other approved items & services

This policy must pay benefits without regard to other health benefit coverage to which you may be entitled under Medicare or other insurance.

Before You Buy This Insurance

√ Check the coverage in all health insurance policies you already have.

√ For more information about Medicare and Medicare Supplement insurance, review the Guide to Health Insurance for People with Medicare, available from the insurance company.

√ For help in understanding your health insurance, contact your state insurance departMent or state [health] insurance [assistance] program [SHIP].

[Alternative disclosure statement for other health insurance policies not specifically identified in the preceding statements.]

IMPORTANT NOTICE TO PERSONS ON MEDICARE

THIS IS NOT MEDICARE SUPPLEMENT INSURANCE

Some health care services paid for by Medicare may also trigger the payment of benefits from this policy.

This insurance provides limited benefits if you meet the conditions listed in the policy. It does not pay your Medicare deductibles or coinsurance and is not a substitute for Medicare Supplement insurance.

Medicare generally pays for most or all of these expenses.

Medicare pays extensive benefits for medically necessary services regardless of the reason you need them. These include:

● hospitalization

● physician services

● hospice

● [outpatient prescription drugs if you are enrolled in Medicare Part D]

● other approved items and services

This policy must pay benefits without regard to other health benefit coverage to which you may be entitled under Medicare or other insurance.

Before You Buy This Insurance

√ Check the coverage in all health insurance policies you already have.

√ For more information about Medicare and Medicare Supplement insurance, review the Guide to Health Insurance for People with Medicare, available from the insurance company.

√ For help in understanding your health insurance, contact your state insurance department or state [health] insurance [assistance] program [SHIP].

History

• SOURCE: Final Rulemaking published at 46 DCR 10175 (December 17, 1999); as amended by Final Rulemaking published at 50 DCR 4166 (May 30, 2003); as amended by Final Rulemaking published at 50 DCR 5882 (July 25, 2003); as amended by Final Rulemaking published at 53 DCR 2955 (April 14, 2006); as amended by Final Rulemaking published at 56 DCR 8840 (November 13, 2009), incorporating text of Proposed Rulemaking published at 56 DCR 7661, 7724 (September 25, 2009).

26-A23 REINSURANCE

26-A DCMR § 2300 PREAMBLE

2300.1 The District of Columbia Insurance Administration recognizes that licensed insurers routinely enter into reinsurance agreements that yield legitimate relief to the ceding insurer from strain to surplus. However, it is improper for a licensed insurer, in the capacity of ceding insurer, to enter into reinsurance agreements for the principal purpose of producing significant surplus aid for the ceding insurer, typically on a temporary basis, while not transferring all of the significant risks inherent in the business being reinsured. In substance or effect, the expected potential liability to the ceding insurer remains basically unchanged by the reinsurance transaction, notwithstanding certain risk elements in the reinsurance agreement, such as catastrophic mortality or extraordinary survival.

History

• SOURCE: Final Rulemaking published at 41 DCR 2214(April 22, 1994).

26-A DCMR § 2301 SCOPE

2301.1 This regulation shall apply to all domestic life and accident and health insurers and to all other licensed life and accident and health insurers which are not subject to a substantially similar regulation in their domicilary state. This regulation shall also similarly apply to licensed property and casualty insurers with respect to their accident and health business. This regulation shall not apply to assumption reinsurance, yearly renewable term reinsurance or certain nonproportional reinsurance such as stop loss or catastrophe reinsurance.

History

• SOURCE: Final Rulemaking published at 41 DCR 2214(April 22, 1994).

26-A DCMR § 2302 ACCOUNTING REQUIREMENTS

2302.1 No insurer subject to this regulation shall, for reinsurance ceded, reduce any liability or establish any asset in any financial statement filed with the Commissioner of Insurance if, by the terms of the reinsurance agreement, in substance or effect, any of the following conditions exist:

(a) Renewal expense allowances provided or to be provided to the ceding insurer by the reinsurer in any accounting period, are not sufficient to cover anticipated allocable renewal expenses of the ceding insurer on the portion value of the shortfall (using assumptions equal to the applicable statutory reserve basis on the business reinsured). Those expenses include to, billing, valuation, claims and maintenance expected by the company at the time the business is reinsured;

(b) The ceding insurer can be deprived of surplus or assets at the reinsurer's option or automatically upon the occurrence of some event, such as the insolvency of the ceding insurer, except that termination of the reinsurance agreement by the reinsurer for nopayment of reinsurance premiums or other amounts due, such as modified coinsurance reserve adjustments, interest and adjustments on funds withheld, and tax reimbursements, shall not be considered to be such a deprivation of surplus or assets;

(c) The ceding insurer is required to reimburse the reinsurer for negative experience under the reinsurance agreement, except that neither offsetting experience refunds against current and prior years' losses under the agreement nor payment by the ceding insurer of an amount equal to the current or prior years' losses under the agreement upon voluntary termination of in force reinsurance by the ceding insurer shall be considered such a reimbursement to the reinsurer for negative experience. Voluntary termination does not include situations where termination occurs because of unreasonable provisions which allow the reinsurer to reduce its risk under the agreement. An example of such a provision is the right of the reinsurer to increase reinsurance premiums or risk and expense charges to excessive levels forcing the ceding company to prematurely terminate the reinsurance agreement.

(d) The ceding insurer must, at specific points in time scheduled in the agreement, terminate or automatically recapture all or part of the reinsurance ceded;

(e) The reinsurance agreement involves the possible payment by the ceding insurer to the reinsurer of amounts other than from income realized from the reinsured policies. For example, it is improper for a ceding company to pay reinsurance premiums, or other fees or charges to a reinsurer which are greater than the direct premiums collected by the ceding company;

(f) The treaty does not transfer all of the significant risk inherent in the business being reinsured. The following table identifies for a representative sampling of products or type of business, the risks which are determined to be significant. For products not specifically included, the risks determined to be significant shall be consistent with this table. Risk categories:

(1) Morbidity

(2) Mortality

(3) Lapse

This is the risk that a policy will voluntarily terminate prior to the recoupment of a statutory surplus strain experienced at issue of the policy.

(4) Credit Quality (C1)

This is the risk that invested assets supporting the reinsured business will decrease in value. The main hazards are that assets will default or that there will be a decrease in earning power. It excludes market value declines due to changes in interest rate.

(5) Reinvestment (C3)

This is the risk that interest rates will fall and funds reinvested (coupon payments or monies received upon asset maturity or call) will therefore earn less that expected. If asset durations are less that liability durations, the mismatch will increase.

(6) Disintermediation (C3)

This is the risk that interest rates rise and policy loans and surrenders increase or maturing contract do not renew at anticipated rates of renewal. If asset durations are greater than the liability durations, the mismatch will increase. Policyholders will move their funds into new products offering higher rates. The company may have to sell assets at a loss to provide for these withdrawals.

• • Significant 0 - Insignificant

RISK CATEGORY

a b c d e f

Health Insurance - other than LTC/LTD*

• 0 + 0 0 0

Health Insurance - LTC/LTD*

• 0 + + + 0

Immediate Annuities

0 + 0 + + 0

Single Premium Deferred Annuities

0 0 + + + +

Flexible Premium Deferred Annuities

0 0 + + + +

Guaranteed Interest Contracts

0 0 0 + + +

Other Annuity Deposit Business

0 0 + + + +

Single Premium Whole Life

0 + + + + +

Traditional Non-Par Permanent

0 + + + + +

Traditional Non-Par Term

0 + + 0 0 0

Traditional Par Permanent

0 + + + + +

Traditional Par Term

0 + + 0 0 0

Adjustable Premium Permanent

0 + + + + +

Indeterminate Premium Permanent

0 + + + + +

Universal Life Flexible Premium

0 + + + + +

Universal Life Fixed Premium

0 + + + + +

Universal Life Fixed Premium

dump-in premium allowed

0 + + + + +

*LTC = Long Term Care Insurance

LTD = Long Term Disability Insurance

(g) The credit quality, reinvestment, or disintermediation risk is significant for the business reinsured and the ceding company does not (other than for the classes of business excepted in Paragraph (h) either transfer the underlying assets to the reinsurer or legally segregate such assets in a trust or escrow account or otherwise establish a mechanism satisfactory to the commissioner which legally segregates, by contract or contract provision, the underlying assets.

(h) Notwithstanding the requirements of Paragraph (g), the assets supporting the reserves for the following classes of business and any classes of business which do not have a significant credit quality, reinvestment or disintermediation risk may be held by the ceding company without segregation of such assets:

• Health Insurance - LTC/LTD

• Traditional Non-Par Permanent

• Traditional Par Permanent

• Adjustable Premium Permanent

• Indetermine Premium Permanent

• Universal Life Fixed Premium

(no dump-in premiums allowed

The associated formula for determining the reserve interest rate adjustment must use a formula which reflects the ceding company's investment earning and incorporates all realized and unrealized gains and losses reflected in the statutory statement. The following is an acceptable formula:

Rate

= 2(I + CG)

X + Y - I - CG

Where:

I is the net investment income (Exhibit 2, Line 16, Column 7)

CG is capital gains less capital losses (Exhibit 4, line 10, Column 6)

X is the current year cash and invested assets (Page 2, Line 10 A, Column 1) plus investment income due and accrued (Page 2, Line 16, Column 1) less borrowed money (Page 3, Line 22, Column 1)

Y is the same as X but for the prior year

(i) Settlements are made less frequently than quarterly or payments due form the reinsurer are not made in cash within ninety (90) days of the settlement date.

(j) The ceding insurer is required to make representations or warranties not reasonable related to the business being reinsured.

(k) The ceding insurer is required to make representations or warranties about future performance of the business being reinsured.

(l) The reinsurance agreement is entered into for the principal purpose of producing significant surplus aid for the ceding insurer, typically on a temporary basis, while not transferring all of the significant risks inherent in the business reinsured and, in substance or effect, the expected potential liability to the ceding insurer remains basically unchanged.

2302.2 Notwithstanding section 2302.1, an insurer subject to this regulation may, with the prior approval of the Commissioner, take such reserve credit or establish such asset as the Commissioner may deem consistent with the applicable law and regulations including actuarial interpretations or standards adopted by the Insurance Administration.

2302.3 Agreements entered into after the effective date of this regulation which involve the reinsurance of business issued prior to the effective date of the agreements, along with any subsequent amendments thereto, shall be filed by the ceding company with the Commissioner within thirty (30) days from its date of execution. Each filing shall include data detailing the financial impact of the transaction. The ceding insurer's actuary who signs the financial statement actuarial opinion with respect to valuation of reserves shall consider this regulation and any applicable actuarial standards of practice when determining the proper credit in financial statement filed with this department. The actuary should maintain adequate documentation and be prepared upon request to describe the actuarial work performed for inclusion in the financial statements and to demonstrate that such work conforms to this regulation.

2302.4 Any increase in surplus net of federal income tax resulting from arrangements described in Subsection C(1) shall be identified separately on the insurer's statutory financial statement as a surplus item (aggregate write-ins for gains and losses in surplus in the Capital and Surplus Account, page 4 of the Annual Financial Statement) and recognition of the surplus increase as income shall be reflected on a net of tax basis in the "Reinsurance ceded" line, page 4 of the Annual Statement as earnings emerge from the business reinsured.

Example: On the last day of calendar year N, company XYZ pays a $20 million initial commission and expense allowance to company ABC for reinsuring an existing block and business. Assuming a 34% tax rate, the net increase in surplus at inception is $13.2 million ($20 million - $6.8 million) which is reported on the "Aggregated write-ins for gains and losses in surplus" line in the Capital and Surplus account. $6.9 million (34% of 20 million) is reported as income on the "Commissions and expense allowances on reinsurance ceded" line of the Summary of Operations.

At the end of year N+1 the business has earned $4 million. ABC has paid $.5 million in profit and risk charges in arrears for the year and has received a $1 million experience refund. Company ABC's annual statement would report $1.65 million (66% of ($4 million.- $1 million - $.5 million) up to a maximum of $13.2 million) on the "Commissions and expense allowance on reinsurance ceded' line of the Summary of Operations, and -$1.65 million on the "Aggregate write-ins for gains and losses in surplus' line of the Capital and Surplus account. The experience refund would be reported separately as miscellaneous income item in the Summary of Operation.

History

• SOURCE: Final Rulemaking published at 41 DCR 2214(April 22, 1994).

26-A DCMR § 2303 WRITTEN AGREEMENTS

2303.1 No reinsurance agreement or amendment to any agreement or amendment to any agreement may be used to reduce any liability or to establish any asset in any financial statement filed with the Insurance Administration, unless the agreement, amendment or a binding letter of intent has been duly executed by both parties no later than the "as of date" of the financial statement.

2303.2 In the case of a letter of intent, a reinsurance agreement or an amendment to a reinsurance agreement must be executed within a reasonable period of time, not exceeding ninety (90) days from the execution date of the letter of intent, in order for credit to be granted for the reinsurance ceded.

2303.3 The reinsurance agreement shall contain provisions which provide that:

(a) The agreement shall constitute the entire agreement between the parties with respect to the business being reinsured thereunder and that there are no understandings between the parties other than as expressed in the agreement; and

(b) Any change or modification to the agreement shall be null and void unless made by amendment to the agreement and signed by both parties.

History

• SOURCE: Final Rulemaking published at 41 DCR 2214(April 22, 1994).

26-A DCMR § 2304 EXISTING AGREEMENTS

2304.1 Insurers subject to this regulation shall reduce to zero by December 31, 1994 any reserves credits or assets established with respect to reinsurance agreements entered into prior to the effective date of this regulation which, under the provisions of this regulation would not be entitled to recognition of the reserve credits or assets; provided, however, that the reinsurance agreements shall have been in compliance with laws or regulations in existence immediately preceding the effective date of this regulation.

History

• SOURCE: Final Rulemaking published at 41 DCR 2214(April 22, 1994).

26-A24 COMPANY ORGANIZATION, MANAGEMENT AND SECURITIES

26-A DCMR § 2400 SCOPE

2400.1 The provisions of this law shall apply to insurance companies regulated by District of Columbia Code Sec. 35-422.

History

• SOURCE: Final Rulemaking published at 41 DCR 2223(April 22, 1994).

26-A DCMR § 2401 VALUATION OF BONDS

2401.1 All bonds or other evidences of debt having a fixed term and rate of interest held by an insurer may, if amply secured and not in default as to principal or interest, be valued as follows:

(a) If purchased at par, at the value.

(b) If purchased above or below par, on the basis of the purchase price adjusted so as to bring the value to par at maturity and so as to yield in the meantime the effective rate of interest at which the purchase was made.

(c) Purchase price shall in no case be taken at a higher figure than the actual market value at the time of purchase, plus actual brokerage, transfer, postage or express charges paid in the acquisition of such securities.

2401.2 The Commissioner of Insurance shall have full discretion in determining the method of calculating values according to the rules set forth in this section, but no such method or valuation shall be inconsistent with any applicable valuation or method used by insurers in general, or any such method then currently formulated or approved by the National Association of Insurance Commissioners or its successor organization.

History

• SOURCE: Final Rulemaking published at 41 DCR 2223(April 22, 1994).

26-A DCMR § 2402 VALUATION OF OTHER SECURITIES

2402.1 Securities, other than those referred to in Section 2401, held by an insurer shall be valued, in the discretion of the Commissioner of Insurance, at their market value, or at their appraised value, or at prices determined by it as representing their fair market value.

2402.2 Preferred or guaranteed stocks or shares while paying full dividends may be carried at a fixed value in lieu of market value, at the discretion of the department and in accordance with such method of valuation as it may approve.

2402.3 Stock of a subsidiary corporation of an insurer shall not be valued at an amount in excess of the net value thereof as based upon those assets only of the subsidiary which would be eligible under for investment of the funds of the insurer directly.

2402.4 No valuations under this section shall be inconsistent with any applicable valuation or method then currently formulated or approved by the National Association of Insurance Commissioners or its successor organization.

History

• SOURCE: Final Rulemaking published at 41 DCR 2223(April 22, 1994).

26-A DCMR § 2403 OTHER INVESTED ASSETS

2403.1 Insurers other invested assets shall be valued in accordance with procedures promulgated by the National Association of Insurance Commissioner's Financial Condition subcommittee or as prescribed by the Commissioner of Insurance which will be made available to the public.

History

• SOURCE: Final Rulemaking published at 41 DCR 2223(April 22, 1994).

26-A25 ANNUAL FINANCIAL STATEMENT AND CORPORATE GOVERNANCE DISCLOSURE FILING REQUIREMENTS

26-A DCMR § 2500 SCOPE

2500.1 The provisions of this chapter shall apply to all domestic, foreign, and alien insurers that are authorized to transact insurance in the District of Columbia and required to file annual financial statements pursuant to the Required Annual Financial Statements and Participation in the NAIC Insurance Regulatory Information System Act of 1993, effective October 21, 1993 (D.C. Law 10-42; D.C Official Code § 31-1901 et seq.), and corporate governance disclosures pursuant to the Insurer Corporate Governance Annual Report Act of 2021, effective September 22, 2021 (D.C. Law 24-26; 68 DCR 7994).

History

• SOURCE: Final Rulemaking published at 41 DCR 2225(April 22, 1994); as amended by Final Rulemaking published at 69 DCR 001865 (March 11, 2022). District of Columbia Municipal Regulations Insurance 26-A DCMR § 2500

26-A DCMR § 2501 FILING REQUIREMENTS

2501.1 Insurers required to file annual statements pursuant to the act shall use the annual statement instructions of the National Association of Insurance Commissioners.

2501.2 All financial statements shall be filed on diskette with the National Association of Insurance Commissioners for all companies licensed in more than one state.

History

• SOURCE: Final Rulemaking published at 41 DCR 2225(April 22, 1994); as amended by Final Rulemaking published at 42 DCR 2488 (May 19, 1995).

26-A DCMR § 2502 [RESERVED]

History

• SOURCE: Final Rulemaking published at 69 DCR 001865 (March 11, 2022). District of Columbia Municipal Regulations Insurance 26-A DCMR § 2502

26-A DCMR § 2503 [RESERVED]

History

• SOURCE: Final Rulemaking published at 69 DCR 001865 (March 11, 2022). District of Columbia Municipal Regulations Insurance 26-A DCMR § 2503

26-A DCMR § 2504 [RESERVED]

History

• SOURCE: Final Rulemaking published at 69 DCR 001865 (March 11, 2022). District of Columbia Municipal Regulations Insurance 26-A DCMR § 2504

26-A DCMR § 2505 [RESERVED]

History

• SOURCE: Final Rulemaking published at 69 DCR 001865 (March 11, 2022). District of Columbia Municipal Regulations Insurance 26-A DCMR § 2505

26-A DCMR § 2506 [RESERVED]

History

• SOURCE: Final Rulemaking published at 69 DCR 001865 (March 11, 2022). District of Columbia Municipal Regulations Insurance 26-A DCMR § 2506

26-A DCMR § 2507 [RESERVED]

History

• SOURCE: Final Rulemaking published at 69 DCR 001865 (March 11, 2022). District of Columbia Municipal Regulations Insurance 26-A DCMR § 2507

26-A DCMR § 2508 [RESERVED]

History

• SOURCE: Final Rulemaking published at 69 DCR 001865 (March 11, 2022). District of Columbia Municipal Regulations Insurance 26-A DCMR § 2508

26-A DCMR § 2509 [RESERVED]

History

• SOURCE: Final Rulemaking published at 69 DCR 001865 (March 11, 2022). District of Columbia Municipal Regulations Insurance 26-A DCMR § 2509

26-A DCMR § 2510 [RESERVED]

History

• SOURCE: Final Rulemaking published at 69 DCR 001865 (March 11, 2022). District of Columbia Municipal Regulations Insurance 26-A DCMR § 2510

26-A DCMR § 2511 CORPORATE GOVERNANCE ANNUAL DISCLOSURE

2511.1 The purpose of §§ 2511-2513 is to set forth the procedures for the filing and required contents of the Corporate Governance Annual Disclosure (“CGAD”) and to implement the provisions of Insurer Corporate Governance Annual Report Act of 2021(“Act”), effective September 22, 2021 (D.C. Law 24-26; 68 DCR 7994).

History

• SOURCE: Final Rulemaking published at 69 DCR 001865 (March 11, 2022). District of Columbia Municipal Regulations Insurance 26-A DCMR § 2511

26-A DCMR § 2512 FILING PROCEDURES

2512.1 An insurer, or the insurance group of which the insurer is a member, required to file a CGAD by the Act, shall, no later than June 1 of each calendar year, submit to the Commissioner a CGAD that contains the information described in section 2513 of this chapter.

2512.2 The CGAD shall include a signature of the insurer’s or insurance group’s chief executive officer or corporate secretary attesting to the best of that individual’s belief and knowledge that:

(a) The insurer or insurance group has implemented a corporate governance practice that complies with these rules; and

(b) A copy of the CGAD has been provided to the insurer’s or insurance group’s

Board of Directors (“Board”) or the appropriate committee thereof.

2512.3 The insurer or insurance group shall have discretion regarding the appropriate format for providing the information required by these regulations and may customize the CGAD to provide the most relevant information necessary to permit the Commissioner to gain an understanding of the corporate governance structure, policies and practices utilized by the insurer or insurance group.

2512.4 For purposes of completing the CGAD, the insurer or insurance group shall consider the following in determining how to report its governance activities:

(a) The insurer or insurance group may provide information on governance activities that occur at the ultimate controlling parent level, an intermediate holding company level or the individual legal entity level, depending upon how the insurer or insurance group has structured its system of corporate governance;

(b) In complying with paragraph (a) of this subsection, it is recommended that the insurer or insurance evaluate where:

(1) The insurer’s or insurance group’s risk appetite is determined;

(2) The earnings, capital, liquidity, operations, and reputation of the insurer are overseen collectively and the supervision of these factors are coordinated and exercised; and

(3) The legal liability for failure of general corporate governance duties would be placed; and

(c) The insurer or insurance group shall indicate in its CGAD what criteria was used to determine the level of reporting and explain any subsequent changes in level of reporting.

2512.5 Notwithstanding § 2512.1, and as outlined in section 4 of the Act, if the CGAD is completed at the insurance group level, then it shall be filed with the lead state of the group as determined by the procedures outlined in the most recent Financial Analysis Handbook adopted by the National Association of Insurance Commissioners (“NAIC”). In these instances, a copy of the CGAD shall be provided to the chief regulatory official of any state in which the insurance group has a domestic insurer, upon request.

2512.6 An insurer or insurance group may comply with this section by referencing other existing documents (e.g., Own Risk Solvency Assessment Summary Report, Holding Company Form B or F Filings, Securities and Exchange Commission (SEC) Proxy Statements, or foreign regulatory reporting requirements) if the documents provide information that is comparable to the information described in section 2513 of this chapter. The insurer or insurance group shall clearly reference the location of the relevant information within the CGAD and attach the referenced document if it is not already filed or available to the regulator.

2512.7 Each year following the initial filing of the CGAD, the insurer or insurance group shall file an amended version of the previously filed CGAD indicating where changes have been made. The filing should state whether or not changes were made in the information or activities reported by the insurer or insurance group.

2512.8 The review of the CGAD and any additional requests for information shall be made through the lead state as determined by the current NAIC Financial Analysis Handbook.

History

• SOURCE: Final Rulemaking published at 69 DCR 001865 (March 11, 2022). District of Columbia Municipal Regulations Insurance 26-A DCMR § 2512 District of Columbia Municipal Regulations Insurance 26-A DCMR § 2512

26-A DCMR § 2513 CONTENTS OF CORPORATE GOVERNANCE ANNUAL DISCLOSURE

2513.1 The insurer or insurance group shall be as descriptive as possible in completing the CGAD, with inclusion of attachments or example documents that are used in the governance process, in order to demonstrate the strengths of their governance framework and practices.

2513.2 The CGAD shall describe the insurer’s or insurance group’s corporate governance framework and structure including consideration of the following:

(a) The Board and various committees thereof ultimately responsible for overseeing the insurer or insurance group and the level(s) at which that oversight occurs (e.g., ultimate control level, intermediate holding company, or legal entity), including the rationale for the current Board size and structure; and

(b) The duties of the Board and each of its significant committees and how they are governed (e.g., bylaws, charters, or informal mandates), as well as how the Board’s leadership is structured, including a discussion of the roles of Chief Executive Officer (“CEO”) and Chair of the Board within the organization.

2513.3 The insurer or insurance group shall describe the policies and practices of the most senior governing entity and significant committees thereof, including a discussion of the following factors:

(a) How the qualifications, expertise and experience of each Board member meet the needs of the insurer or insurance group;

(b) How an appropriate amount of independence is maintained on the Board and its significant committees;

(c) The number of meetings held by the Board and its significant committees over the past year as well as information on director attendance;

(d) How the insurer or insurance group identifies, nominates, and elects members to the Board and its committees, including:

(1) Whether a nomination committee is in place to identify and select individuals for consideration;

(2) Whether term limits are placed on directors;

(3) How the election and re-election processes function; and

(4) Whether a Board diversity policy is in place and if so, how it functions; and

(e) The processes in place for the Board to evaluate its performance and the performance of its committees, as well as any recent measures taken to improve performance, including any Board or committee training programs that have been put in place.

2513.4 The insurer or insurance group shall describe the policies and practices for directing Senior Management, including a description of the following factors:

(a) Any processes or practices (i.e., suitability standards) to determine whether officers and key persons in control functions have the appropriate background, experience, and integrity to fulfill their prospective roles, including:

(1) Identification of the specific positions for which suitability standards have been developed and a description of the standards employed; and

(2) Any changes in an officer’s or key person’s suitability as outlined by the insurer’s or insurance group’s standards and procedures to monitor and evaluate such changes;

(b) The insurer’s or insurance group’s code of business conduct and ethics, the discussion of which considers compliance with laws, rules, and regulations, and proactive reporting of any illegal or unethical behavior;

(c) The insurer’s or insurance group’s processes for performance evaluation, compensation, and corrective action to ensure effective senior management throughout the organization, including a description of the general objectives of significant compensation programs and what the programs are designed to reward. The description shall include sufficient detail to allow the Commissioner to understand how the organization ensures that compensation programs do not encourage or reward excessive risk taking. Elements to be discussed should include:

(1) The Board’s role in overseeing management compensation programs and practices;

(2) The various elements of compensation awarded in the insurer’s or insurance group’s compensation programs and how the insurer or insurance group determines and calculates the amount of each element of compensation paid;

(3) How compensation programs are related to both company and individual performance over time;

(4) Whether compensation programs include risk adjustments and how those adjustments are incorporated into the programs for employees at different levels;

(5) Any claw back provisions built into the programs to recover awards or payments if the performance measures upon which they are based are restated or otherwise adjusted; or

(6) Any other factors relevant in understanding how the insurer or insurance group monitors its compensation policies to determine whether its risk management objectives are met by incentivizing its employees.

(d) The insurer’s or insurance group’s plans for CEO and Senior Management succession.

2513.5 The insurer or insurance group shall describe the processes by which the Board, its committees and Senior Management ensure an appropriate amount of oversight to the critical risk areas impacting the insurer’s business activities, including a discussion of:

(a) How oversight and management responsibilities are delegated between the Board, its committees, and Senior Management;

(b) How the Board is kept informed of the insurer’s strategic plans, the associated risks, and steps that Senior Management is taking to monitor and manage those risks;

(c) How reporting responsibilities are organized for each critical risk area. The description should allow the Commissioner to understand the frequency at which information on each critical risk area is reported to and reviewed by Senior Management and the Board. This description may include the following critical risk areas of the insurer:

(1) Risk management processes (an ORSA Summary Report filer may refer to its ORSA Summary Report pursuant to the Risk Management and Own Risk and Solvency Assessment Model Act);

(2) Actuarial function;

(3) Investment decision-making processes;

(4) Reinsurance decision-making processes;

(5) Business strategy/finance decision-making processes;

(6) Compliance function;

(7) Financial reporting/internal auditing; and

(8) Market conduct decision-making processes.

History

• SOURCE: Final Rulemaking published at 69 DCR 001865 (March 11, 2022). District of Columbia Municipal Regulations Insurance 26-A DCMR § 2513

26-A DCMR § 2599 DEFINITIONS

2599.1 When used in this chapter, the following terms shall have the meanings ascribed:

Commissioner – the Commissioner of the District of Columbia Department of Insurance, Securities, and Banking.

Insurance group – those insurers and affiliates included within an insurance holding company system as defined at D.C. Official Code § 31-701(4).

Insurer – includes any company defined by §§ 31-2501.03 and 31-4202, authorized to do the business of insurance in the District, except that it shall not include agencies, authorities, or instrumentalities of the United States, its possessions and territories, the Commonwealth of Puerto Rico, the District, or a state or political subdivision of a state.

Senior management – any corporate officer responsible for reporting information to the board of directors at regular intervals or providing this information to shareholders or regulators including, the Chief Executive Officer, Chief Legal Officer (“CLO”), Chief Information Officer (“CIO”), Chief Technology Officer (“CTO”), Chief Revenue Officer (“CRO”), Chief Visionary Officer (“CVO”), or any other “C” level executive.

History

• SOURCE: Final Rulemaking published at 69 DCR 001865 (March 11, 2022). District of Columbia Municipal Regulations Insurance 26-A DCMR § 2599

26-A26 LONG-TERM CARE INSURANCE

26-A DCMR § 2600 APPLICABILITY AND SCOPE

Except as otherwise specifically provided, this chapter shall apply to all long-term care insurance policies and life insurance policies that accelerate benefits for long-term care that are delivered or issued for delivery in the District of Columbia on or after December 16, 2005, by insurers, fraternal benefit societies, nonprofit health, hospital, and medical service corporations, prepaid health plans, health maintenance organizations, and all similar organizations.

This chapter shall also apply to policies that have indemnity benefits that are triggered by activities of daily living and are sold as disability income insurance, if:

The benefits of the disability income policy are dependent upon or vary in amount based on the receipt of long-term care services;

The disability income policy is advertised, marketed, or offered as insurance for long-term care services; or

Benefits under the policy may commence after the policyholder has reached Social Security’s normal retirement age unless benefits are designed to replace lost income or pay for specific expenses other than long-term care services.

History

• SOURCE: Final Rulemaking published at 52 DCR 10902 (December 16, 2005); as amended by Final Rulemaking published at 55 DCR 3759 (April 11, 2008). District of Columbia Municipal Regulations Insurance, Securities, and Banking 26-A DCMR § 2600

26-A DCMR § 2601 POLICY TERMS AND DEFINITIONS

A long-term care insurance policy delivered or issued for delivery in the District of Columbia shall not use any of the following terms unless the term is defined in the policy and is defined as set forth in section 2699:

“Activities of daily living”;

“Acute condition”;

“Adult day care”;

“Bathing”;

“Cognitive impairment”;

“Continence”;

“Dressing”;

“Eating”;

“Hands-on assistance”;

“Home health care services”;

“Medicare”;

“Personal care”;

“Toileting”; and

“Transferring”.

A long-term care insurance policy delivered or issued for delivery in the District of Columbia shall not define the phrase “mental or nervous disorder,” or a phrase of similar import, to include more than neurosis, psychoneurosis, psychopathy, psychosis, or mental or emotional disease or disorder.

When used in a long-term care insurance policy delivered or issued for delivery in the District of Columbia, the terms “skilled nursing care,” “intermediate care,” “personal care,” “home care,” and other services shall be defined in relation to the level of skill required, the nature of the care, and the setting in which care must be delivered.

All terms referring to providers of services, including “skilled nursing facility,” “extended care facility,” “intermediate care facility,” “convalescent nursing home,” “personal care facility,” and “home care agency,” shall be defined in a long-term care insurance policy delivered or issued for delivery in the District of Columbia in relation to the services and facilities required to be available and the licensure or degree status of those providing or supervising the services. The definition may require that the provider be appropriately licensed or certified.

History

• SOURCE: Final Rulemaking published at 52 DCR 10902 (December 16, 2005); as amended by Final Rulemaking published at 55 DCR 3759 (April 11, 2008). District of Columbia Municipal Regulations Insurance, Securities, and Banking 26-A DCMR § 2601

26-A DCMR § 2602 POLICY PRACTICES AND PROVISIONS: RENEWABILITY AND LEVEL PREMIUMS

An individual long-term care insurance policy shall contain a renewal provision.

A policy issued to an individual shall not contain a renewal provision other than a “guaranteed renewable” or “noncancellable” provision.

Neither the term “guaranteed renewable” nor “noncancellable” shall be used in an individual long-term care insurance policy unless:

The use conforms with the requirements of this section; and

Further explanatory language, in conformity with the disclosure requirements of section 2618, is also included.

The term “guaranteed renewable” may be used only when the insured has the right to continue the long-term care insurance in force by the timely payment of premiums and when the insurer has no unilateral right to make any change in any provision of the policy or rider while the insurance is in force, and cannot decline to renew, except that rates may be revised by the insurer on a class basis.

The term “noncancellable” may be used only when the insured has the right to continue the long-term care insurance in force by the timely payment of premiums and the insurer has no right to unilaterally make any change in any provision of the insurance or in the premium rate.

The term “level premium” may be used only when the insurer does not have the right to change the premium.

In addition to the other requirements of this section, a qualified long-term care insurance contract shall be guaranteed renewable within the meaning of section 7702B(b)(1)(C) of the Internal Revenue Code of 1986, approved August 21, 1996 (110 Stat. 2054; 26 U.S.C. § 7702B(b)(1)(C)).

History

• SOURCE: Final Rulemaking published at 52 DCR 10902 (December 16, 2005); as amended by Final Rulemaking published at 55 DCR 3759 (April 11, 2008). District of Columbia Municipal Regulations Insurance, Securities, and Banking 26-A DCMR § 2602

26-A DCMR § 2603 POLICY PRACTICES AND PROVISIONS: LIMITATIONS AND EXCLUSIONS

A policy shall not be delivered or issued for delivery in the District of Columbia as long-term care insurance if the policy limits or excludes coverage by type of illness, treatment, medical condition, or accident, except for the following reasons:

Preexisting conditions or diseases;

Mental or nervous disorders; however, this shall not permit exclusion or limitation of benefits on the basis of Alzheimer’s disease;

Alcoholism and drug addiction;

Illness, treatment, or medical condition arising out of:

War or act of war (whether declared or undeclared);

Participation in a felony, riot, or insurrection;

Service in the armed forces or auxiliary units of the armed forces;

Suicide (sane or insane), attempted suicide, or intentionally self-inflicted injury; or

Aviation (if insured is non-fare-paying passenger).

Treatment provided in a government facility (unless otherwise required by law);

Services for which benefits are available under Medicare or another governmental program (except Medicaid), any state or federal workers’ compensation, employer’s liability, or occupational disease law, or any motor vehicle no-fault law;

Services provided by a member of the covered person’s immediate family;

Services for which no charge is normally made in the absence of insurance;

Expenses for services or items available or paid under another long-term care insurance or health insurance policy; and

In the case of a qualified long-term care insurance contract, expenses for services or items to the extent that the expenses are reimbursable under Title XVIII of the Social Security Act, approved July 30, 1965 (79 Stat. 290; 42 U.S.C. § 1395 et seq.), or would be so reimbursable but for the application of a deductible or coinsurance amount.

2603.2 This section is not intended to prohibit exclusions and limitations by type of provider or territorial limitations.

History

• SOURCE: Final Rulemaking published at 52 DCR 10902 (December 16, 2005); as amended by Final Rulemaking published at 55 DCR 3759 (April 11, 2008). District of Columbia Municipal Regulations Insurance, Securities, and Banking 26-A DCMR § 2603

26-A DCMR § 2604 POLICY PRACTICES AND PROVISIONS: EXTENSION OF BENEFITS

Termination of long-term care insurance shall be without prejudice to benefits payable for institutionalization if the institutionalization began while the long-term care insurance was in force and continues without interruption after termination. The extension of benefits beyond the period the long-term care insurance was in force may be limited to the duration of the benefit period, if any, or to payment of the maximum benefits and may be subject to any policy waiting period and any other applicable provisions of the policy.

History

• SOURCE: Final Rulemaking published at 52 DCR 10902 (December 16, 2005); as amended by Final Rulemaking published at 55 DCR 3759 (April 11, 2008). District of Columbia Municipal Regulations Insurance, Securities, and Banking 26-A DCMR § 2604

26-A DCMR § 2605 POLICY PRACTICES AND PROVISIONS: CONTINUATION OR CONVERSION

Group long-term care insurance issued in the District of Columbia on or after December 16, 2005, shall provide covered individuals with a basis for continuation or conversion of coverage.

Written application for a converted policy shall be made and the first premium due, if any, shall be paid as directed by the insurer not later than thirty-one (31) days after termination of coverage under the group policy. The converted policy shall be issued effective on the day following the termination of coverage under the group policy and shall be renewable annually.

Unless the group policy from which conversion is made replaced previous group coverage, the premium for the converted policy shall be calculated on the basis of the insured’s age at inception of coverage under the group policy from which conversion is made. If the group policy from which conversion is made replaced previous group coverage, the premium for the converted policy shall be calculated on the basis of the insured’s age at inception of coverage under the group policy that was replaced.

Continuation of coverage or issuance of a converted policy shall be mandatory, except if:

Termination of group coverage resulted from an individual’s failure to make a required payment of premium or contribution when due; or

The terminating coverage is replaced, not later than thirty-one (31) days after termination, by group coverage effective on the day following the termination of coverage if:

The replacement group coverage provides benefits identical to or benefits determined by the Commissioner to be substantially equivalent to or in excess of those provided by the terminating coverage; and

The premium for the replacement group coverage is calculated in a manner consistent with the requirements of subsection 2605.3.

Notwithstanding any other provision of this section, a converted policy issued to an individual who at the time of conversion is covered by another long-term care insurance policy that provides benefits on the basis of incurred expenses may contain a provision that results in a reduction of benefits payable if the benefits provided under the additional coverage, together with the full benefits provided by the converted policy, would result in payment of more than one hundred percent (100%) of incurred expenses. The provision may be included in the converted policy only if the converted policy also provides for a premium decrease or refund which reflects the reduction in benefits payable.

A converted policy may provide that the benefits payable under the converted policy, together with the benefits payable under the group policy from which conversion is made, shall not exceed those that would have been payable had the individual’s coverage under the group policy remained in force and effect.

Notwithstanding any other provision of this section, an insured individual whose eligibility for group long-term care coverage is based upon his or her relationship to another person shall be entitled to continuation of coverage under the group policy upon termination of the qualifying relationship by death or dissolution of marriage.

For the purposes of this section, the phrase:

“Basis for continuation of coverage” means a policy provision that maintains coverage under the existing group policy when the coverage would otherwise terminate and that is subject only to the continued timely payment of premium when due. Group policies that restrict provision of benefits and services or contain incentives to use certain providers or facilities may provide continuation benefits that are substantially equivalent to the benefits of the existing group policy. The Commissioner shall make a determination as to the substantial equivalency of benefits and, in doing so, shall take into consideration the differences between managed care and non-managed care plans, including provider system arrangements, service availability, benefit levels, and administrative complexity;

“Basis for conversion of coverage” means a policy provision under which an individual whose coverage under the group policy would otherwise terminate or has been terminated for any reason, including discontinuance of the group policy in its entirety or with respect to an insured class, and who has been continuously insured under the group policy (and any group policy that it replaced) for at least six (6) months immediately prior to termination, shall be entitled to the issuance of a converted policy by the insurer under whose group policy he or she is covered, without evidence of insurability;

“Converted policy” means an individual policy of long-term care insurance providing benefits identical to or benefits determined by the Commissioner to be substantially equivalent to or in excess of those provided under the group policy from which conversion is made. If the group policy from which conversion is made restricts provision of benefits and services to, or contains incentives to use certain providers or facilities, the Commissioner, in making a determination as to the substantial equivalency of benefits, shall take into consideration the differences between managed care and non-managed care plans, including provider system arrangements, service availability, benefit levels, and administrative complexity; and

“Managed-care plan” means a health care or assisted living arrangement designed to coordinate patient care or control costs through utilization review, case management, or use of specific provider networks.

History

• SOURCE: Final Rulemaking published at 52 DCR 10902 (December 16, 2005); as amended by Final Rulemaking published at 55 DCR 3759 (April 11, 2008). District of Columbia Municipal Regulations Insurance, Securities, and Banking 26-A DCMR § 2605

26-A DCMR § 2606 POLICY PRACTICES AND PROVISIONS: DISCONTINUANCE AND REPLACEMENT

If a group long-term care policy is replaced by another group long-term care policy issued to the same policyholder, the succeeding insurer shall offer coverage to all persons covered under the previous group policy on its date of termination. Coverage provided or offered to individuals by the succeeding insurer and premiums charged to persons under the new group policy shall not:

(a) Result in an exclusion for preexisting conditions that would have been covered under the group policy being replaced; or

(b) Vary or otherwise depend on the individual’s health or disability status, claim experience, or use of long-term care services.

The premium charged to an insured shall not increase due to either of the following:

The increasing age of the insured at ages beyond sixty-five (65); or

The duration the insured has been covered under the policy.

The purchase of additional coverage shall not be considered a premium rate increase, but for the purposes of the calculation required under section 2639, the portion of the premium attributable to the additional coverage shall be added to and considered part of the initial annual premium.

A reduction in benefits shall not be considered a premium change, but for the purposes of the calculation required under section 2639, the initial annual premium shall be based on the reduced benefits.

History

• SOURCE: Final Rulemaking published at 52 DCR 10902 (December 16, 2005); as amended by Final Rulemaking published at 55 DCR 3759 (April 11, 2008). District of Columbia Municipal Regulations Insurance, Securities, and Banking 26-A DCMR § 2606

26-A DCMR § 2607 POLICY PRACTICES AND PROVISIONS: ELECTRONIC ENROLLMENT FOR GROUP POLICIES

In the case of the type of group long-term care insurance defined in section 2(4)(A) of the Long-Term Care Insurance Act of 2000, effective May 23, 2000 (D.C. Law 13-121; D.C. Official Code § 31-3601(4)(A) (2001)), a requirement that the signature of an insured be obtained by an agent or insurer shall be deemed satisfied if:

Consent is obtained by telephonic or electronic enrollment by the group policyholder or insurer;

The telephonic or electronic enrollment provides necessary and reasonable safeguards to assure the accuracy, retention, and prompt retrieval of records; and

The telephonic or electronic enrollment provides necessary and reasonable safeguards to assure that the confidentiality of individually identifiable information and privileged information is maintained.

A verification of enrollment information shall be provided to an insured providing consent pursuant to subsection 2607.1.

The insurer shall make available, upon the request of the Commissioner, records that will demonstrate the insurer’s ability to confirm enrollment and coverage amounts of insureds providing consent pursuant to subsection 2607.1.

History

• SOURCE: Final Rulemaking published at 52 DCR 10902 (December 16, 2005); as amended by Final Rulemaking published at 55 DCR 3759 (April 11, 2008). District of Columbia Municipal Regulations Insurance, Securities, and Banking 26-A DCMR § 2607

26-A DCMR § 2608 UNINTENTIONAL LAPSE

An insurer offering long-term care insurance shall, as a protection against unintentional lapse, comply with the following:

No individual long-term care insurance policy or certificate shall be issued until the insurer has received from the applicant either a written designation of at least one (1) person, in addition to the applicant, who is to receive notice of lapse or termination of the policy or certificate for nonpayment of premium or a written waiver dated and signed by the applicant electing not to designate an additional person to receive notice. The applicant shall have the right to designate at least one (1) person who is to receive the notice of termination, in addition to the insured. Designation shall not constitute acceptance of any liability by the third party for services provided to the insured. The form used for the written designation shall provide space clearly designated for listing at least one (1) person. The designation shall include each person’s full name and home address. In the case of an applicant who elects not to designate an additional person, the waiver shall state: “Protection against unintended lapse. I understand that I have the right to designate at least one person other than myself to receive notice of lapse or termination of this long-term care insurance policy for nonpayment of premium. I understand that notice will not be given until thirty (30) days after a premium is due and unpaid. I elect NOT to designate a person to receive this notice.” The insurer shall notify the insured, no less than once every two (2) years, of the right to change this written designation.

If the policyholder or certificateholder pays premium for a long-term care insurance policy or certificate through a payroll or pension deduction plan, the requirements contained in paragraph (a) of this subsection need not be met until sixty (60) days after the policyholder or certificateholder is no longer on the payroll or pension deduction plan. The application or enrollment form for such policies or certificates shall clearly indicate the payroll or pension deduction plan selected by the applicant.

No individual long-term care insurance policy or certificate shall lapse or be terminated for nonpayment of premium unless the insurer, at least thirty (30) days before the effective date of the lapse or termination, has given notice to the insured and to those persons designated pursuant to paragraph (a) of this subsection, at the address provided by the insured for the purpose of receiving notice of lapse or termination. Notice shall be given by first class United States mail, postage prepaid, and notice may not be given until thirty (30) days after a premium is due and unpaid. Notice shall be deemed to have been given as of five (5) days after the date of mailing.

History

• SOURCE: Final Rulemaking published at 52 DCR 10902 (December 16, 2005); as amended by Final Rulemaking published at 55 DCR 3759 (April 11, 2008). District of Columbia Municipal Regulations Insurance, Securities, and Banking 26-A DCMR § 2608

26-A DCMR § 2609 REINSTATEMENT

In addition to the requirements of section 2608, a long-term care insurance policy or certificate shall include a provision that provides for reinstatement of coverage, in the event of lapse, if the insurer is provided proof that the policyholder or certificateholder was cognitively impaired or had a loss of functional capacity before the grace period contained in the policy expired. This option shall be available to the insured if requested within five (5) months after termination and shall allow for the collection of past due premium, where appropriate. The standard of proof of cognitive impairment or loss of functional capacity shall not be more stringent than the benefit eligibility criteria for cognitive impairment or the loss of functional capacity contained in the policy or certificate.

History

• SOURCE: Final Rulemaking published at 52 DCR 10902 (December 16, 2005); as amended by Final Rulemaking published at 55 DCR 3759 (April 11, 2008). District of Columbia Municipal Regulations Insurance, Securities, and Banking 26-A DCMR § 2609

26-A DCMR § 2610 REQUIRED DISCLOSURE PROVISIONS: RENEWABILITY AND PREMIUM RATE CHANGES

The renewal provision required by section 2602 shall be appropriately captioned, shall appear on the first page of the policy, and shall clearly state that the coverage is guaranteed renewable or noncancellable. This subsection shall not apply to a policy that does not contain a renewal provision and under which the right to nonrenew is reserved solely to the policyholder.

A long-term care insurance policy or certificate, other than one where the insurer does not have the right to change the premium, shall include a statement that premium rates may change.

History

• SOURCE: Final Rulemaking published at 52 DCR 10902 (December 16, 2005); as amended by Final Rulemaking published at 55 DCR 3759 (April 11, 2008). District of Columbia Municipal Regulations Insurance, Securities, and Banking 26-A DCMR § 2610

26-A DCMR § 2611 REQUIRED DISCLOSURE PROVISIONS: RIDERS AND ENDORSEMENTS

Except for riders or endorsements by which the insurer effectuates a request made in writing by the insured under an individual long-term care insurance policy, all riders or endorsements added to an individual long-term insurance policy after the date of issue or at reinstatement or renewal that reduce or eliminate benefits or coverage in the policy shall require signed acceptance by the individual insured. After the date of policy issue, a rider or endorsement that increases benefits or coverage with a concomitant increase in premium during the policy term shall be agreed to in writing signed by the insured, except if the increased benefits or coverage are required by law. If a separate additional premium is charged for benefits provided in connection with riders or endorsements, the premium charge shall be set forth in the policy, rider, or endorsement.

History

• SOURCE: Final Rulemaking published at 52 DCR 10902 (December 16, 2005); as amended by Final Rulemaking published at 55 DCR 3759 (April 11, 2008). District of Columbia Municipal Regulations Insurance, Securities, and Banking 26-A DCMR § 2611

26-A DCMR § 2612 REQUIRED DISCLOSURE PROVISIONS: PAYMENT OF BENEFITS

A long-term care insurance policy that provides for the payment of benefits based on standards described as “usual and customary,” “reasonable and customary,” or words of similar import shall include a definition of those terms and an explanation of the terms in the policy’s accompanying outline of coverage.

History

• SOURCE: Final Rulemaking published at 52 DCR 10902 (December 16, 2005); as amended by Final Rulemaking published at 55 DCR 3759 (April 11, 2008). District of Columbia Municipal Regulations Insurance, Securities, and Banking 26-A DCMR § 2612

26-A DCMR § 2613 REQUIRED DISCLOSURE PROVISIONS: PREEXISTING CONDITIONS LIMITATIONS

If a long-term care insurance policy or certificate contains any limitations with respect to preexisting conditions, the limitations shall appear as a separate paragraph of the policy or certificate that shall be labeled “Preexisting Condition Limitations.”

History

• SOURCE: Final Rulemaking published at 52 DCR 10902 (December 16, 2005); as amended by Final Rulemaking published at 55 DCR 3759 (April 11, 2008). District of Columbia Municipal Regulations Insurance, Securities, and Banking 26-A DCMR § 2613

26-A DCMR § 2614 REQUIRED DISCLOSURE PROVISIONS: LIMITATIONS AND CONDITIONS OTHER THAN PREEXISTING CONDITIONS

A long-term care insurance policy or certificate that contains any limitations or conditions for eligibility, other than a limitation covered by section 2613, shall set forth a description of the limitations or conditions, including any required number of days of confinement, in a separate paragraph of the policy or certificate and shall label such paragraph “Limitations or Conditions on Eligibility for Benefits.”

The disclosure of limitations with respect to preexisting conditions shall be governed by section 2613.

History

• SOURCE: Final Rulemaking published at 52 DCR 10902 (December 16, 2005); as amended by Final Rulemaking published at 55 DCR 3759 (April 11, 2008). District of Columbia Municipal Regulations Insurance, Securities, and Banking 26-A DCMR § 2614

26-A DCMR § 2615 REQUIRED DISCLOSURE PROVISIONS: TAX CONSEQUENCES

With regard to life insurance policies that provide an accelerated benefit for long-term care, a disclosure statement shall be provided at the time of application for the policy or rider and at the time the accelerated benefit payment request is submitted; the disclosure statement shall state that receipt of the accelerated benefits may be taxable and that assistance should be sought from a personal tax advisor. The disclosure statement shall be prominently displayed on the first page of the policy or rider and any other related documents. This section shall not apply to qualified long-term care insurance contracts.

History

• SOURCE: Final Rulemaking published at 52 DCR 10902 (December 16, 2005); as amended by Final Rulemaking published at 55 DCR 3759 (April 11, 2008). District of Columbia Municipal Regulations Insurance, Securities, and Banking 26-A DCMR § 2615

26-A DCMR § 2616 REQUIRED DISCLOSURE PROVISIONS: BENEFIT TRIGGERS

Activities of daily living and cognitive impairment shall be used to measure an insured’s need for long-term care and shall be described in the policy or certificate in a separate section that shall be labeled “Eligibility for the Payment of Benefits.” Additional benefit triggers, if any, shall also be explained in this section. If the triggers differ for different benefits, explanation of the trigger shall accompany each benefit description. If an attending physician or other specified person is required to certify a certain level of functional dependency in order to be eligible for benefits, this requirement shall be specified.

History

• SOURCE: Final Rulemaking published at 52 DCR 10902 (December 16, 2005); as amended by Final Rulemaking published at 55 DCR 3759 (April 11, 2008). District of Columbia Municipal Regulations Insurance, Securities, and Banking 26-A DCMR § 2616

26-A DCMR § 2617 REQUIRED DISCLOSURE PROVISIONS: QUALIFIED AND NON-QUALIFIED CONTRACTS

A qualified long-term care insurance contract shall include a disclosure statement in the policy and in the outline of coverage, which disclosure statement shall be in the form set forth in subsection 2642.6, stating that the policy is intended to be a qualified long-term care insurance contract under section 7702B(b) of the Internal Revenue Code of 1986, approved August 21, 1996 (110 Stat. 2054; 26 U.S.C. § 7702B(b)).

A non-qualified long-term care insurance contract shall include a disclosure statement in the policy and in the outline of coverage, which disclosure statement shall be in the form set forth in subsection 2642.6, stating that the policy is not intended to be a qualified long-term care insurance contract.

History

• SOURCE: Final Rulemaking published at 52 DCR 10902 (December 16, 2005); as amended by Final Rulemaking published at 55 DCR 3759 (April 11, 2008). District of Columbia Municipal Regulations Insurance, Securities, and Banking 26-A DCMR § 2617

26-A DCMR § 2618 REQUIRED DISCLOSURE OF RATING PRACTICES TO CONSUMERS

Except as provided in subsection 2618.2, this section shall apply to a long-term care insurance policy or certificate issued in the District of Columbia on or after June 16, 2006.

For certificates issued on or after December 16, 2005, under a group long-term care insurance policy as defined in section 2(4)(A) of the Long-Term Care Insurance Act of 2000, effective May 23, 2000 (D.C. Law 13-121; D.C. Official Code § 31-3601(4)(A) (2001)), which policy was in force on December 16, 2005, the provisions of this section shall apply on the first policy anniversary that occurs on or after December 16, 2006.

(a) Other than policies for which no applicable premium rate or rate schedule increase may be made, insurers shall provide the following information to an applicant at the time of application or enrollment, unless the method of application does not allow for delivery at that time, in which case an insurer shall provide the following information to the applicant no later than at the time of the delivery of the policy or certificate:

A statement that the policy may be subject to rate increases in the future;

An explanation of potential future premium rate revisions and the policyholder’s or certificateholder’s option in the event of a premium rate revision;

The premium rate or rate schedules applicable to the applicant that will be in effect until a request is made for an increase;

A general explanation for applying premium rate or rate schedule adjustments that shall include:

A description of when premium rate or rate schedule adjustments will be effective (for example, next anniversary date or next billing date); and

The right to a revised premium rate or rate schedule as provided in subparagraph (3) of this paragraph if the premium rate or rate schedule is changed; and

Information regarding each premium rate increase on the policy form or a similar policy form over the past ten (10) years for the District of Columbia or any other jurisdiction that, at a minimum, identifies:

The policy forms for which premium rates have been increased;

The calendar years when the form was available for purchase; and

The amount or percent of each increase, expressed as a percent of the premium rate prior to the increase, or expressed as minimum and maximum percents if the rate increase was variable by rating characteristics.

The insurer may provide additional explanatory information related to the rate increase if the additional explanatory information is provided in a fair manner.

An insurer may exclude from the disclosure required by subsection 2618.3 premium rate increases that only apply to blocks of business acquired from other nonaffiliated insurers or to long-term care insurance policies acquired from other nonaffiliated insurers if those increases occurred prior to the acquisition.

If an acquiring insurer files for a rate increase on a long-term care insurance policy form acquired from a nonaffiliated insurer or a block of policy forms acquired from a nonaffiliated insurer on or before the later of December 16, 2005, or the end of a twenty-four (24) month period following the acquisition of the block of policies, the acquiring insurer may exclude that rate increase from the disclosure; however, the nonaffiliated selling company shall include the disclosure of that rate increase in accordance with subsection 2618.3(5).

If the acquiring insurer described in subsection 2618.5 files for a rate increase, subsequent to a rate increase covered by subsection 2618.5, on the same policy form acquired from a nonaffiliated insurer or block of policy forms acquired from a nonaffiliated insurer described in subsection 2618.5, the acquiring insurer shall make all disclosures required by subsection 2618.3(5), including disclosure of the earlier rate increase covered by subsection 2618.5, even if the subsequent rate increase is filed within the twenty-four (24) month period described in subsection 2618.5.

An applicant shall sign an acknowledgement at the time of application, unless the method of application does not allow for signature at that time, that the insurer made the disclosure required under subparagraphs (a)(1) and (a)(5) of subsection 2618.3. If due to the method of application the applicant cannot sign an acknowledgement at the time of application, the applicant shall sign an acknowledgment no later than at the time of the delivery of the policy or certificate.

An insurer shall use the forms in Appendices B and F to comply with the requirements of subsection 2618.3 through 2618.7.

An insurer shall provide notice of an upcoming premium rate schedule increase to all policyholders or certificateholders, if applicable, at least forty-five (45) days prior to the implementation of the premium rate schedule increase by the insurer. The notice shall include the information required by subsections 2618.3 through 2618.6 when the rate increase is implemented.

History

• SOURCE: Final Rulemaking published at 52 DCR 10902 (December 16, 2005); as amended by Final Rulemaking published at 55 DCR 3759 (April 11, 2008). District of Columbia Municipal Regulations Insurance, Securities, and Banking 26-A DCMR § 2618

26-A DCMR § 2619 INITIAL FILING REQUIREMENTS

The requirements of this section shall apply to a long-term care insurance policy issued in the District of Columbia on or after June 16, 2006.

An insurer shall provide the following information to the Commissioner at least thirty (30) days prior to making a long-term care insurance form available for sale:

A copy of the disclosure documents required by section 2618; and

An actuarial certification consisting of the following:

A statement that the initial premium rate schedule is sufficient to cover anticipated costs under moderately adverse experience and that the premium rate schedule is reasonably expected to be sustainable over the life of the form with no future premium increases anticipated;

A statement that the policy design and coverage provided have been reviewed and taken into consideration;

A statement that the underwriting and claims adjudication processes have been reviewed and taken into consideration;

A complete description of the basis for contract reserves that are anticipated to be held under the form, including the following:

Sufficient detail or sample calculations so as to completely depict the reserve amounts to be held;

A statement that the assumptions used for reserves contain reasonable margins for adverse experience;

A statement that the net valuation premium for renewal years does not increase (except for attained-age rating where permitted); and

A statement that the difference between the gross premium and the net valuation premium for renewal years is sufficient to cover expected renewal expenses; or, if such a statement cannot be made, a complete description of the situations where the difference is not sufficient. An aggregate distribution of anticipated issues may be used as long as the underlying gross premiums maintain a reasonably consistent relationship. If the gross premiums for certain age groups appear to be inconsistent with this requirement, the Commissioner may request a demonstration under subsection 2619.3 based on a standard age distribution; and

(A) A statement that the premium rate schedule is not less than the premium rate schedule for existing similar policy forms also available from the insurer except for reasonable differences attributable to benefits; or

(B) A comparison of the premium rate schedules for similar policy forms that are currently available from the insurer with an explanation of the differences between the premium rate schedule for the policy form and similar policy forms.

The Commissioner may request an actuarial demonstration that benefits are reasonable in relation to premiums. The actuarial demonstration shall include either premium and claim experience on similar policy forms, adjusted for any premium or benefit differences, relevant and credible data from other studies, or both.

If the Commissioner asks for additional information under this section, the period in subsection 2619.2 shall not include the period during which the insurer is preparing the requested information.

History

• SOURCE: Final Rulemaking published at 52 DCR 10902 (December 16, 2005); as amended by Final Rulemaking published at 55 DCR 3759 (April 11, 2008). District of Columbia Municipal Regulations Insurance, Securities, and Banking 26-A DCMR § 2619

26-A DCMR § 2620 APPLICATION QUESTIONS; PROHIBITION AGAINST POST-CLAIMS UNDERWRITING

All applications for long-term care insurance policies or certificates, except those that are guaranteed issue, shall contain clear and unambiguous questions designed to ascertain the health condition of the applicant.

If an application for long-term care insurance contains a question that asks whether the applicant has had medication prescribed by a physician, it shall also ask the applicant to list the medication that has been prescribed.

If the medications listed in an application were known by the insurer, or should have been known at the time of application, to be directly related to a medical condition for which coverage would otherwise be denied, then the policy or certificate shall not be rescinded for that condition.

Except for policies or certificates that are guaranteed issue, the following language shall be set out conspicuously and in close conjunction with the applicant’s signature block on an application for a long-term care insurance policy or certificate:

Caution: If your answers on this application are incorrect or untrue, [company] has the right to deny benefits or rescind your policy.

The following language, or language substantially similar to the following, shall be set out conspicuously on the long-term care insurance policy or certificate at the time of delivery:

Caution: The issuance of this long-term care insurance [policy] [certificate] is based upon your responses to the questions on your application. A copy of your [application] [enrollment form] [is enclosed] [was retained by you when you applied]. If your answers are incorrect or untrue, the company has the right to deny benefits or rescind your policy. The best time to clear up any questions is now, before a claim arises! If, for any reason, any of your answers are incorrect, contact the company at this address: [insert address]

Prior to the issuance of a long-term care insurance policy or certificate to an applicant who is age eighty (80) or older, the insurer shall obtain one of the following:

A report of a physical examination;

An assessment of functional capacity;

An attending physician’s statement; or

Copies of medical records.

History

• SOURCE: Final Rulemaking published at 52 DCR 10902 (December 16, 2005); as amended by Final Rulemaking published at 55 DCR 3759 (April 11, 2008). District of Columbia Municipal Regulations Insurance, Securities, and Banking 26-A DCMR § 2620

26-A DCMR § 2621 COMPLETED APPLICATIONS

A copy of the completed application or enrollment form (whichever is applicable) shall be delivered to the insured no later than at the time of the delivery of the policy or certificate unless a copy of the completed application was retained by the applicant at the time of application.

History

• SOURCE: Final Rulemaking published at 52 DCR 10902 (December 16, 2005); as amended by Final Rulemaking published at 55 DCR 3759 (April 11, 2008). District of Columbia Municipal Regulations Insurance, Securities, and Banking 26-A DCMR § 2621

26-A DCMR § 2622 RECORDS AND REPORTS OF RESCISSIONS

Every insurer selling or issuing long-term care insurance shall maintain a record of all policy or certificate rescissions, both in the District and nationally, except those that the insured or other entity voluntarily effectuated, and shall annually furnish this information to the Commissioner in the format prescribed in Appendix A.

History

• SOURCE: Final Rulemaking published at 52 DCR 10902 (December 16, 2005); as amended by Final Rulemaking published at 55 DCR 3759 (April 11, 2008). District of Columbia Municipal Regulations Insurance, Securities, and Banking 26-A DCMR § 2622

26-A DCMR § 2623 MINIMUM STANDARDS FOR HOME HEALTH AND COMMUNITY CARE BENEFITS

A long-term care insurance policy or certificate that provides benefits for home health care or community care services shall not limit or exclude those benefits by any of the following means:

Requiring that the insured or claimant would need care in a skilled nursing facility if home health care services were not provided;

Requiring that the insured or claimant first or simultaneously receive nursing or therapeutic services, or both, in a home, community, or institutional setting before home health care services are covered;

Limiting eligible services to services provided by registered nurses or licensed practical nurses;

Requiring that a nurse or therapist provide services covered by the policy that can be provided by a home health aide or other licensed or certified home care worker acting within the scope of his or her licensure or certification;

Excluding coverage for personal care services provided by a home health aide;

Requiring that the provision of home health care services be at a level of certification or licensure greater than that required by the eligible service;

Requiring that the insured or claimant have an acute condition before home health care services are covered;

Limiting benefits to services provided by Medicare-certified agencies or providers; or

Excluding coverage for adult day care services.

A long-term care insurance policy or certificate that provides for home health care or community care services shall provide total home health care or community care coverage that is a dollar amount equivalent to at least one-half (1/2) of one (1) year’s coverage available for nursing home benefits under the policy or certificate, at the time covered home health care or community care services are being received. This requirement shall not apply to a policy or certificate issued to a resident of a continuing care retirement community.

Home health care coverage may be applied to the non-home health care benefits provided in the policy or certificate when determining maximum coverage under the terms of the policy or certificate.

History

• SOURCE: Final Rulemaking published at 52 DCR 10902 (December 16, 2005); as amended by Final Rulemaking published at 55 DCR 3759 (April 11, 2008). District of Columbia Municipal Regulations Insurance, Securities, and Banking 26-A DCMR § 2623

26-A DCMR § 2624 REQUIREMENT TO OFFER INFLATION PROTECTION

No insurer may offer a long-term care insurance policy unless the insurer also offers to the policyholder in addition to any other inflation protection the option to purchase a policy that provides for benefit levels to increase with benefit maximums or reasonable durations which are meaningful to account for reasonably anticipated increases in the costs of long-term care services covered by the policy. Insurers shall offer to each policyholder, at the time of purchase, the option to purchase a policy with an inflation protection feature no less favorable than one of the following:

Increases benefit levels annually in such a manner that the increases are compounded annually at a rate of not less than five percent (5%);

Guarantees the insured individual the right to periodically increase benefit levels without providing evidence of insurability or health status so long as the option for the previous period has not been declined. The amount of the additional benefit shall be no less than the difference between the existing policy benefit and that benefit compounded annually at a rate of at least five percent (5%) for the period beginning with the purchase of the existing benefit and extending until the year in which the offer is made; or

Covers a specified percentage of actual or reasonable charges and does not include a maximum specified indemnity amount or limit.

If the policy is issued to a group, the offer required by subsection 2624.1 shall be made to the group policyholder; except, if the policy is issued to a group defined in section 2(4)(D) of the Long-Term Care Insurance Act of 2000, effective May 23, 2000 (D.C. Law 13-121; D.C. Official Code § 31-3601(4)(D) (2001)), other than to a continuing care retirement community, the offer shall be made to each proposed certificateholder.

The offer otherwise required by subsection 2624.1 shall not be required of a life insurance policy or rider containing accelerated long-term care benefits.

An insurer shall include the following information in or with the outline of coverage:

A graphic comparison of the benefit levels of a policy that increases benefits over the policy period with a policy that does not increase benefits. The graphic comparison shall show benefit levels over at least a twenty (20) year period; and

Expected premium increases or additional premiums to pay for automatic or optional benefit increases.

An insurer may use a reasonable hypothetical, or a graphic demonstration, for the purposes of making the disclosures required under subsection 2624.4.

Inflation protection benefit increases under a policy that contains these benefits shall continue without regard to an insured’s age, claim status, claim history, or the length of time the person has been insured under the policy.

An offer of inflation protection that provides for automatic benefit increases shall include an offer of a premium that the insurer expects to remain constant. The offer shall disclose in a conspicuous manner that the premium may change in the future unless the premium is guaranteed to remain constant.

Inflation protection as provided in this section shall be included in a long-term care insurance policy unless an insurer obtains a rejection of inflation protection signed by the policyholder as required in this subsection. The rejection may be either in the application or on a separate form. The rejection shall be considered a part of the application and shall state: “I have reviewed the outline of coverage and the graphs that compare the benefits and premiums of this policy with and without inflation protection. Specifically, I have reviewed Plans _____, and I reject inflation protection.”

History

• SOURCE: Final Rulemaking published at 52 DCR 10902 (December 16, 2005); as amended by Final Rulemaking published at 55 DCR 3759 (April 11, 2008). District of Columbia Municipal Regulations Insurance, Securities, and Banking 26-A DCMR § 2624

26-A DCMR § 2625 REQUIREMENTS FOR APPLICATION FORMS AND REPLACEMENT COVERAGE

(a) Application forms shall include the following questions designed to elicit information as to whether, as of the date of the application, the applicant has another long-term care insurance policy or certificate in force or whether a long-term care insurance policy or certificate is intended to replace another accident and sickness or long-term care insurance policy or certificate presently in force:

“Do you have another long-term care insurance policy or certificate in force (including a health care service contract or health maintenance organization contract)?”

“Did you have another long-term care insurance policy or certificate in force during the last twelve (12) months?”

“If so, with which company?”

“If that policy lapsed, when did it lapse?”

“Are you covered by Medicaid?”

“Do you intend to replace any of your medical or health insurance coverage with this [policy] [certificate]?”.

(b) A supplementary application or other form to be signed by the applicant and agent, except where the coverage is sold without an agent, containing the questions set forth in paragraph (a) of this subsection may be used.

(c) With regard to a replacement policy issued to a group as defined in section 2(4)(A) of the Long-Term Care Insurance Act of 2000, effective May 23, 2000 (D.C. Law 13-121; D.C. Official Code § 31-3601(4)(A) (2001)), the questions set forth in paragraph (a) of this subsection may be modified only to the extent necessary to elicit information about health or long-term care insurance policies other than the group policy being replaced, provided that the certificateholder has been notified of the replacement.

An agent shall list any other health insurance policies that he or she has sold to the applicant, including the following:

A policy sold that is still in force; and

A policy sold in the past five (5) years that is no longer in force.

Upon determining that a sale will involve replacement, an insurer, other than an insurer using direct response solicitation methods, or its agent, shall furnish the applicant, prior to issuance or delivery of the individual long-term care insurance policy, a notice regarding replacement of accident and sickness or long-term care coverage. One copy of the notice shall be retained by the applicant and an additional copy signed by the applicant shall be retained by the insurer. The required notice shall be provided in the following form:

NOTICE TO APPLICANT REGARDING REPLACEMENT

OF INDIVIDUAL ACCIDENT AND SICKNESS OR LONG-TERM CARE INSURANCE

[Insurance company’s name and address]

SAVE THIS NOTICE! IT MAY BE IMPORTANT TO YOU IN THE FUTURE.

According to [your application] [information you have furnished], you intend to lapse or otherwise terminate existing accident and sickness or long-term care insurance and replace it with an individual long-term care insurance policy to be issued by [company name]. Your new policy provides thirty (30) days within which you may decide, without cost, whether you desire to keep the policy. For your own information and protection, you should be aware of and seriously consider certain factors which may affect the insurance protection available to you under the new policy.

You should review this new coverage carefully, comparing it with all accident and sickness or long-term care insurance coverage you now have, and terminate your present policy only if, after due consideration, you find that purchase of this long-term care coverage is a wise decision.

STATEMENT TO APPLICANT BY [AGENT, BROKER, OR OTHER

REPRESENTATIVE]:

(Use additional sheets, as necessary.)

I have reviewed your current medical or health insurance coverage. I believe the

replacement of insurance involved in this transaction materially improves your

position. My conclusion has taken into account the following considerations,

which I call to your attention:

1. Health conditions that you may presently have (preexisting conditions), may not be immediately or fully covered under the new policy. This could result in denial or delay in payment of benefits under the new policy, whereas a similar claim might have been payable under your present policy.

2. District of Columbia law provides that your replacement policy or certificate may not contain new preexisting conditions or probationary periods. The insurer will waive any time periods applicable to preexisting conditions or probationary periods in the new policy (or coverage) for similar benefits to the extent such time was spent (depleted) under the original policy.

3. If you are replacing existing long-term care insurance coverage, you may wish to secure the advice of your present insurer or its agent regarding the proposed replacement of your present policy. This is not only your right, but it is also in your best interest to make sure you understand all the relevant factors involved in replacing your present coverage.

4. If, after due consideration, you still wish to terminate your present policy and replace it with new coverage, be certain to truthfully and completely answer all questions on the application concerning your medical health history. Failure to include all material medical information on an application may provide a basis for the company to deny any future claims and to refund your premium as though your policy had never been in force. After the application has been completed and before you sign it, reread it carefully to be certain that all information has been properly recorded.

---

(Signature of Agent or Broker or Other Representative)

[Typed Name and Address of Agent or Broker or Other Representative]

The above “Notice to Applicant “ was delivered to me on:

---

(Applicant’s Signature) (Date)

Insurers using direct response solicitation methods shall deliver a notice regarding replacement of accident and sickness or long-term care coverage to the applicant upon issuance of the policy. The required notice shall be provided in the following form:

NOTICE TO APPLICANT REGARDING REPLACEMENT

OF ACCIDENT AND SICKNESS OR LONG-TERM CARE INSURANCE

[Insurance company’s name and address]

SAVE THIS NOTICE! IT MAY BE IMPORTANT TO YOU IN THE FUTURE.

According to [your application] [information you have furnished], you intend to lapse or otherwise terminate existing accident and sickness or long-term care insurance and replace it with the long-term care insurance policy delivered herewith issued by [company name]. Your new policy provides thirty (30) days within which you may decide, without cost, whether you desire to keep the policy. For your own information and protection, you should be aware of and seriously consider certain factors which may affect the insurance protection available to you under the new policy.

You should review this new coverage carefully, comparing it with all accident and sickness or long-term care insurance coverage you now have, and terminate your present policy only if, after due consideration, you find that purchase of this long-term care coverage is a wise decision.

1. Health conditions which you may presently have (preexisting conditions) may not be immediately or fully covered under the new policy. This could result in denial or delay in payment of benefits under the new policy, whereas a similar claim might have been payable under your present policy.

2. District of Columbia law provides that your replacement policy or certificate may not contain new preexisting conditions or probationary periods. Your insurer will waive any time periods applicable to preexisting conditions or probationary periods in the new policy (or coverage) or similar benefits to the extent such time was spent (depleted) under the original policy.

3. If you are replacing existing long-term care insurance coverage, you may wish to secure the advice of your present insurer or its agent regarding the proposed replacement of your present policy. This is not only your right, but it is also in your best interest to make sure you understand all the relevant factors involved in replacing your present coverage.

4. [To be included only if the application is attached to the policy.] If, after due consideration, you still wish to terminate your present policy and replace it with new coverage, read the copy of the application attached to your new policy and be sure that all questions are answered fully and correctly. Omissions or misstatements in the application could cause an otherwise valid claim to be denied. Carefully check the application and write to [company name and address] within thirty (30) days if any information is not correct and complete, or if any past medical history has been left out of the application.

[Company Name]

2625.5 Where replacement is intended, the replacing insurer shall notify, in writing, the existing insurer of the proposed replacement. The existing policy shall be identified by the insurer, name of the insured, and policy number or address including zip code. Notice shall be made within five (5) working days from the date the application is received by the insurer or the date the policy is issued, whichever is sooner.

2625.6 Life insurance policies that accelerate benefits for long-term care shall comply with this section if the policy being replaced is a long-term care insurance policy. If the policy being replaced is a life insurance policy, the insurer shall comply with any life insurance replacement requirements. If a life insurance policy that accelerates benefits for long-term care is replaced by another such policy, the replacing insurer shall comply with both the long-term care and the life insurance replacement requirements.

History

• SOURCE: Final Rulemaking published at 52 DCR 10902 (December 16, 2005); as amended by Final Rulemaking published at 55 DCR 3759 (April 11, 2008). District of Columbia Municipal Regulations Insurance, Securities, and Banking 26-A DCMR § 2625

26-A DCMR § 2626 REPORTING REQUIREMENTS

An insurer shall maintain records for each agent of the agent’s amount of replacement sales as a percent of the agent’s total annual sales and the amount of lapses of long-term care insurance policies sold by the agent as a percent of the agent’s total annual sales.

An insurer shall report annually by June 30 the ten percent (10%) of its agents with the greatest percents of lapses and replacements as measured under subsection 2626.1. The report shall be provided on a form conforming with Appendix G.

Reported replacement and lapse rates shall not alone constitute a violation of insurance laws or necessarily imply wrongdoing. The reports shall be for the purpose of reviewing more closely agent activities regarding the sale of long-term care insurance.

An insurer shall report annually by June 30 the number of lapsed policies as a percent of its total annual sales and as a percent of its total number of policies in force as of the end of the preceding calendar year. The report shall be provided on a form conforming with Appendix G.

An insurer shall report annually by June 30 the number of replacement policies sold as a percent of its total annual sales and as a percent of its total number of policies in force as of the preceding calendar year. The report shall be provided on a form conforming with Appendix G.

An insurer shall report annually by June 30, for qualified long-term care insurance contracts, the number of claims denied for each class of business, expressed as a percentage of claims denied. The report shall be provided on a form conforming with Appendix E.

The information in the reports required under this section shall be provided on a District of Columbia-wide basis.

Reports required by this section shall be filed with the Commissioner.

For the purposes of this section, the word:

“Policy” means only long-term care insurance;

“Claim” means, subject to paragraph (c) of this subsection, a request for payment of benefits under an in-force policy regardless of whether the benefit claimed is covered under the policy or any terms or conditions of the policy have been met; and

“Denied” means the insurer refuses to pay a claim for a reason other than for claims not paid for failure to meet the waiting period or because of an applicable preexisting condition.

History

• SOURCE: Final Rulemaking published at 52 DCR 10902 (December 16, 2005); as amended by Final Rulemaking published at 55 DCR 3759 (April 11, 2008). District of Columbia Municipal Regulations Insurance, Securities, and Banking 26-A DCMR § 2626

26-A DCMR § 2627 LICENSING

A producer shall not sell, solicit, or negotiate long-term care insurance except as authorized by the Producer Licensing Act of 2002, effective March 27, 2003 (D.C. Law 14-264; D.C. Official Code § 31-1131.01 et seq. (2001)).

History

• SOURCE: Final Rulemaking published at 52 DCR 10902 (December 16, 2005); as amended by Final Rulemaking published at 55 DCR 3759 (April 11, 2008). District of Columbia Municipal Regulations Insurance, Securities, and Banking 26-A DCMR § 2627

26-A DCMR § 2628 DISCRETIONARY POWERS OF COMMISSIONER

The Commissioner may upon written request and after an administrative hearing issue an order to modify or suspend a specific provision or provisions of this chapter with respect to a specific long-term care insurance policy or certificate upon a written finding that:

The modification or suspension would be in the best interest of the insureds;

The purposes to be achieved could not be effectively or efficiently achieved without the modification or suspension; and

(1) The modification or suspension is necessary for the development of an innovative and reasonable approach for insuring long-term care;

(2) The policy or certificate is to be issued to residents of a life care or continuing care retirement community or some other residential community for the elderly and the modification or suspension is reasonably related to the special needs or nature of such a community; or

(3) The modification or suspension is necessary to permit long-term care insurance to be sold as part of, or in conjunction with, another insurance product.

History

• SOURCE: Final Rulemaking published at 55 DCR 3759 (April 11, 2008). District of Columbia Municipal Regulations Insurance, Securities, and Banking 26-A DCMR § 2628

26-A DCMR § 2629 RESERVE STANDARDS

If long-term care benefits are provided through the acceleration of benefits under group or individual life insurance policies or riders to such policies, policy reserves for the benefits shall be determined in accordance with section 1 of chapter V of the Life Insurance Act, approved June 19, 1934 (48 Stat. 1156; D.C. Official Code § 31-4701 (2001)). Claim reserves shall also be established when the policy or rider is in claim status.

Reserves for policies and riders subject to subsection 2629.1 shall be based on the multiple decrement model utilizing all relevant decrements except for voluntary termination rates. Single decrement approximations shall be acceptable if the calculation produces essentially similar reserves, if the reserve is clearly more conservative, or if the reserve is immaterial. The calculations may take into account the reduction in life insurance benefits due to the payment of long-term care benefits. However, in no event shall the reserves for the long-term care benefit and life insurance benefit be less than the reserves for the life insurance benefit assuming no long-term care benefit.

In the development and calculation of reserves for policies and riders subject to subsection 2629.1, due regard shall be given to the applicable policy provisions, marketing methods, administrative procedures, and all other considerations which have an impact on projected claim costs, including the following:

Definition of insured events;

Covered long-term care facilities;

Existence of home convalescence care coverage;

Definition of facilities;

Existence or absence of barriers to eligibility;

Premium waiver provision;

Renewability;

Ability to raise premiums;

Marketing method;

Underwriting procedures;

Claims adjustment procedures;

Waiting period;

Maximum benefit;

Availability of eligible facilities;

Margins in claim costs;

Optional nature of benefit;

Delay in eligibility for benefit;

Inflation protection provisions; and

Guaranteed insurability option.

Any applicable valuation morbidity table used in the calculation of reserves for polices or riders subject to subsection 2629.1 shall be certified as appropriate as a statutory valuation table by a member of the American Academy of Actuaries.

If long-term care benefits are provided other than as in subsection 2629.1, reserves shall be determined in accordance with the requirements and standards for determining health insurance reserves.

History

• SOURCE: Final Rulemaking published at 55 DCR 3759 (April 11, 2008). District of Columbia Municipal Regulations Insurance, Securities, and Banking 26-A DCMR § 2629

26-A DCMR § 2630 LOSS RATIO

This section shall apply to all long-term care insurance policies or certificates except those covered under sections 2619 and 2631.

Benefits under long-term care insurance policies shall be deemed reasonable in relation to premiums if the expected loss ratio is at least sixty percent (60%), calculated in a manner that provides for adequate reserving of the long-term care insurance risk. In evaluating the expected loss ratio, due consideration shall be given to all relevant factors, including:

Statistical credibility of incurred claims experience and earned premiums;

The period for which rates are computed to provide coverage;

Experienced and projected trends;

Concentration of experience within early policy duration;

Expected claim fluctuation;

Experience refunds, adjustments, or dividends;

Renewability features;

All appropriate expense factors;

Interest;

Experimental nature of the coverage;

Policy reserves;

Mix of business by risk classification; and

Product features such as long elimination periods, high deductibles, and high maximum limits.

Subsection 2630.2 shall not apply to life insurance policies that accelerate benefits for long-term care. A life insurance policy that funds long-term care benefits entirely by accelerating the death benefit shall be considered to provide reasonable benefits in relation to premiums paid if the policy complies with all of the following provisions:

The interest credited internally to determine cash value accumulations, including long-term care, if any, is guaranteed not to be less than the minimum guaranteed interest rate for cash value accumulations without long-term care set forth in the policy;

The portion of the policy that provides life insurance benefits meets the nonforfeiture requirements of section 5 of chapter V of the Life Insurance Act, approved June 19, 1934 (48 Stat. 1161; D.C. Official Code § 31-4705.02 (2001));

The policy meets the disclosure requirements of sections 7(e), 7(f), and 9 of the Long-Term Care Insurance Act of 2000, effective May 23, 2000 (D.C. Law 13-121; D.C. Official Code §§ 31-3606(e), 3606(f), and 3608 (2001));

Any policy illustration meets the applicable requirements of the National Association of Insurance Commissioners Life Insurance Illustrations Model Regulation; and

An actuarial memorandum is filed with the Department of Insurance, Securities, and Banking that includes the following:

A description of the basis on which the long-term care rates were determined;

A description of the basis for the reserves;

A summary of the type of policy, benefits, renewability, general marketing methods, and limits on ages of issuance;

A description and a table of each actuarial assumption used. For expenses, an insurer shall include a percent of premium dollars per policy and dollars per unit of benefits, if any;

A description and a table of the anticipated policy reserves and additional reserves to be held in each future year for active lives;

The estimated average annual premium per policy and the average issue age;

A statement as to whether underwriting is performed at the time of application. The statement shall indicate whether underwriting is used and, if used, the statement shall include a description of the type or types of underwriting used, such as medical underwriting or functional assessment underwriting. Concerning a group policy, the statement shall indicate whether the enrollee or any dependent will be underwritten and when underwriting occurs; and

A description of the effect of the long-term care policy provision on the required premiums, nonforfeiture values, and reserves on the underlying life insurance policy, both for active lives and those in long-term care claim status.

History

• SOURCE: Final Rulemaking published at 55 DCR 3759 (April 11, 2008). District of Columbia Municipal Regulations Insurance, Securities, and Banking 26-A DCMR § 2630

26-A DCMR § 2631 PREMIUM RATE SCHEDULE INCREASES

This section shall apply as follows:

Except as provided in paragraph (b) of this subsection, this section shall apply to a long term care insurance policy or certificate issued in the District of Columbia on or after June 16, 2006.

For certificates issued on or after December 16, 2005, under a group long-term care insurance policy as defined in section 2(4)(A) of the Long-Term Care Insurance Act of 2000, effective May 23, 2000 (D.C. Law 13-121; D.C. Official Code § 31-3601(4)(A) (2001)), which policy was in force on December 16, 2005, the provisions of this section shall apply on the first policy anniversary date that occurs on or after December 16, 2006.

An insurer shall provide notice of a pending premium rate schedule increase, including an exceptional increase, to the Commissioner at least thirty (30) days prior to the notice to the policyholders and shall include the following:

The information required by section 2618;

Certification by a qualified actuary that:

If the requested premium rate schedule increase is implemented and the underlying assumptions, which reflect moderately adverse conditions, are realized, no further premium rate schedule increase are anticipated; and

The premium rate filing is in compliance with the provisions of this section;

An actuarial memorandum justifying the rate schedule change request that includes the following:

Lifetime projections of earned premiums and incurred claims based on the filed premium rate schedule increase and the method and assumptions used in determining the projected values, including reflection of any assumptions that deviate from those used for pricing other forms currently available for sale, in accordance with the following conditions:

Annual values for the five (5) years preceding and the three (3) years following the valuation date shall be provided separately;

The projections shall include the development of the lifetime loss ratio, unless the rate increase is an exceptional increase;

The projections shall demonstrate compliance with subsection 2631.3; and

For exceptional increases:

The projected experience shall be limited to the increases in claims expenses attributable to the approved reasons for the exceptional increase; and

In the event the Commissioner determines as provided in subsection 2632.3 that offsets may exist, the insurer shall use appropriate net projected experience;

Disclosure of how reserves have been incorporated in the rate increase whenever the rate increase will trigger contingent benefit upon lapse;

Disclosure of the analysis performed to determine why a rate adjustment is necessary, which pricing assumptions were not realized and why, and what other actions taken by the company have been relied on by the actuary;

A statement that policy design, underwriting, and claims adjudication practices have been taken into consideration;

If it is necessary to maintain consistent premium rates for new certificates and certificates receiving a rate increase, a document setting forth composite rates reflecting projections of new certificates;

A statement that renewal premium rate schedules are not greater than new business premium rate schedules except for differences attributable to benefits, unless sufficient justification is provided to the Commissioner; and

Sufficient information for review (and approval) of the premium rate schedule increase by the Commissioner.

All premium rate schedule increases shall be determined in accordance with the following requirements:

Exceptional increases shall provide that seventy percent (70%) of the present value of projected additional premiums from the exceptional increase will be returned to policyholders in benefits;

Premium rate schedule increases shall be calculated such that the sum of the accumulated value of incurred claims, without the inclusion of active life reserves, and the present value of future projected incurred claims, without the inclusion of active life reserves, will not be less than the sum of the following:

Fifty-eight percent (58%) of the accumulated value of the initial earned premium;

Eighty-five percent (85%) of the accumulated value of prior premium rate schedule increases on an earned basis;

Fifty-eight percent (58%) of the present value of future projected initial earned premiums; and

Eighty-five percent (85%) of the present value of future projected premiums not in subparagraph (3) of this paragraph on an earned basis;

If a policy form has both exceptional and other increases, the values in subparagraphs (2) and (4) of paragraph (b) of this subsection shall also include seventy percent (70%) for exceptional rate increase amounts; and

All present and accumulated values used to determine rate increases shall use the maximum valuation interest rate for contract reserves as specified in the National Association of Insurance Commissioners Health Reserves Model Regulation Appendix A, Section IIA. The actuary shall disclose as part of the actuarial memorandum the use of any appropriate averages.

For each rate increase that is implemented, the insurer shall file for review and approval by the Commissioner updated projections, as defined in subsection 2631.2(c)(1), annually for the next three (3) years and shall include a comparison of actual results to projected values. The Commissioner may extend the period to longer than three (3) years if actual results are not consistent with projected values from prior projections. For group insurance policies that meet the conditions in subsection 2631.11, the projections required by this subsection shall be provided to the policyholder in lieu of filing with the Commissioner.

If a premium rate in the revised premium rate schedule is greater than two hundred percent (200%) of the comparable rate in the initial premium schedule, lifetime projections, as defined in subsection 2631.2(c)(1), shall be filed for review and approval by the Commissioner every five (5) years following the end of the required period in subsection 2631.4. For group insurance policies that meet the conditions in subsection 2631.11, the projections required by this subsection shall be provided to the policyholder in lieu of filing with the Commissioner.

(a) If the Commissioner determines that the actual experience following a rate increase does not adequately match the projected experience and that the current projections under moderately adverse conditions demonstrate that incurred claims will not exceed proportions of premiums specified in subsection 2631.3, the Commissioner may require the insurer to implement:

Premium rate schedule adjustments; or

Other measures to reduce the difference between the projected and actual experience.

(b) In determining whether the actual experience adequately matches the projected experience, consideration should be given to subsection 2631.2(d), if applicable.

If the majority of the policies or certificates to which the increase is applicable are eligible for the contingent benefit upon lapse, the insurer shall file:

A plan, subject to Commissioner approval, for improved administration or claims processing designed to eliminate the potential for further deterioration of the policy form requiring further premium rate schedule increases, or both, or to demonstrate that appropriate administration and claims processing have been implemented or are in effect; otherwise the Commissioner may impose the condition in subsection 2631.8; and

The original anticipated lifetime loss ratio and the premium rate schedule increase that would have been calculated according to subsection 2631.3 had the greater of the original anticipated lifetime loss ratio or fifty-eight percent (58%) been used in the calculations described in subsections 2631.3(b)(1) and 2631.3(b)(3).

(a) For a rate increase filing that meets the following criteria, the Commissioner shall review, for all policies included in the filing, the projected lapse rates and past lapse rates during the twelve (12) months following each increase to determine if significant adverse lapsation has occurred or is anticipated:

The rate increase is not the first rate increase requested for the specific policy form or forms;

The rate increase is not an exceptional increase; and

The majority of the policies or certificates to which the increase is applicable are eligible for the contingent benefit upon lapse.

(b) If significant adverse lapsation has occurred, is anticipated in the filing, or is evidenced in the actual results as presented in the updated projections provided by the insurer following the requested rate increase, the Commissioner may determine that a rate spiral exists. Following a determination that a rate spiral exists, the Commissioner may require the insurer to offer, without underwriting, to all in-force insureds subject to the rate increase the option to replace existing coverage with one (1) or more reasonably comparable products being offered by the insurer or its affiliates.

(c) An offer required by paragraph (b) of this subsection shall:

(1) Be subject to the approval of the Commissioner;

(2) Be based on actuarially sound principles, but shall not be based on attained age; and

(3) Provide that maximum benefits under a new policy accepted by an insured shall be reduced by comparable benefits already paid under the existing policy.

(d) The insurer shall maintain the experience of all of the replacement insureds separate from the experience of insureds originally issued the policy forms. In the event of a request for a rate increase on the policy form, the rate increase shall be limited to the lesser of the following:

(1) The maximum rate increase determined based on the combined experience; and

(2) The maximum rate increase determined based only on the experience of the insureds originally issued the form plus ten percent (10%).

If the Commissioner determines that an insurer has exhibited a persistent practice of filing inadequate initial premium rates for long-term care insurance, the Commissioner may, in addition to the provisions of subsection 2631.8, prohibit the insurer from:

Filing and marketing comparable coverage for a period of up to five (5) years; or

Offering similar coverage and limiting marketing of new applications to the products subject to recent premium rate schedule increases.

Subsections 2631.1 through 2631.9 shall not apply to policies for which the long-term care benefits provided by the policy are incidental, as defined in subsection 2699, if the policy complies with all of the following provisions:

The interest credited internally to determine cash value accumulations, including long-term care, if any, are guaranteed not to be less than the minimum guaranteed interest rate for cash value accumulations without long-term care set forth in the policy;

The portion of the policy that provides insurance benefits other than long-term care coverage meets the nonforfeiture requirements, as applicable, of:

Section 5b of chapter V of the Life Insurance Act, approved June 19, 1934 (62 Stat. 30; D.C. Official Code § 31-4705.02 (2001));

Section 5c of chapter V of the Life Insurance Act, approved October 13, 1978 (D.C. Law 2-120; D.C. Official Code § 31-4705.03 (2001)); and

Any other District of Columbia law or regulation setting forth nonforfeiture requirements;

The policy meets the disclosure requirements of sections 7(e), 7(f), and 8 of the Long-Term Care Insurance Act of 2000, effective May 23, 2000 (D.C. Law 13-121; D.C. Official Code §§ 31-3606(e), 3606(f) and 3608 (2001));

The portion of the policy that provides insurance benefits other than long-term care coverage meets the requirements of any applicable:

District of Columbia life insurance policy illustrations law or regulation; and

District of Columbia annuity and variable annuity disclosure law or regulation;

An actuarial memorandum is filed with the Department of Insurance, Securities, and Banking that includes the following:

A description of the basis on which the long-term care rates were determined;

A description of the basis for the reserves;

A summary of the type of policy, benefits, renewability, general marketing methods, and limits on ages of issuance;

A description and a table of each actuarial assumption used. For expenses, an insurer shall include the percent of premium dollars per policy and dollars per unit of benefits, if any;

A description and a table of the anticipated policy reserves and additional reserves to be held in each future year for active lives;

The estimated average annual premium per policy and the average issue age;

A statement as to whether underwriting is performed at the time of application. The statement shall indicate whether underwriting is used and, if used, the statement shall include a description of the type or types of underwriting used, such as medical underwriting or functional assessment underwriting. For a group policy, the statement shall indicate whether the enrollee or any dependent will be underwritten and when underwriting occurs; and

A description of the effect of the long-term care policy provision on the required premiums, nonforfeiture values, and reserves on the underlying insurance policy, both for active lives and those in long-term care claim status.

Subsections 2631.6 and 2631.8 shall not apply to a group long-term care insurance policy as defined in section 2(4)(A) of the Long-Term Care Insurance Act of 2000, effective May 23, 2000 (D.C. Law 13-121; D.C. Official Code § 31-3601(4)(A) (2001)), if:

The policy insures two hundred and fifty (250) or more persons and the policyholder has five thousand (5,000) or more eligible employees of a single employer; or

The policyholder, and not the certificateholders, pays a material portion of the premium, which shall not be less than twenty percent (20%) of the total premium for the group in the calendar year prior to the year a rate increase is filed.

History

• SOURCE: Final Rulemaking published at 55 DCR 3759 (April 11, 2008). District of Columbia Municipal Regulations Insurance, Securities, and Banking 26-A DCMR § 2631

26-A DCMR § 2632 EXCEPTIONAL INCREASES

Except as provided in section 2631, exceptional increases shall be subject to the same requirements as other premium rate schedule increases.

The Commissioner may request a review by an independent actuary or a professional actuarial body of the basis for a request that an increase be considered an exceptional increase.

The Commissioner, in determining whether a justification for an exceptional increase exists, shall also determine any potential offsets to higher claims costs.

For the purposes of this section, the term “exceptional increase” means an increase filed by an insurer as exceptional and for which the Commissioner determines the need for the premium rate increase is justified due to:

Changes in laws or regulations applicable to long-term care coverage in the District of Columbia; or

Increased and unexpected utilization that affects the majority of insurers of similar products.

History

• SOURCE: Final Rulemaking published at 55 DCR 3759 (April 11, 2008). District of Columbia Municipal Regulations Insurance, Securities, and Banking 26-A DCMR § 2632

26-A DCMR § 2633 FILING AND APPROVAL REQUIREMENT FOR GROUP POLICIES

Prior to an insurer or similar organization offering group long-term care insurance to a resident of the District of Columbia pursuant to section 5 of the Long-Term Care Insurance Act of 2000, effective May 23, 2000 (D.C. Law 13-121; D.C. Official Code § 31-3604 (2001)), it shall file with the Commissioner evidence that the group policy or certificate has been approved by a state having statutory or regulatory long-term care insurance requirements substantially similar to those adopted in the District of Columbia.

History

• SOURCE: Final Rulemaking published at 55 DCR 3759 (April 11, 2008). District of Columbia Municipal Regulations Insurance, Securities, and Banking 26-A DCMR § 2633

26-A DCMR § 2634 FILING REQUIREMENTS FOR ADVERTISING

An insurer, health care service plan, or other entity providing long-term care insurance or benefits in the District of Columbia shall provide a copy of any long-term care insurance advertisement intended for use in the District of Columbia whether through written, electronic, radio, or television medium to the Commissioner.

Each advertisement described in subsection 2634.1 shall be subject to review or approval by the Commissioner to the extent required under District of Columbia law.

Each advertisement described in subsection 2634.1 shall be retained by the insurer, health care service plan, or other entity for at least three (3) years from the date the advertisement was first used.

The Commissioner may exempt an advertisement from a requirement of this section if, in the Commissioner’s opinion, the requirement may not be reasonably applied.

History

• SOURCE: Final Rulemaking published at 55 DCR 3759 (April 11, 2008). District of Columbia Municipal Regulations Insurance, Securities, and Banking 26-A DCMR § 2634

26-A DCMR § 2635 STANDARDS FOR MARKETING — GENERAL

An insurer, health care service plan, or other entity marketing long-term care insurance or benefits in the District of Columbia, directly or through its producers, shall:

Establish marketing procedures and agent training requirements to assure the following:

Marketing activities, including comparison of policies, by its agents or other producers will be fair and accurate; and

Excessive insurance is not sold or issued;

Display prominently by type, stamp, or other appropriate means, on the first page of the outline of coverage and policy the following:

“Notice to buyer. This policy may not cover all of the costs associated with long-term care incurred by the buyer during the period of coverage. The buyer is advised to review carefully all policy limitations.” ;

Provide copies of the disclosure forms required by subsections 2618.3 through 2618.8 (Appendices B and F) to the applicant;

Inquire and otherwise make every reasonable effort to identify whether a prospective applicant or enrollee for long-term care insurance already has accident and sickness or long-term care insurance and the types and amounts of any such insurance, except that in the case of qualified long-term care insurance contracts, an inquiry into whether a prospective applicant or enrollee for long-term care insurance has accident and sickness insurance shall not be required;

Establish auditable procedures for verifying compliance with this subsection;

If the state in which the policy or certificate is to be delivered or issued for delivery has a senior insurance counseling program approved by the state’s insurance commissioner, provide, at solicitation, written notice to the prospective policyholder and certificateholder that the program is available and the name, address, and telephone number of the program;

For long-term care health insurance policies and certificates, use the terms “noncancellable” or “level premium” only when the policy or certificate conforms to subsections 2602.5 and 2602.6; and

Provide an explanation of contingent benefit upon lapse provided for in subsection 2639.6.

The following acts and practices are prohibited:

Twisting. Knowingly making a misleading representation or incomplete or fraudulent comparison of an insurance policy or insurer for the purpose of inducing, or tending to induce, any person to lapse, forfeit, surrender, terminate, retain, pledge, assign, borrow on, or convert any insurance policy or to take out a policy of insurance with another insurer;

High pressure tactics. Employing a method of marketing having the effect of or tending to induce the purchase of insurance through force, fright, threat, whether explicit or implied, or undue pressure to purchase or recommend the purchase of insurance;

Cold lead advertising. Making use directly or indirectly of a method of marketing which fails to disclose in a conspicuous manner that a purpose of the method of marketing is solicitation of insurance and that contact will be made by an insurance agent or insurance company; and

Misrepresentation. Misrepresenting a material fact in selling or offering to sell a long-term care insurance policy.

History

• SOURCE: Final Rulemaking published at 55 DCR 3759 (April 11, 2008). District of Columbia Municipal Regulations Insurance, Securities, and Banking 26-A DCMR § 2635

26-A DCMR § 2636 STANDARDS FOR MARKETING — ASSOCIATIONS

With respect to the obligations set forth in this section, the primary responsibility of an association, as defined in section 2(4)(B) of the Long-Term Care Insurance Act of 2000, effective May 23, 2000 (D.C. Law 13-121; D.C. Official Code § 31-3601(4)(B) (2001)), when endorsing or selling long-term care insurance shall be to educate its members concerning long-term care issues in general so that its members can make informed decisions. An association shall provide objective information regarding a long-term care insurance policy or certificate endorsed or sold by the association to ensure that members of the association receive a balanced and complete explanation of the features in the policies or certificates that are being endorsed or sold. In meeting the obligations of this section, the following actions shall be taken:

The insurer shall file with the Department of Insurance, Securities, and Banking the following material:

The policy and certificate;

A corresponding outline of coverage; and

All advertisements requested by the Department of Insurance, Securities, and Banking.

The association shall disclose the following in a long-term care insurance solicitation:

The specific nature and amount of the compensation arrangements (including all fees, commissions, administrative fees, and other forms of financial support) that the association receives from endorsement or sale of the policy or certificate to its members; and

A brief description of the process under which the policies and the insurer issuing the policies were selected.

If the association and the insurer have interlocking directorates or trustee arrangements, the association shall disclose that fact to its members.

The board of directors of an association selling or endorsing a long-term care insurance policy or certificate shall review and approve the insurance policy as well as the compensation arrangements made with the insurer.

(1) The association shall:

At the time of the association’s decision to endorse, engage the services of a person with expertise in long-term care insurance not affiliated with the insurer to conduct an examination of the policy, including its benefits, features, and rates, and update the examination thereafter in the event of material change;

Actively monitor the marketing efforts of the insurer and its agents; and

Review and approve all marketing materials or other insurance communications used to promote sales or sent to members regarding the policy or certificate.

Sub-subparagraph (e)(1)(A) of this subsection shall not apply to a qualified long-term care insurance contract.

No group long-term care insurance policy or certificate may be issued to an association unless the insurer files with the Department of Insurance, Securities, and Banking the information required by this section.

An insurer shall not issue a long-term care policy or certificate to an association or continue to market such a policy or certificate unless the insurer certifies annually that the association has complied with the requirements set forth in this section.

Failure to comply with the filing and certification requirements of this section shall constitute an unfair trade practice.

History

• SOURCE: Final Rulemaking published at 55 DCR 3759 (April 11, 2008). District of Columbia Municipal Regulations Insurance, Securities, and Banking 26-A DCMR § 2636

26-A DCMR § 2637 SUITABILITY

This section shall not apply to life insurance policies that accelerate benefits for long-term care.

Every insurer, health care service plan, or other entity marketing long-term care insurance (the “issuer”) shall:

Develop and use suitability standards to determine whether the purchase or replacement of long-term care insurance is appropriate for the needs of the applicant;

Train its agents in the use of its suitability standards; and

Maintain a copy of its suitability standards and make them available for inspection upon request by the Commissioner.

To determine whether the applicant meets the standards developed by the issuer, the agent and issuer shall develop procedures that take the following into consideration:

The ability to pay for the proposed coverage and other pertinent financial information related to the purchase of the coverage;

The applicant’s goals or needs with respect to long-term care and the advantages and disadvantages of insurance to meet these goals or needs; and

The values, benefits, and costs of the applicant’s existing insurance, if any, when compared to the values, benefits, and costs of the recommended purchase or replacement.

The issuer and, where an agent is involved, the agent shall make reasonable efforts to obtain the information set out in subsection 2637.3. The efforts shall include presentation to the applicant, at or prior to application, of a “Long-Term Care Insurance Personal Worksheet.” The personal worksheet used by the issuer shall contain, at a minimum, the information in the format contained in Appendix B, in not less than twelve (12) point type. The issuer may request that the applicant provide additional information to comply with its suitability standards. A copy of the personal worksheet used by the issuer shall be filed with the Commissioner.

A completed personal worksheet shall be returned to the issuer prior to the issuer’s consideration of the applicant for coverage, except the personal worksheet need not be returned for sales of employer group long-term care insurance to employees and their spouses.

The sale or dissemination outside the company or agency by the issuer or agent of information obtained through the personal worksheet is prohibited.

The issuer shall use the suitability standards it has developed pursuant to this section in determining whether issuing long-term care insurance to an applicant is appropriate.

Agents shall use the suitability standards developed by the issuer in marketing long-term care insurance.

At the same time as the personal worksheet is provided to the applicant, the disclosure form entitled “Things You Should Know Before You Buy Long-Term Care Insurance” shall be provided. The form shall be in the format contained in Appendix C and shall be in not less than twelve (12) point type.

If the issuer determines that the applicant does not meet its financial suitability standards, or if the applicant declines to provide information on the personal worksheet, the issuer shall either reject the application or send the applicant a letter similar to Appendix D; provided, if the applicant declines to provide financial information, the issuer may use some other method to verify the applicant’s intent. Either the applicant’s returned letter or a record of the alternative method of verification shall be made part of the applicant’s file.

The issuer shall report annually to the Commissioner the total number of applications received from residents of the District of Columbia, the number of applicants who declined to provide information on the personal worksheet, the number of applicants who did not meet the suitability standards, and the number of those who chose to confirm after receiving a suitability letter.

History

• SOURCE: Final Rulemaking published at 55 DCR 3759 (April 11, 2008). District of Columbia Municipal Regulations Insurance, Securities, and Banking 26-A DCMR § 2637

26-A DCMR § 2638 RESTRICTION ON PREEXISTING CONDITIONS AND PROBATIONARY PERIODS IN REPLACEMENT POLICIES OR CERTIFICATES

If a long-term care insurance policy or certificate replaces another long-term care insurance policy or certificate, the replacing insurer shall waive any time periods applicable to preexisting conditions and probationary periods in the new long-term care policy for similar benefits to the extent that similar exclusions have been satisfied under the original policy.

History

• SOURCE: Final Rulemaking published at 55 DCR 3759 (April 11, 2008). District of Columbia Municipal Regulations Insurance, Securities, and Banking 26-A DCMR § 2638

26-A DCMR § 2639 NONFORFEITURE BENEFIT REQUIREMENT

This section shall not apply to life insurance policies or riders that accelerate benefits for long-term care.

To comply with the requirement to offer a nonforfeiture benefit pursuant to the provisions of section 11 of the Long-Term Care Insurance Act of 2000, effective May 23, 2000 (D.C. Law 13-121; D.C. Official Code § 31-3610 (2001)), all of the following conditions shall be met:

A policy or certificate offered with nonforfeiture benefits shall have coverage elements, eligibility, benefit triggers, and benefit length that are the same as coverage to be issued without nonforfeiture benefits.

The nonforfeiture benefit included in the offer shall be the benefit described in subsection 2639.9 and shall comply with subsection 2639.10.

The offer shall be in writing if the nonforfeiture benefit is not otherwise described in the outline of coverage or other materials given to the prospective policyholder.

If an offer required to be made under section 11 of the Long-Term Care Insurance Act of 2000, effective May 23, 2000 (D.C. Law 13-121; D.C. Official Code § 31-3610 (2001)), is rejected, the insurer shall provide the contingent benefit upon lapse described in this section.

If an offer required to be made under section 11 of the Long-Term Care Insurance Act of 2000, effective May 23, 2000 (D.C. Law 13-121; D.C. Official Code § 31-3610 (2001)), is rejected for individual and group policies without nonforfeiture benefits issued after December 16, 2005, the insurer shall provide a contingent benefit upon lapse.

If a group policyholder makes a nonforfeiture benefit an option to a certificate holder, the certificate shall provide either the nonforfeiture benefit or the contingent benefit upon lapse.

The contingent benefit upon lapse shall be triggered every time an insurer increases the premium rates to a level that results in a cumulative increase of the annual premium equal to or exceeding the percentage of the insured’s initial annual premium set forth in the chart below based on the insured’s issue age (i.e., every time a “substantial premium increase” is triggered), and the policy or certificate lapses within one hundred and twenty (120) days of the due date of the premium so increased. Unless otherwise required, policyholders shall be notified at least thirty (30) days prior to the due date of the premium reflecting the rate increase. The triggers for a substantial premium increase shall be as follows:

Triggers for a Substantial Premium Increase

Issue Age

Percent Increase Over Initial Premium

29 and under

200%

30-34

190%

35-39

170%

40-44

150%

45-49

130%

50-54

110%

55-59

90%

60

70%

61

66%

62

62%

63

58%

64

54%

65

50%

66

48%

67

46%

68

44%

69

42%

70

40%

71

38%

72

36%

73

34%

74

32%

75

30%

76

28%

77

26%

78

24%

79

22%

80

20%

81

19%

82

18%

83

17%

84

16%

85

15%

86

14%

87

13%

88

12%

89

11%

90 and over

10%

To determine whether contingent benefit upon lapse provisions are triggered under subsection 2639.6, a replacing insurer that purchased or otherwise assumed a block or blocks of long-term care insurance policies from another insurer shall calculate the percentage increase based on the initial annual premium paid by the insured when the policy was first purchased from the original insurer.

On or before the effective date of a substantial premium increase as defined in section 2639.6 above, the insurer shall:

Offer to reduce policy benefits provided by the current coverage, without requiring additional underwriting, so that required premium payments are not increased;

Offer to convert to a paid-up status with a shortened benefit period in accordance with the terms of subsection 2639.9. This option may be elected at any time during the one hundred and twenty (120) day period referenced in subsection 2639.6; and

Notify the policyholder or certificate holder that a default or lapse at any time during the one hundred and twenty (120) day period referenced in subsection 2639.6 shall be deemed to be the election of the offer to convert described in paragraph (b) of this subsection.

The following benefits shall be required as nonforfeiture benefits and shall be provided in accordance with the following standards:

The nonforfeiture benefit shall be of a shortened benefit period providing paid-up long-term care insurance coverage after lapse. The same benefits (amounts and frequency in effect at the time of lapse but not increased thereafter) shall be payable for a qualifying claim, but the lifetime maximum dollars or days of benefits shall be determined as specified in paragraph (b) of this subsection.

The standard nonforfeiture credit shall be equal to one hundred percent (100%) of the sum of all premiums paid, including the premiums paid prior to any changes in benefits. The insurer may offer additional shortened benefit period options, as long as the benefits for each duration equal or exceed the standard nonforfeiture credit for that duration. However, the minimum nonforfeiture credit shall not be less than thirty (30) times the daily nursing home benefit at the time of lapse. In either event, the calculation of the nonforfeiture credit shall be subject to the limitation of subsection 2639.11.

Nonforfeiture credits may be used for all care and services qualifying for benefits under the terms of the policy or certificate, up to the limits specified in the policy or certificate.

(a) The nonforfeiture benefit shall begin not later than the end of the third year after the issue date of the policy or certificate. The contingent benefit upon lapse shall be effective during the first three (3) years as well as thereafter.

(b) Notwithstanding paragraph (a) of this subsection, for a policy or certificate with attained age rating, the nonforfeiture benefit shall begin on the earlier of:

The end of the tenth year following the policy or certificate issue date; or

The end of the second year following the date the policy or certificate is no longer subject to attained age rating.

(c) For the purposes of this subsection, attained age rating shall be defined as a schedule of premiums starting from the issue date that increases age at least one percent (1%) per year prior to age fifty (50) and at least three percent (3%) per year beyond age fifty (50).

All benefits paid by the insurer while the policy or certificate is in premium paying status and in the paid up status shall not exceed the maximum benefits which would be payable if the policy or certificate had remained in premium paying status.

There shall be no difference in the minimum nonforfeiture benefits required under this section for group and individual policies.

The requirements set forth in this section shall become effective on December 16, 2006, and shall apply as follows:

Except as provided in paragraph (b) of this subsection, the provisions of this section shall apply to a long-term care policy issued in the District of Columbia on or after December 16, 2005.

For certificates issued on or after December 16, 2005, under a group long-term care insurance policy as defined in section 2(4)(A) of the Long-Term Care Insurance Act of 2000, effective May 23, 2000 (D.C. Law 13-121; D.C. Code § 31-3601(4)(A)), which policy was in force on December 16, 2005, the provisions of this section shall not apply.

Premiums charged for a policy or certificate containing nonforfeiture benefits or a contingent benefit on lapse shall be subject to the loss ratio requirements of section 2630 treating the policy as a whole.

A nonforfeiture benefit for qualified long-term care insurance contracts that are level premium contracts shall be offered that meets all of the following requirements:

The nonforfeiture provision shall be appropriately captioned.

The nonforfeiture provision shall provide a benefit available in the event of a default in the payment of any premiums and shall state that the amount of the benefit may be adjusted subsequent to being initially granted only as necessary to reflect changes in claims, persistency, and interest as reflected in changes in rates for premium paying contracts approved by the Commissioner for the same contract form.

The nonforfeiture provision shall provide at least one of the following:

Reduced paid-up insurance;

Extended term insurance;

Shortened benefit period; or

Other similar offerings approved by the Commissioner.

History

• SOURCE: Final Rulemaking published at 55 DCR 3759 (April 11, 2008). District of Columbia Municipal Regulations Insurance, Securities, and Banking 26-A DCMR § 2639

26-A DCMR § 2640 STANDARDS FOR BENEFIT TRIGGERS

A long-term care insurance policy shall condition the payment of benefits on a determination of the insured’s ability to perform activities of daily living and on cognitive impairment. Eligibility for the payment of benefits shall not be more restrictive than requiring either a deficiency in the ability to perform not more than three (3) of the activities of daily living or the presence of cognitive impairment.

Activities of daily living shall include at least the following:

Bathing;

Continence;

Dressing;

Eating;

Toileting; and

Transferring.

Each activity of daily living shall be defined in the policy. The definition in the policy of an activity of daily living listed in subsection 2640.2 shall be the same as the definition of the activity set forth in section 2699.

Insurers may use activities of daily living in addition to those contained in subsection 2640.2 to trigger covered benefits, if the activities are defined in the policy.

An insurer may use additional provisions for the determination of when benefits are payable under a policy or certificate; however, the provisions shall not restrict, and shall not be in lieu of, the requirements in subsections 2640.1 and 2640.2.

For the purposes of this section, the determination of a deficiency shall not be more restrictive than the following:

Requiring the hands-on assistance of another person to perform the prescribed activity of daily living; or

If the deficiency is due to the presence of a cognitive impairment, supervision or verbal cueing by another person is needed in order to protect the insured or others.

Assessments of activities of daily living and cognitive impairment shall be performed by licensed or certified professionals, such as physicians, nurses, or social workers.

A long-term care insurance policy shall include a clear description of the process for appealing and resolving benefit determinations.

The requirements set forth in this section shall be effective on December 16, 2006, and shall apply as follows:

Except as provided in paragraph (b) of this subsection, the provisions of this section shall apply to a long-term care insurance policy issued in the District of Columbia on or after December 16, 2005; and

For certificates issued on or after December 16, 2005, under a group long-term care insurance policy as defined in section 2(4)(A) of the Long-Term Care Insurance Act of 2000, effective May 23, 2000 (D.C. Law 13-121; D.C. Official Code § 31-3601(4)(A) (2001)), that were in force on December 16, 2005, the provisions of this section shall not apply.

History

• SOURCE: Final Rulemaking published at 55 DCR 3759 (April 11, 2008). District of Columbia Municipal Regulations Insurance, Securities, and Banking 26-A DCMR § 2640

26-A DCMR § 2641 ADDITIONAL STANDARDS FOR BENEFIT TRIGGERS FOR QUALIFIED LONG-TERM CARE INSURANCE CONTRACTS

A qualified long-term care insurance contract shall pay only for qualified long-term care services received by a chronically ill individual provided pursuant to a plan of care prescribed by a licensed health care practitioner.

A qualified long-term care insurance contract shall condition the payment of benefits on a determination of the insured’s inability to perform activities of daily living for an expected period of at least ninety (90) days due to a loss of functional capacity or to severe cognitive impairment.

Certifications regarding activities of daily living and cognitive impairment required pursuant to subsection 2641.2 shall be performed by the following licensed or certified practitioners: physicians, registered professional nurses, licensed social workers, or other individuals who meet requirements prescribed by the Secretary of the United States Department of the Treasury.

Certifications required pursuant to subsection 2641.2 may be performed by a licensed health care practitioner at the direction of the carrier as is reasonably necessary with respect to a specific claim, except that when a licensed health care practitioner has certified that an insured is unable to perform activities of daily living for an expected period of at least ninety (90) days due to a loss of functional capacity and the insured is in claim status, the certification shall not be rescinded and additional certifications shall not be performed until after the expiration of the ninety (90) day period.

Qualified long-term care insurance contracts shall include a clear description of the process for appealing and resolving disputes with respect to benefit determinations.

For the purposes of this section the following definitions shall apply:

“Qualified long-term care services” has the meaning prescribed in section 7702B(c)(1) of the Internal Revenue Code of 1986, approved August 21, 1996 (110 Stat. 2055; 26 U.S.C. § 7702B(c)(1)). Under that provision, the term “qualified long-term care services” means necessary diagnostic, preventive, therapeutic, curative, treatment, mitigation and rehabilitative services, and maintenance or personal care services that are required by a chronically ill individual and are provided pursuant to a plan of care prescribed by a licensed health care practitioner.

(1) “Chronically ill individual” has the meaning prescribed in section 7702B(c)(2) of the Internal Revenue Code of 1986, approved August 21, 1996 (110 Stat. 2055; 26 U.S.C. § 7702B(c)(2)). Under this provision, a chronically ill individual means an individual who has been certified by a licensed health care practitioner as:

Being unable to perform (without substantial assistance from another individual) at least two (2) activities of daily living for a period of at least ninety (90) days due to a loss of functional capacity; or

Requiring substantial supervision to protect the individual from threats to health and safety due to severe cognitive impairment.

The term “chronically ill individual” shall not include an individual otherwise meeting the requirements of subparagraph (1) of this paragraph unless within the preceding twelve (12) month period a licensed health care practitioner has certified that the individual meets those requirements.

“Licensed health care practitioner” means a physician, as defined in section 1861(r)(1) of the Social Security Act, approved July 30, 1965 (79 Stat. 321; 42 U.S.C. § 1395x(r)), a registered professional nurse, licensed social worker, or other individual who meets requirements prescribed by the Secretary of the United States Department of the Treasury under section 7702B(c)(4) of the Internal Revenue Code of 1986, approved August 21, 1996 (110 Stat. 2056; 26 U.S.C. § 7702B(c)(4)).

“Maintenance or personal care services” means care the primary purpose of which is the provision of needed assistance with a disability as a result of which the individual is a chronically ill individual (including the protection from threats to health and safety due to severe cognitive impairment).

History

• SOURCE: Final Rulemaking published at 55 DCR 3759 (April 11, 2008). District of Columbia Municipal Regulations Insurance, Securities, and Banking 26-A DCMR § 2641

26-A DCMR § 2642 STANDARD FORMAT OUTLINE OF COVERAGE

This section implements, interprets, and makes specific the provisions of section 7 of the Long-Term Care Insurance Act of 2000, effective May 23, 2000 (D.C. Law 13-121; D.C. Official Code § 31-3606 (2001)) in prescribing a standard format and the content of an outline of coverage.

The outline of coverage shall be a free-standing document, using type that is no smaller than ten (10) points.

The outline of coverage shall contain no material of an advertising nature.

Text that is capitalized or underscored in the standard format outline of coverage may be emphasized by other means that provide prominence equivalent to the capitalization or underscoring.

Use of the text and sequence of text of the standard format outline of coverage is mandatory, unless otherwise specifically indicated.

The format for the outline of coverage shall be as follows:

[COMPANY NAME]

[ADDRESS - CITY & STATE]

[TELEPHONE NUMBER]

LONG-TERM CARE INSURANCE

OUTLINE OF COVERAGE

[Policy Number or Group Master Policy and Certificate Number]

[Except for policies or certificates that are guaranteed issue, the following

caution statement, or language substantially similar, shall appear as follows in

the outline of coverage.]

Caution: The issuance of this long-term care insurance [policy] [certificate] is

based upon your responses to the questions on your application. A copy of your

[application] [enrollment form] [is enclosed] [was retained by you when you

applied]. If your answers are incorrect or untrue, the company has the right to

deny benefits or rescind your policy. The best time to clear up any questions is

now, before a claim arises! If, for any reason, any of your answers are incorrect,

contact the company at this address: [insert address]

1. This policy is [an individual policy of insurance] [a group policy that was issued in the [indicate jurisdiction in which group policy was issued]].

2. PURPOSE OF OUTLINE OF COVERAGE. This outline of coverage provides a very brief description of the important features of the policy. You should compare this outline of coverage to outlines of coverage for other policies available to you. This is not an insurance contract, but only a summary of coverage. Only the individual or group policy contains governing contractual provisions. This means that the policy or group policy sets forth in detail the rights and obligations of both you and the insurance company. Therefore, if you purchase this coverage, or any other coverage, it is important that you READ YOUR [POLICY] [CERTIFICATE] CAREFULLY!

3. FEDERAL TAX CONSEQUENCES.

This [policy] [certificate] is intended to be a federally tax-qualified long-term care insurance contract under Section 7702B(b) of the Internal Revenue Code of 1986, as amended.

OR

Federal Tax Implications of this [policy] [certificate]. This [policy] [certificate] is not intended to be a federally tax-qualified long-term care insurance contract under Section 7702B(b) of the Internal Revenue Code of 1986, as amended. Benefits received under the [policy] [certificate] may be taxable as income.

4. TERMS UNDER WHICH THE POLICY OR CERTIFICATE MAY BE CONTINUED IN FORCE OR DISCONTINUED.

(a) [For long-term care health insurance policies or certificates describe one of the following permissible policy renewability provisions:]

(1) [Policies and certificates that are guaranteed renewable shall contain the following statement:] RENEWABILITY: THIS [POLICY] [CERTIFICATE] IS GUARANTEED RENEWABLE. This means you have the right, subject to the terms of your [policy] [certificate], to continue this policy as long as you pay your premiums on time. [Company Name] cannot change any of the terms of your policy on its own, except that, in the future, IT MAY INCREASE THE PREMIUM YOU PAY.

(2) [Policies and certificates that are noncancellable shall contain the following statement:] RENEWABILITY: THIS [POLICY] [CERTIFICATE] IS NONCANCELLABLE. This means that you have the right, subject to the terms of your policy, to continue this policy as long as you pay your premiums on time. [Company Name] cannot change the premium you currently pay. However, if your policy contains an inflation protection feature where you choose to increase your benefits, [Company Name] may increase your premium at that time for those additional benefits.

(b) [For group coverage, specifically describe continuation/conversion provisions applicable to the certificate and group policy.]

(c) [Describe waiver of premium provisions or state that there are no such provisions.]

5. TERMS UNDER WHICH THE COMPANY MAY CHANGE PREMIUMS

[In bold type larger than the maximum type required to be used for the other provisions of the outline of coverage, state whether or not the company has a right to change the premium, and, if a right exists, describe clearly and concisely each circumstance under which the premium may change.]

6. TERMS UNDER WHICH THE POLICY OR CERTIFICATE MAY BE RETURNED AND PREMIUM REFUNDED.

(a) [Provide a brief description of the right to return–“free look” provision of the policy.]

(b) [Include a statement that the policy either does or does not contain provisions providing for a refund or partial refund of premium upon the death of an insured or surrender of the policy or certificate. If the policy contains such provisions, include a description of them.]

7. THIS IS NOT MEDICARE SUPPLEMENT COVERAGE. If you are

eligible for Medicare, review the Medicare Supplement Buyer's Guide available from the insurance company.

(a) [For agents] Neither [Company Name] nor its agents represent Medicare, the federal government, or any state government.

(b) [For direct response] [Company Name] is not representing Medicare, the federal government, or any state government.

8. LONG-TERM CARE COVERAGE. Policies of this category are designed to provide coverage for one or more necessary or medically necessary diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services, provided in a setting other than an acute care unit of a hospital, such as in a nursing home, in the community, or in the home.

This policy provides coverage in the form of a fixed dollar indemnity benefit for covered long-term care expenses, subject to policy [limitations] [waiting periods] and [coinsurance] requirements. [Modify this paragraph if the policy is not an indemnity policy.]

9. BENEFITS PROVIDED BY THIS POLICY.

[Describe:

(a) Covered services, related deductibles, waiting periods, elimination periods, and benefit maximums.

(b) Institutional benefits, by skill level.

(c) Non-institutional benefits, by skill level.

(d) Eligibility for Payment of Benefits

[Activities of daily living and cognitive impairment shall be used to measure an insured’s need for long-term care and must be defined and described as part of the outline of coverage.]

[Any additional benefit triggers must also be explained. If these triggers differ for different benefits, explanation of the triggers should accompany each benefit description. If an attending physician or other specified person must certify a certain level of functional dependency in order to be eligible for benefits, this too must be specified.]]

10. LIMITATIONS AND EXCLUSIONS

[Describe:

(a) Preexisting conditions;

(b) Non-eligible facilities and providers;

(c) Non-eligible levels of care (e.g., unlicensed providers, care or treatment provided by a family member, etc.);

(d) Exclusions and exceptions;

(e) Limitations.]

[This section should provide a brief specific description of any

policy provisions that limit, exclude, restrict, reduce, delay, or in

any other manner operate to qualify payment of the benefits

described in Number 6 above.]

THIS POLICY MAY NOT COVER ALL THE EXPENSES

ASSOCIATED WITH YOUR LONG-TERM CARE NEEDS.

11. RELATIONSHIP OF COST OF CARE AND BENEFITS. Because the costs of long-term care services will likely increase over time, you should consider whether and how the benefits of this plan may be adjusted.

[As applicable, indicate the following:

(a) That the benefit level will not increase over time;

(b) Any automatic benefit adjustment provisions;

(c) Whether the insured will be guaranteed the option to buy additional benefits and the basis upon which benefits will be increased over time if not by a specified amount or percentage;

(d) If there is such a guarantee, include whether additional underwriting or health screening will be required, the frequency and amounts of the upgrade options, and any significant restrictions or limitations;

(e) And finally, describe whether there will be any additional premium charge imposed, and how that is to be calculated.]

12. ALZHEIMER’S DISEASE AND OTHER ORGANIC BRAIN DISORDERS.

[State that the policy provides coverage for insureds clinically diagnosed as having Alzheimer’s disease or related degenerative and dementing illnesses. Specifically describe each benefit screen or other policy provision that provides preconditions to the availability of policy benefits for such an insured.]

13. PREMIUM.

[(a) State the total annual premium for the policy;

(b) If the premium varies with an applicant’s choice among benefit options, indicate the portion of annual premium that corresponds to each benefit option.]

14. ADDITIONAL FEATURES.

[(a) Indicate if medical underwriting is used;

(b) Describe other important features.]

15. CONTACT THE STATE SENIOR HEALTH INSURANCE ASSISTANCE PROGRAM IF YOU HAVE GENERAL QUESTIONS REGARDING LONG-TERM CARE INSURANCE. CONTACT THE INSURANCE COMPANY IF YOU HAVE SPECIFIC QUESTIONS REGARDING YOUR LONG-TERM CARE INSURANCE POLICY OR CERTIFICATE.

History

• SOURCE: Final Rulemaking published at 55 DCR 3759 (April 11, 2008). District of Columbia Municipal Regulations Insurance, Securities, and Banking 26-A DCMR § 2642

26-A DCMR § 2643 REQUIREMENT TO DELIVER SHOPPER’S GUIDE

A long-term care insurance shopper’s guide in the format developed by the National Association of Insurance Commissioners (“NAIC”), or a guide developed or approved by the Commissioner, shall be provided to all prospective applicants for a long-term care insurance policy or certificate.

In the case of agent solicitations, an agent shall deliver the shopper’s guide prior to the presentation of an application or enrollment form.

In the case of direct response solicitations, the shopper’s guide shall be presented in conjunction with an application or enrollment form.

Life insurance policies or riders containing accelerated long-term care benefits are not required to furnish the shopper’s guide but shall furnish the policy summary required under section 7 of the Long-Term Care Insurance Act of 2000, effective May 23, 2000 (D.C. Law 13-121; D.C. Official Code § 31-3606 (2001)).

History

• SOURCE: Final Rulemaking published at 55 DCR 3759 (April 11, 2008). District of Columbia Municipal Regulations Insurance, Securities, and Banking 26-A DCMR § 2643

26-A DCMR § 2644 PENALTIES

In addition to any other penalties provided by the laws of the District of Columbia, an insurer or agent found to have violated a requirement of District of Columbia law relating to the regulation of long-term care insurance or the marketing of such insurance shall be subject to a fine of up to three (3) times the amount of any commissions paid for each policy involved in the violation or up to ten thousand dollars ($10,000), whichever is greater.

History

• SOURCE: Final Rulemaking published at 55 DCR 3759 (April 11, 2008). District of Columbia Municipal Regulations Insurance, Securities, and Banking 26-A DCMR § 2644

26-A DCMR § 2699 DEFINITIONS

For the purposes of this chapter, the following words and phrases shall have the meanings ascribed:

Activities of daily living - at least bathing, continence, dressing, eating, toileting, and transferring.

Acute condition - condition where the individual is medically unstable. Such an individual requires frequent monitoring by medical professionals, such as physicians and registered nurses, in order to maintain his or her health status.

Adult day care - a program for six (6) or more individuals of social and health-related services provided during the day in a community group setting for the purpose of supporting frail, impaired elderly, or other disabled adults who can benefit from care in a group setting outside the home.

Applicant - has the same meaning as set forth in section 2(1) of the Long-Term Care Insurance Act of 2000, effective May 23, 2000 (D.C. Law 13-121; D.C. Official Code § 31-3601(1) (2001)).

Bathing - washing oneself by sponge bath or in either a tub or shower, including the task of getting into or out of the tub or shower.

Certificate - has the same meaning as set forth in section 2(2) of the Long-Term Care Insurance Act of 2000, effective May 23, 2000 (D.C. Law 13-121; D.C. Official Code § 31-3601(2) (2001)).

Cognitive impairment - a deficiency in a person’s short or long-term memory, orientation as to person, place and time, deductive or abstract reasoning, or judgment as it relates to safety awareness.

Commissioner - the Commissioner of the Department of Insurance, Securities, and Banking.

Continence - the ability to maintain control of bowel and bladder function; or, when unable to maintain control of bowel or bladder function, the ability to perform associated personal hygiene (including caring for catheter or colostomy bag).

Dressing - putting on and taking off all items of clothing and any necessary braces, fasteners, or artificial limbs.

Eating - feeding oneself by getting food into the body from a receptacle (such as a plate, cup, or table) or by a feeding tube or intravenously.

Group long-term care insurance - has the same meaning as set forth in section 2(4) of the Long-Term Care Insurance Act of 2000, effective May 23, 2000 (D.C. Law 13-121; D.C. Official Code § 31-3601(4) (2001)).

Hands-on assistance - physical assistance (minimal, moderate, or maximal) without which the individual would not be able to perform the activities of daily living.

Home health care services - medical and nonmedical services provided to ill, disabled, or infirm persons in their residences. Such services may include homemaker services, assistance with activities of daily living, and respite care services.

Incidental - as used in section 2631, that the value of the long-term care benefits provided is less than ten percent (10%) of the total value of the benefits provided over the life of the policy. These values shall be measured as of the date of issue.

Long-term care insurance - has the same meaning as set forth in section 2(5) of the Long-Term Care Insurance Act of 2000, effective May 23, 2000 (D.C. Law 13-121; D.C. Official Code § 31-3601(5) (2001)).

Medicare - “The Health Insurance for the Aged Act, Title XVIII of the Social Security Amendments of 1965 as Then Constituted or Later Amended,” or “Title I, Part I of Public Law 89-97, as Enacted by the Eighty-Ninth Congress of the United States of America and popularly known as the Health Insurance for the Aged Act, as then constituted and any later amendments or substitutes thereof,” or words of similar import.

Personal care - the provision of hands-on services to assist an individual with activities of daily living.

Policy - has the same meaning as set forth in section 2(7) of the Long-Term Care Insurance Act of 2000, effective May 23, 2000 (D.C. Law 13-121; D.C. Official Code § 31-3601(7) (2001)).

Qualified actuary - a member in good standing of the American Academy of Actuaries.

Qualified long-term care insurance contract - has the same meaning as set forth in section 2(8) of the Long-Term Care Insurance Act of 2000, effective May 23, 2000 (D.C. Law 13-121; D.C. Official Code § 31-3601(8) (2001)).

Similar policy forms - all of the long-term care insurance policies and certificates issued by an insurer in the same long-term care benefit classification as the policy form being considered. Certificates of groups that meet the definition in section 2(4)(A) of the Long-Term Care Insurance Act of 2000, effective May 23, 2000 (D.C. Law 13-121; D.C. Official Code § 31-3601(4)(A) (2001)) are not considered similar to certificates or policies otherwise issued as long-term care insurance, but shall be considered similar to other comparable certificates with the same long-term care benefit classifications. For the purposes of determining similar policy forms, long-term care benefit classifications are defined as follows: institutional long-term care benefits only, non-institutional long-term care benefits only, or comprehensive long-term care benefits.

Toileting - getting to and from the toilet, getting on and off the toilet, and performing associated personal hygiene.

Transferring - moving into or out of a bed, chair, or wheelchair.

APPENDIX A

Rescission Reporting Form For

Long-Term Care Insurance Policies

For the District Of Columbia

For the Reporting Year of _____

Due: March 1 annually

Company Name: ______________________________________________________

Address: ______________________________________________________

---

Phone Number: ______________________________________________________

Instructions:

The purpose of this form is to report all rescissions of long-term care insurance policies or certificates. Those rescissions voluntarily effectuated by an insured are not required to be included in this report. Please furnish one form per rescission.

Policy

Form #

Policy and

Certificate #

Name of

Insured

Date of

Policy

Issuance

Date/s

Claim/s

Submitted

Date of

Rescission

Detailed reason for rescission: _______________________________________________

---

---

---

---

---

Signature

---

Name and Title (please type)

---

Date

APPENDIX B

LONG-TERM CARE INSURANCE

PERSONAL WORKSHEET

People buy long-term care insurance for many reasons. Some don’t want to use their own assets to pay for long-term care. Some buy insurance to make sure they can choose the type of care they get. Others don’t want their family to have to pay for care or don’t want to go on Medicaid. But long term care insurance may be expensive and may not be right for everyone.

Under District of Columbia law, the insurance company must fill out part of the information on this worksheet and ask you to fill out the rest to help you and the company decide if you should buy this policy.

Premium Information

Policy Form Numbers _____________________

The premium for the coverage you are considering will be [$_________ per month, or $_______ per year,] [a one-time single premium of $____________].

Type of Policy (noncancellable/guaranteed renewable): __________________________

The Company’s Right to Increase Premiums: [The company cannot raise your rates on this policy.] [The company has a right to increase premiums on this policy form in the future, provided it raises rates for all policies in the same class in the District of Columbia.] [Insurers shall use the appropriate bracketed statement. Rate guarantees shall not be shown on this form.]

Rate Increase History

The company has sold long-term care insurance since [year] and has sold this policy since [year] . [The company has never raised its rates for any long-term care policy it has sold in the District of Columbia or any other state.] [The company has not raised its rates for this policy form or similar policy forms in the District of Columbia or any other state in the last 10 years.] [The company has raised its premium rates on this policy form or similar policy forms in the last 10 years. Following is a summary of the rate increases.]

Drafting Note: A company may use the first bracketed sentence above only if it has never increased rates under any prior policy forms in the District of Columbia or any other state. The issuer shall list each premium increase it has instituted on this or similar policy forms in the District of Columbia or any other state during the last 10 years. The list shall provide the policy form, the calendar years the form was available for sale, and the calendar year and the amount (percentage) of each increase. The insurer shall provide minimum and maximum percentages if the rate increase is variable by rating characteristics. The insurer may provide, in a fair manner, additional explanatory information as appropriate.

Questions Related to Your Income

How will you pay each year’s premium?

 From my income  From my savings/investments  My family will pay

[ Have you considered whether you could afford to keep this policy if the premiums went up, for example, by 20%?]

Drafting Note: The issuer is not required to use the bracketed sentence if the policy is fully paid up or is a noncancellable policy.

What is your annual income? (check one)  Under $10,000  $[10-20,000]

 $[20-30,000]  $[30-50,000]  Over $50,000

Drafting Note: The issuer may choose the numbers to put in the brackets to fit its suitability standards.

How do you expect your income to change over the next 10 years? (check one)

 No change  Increase  Decrease

If you will be paying premiums with money received only from your own income, a rule of thumb is that you may not be able to afford this policy if the premiums will be more than 7% of your income.

Will you buy inflation protection? (check one)  Yes  No

If not, have you considered how you will pay for the difference between future costs and your daily benefit amount?

 From my income  From my savings/investments  My family will pay

The national average annual cost of care in [insert year] was [insert $ amount] , but this figure varies across the country. In ten years the national average annual cost would be about [insert $ amount] if costs increase 5% annually.

Drafting Note: The projected cost can be based on federal estimates in a current year. In the above statement, the second figure equals 163% of the first figure.

What elimination period are you considering?

Number of days _______ Approximate cost $__________ for that period of care.

How are you planning to pay for your care during the elimination period? (check one)

 From my income  From my savings/investments  My family will pay

Questions Related to Your Savings and Investments

Not counting your home, about how much are all of your assets (your savings and investments) worth? (check one)

 Under $20,000  $20,000-$30,000  $30,000-$50,000  Over $50,000

How do you expect your assets to change over the next ten years? (check one)

 Stay about the same  Increase  Decrease

If you are buying this policy to protect your assets and your assets are less than $30,000, you may wish to consider other options for financing your long-term care.

Disclosure Statement

 The answers to the questions above describe my financial situation

or

 I choose not to complete this information.

(Check one.)

 I acknowledge that the carrier and/or its agent (below) has reviewed this form with me including the premium, premium rate increase history, and potential for premium increases in the future. [For direct mail situations, use the following: I acknowledge that I have reviewed this form including the premium, premium rate increase history, and potential for premium increases in the future.] I understand the above disclosures. I understand that the rates for this policy may increase in the future. (This box must be checked).

Signed: ______________________________ __________________

(Applicant) (Date)

[ I explained to the applicant the importance of completing this information.

Signed: ______________________________ __________________

(Agent) (Date)

Agent’s Printed Name: ]

[In order for us to process your application, please return this signed statement to [name of company] , along with your application.]

[My agent has advised me that this policy does not seem to be suitable for me. However, I still want the company to consider my application.

Signed: ______________________________ __________________

(Applicant) (Date) ]

Drafting Note: Choose the appropriate sentences depending on whether this is a direct mail or agent sale.

The company may contact you to verify your answers.

Drafting Note: When the Long-Term Care Insurance Personal Worksheet is furnished to employees and their spouses under employer group policies, the text from the heading “Disclosure Statement” to the end of the model may be removed.

APPENDIX C

Things You Should Know Before You Buy

Long-Term Care Insurance

Long-Term Care Insurance

A long-term care insurance policy may pay most of the costs for your care in a nursing home. Many policies also pay for care at home or other community settings. Since policies can vary in coverage, you should read this policy and make sure you understand what it covers before you buy it.

[You should not buy this insurance policy unless you can afford to pay the premiums every year.] [Remember that the company can increase premiums in the future.]

Drafting Note: For single premium policies, delete this bullet; for noncancellable policies, delete the second sentence only.

The personal worksheet includes questions designed to help you and the company determine whether this policy is suitable for your needs.

Medicare

Medicare does not pay for most long-term care.

Medicaid

Medicaid will generally pay for long-term care if you have very little income and few assets. You probably should not buy this policy if you are now eligible for Medicaid.

Many people become eligible for Medicaid after they have used up their own financial resources by paying for long-term care services.

When Medicaid pays your spouse’s nursing home bills, you are allowed to keep your house and furniture, a living allowance, and some of your joint assets.

Your choice of long-term care services may be limited if you are receiving Medicaid. To learn more about Medicaid, contact your local or state Medicaid agency.

Shopper’s

Guide

Make sure the insurance company or agent gives you a copy of a book called the National Association of Insurance Commissioners’ “Shopper’s Guide to Long-Term Care Insurance.” Read it carefully. If you have decided to apply for long-term care insurance, you have the right to return the policy within 30 days and get back any premium you have paid if you are dissatisfied for any reason or choose not to purchase the policy.

Counseling

Free counseling and additional information about long-term care insurance are available through your state’s insurance counseling program. Contact your state insurance department or department on aging for more information about the senior health insurance counseling program in your state.

APPENDIX D

Long-Term Care Insurance Suitability Letter

Dear [Applicant]:

Your recent application for long-term care insurance included a personal worksheet, which asked questions about your finances and your reasons for buying long-term care insurance. For your protection, District of Columbia law requires us to consider this information when we review your application, to avoid selling a policy to those who may not need coverage.

[Your answers indicate that long-term care insurance may not meet your financial needs. We suggest that you review the information provided along with your application, including the booklet “Shopper’s Guide to Long-Term Care Insurance” and the page titled “Things You Should Know Before Buying Long-Term Care Insurance.” The District of Columbia insurance department also has information about long-term care insurance and may be able to refer you to a counselor free of charge who can help you decide whether to buy this policy.]

[You chose not to provide any financial information for us to review.]

Drafting Note: Choose the paragraph above that applies.

We have suspended our final review of your application. If, after careful consideration, you still believe this policy is what you want, check the appropriate box below and return this letter to us within the next 60 days. We will then continue reviewing your application and issue a policy if you meet our medical standards.

If we do not hear from you within the next 60 days, we will close your file and not issue you a policy.

You should understand that you will not have any coverage until we hear back from you, approve your application, and issue you a policy.

Please check one box and return in the enclosed envelope.

 Yes, [although my worksheet indicates that long-term care insurance may not be a suitable purchase,] I wish to purchase this coverage. Please resume review of my application.

Drafting Note: Delete the phrase in brackets if the applicant did not answer the questions about income.

 No. I have decided not to buy a policy at this time.

---

APPLICANT’S SIGNATURE DATE

Please return to [issuer] at [address] by [date] .

APPENDIX E

Claims Denial Reporting Form

Long-Term Care Insurance

For the District of Columbia

For the Reporting Year of _______

Due: June 30 annually

Company Name: _________________________________________________________

Company Address: _______________________________________________________

---

Company NAIC Number: __________________________________________________

Contact Person: _______________________ Phone Number: _____________________

Line of Business: Individual Group

Instructions

The purpose of this form is to report all long-term care claim denials under in-force long-term care insurance policies. “Denied” means a claim that is not paid for any reason other than for claims not paid for failure to meet the waiting period or because of an applicable preexisting condition.

D.C. Data

Nationwide Data1

1

Total Number of Long-Term Care Claims Reported

2

Total Number of Long-Term Care Claims Denied/Not Paid

3

Number of Claims Not Paid Due to Preexisting Condition Exclusion

4

Number of Claims Not Paid Due to Waiting (Elimination) Period Not Met

5

Net Number of Long-Term Care Claims Denied for Reporting Purposes (Line 2 Minus Line 3 Minus Line 4)

6

Percentage of Long-Term Care Claims Denied of Those Reported (Line 5 Divided by Line 1)

7

Number of Long-Term Care Claims Denied Due to:

8

Long-Term Care Services Not Covered Under the Policy2

9

Provider/Facility Not Qualified Under the Policy3

10

Benefit Eligibility Criteria Not Met4

11

Other

1. The nationwide data may be viewed as a more representative and credible indicator where the data for claims reported and denied for the District of Columbia are small in number.

2. Example — home health care claim filed under a nursing home only policy.

3. Example — a facility that does not meet the minimum level of care requirements or the licensing requirements as outlined in the policy.

4. Examples — a benefit trigger not met, certification by a licensed health care practitioner not provided, no plan of care.

APPENDIX F

Long-Term Care Insurance

Potential Rate Increase Disclosure Form

Instructions: This form provides information to the applicant regarding premium rate schedules, rate schedule adjustments, potential rate revisions, and policyholder options in the event of a rate increase.

Insurers shall provide all of the following information to the applicant:

1. [Premium Rate] [Premium Rate Schedules] : [Premium rate] [Premium rate schedules] that [is] [are] applicable to you and that will be in effect until a request is made and [filed] [approved] for an increase [is] [are] [on the application] [$_____] )

2. The [premium] [premium rate schedule] for this policy [will be shown on the schedule page of] [will be attached to] your policy.

3. Rate Schedule Adjustments: The company will provide a description of when premium rate or rate schedule adjustments will be effective (e.g., next anniversary date, next billing date, etc.) (fill in the blank): __________________.

4. Potential Rate Revisions: This policy is Guaranteed Renewable. This means that the rates for this product may be increased in the future. Your rates can NOT be increased due to your increasing age or declining health, but your rates may go up based on the experience of all policyholders with a policy similar to yours.

If you receive a premium rate or premium rate schedule increase in the future, you will be notified of the new premium amount and you will be able to exercise at least one of the following options:

Pay the increased premium and continue your policy in force as is.

Reduce your policy benefits to a level such that your premiums will not increase. (Subject to state law minimum standards.)

Exercise your nonforfeiture option if purchased. (This option is available for purchase for an additional premium.)

Exercise your contingent nonforfeiture rights.* (This option may be available if you do not purchase a separate nonforfeiture option.)

Turn the Page

• Contingent Nonforfeiture

If the premium rate for your policy goes up in the future and you didn’t buy a nonforfeiture option, you may be eligible for contingent nonforfeiture. Here’s how to tell if you are eligible:

You will keep some long-term care insurance coverage, if:

Your premium after the increase exceeds your original premium by the percentage shown (or more) in the following table; and

You lapse (do not pay more premiums) within 120 days of the increase.

The amount of coverage (i.e., new lifetime maximum benefit amount) you will keep will equal the total amount of premiums you have paid since your policy was first issued. If you have already received benefits under the policy, so that the remaining maximum benefit amount is less than the total amount of premiums you have paid, the amount of coverage will be that remaining amount.

Except for this reduced lifetime maximum benefit amount, all other policy benefits will remain at the levels attained at the time of the lapse and will not increase thereafter.

Should you choose this Contingent Nonforfeiture option, your policy, with this reduced maximum benefit amount, will be considered “paid-up” with no further premiums due.

Example:

You bought the policy at age 65 and paid the $1,000 annual premium for 10 years, so you have paid a total of $10,000 in premium.

In the eleventh year, you receive a rate increase of 50%, or $500 for a new annual premium of $1,500, and you decide to lapse the policy (not pay any more premiums).

Your “paid-up” policy benefits are $10,000 (provided you have at least $10,000 of benefits remaining under your policy).

Turn the Page

Contingent Nonforfeiture

Cumulative Premium Increase Over Initial Premium

That Qualifies for Contingent Nonforfeiture

(Percentage increase is cumulative from date of original issue. It does NOT represent a one-time increase.)

Issue Age

Percent Increase Over Initial Premium

29 and under

200%

30-34

190%

35-39

170%

40-44

150%

45-49

130%

50-54

110%

55-59

90%

60

70%

61

66%

62

62%

63

58%

64

54%

65

50%

66

48%

67

46%

68

44%

69

42%

70

40%

71

38%

72

36%

73

34%

74

32%

75

30%

76

28%

77

26%

78

24%

79

22%

80

20%

81

19%

82

18%

83

17%

84

16%

85

15%

86

14%

87

13%

88

12%

89

11%

90 and over

10%

APPENDIX G

Long-Term Care Insurance

Replacement and Lapse Reporting Form

For the District of Columbia

For the Reporting Year of ________

Due: June 30 annually

Company Name: _________________________________________________________

Company Address: _______________________________________________________

---

Company NAIC Number: __________________________________________________

Contact Person: _______________________ Phone Number: (____) _______________

Instructions

The purpose of this form is to report on a District of Columbia-wide basis information regarding long-term care insurance policy replacements and lapses. Specifically, every insurer shall maintain records for each agent on that agent’s amount of long-term care insurance replacement sales as a percent of the agent’s total annual sales and the amount of lapses of long-term care insurance policies sold by the agent as a percent of the agent’s total annual sales. The tables below should be used to report the ten percent (10%) of the insurer’s agents with the greatest percents of replacements and lapses.

Listing of the 10% of Agents with the Greatest Percent of Replacements

Agent’s Name

Number of Policies Sold by this Agent

Number of Policies Replaced by this Agent

Number of Replacements as Percent of Number Sold by this Agent

Listing of the 10% of Agents with the Greatest Percent of Lapses

Agent’s Name

Number of Policies Sold by this Agent

Number of Policies Lapsed by this Agent

Number of Lapses as Percent of Number Sold by this Agent

Company Totals

Percent of Replacement Policies Sold to Total Annual Sales ____%

Percent of Replacement Policies Sold to Policies In Force (as of the end of the preceding calendar year) ____%

Percent of Lapsed Policies to Total Annual Sales _____%

Percent of Lapsed Policies to Policies In Force (as of the end of the preceding calendar year) _____%

History

• SOURCE: Final Rulemaking published at 52 DCR 10902 (December 16, 2005); as amended by Final Rulemaking published at 55 DCR 3759 (April 11, 2008). District of Columbia Municipal Regulations Insurance, Securities, and Banking 26-A DCMR § 2699

26-A27 VARIABLE LIFE INSURANCE CONTRACTS

26-A DCMR § 2700 AUTHORITY

2700.1 The following rules applicable to variable life insurance policies are promulgated under the authority of Section 41, ch. III of the Life Insurance Act, as amended, D.C. Code Section 35-639 (1993 & 1994 Supp.).

2700.2 The issuance or delivery of life insurance policies on a variable basis in the District of Columbia (hereinafter the District) that is not in compliance with these rules shall be deemed in violation of the Life Insurance Act, the regulations issued pursuant thereto, and further, shall be deemed to constitute the transaction of insurance business which is hazardous to the policy holders and the public and contrary to the public interest.

History

• SOURCE: Final Rulemaking published at 42 DCR 1047(February 24, 1995).

26-A DCMR § 2701 [RESERVED]

History

• SOURCE: Final Rulemaking published at 42 DCR 1047(February 24, 1995).

26-A DCMR § 2702 QUALIFICATION OF INSURER TO ISSUE VARIABLE LIFE INSURANCE

2702.1 The following requirements are applicable to all insurers either seeking authority to issue variable life insurance in the District or having authority to issue variable life insurance in the District.

2702.2 An insurer shall not deliver or issue for delivery in the District any variable life insurance policies unless:

(a) The insurer is licensed or organized to do a life insurance business in the District;

(b) The insurer has obtained the written approval of the Commissioner for the issuance of variable life insurance policies in the District. The Commissioner shall grant such written approval only after he has found that:

(1) The plan of operation for the issuance of variable life insurance policies is not unsound;

(2) The general character, reputation and experience of the management and those persons or firms proposed to supply consulting, investment, administrative or custodial services to the insurer are such as to reasonably assure competent operation of the variable life insurance business of the insurer in the District; and

(3) The present and foreseeable future financial condition of the insurer and its method of operation in connection with the issuance of such policies is not likely to render its operation hazardous to the public or its policyholders in the District. The Commissioner shall consider, among other things:

(A) The history of operation and financial condition of the insurer;

(B) The qualifications, fitness, character, responsibility, reputation and experience

of the officers and directors and other management of the insurer and those persons or firms proposed to supply consulting, investment, administrative or custodial services to the insurer;

(C) The applicable law and regulations under which the insurer is authorized in its state of domicile to issue variable life insurance policies. The state of entry of an alien insurer shall be deemed its state of domicile for this purpose; and

(D) If the insurer is a subsidiary of, or is affiliated by common management or ownership with another company, its relationship to such other company and the degree to which the requesting insurer, as well as the other company, meets these standards.

History

• SOURCE: Final Rulemaking published at 42 DCR 1047(February 24, 1995).

26-A DCMR § 2703 FILING FOR APPROVAL TO DO BUSINESS IN THE DISTRICT

2703.1 The Commissioner may, at his discretion, require that an insurer, before it delivers or issues for delivery any variable life insurance policy in the District, file with the Commissioner the following information for the consideration of the Commissioner in making the determination required by Section 2702 of this chapter:

(a) Copies of and a general description of the variable life insurance policies it intends to issue;

(b) A general description of the methods of operation of the variable life insurance business of the insurer, including methods of distribution of policies and the names of those persons or firms proposed to supply consulting, investment, administrative, custodial or distribution services to the insurer;

(c) With respect to any separate account maintained by an insurer for any variable life insurance policy, a statement of the investment policy the issuer intends to follow for the investment of the assets held in such separate account and a statement of procedures for changing such investment policy. The statement of investment policy shall include a description of the investment objectives intended for the separate account;

(d) A description of any investment advisory services contemplated as required by Section 2728;

(e) If requested by the Commissioner, a copy of the statutes and regulations of the state of domicile of the insurer under which it is authorized to issue variable life insurance policies;

(f) Biographical data with respect to officers and directors of the insurer on the National Association of Insurance Commissioners Uniform Biographical Data Form; and

(g) A statement of the insurer's actuary describing the mortality and expense risks which the insurer will bear under the policy.

History

• SOURCE: Final Rulemaking published at 42 DCR 1047(February 24, 1995).

26-A DCMR § 2704 STANDARDS OF SUITABILITY

2704.1 An insurer seeking approval to enter into the variable life insurance business in the District shall establish and maintain a written statement specifying the Standards of Suitability to be used by the insurer. These Standards of Suitability shall be binding on the insurer and those to whom it refers, and shall specify that no recommendation shall be made to an applicant to purchase a variable life insurance policy and that no variable life insurance policy shall be issued in the absence of reasonable grounds to believe that the purchase of such policy is suitable for the applicant concerning the applicant's insurance and investment objectives, financial situation and needs, and any other information known to the insurer or the agent making the recommendation.

History

• SOURCE: Final Rulemaking published at 42 DCR 1047(February 24, 1995).

26-A DCMR § 2705 USE OF SALES MATERIAL

2705.1 An insurer authorized to transact variable life insurance business in the District shall not use any sales material, advertising material or descriptive literature or other materials of any kind in connection with its variable life insurance business in the District which is false, misleading, deceptive or inaccurate.

History

• SOURCE: Final Rulemaking published at 42 DCR 1047(February 24, 1995).

26-A DCMR § 2706 REQUIREMENTS APPLICABLE TO CONTRACTUAL SERVICES

2706.1 A contract between an insurer and suppliers of consulting, investment, administrative, sales, marketing, custodial or other services with respect to variable life insurance operations shall be in writing and provide that the supplier of such services shall furnish the Commissioner with any information or reports in connection with such services which the Commissioner may request in order to ascertain whether the variable life insurance operations of the insurer are being conducted in a manner consistent with these regulations, and any other applicable law or regulations.

2706.2 The contract shall be fair and equitable to all parties and not endanger policyholders of the insurer in the District.

2706.3 The contract may not relieve the insurer from any responsibilities or obligations imposed upon the operations of its variable life insurance business by this chapter or any other law or regulation.

History

• SOURCE: Final Rulemaking published at 42 DCR 1047(February 24, 1995).

26-A DCMR § 2707 REPORTS TO THE COMMISSIONER

2707.1 An insurer authorized to transact the business of variable life insurance in the District shall submit to the Commissioner, in addition to any other materials which may be required by this regulation or any other applicable laws or regulations:

(a) An Annual Statement of the business of its variable life insurance separate account or accounts in such forms as may be prescribed by the National Association of Insurance Commissioners; and

(b) Prior to the use in the District any information furnished to applicants as provided for in Section 2729; and

(c) Prior to the use in the District the form of any of the Reports to Policyholders as provided for in 2731; and

(d) Such additional information concerning its variable life insurance operations or its separate accounts as the Commissioner shall deem necessary.

2707.2 Any material submitted to the Commissioner under this section shall be disapproved if it is found to be false, misleading, deceptive or inaccurate in any material respect and, if previously distributed, the Commissioner shall require the distribution of amended material.

History

• SOURCE: Final Rulemaking published at 42 DCR 1047(February 24, 1995).

26-A DCMR § 2708 AUTHORITY OF THE COMMISSIONER TO DISAPPROVE

2708.1 Any material required to be filed with and approved by the Commissioner shall be subject to disapproval if at any time it is found by him not to comply with the standards established in this regulation.

History

• SOURCE: Final Rulemaking published at 42 DCR 1047(February 24, 1995).

26-A DCMR § 2709 INSURANCE POLICY REQUIREMENTS

2709.1 Policy Qualification. The Commissioner shall not approve any variable life insurance form filed pursuant to this regulation unless it conforms to the requirements of this chapter.

History

• SOURCE: Final Rulemaking published at 42 DCR 1047(February 24, 1995).

26-A DCMR § 2710 FILING OF VARIABLE LIFE INSURANCE POLICIES

2710.1 All variable life insurance policies, and all riders, endorsements, applications and other documents which are to be attached to be made a part of the policy and which relate to the variable nature of the policy, shall be filed with the Commissioner and approved by him prior to delivery or issuance for delivery in the District.

2710.2 The procedures and requirements for such filing and approval shall be, to the extent appropriate and not inconsistent with this regulation, the same as those otherwise applicable to other life insurance policies.

2710.3 The Commissioner may approve variable life insurance policies and related forms with provisions the Commissioner deems to be not less favorable to the policyholder and the beneficiary than those required by this regulation.

History

• SOURCE: Final Rulemaking published at 42 DCR 1047(February 24, 1995).

26-A DCMR § 2711 MANDATORY POLICY BENEFITS AND DESIGN REQUIREMENTS

2711.1 Variable life insurance policies delivered or issued for delivery in the District shall comply with the following minimum requirements:

(a) Mortality and expense risks shall be borne by the insurer. The mortality and expense charges shall be subject to the maximums stated in the contract;

(b) For scheduled premium policies, a minimum death benefit shall be provided in an amount at least equal to the initial face amount of the policy so long as premiums are duly paid;

(c) The policy shall reflect the investment experience of one or more separate accounts established and maintained by the insurer. The insurer must demonstrate that the reflection of investment experience in the variable life insurance policy is actuarially sound;

(d) Each variable life insurance policy shall be credited with the full amount of the net investment return applied to the benefit base;

(e) Changes in variable death benefits of each variable life insurance policy shall be determined at least annually;

(f) The cash value of each variable life insurance policy shall be determined at least monthly. The method of computation of cash values and other nonforfeiture benefits, as described either in the policy or in a statement filed with the Commissioner of the state in which the policy is delivered, or issued for delivery, shall be in accordance with actuarial procedures that recognize the variable nature of the policy:

(1) The method of computation must be such that, if the net investment return credited to the policy at all times from the date of issue should be equal to the assumed investment rate with premiums and benefits determined accordingly under the terms of the policy, then the resulting cash values must be at least equal to the minimum values required by D.C. Code Section 35-507, for a general account policy with such premiums and benefits.

(2) The assumed investment rate shall not exceed the maximum interest rate permitted under the Standard Nonforfeiture Law of the District, D.C. Code Section 35-501 et seq. If the policy does not contain an assumed investment rate this demonstration shall be based on the maximum interest rate permitted under the Standard Nonforfeiture Law, D.C. Code Section 35-501 et seq.

(3) The method of computation may disregard incidental minimum guarantees as to the dollar amounts payable. Incidental minimum guarantees include, for example, but are not limited to, a guarantee that the amount payable at death or maturity shall be least equal to the amount that otherwise would have been payable if the net investment return credited to the policy at all times from the date of issue had been equal to the assumed investment rate.

(g) The computation of values required for each variable life insurance policy may be based upon such reasonable and necessary approximations as are acceptable to the Commissioner.

History

• SOURCE: Final Rulemaking published at 42 DCR 1047 (February 24, 1995).

26-A DCMR § 2712 MANDATORY POLICY PROVISIONS

2712.1 Every variable life insurance policy filed for approval in the District shall be plainly printed in a type size not less than 10-point with a lower case unspaced alphabet length not less than 120-point, and shall contain at least the following:

(a) The cover page or pages corresponding to the cover page of each such policy shall contain:

(1) A prominent statement in either contrasting color or in bold-faced type that the amount or duration of death benefit may be variable or fixed under specified conditions;

(2) A prominent statement in either contrasting color or in bold-faced type that cash values may increase or decrease in accordance with the experience of the separate account subject to any specified minimum guarantees;

(3) A statement describing any minimum death benefit required pursuant to Section 2711.1 (b);

(4) The method, or a reference to the policy provision which describes the method, for determining the amount of insurance payable at death;

(5) A captioned provision that the policyholder may return the variable life insurance policy within forty-five (45) days of the date of execution of the application or within ten (10) days of receipt of the policy by the policyholder, which ever is later, and receive a refund of all premium payments for the policy; and

(6) Such other items as are currently required for fixed benefit life insurance policies and which are not inconsistent with this regulation.

(b) For scheduled premium policies, a provision for a grace period of not less than thirty-one (31) days from the premium due date which shall provide that when the premium is paid within the grace period, policy values will be the same, except for the deduction of any overdue premium, as if the premium were paid on or before the due date.

(c) For flexible premium policies, a provision for a grace period beginning on the policy processing day when the total charges authorized by the policy that are necessary to keep the policy in force until the next policy processing day exceed the amounts available under the policy to pay such charges in accordance with the terms of the policy. Such grace period shall end on a date not less than 61 days after the mailing date of the Report to Policyholders required by Section 2731.1(d). The death benefit payable during the grace period will equal the death benefit in effect immediately prior to such period less any overdue charges. If the policy processing days occur monthly, the insurer may require the payment of not more than 3 times the charges which were due on the policy processing day on which the amounts available under the policy were insufficient to pay all charges authorized by the policy that are necessary to keep such policy in force until the next policy processing day.

(d) For schedule premium policies, a provision that the policy will be reinstated at any time within two (2) years from the date of default upon the written application of the insured and evidence of insurability, including good health, satisfactory to the insurer, unless the cash surrender value has been paid or the period of extended insurance has expired, upon the payment of any outstanding indebtedness arising subsequent to the end of the grace period following the date of default together with accrued interest thereon to the date of reinstatement and payment of an amount not exceeding the greater of:

(1) All overdue premiums with interest at a specified rate calculated in accordance with D.C. Code Section 35-503(a)(10) and any indebtedness in effect at the end of the grace period following the date of default with interest at specified rate as calculated in accordance with Section 35-501(a)(6)(G)(ii); or

(2) 110% of the increase in cash value resulting from reinstatement plus all overdue premiums for incidental insurance benefits with interest at a specified rate as calculated in accordance with D.C. Code Section 35-503(a)(10).

(e) A full description of the benefit base and of the method of calculation and application of any factors used to adjust variable benefits under the policy;

(f) A provision designating the separate account to be used and stating that:

(1) The assets of such separate account shall be available to cover the liabilities of the general account of the insurer only to the extent that the assets of the separate account exceed the liabilities of the separate account arising under the variable life insurance policies supported by the separate account.

(2) The assets of such separate account shall be valued at least as often as any policy benefits vary but at least monthly.

(g) A provision specifying what documents constitute the entire insurance contract under District law;

(h) A designation of the officers who are empowered to make an agreement or representation on behalf of the insurer and an indication that statements by the insured, or on his behalf, shall be considered as representations and not warranties;

(i) An identification of the owner of the insurance contract;

(j) A provision setting forth conditions or requirements as to the designation, or change of designation, of a beneficiary and a provision for disbursement of benefits in the absence of a beneficiary designation;

(k) A statement of any conditions or requirements concerning the assignment of the policy;

(l) A description of any adjustments in policy values to be made in the event of misstatement of age or sex of the insured;

(m) A provision that the policy shall be incontestable by the insurer after it has been in force for two (2) years during the lifetime of the insured, provided, however, that any increase in the amount of the policy's death benefits subsequent to the policy issue date, which increase occurred upon a new application or request of the owner and was subject to satisfactory proof of the insured's insurability, shall be incontestable after any such increase has been in force, during the lifetime of the insured, for two years from the date of issue of such increase;

(n) A provision stating that the investment policy of the separate account shall not be changed without the approval of the Insurance Commissioner of the state of domicile of the insurer, and that the approval process is on file with the Commissioner of the District;

(o) A provision that payment of variable death benefits in excess of any minimum death benefits, cash values, policy loans or partial withdrawals (except when used to pay premiums) or partial surrenders may be deferred:

(1) For up to six (6) months from the date of request, if such payments are based on policy values which do not depend on the investment performance of the separate account; or

(2) Otherwise, for any period during which the New York Stock Exchange is closed for trading (except for normal holiday closing) or when the Securities and Exchange Commission has determined that a state of emergency exists which may make such payment impractical;

(p) If settlement options are provided, at least one such option shall be provided on a fixed basis only;

(q) A description of the basis for computing the cash surrender value shall be included.

(r) Premiums or charges for incidental insurance benefits shall be stated separately;

(s) Any other policy provision required by this regulation;

(t) Such other items as are currently required for fixed benefit life insurance policies and, are not inconsistent with this regulation;

(u) A provision for nonforfeiture insurance benefits. The insurer may establish a reasonable minimum cash value below which any nonforfeiture insurance options will not be available.

History

• SOURCE: Final Rulemaking published at 42 DCR 1047 (February 24, 1995).

26-A DCMR § 2713 POLICY LOAN PROVISIONS

2713.1 A variable life insurance policy, other than term insurance policies and pure endowment policies delivered or issued for delivery in the District shall contain provisions which are not less favorable to the policyholder than the following:

(a) A provision for policy loans after the policy has been in force for three (3) full years which provides the following:

(1) At least 75% of the policy's cash surrender value may be borrowed.

(2) The amount borrowed shall bear interest at a rate not to exceed that permitted by District insurance law.

(3) Any indebtedness shall be deducted from the proceeds payable on death.

(4) Any indebtedness shall be deducted from the cash value upon surrender or in determining any nonforfeiture benefit.

(5) For scheduled premium policies, whenever the indebtedness exceeds the cash surrender value, the insurer shall give notice of any intent to cancel the policy if the excess indebtedness is not repaid within thirty-one (31) days after the date of mailing of such notice. For flexible premium policies, whenever the total charges authorized by the policy that are necessary to keep the policy in force until the next following policy processing day exceed the amounts available under the policy to pay such charges, a report must be sent to the policyholder containing the information specified by Section 2712 or Section 2731.

(6) The policy may provide that if, at any time, so long as premiums are duly paid, the variable death benefit is less than it would have been if no loan or withdrawal had ever been made, the policyholder may increase such variable death benefit up to what it would have been if there had been no loan or withdrawal by paying an amount not exceeding 110 percent of the corresponding increase in cash value and by furnishing such evidence of insurability as the insurer may request.

(7) The policy may specify a reasonable minimum amount which may be borrowed at any time but such minimum shall not apply to any automatic premium loan provision.

(8) No policy loan provision is required if the policy is under extended insurance nonforfeiture option.

(9) The policy loan provisions shall be constructed so that variable life insurance policyholders who have not exercised such provisions are not disadvantaged by the exercise thereof.

(10) Amounts paid to the policyholders upon the exercise of any policy loan provision shall be withdrawn from the separate account and shall be returned to the separate account upon repayment except that a stock insurer may provide the amounts for policy loans from the general account.

History

• SOURCE: Final Rulemaking published at 42 DCR 1047 (February 24, 1995).

26-A DCMR § 2714 OTHER POLICY PROVISIONS

2714.1 The following provision may in substance be included in a variable life insurance policy or related form delivered or issued for delivery in the District:

(a) An exclusion for suicide within two (2) years of the issue date of the policy provided, however, that to the extent of the increased death benefits only, the policy may provide an exclusion for suicide within two years of any increase in death benefits which result from an application of the owner subsequent to the policy issue date;

(b) Incidental insurance benefits may be offered on a fixed or variable basis;

(c) Policies issued on a participating basis shall offer to pay dividend amounts in cash. In addition, such policies may offer the following dividend options:

(1) The amount of the dividend may be credited against premium payments;

(2) The amount of the dividend may be applied to provide paid-up amounts of additional fixed or variable benefit whole life insurance;

(3) The amount of the dividend may be deposited in the general account at a specified minimum rate of interest;

(4) The amount of the dividend may be applied to provide paid-up amounts of fixed benefit one-year term insurance;

(5) The amount of the dividend may be deposited as a variable deposit in a separate account.

(d) A provision allowing the policyholder to elect in writing in the application for the policy or thereafter an automatic premium loan on a basis not less favorable than that required of policy loans under Section 2713, except that a restriction that no more than two consecutive premiums can be paid under this provision may be imposed;

(e) A provision allowing the policyholder to make partial withdrawals;

(f) Any other policy provision approved by the Commissioner.

History

• SOURCE: Final Rulemaking published at 42 DCR 1047 (February 24, 1995).

26-A DCMR § 2715 RESERVE LIABILITIES FOR VARIABLE LIFE INSURANCE

2715.1 Reserve liabilities for variable life insurance policies shall be established under the Standard Valuation Law in accordance with actuarial procedures that recognize the variable nature of the benefits provided and any mortality guarantees.

History

• SOURCE: Final Rulemaking published at 42 DCR 1047 (February 24, 1995).

26-A DCMR § 2716 RESERVE LIABILITIES FOR THE GUARANTEED MINIMUM DEATH BENEFIT

2716.1 Reserve liabilities for the variable life insurance policies shall be established under the Standard Valuation Law, District of Columbia Code, Section 35-501 et seq. in accordance with actuarial procedures that recognize the variable nature of the benefits provided and any mortality guarantees.

2716.2 Reserve liabilities for the guaranteed minimum death benefit shall be the reserve needed to provide for the contingency of death occurring when the guaranteed minimum death benefit exceeds the death benefit that would be paid in the absence of the guarantee, and shall be maintained in the general account of the insurer and shall not be less than the greater of the following minimum reserves:

(a) The aggregate total of the term costs, if any, covering a period of one full year from the valuation date of the guarantee on each variable life insurance contract, assuming an immediate one-third depreciation in the current value of the assets in the separate account followed by a net investment return equal to the assumed investment rate;

(b) The aggregate total of the "attained age level" reserves on each variable life insurance contract. The "attained age level" reserve on each variable life insurance contract shall not be less than zero and shall equal the "residue," as described in Paragraph (1) below, of the prior year's "attained age level" reserve on the contract, with any such "residue," increased or decreased by a payment computed on an attained age basis as described in Paragraph (2) below.

(1) The "residue" of the prior year's "attained age level" reserve on each variable life insurance contract shall not be less than zero and shall be determined by adding interest at the valuation interest rate to such prior year's reserve, deducting the tabular claims based on the "excess," if any, of the guaranteed minimum death benefit over the death benefit that would be payable in the absence of such guarantee, and dividing the net result by the tabular probability of survival. The "excess" referred to in the preceding sentence shall be based on the actual level of death benefits that would have been in effect during the preceding year in the absence of the guarantee, taking appropriate account of the reserve assumptions regarding the distribution of death claim payments over the year.

(2) The payment referred to in Section 2716.2(2) of this chapter shall be computed so that the present value of a level payment of that amount each year over the future period for which charges for this risk will be collected under the contract, is equal to (A) minus (B) minus (C), where (A) is the present value of the future guaranteed minimum death benefits, (B) is the present value of the future death benefits that would be payable in the absence of such guarantee, and (C) is any "residue," as described in Paragraph (1), of the prior year's "attained age level" reserve on such variable life insurance contract. If no future charges for this risk will be collected under the contract, the payment shall equal (A) minus (B) minus (C). The amounts of the future death benefits referred to in (B) shall be computed assuming a net investment return of the separate account which may differ from the assumed investment rate and/or the valuation interest but in no event may exceed the maximum interest rate permitted for the valuation of life insurance contracts.

(c) The valuation interest rate and mortality table used in computing the two minimum reserves described in Subsection (A) and (B) above shall conform to permissible standards for the valuation of life insurance contracts. In determining such minimum reserves, the company may employ suitable approximations and estimates, including but not limited to groupings and averages.

History

• SOURCE: Final Rulemaking published at 42 DCR 1047(February 24, 1995).

26-A DCMR § 2717 INCIDENTAL INSURANCE BENEFIT

2717.1 Reserve liabilities for all fixed incidental insurance benefits and any guarantees associated with variable accidental insurance benefits shall be maintained in the general account and reserve liabilities for all variable aspects of the variable incidental insurance benefits shall be maintained in a separate account, amounts determined in accordance with the actuarial procedures appropriate to such benefits.

History

• SOURCE: Final Rulemaking published at 42 DCR 1047 (February 24, 1995).

26-A DCMR § 2718 SEPARATE ACCOUNTS: ESTABLISHMENT AND ADMINISTRATION

2718.1 The following requirements apply to the establishment and administration of variable life insurance separate accounts by any domestic insurer:

2718.2 Any domestic insurer issuing variable life insurance shall establish one or more separate accounts accordance with the Insurance Laws of the District.

2718.3 If no law or other regulation provides for the custody of separate account assets and if such insurer is not the custodian of such separate account assets, all contracts for custody of such assets shall be in writing and the Commissioner shall have authority to review and approve of both the terms of any such contract and the proposed custodian prior to the transfer of custody.

2718.4 Such insurer shall not without prior written approval of the Commissioner employ in any material in connection with the handling of separate account assets any person who:

(a) Within the last ten (10) years has been convicted of any felony or a misdemeanor arising out of such person's conduct involving embezzlement, fraudulent conversion, or misappropriation of funds or securities or involving violation of Sections 1341, 1342 or 1343 of Title 18, United States Code; or

(b) Within the last ten (10) years has been found by any state regulatory to have violated or has acknowledged violation of any provision of any state insurance law involving fraud, deceit or knowing misrepresentation; or

(c) Within the last ten (10) years has been found by federal or state regulatory authorities to have violated or has acknowledged violation of any provision of federal or state securities laws involving fraud, deceit or knowing misrepresentation.

2718.5 All persons with access to the cash, securities, or other assets of the separate account shall be under bond in the amount of not less than the greater of $500,000 or 25 percent of the assets to which the person has access, but the bond need not exceed 5 million dollars.

2718.6 The assets of such separate accounts shall be valued at least as often as variable benefits are determined but in any event at least monthly.

History

• SOURCE: Final Rulemaking published at 42 DCR 1047 (February 24, 1995).

26-A DCMR § 2719 [RESERVED]

History

• SOURCE: Final Rulemaking published at 42 DCR 1047 (February 24, 1995).

26-A DCMR § 2720 AMOUNTS IN THE SEPARATE ACCOUNTS

2720.1 The insurer shall maintain in each separate account assets with a value at least equal to the greater of the valuation reserves for the variable portion of the variable life insurance policies or the benefit base for such policies.

History

• SOURCE: Final Rulemaking published at 42 DCR 1047 (February 24, 1995).

26-A DCMR § 2721 INVESTMENTS BY THE SEPARATE ACCOUNT

2721.1 A sale, exchange, or other transfer of assets may not be made by an insurer or any of its affiliates between any of its separate accounts or between any other investment account and one or more of its separate accounts unless:

(a) In case of transfer into a separate account, such transfer is made solely to establish the account or to support the operation of the policies with respect to the separate account to which the transfer is made; and

(b) Such transfer, whether into or from a separate account, is made by a transfer of cash; but other assets may be transferred if approved by the Commissioner in advance.

2721.2 Assets allocated to variable life insurance separate account shall have sufficient net investment income and readily marketable assets to meet anticipated withdrawals under policies funded by the account.

History

• SOURCE: Final Rulemaking published at 42 DCR 1047 (February 24, 1995).

26-A DCMR § 2722 LIMITATIONS ON OWNERSHIP

2722.1 A variable life insurance separate account shall not purchase or otherwise acquire the securities of any issuer, other than securities issued or guaranteed as to principal and interest by the United States, if immediately after such purchase or acquisition the value of such investment, together with prior investments of such separate account in such security valued as required by these regulations, would exceed 10 percent of the value of the assets of the separate account. The Commissioner may waive this limitation in writing if he believes such waiver will not render the operation of the separate account hazardous to the public or the policyholders in the District.

2722.2 No separate account may not purchase or otherwise acquire the voting securities of any issuer if as a result of such acquisition the insurer and its separate accounts in the aggregate, will own more than ten percent (10%) of the total issued and outstanding voting securities of such issuer. The Commissioner may waive this limitation in writing if he believes such waiver will not render the operation of the separate account hazardous to the public or the policyholders in the District or jeopardize the independent operation of the issuer of such securities.

2722.3 The percentage limitation specified in Subsection 2722.1 of this section shall not be construed to preclude the investment of the assets of separate accounts in shares of investment companies registered pursuant to the Investment Company Act of 1940 if the investments and investment policies of such investment companies comply substantially with the provisions of Section 2721 of this chapter and other applicable portions of this regulation.

History

• SOURCE: Final Rulemaking published at 42 DCR 1047 (February 24, 1995).

26-A DCMR § 2723 VALUATION OF SEPARATE ACCOUNT ASSETS

2723.1 Investments of the separate account shall be valued at their market value on the date of valuation, or at amortized cost if it approximates market value.

History

• SOURCE: Final Rulemaking published at 42 DCR 1047 (February 24, 1995).

26-A DCMR § 2724 SEPARATE ACCOUNT INVESTMENT POLICY

2724.1 The investment policy of a separate account operated by a domestic insurer shall not be changed without first filing such change with the Insurance Commissioner.

2724.2 Any change filed pursuant to this section shall be effective sixty days after the date it was filed with the Commissioner, unless the Commissioner notifies the insurer before the end of such sixty-day period of his disapproval of the proposed change. At any time the Commissioner may, after notice and public hearing, disapprove any change that has become effective pursuant to this section.

2724.3 The Commissioner may disapprove the change if he determines that the change would be detrimental to the interests of the policyholders participating in such separate accounts.

History

• SOURCE: Final Rulemaking published at 42 DCR 1047 (February 24, 1995).

26-A DCMR § 2725 CHARGES AGAINST SEPARATE ACCOUNT

2725.1 The insurer must disclose in writing, prior to or contemporaneously with delivery of the policy, all charges that may be made against the separate account, including, but not limited to, the following:

(a) Taxes or reserves for taxes attributable to investment gains and income of the separate account;

(b) Actual cost of reasonable brokerage fees and similar direct acquisition and sale costs incurred in the purchase or sale of separate account assets;

(c) Actuarially determined costs of insurance (tabular costs) and the release of separate account liabilities;

(d) Charges for administrative expenses and investment management expenses, including internal costs attributable to the investment management of assets of the separate account;

(e) A charge, at a rate specified in the policy, for mortality and expense guarantees;

(f) Any amounts in excess of those required to be held in the separate accounts;

(g) Charges for incidental insurance benefits.

History

• SOURCE: Final Rulemaking published at 42 DCR 1047 (February 24, 1995).

26-A DCMR § 2726 STANDARDS OF CONDUCT

2726.1 An insurer seeking approval to enter into the variable life insurance business in the District shall adopt by formal action of its Board of Directors a written statement specifying the Standards of Conduct of the insurer, its officers, directors, employees, and affiliates with respect to investments of separate accounts and variable life insurance operations. These Standards of Conduct shall be binding on the insurer and those to whom it refers. A code or codes of ethics meeting the requirements of Section 17j under the Investment Company Act of 1940, Pub. L. 101-550, Section Title 1, Section 104(c)(1990) and applicable rules and regulations thereunder shall satisfy the provisions of this Section.

History

• SOURCE: Final Rulemaking published at 42 DCR 1047(February 24, 1995).

26-A DCMR § 2727 CONFLICTS OF INTEREST

2727.1 Rules under any provision of the Insurance Laws of the District or any regulation applicable to the officers and directors of insurance companies with respect to conflicts of interest shall also apply to members of any separate account's committee or other similar body.

History

• SOURCE: Final Rulemaking published at 42 DCR 1047(February 24, 1995).

26-A DCMR § 2728 INVESTMENT ADVISORY SERVICES TO A SEPARATE ACCOUNT

2728.1 An insurer shall not enter into a contract under which any person undertakes, for a fee, to regularly furnish investment advice to such insurer with respect to its separate accounts maintained for variable life insurance policies unless:

(a) The person providing such advice is registered as an investment adviser under the Investment Advice Act of 1940; or

(b) The person providing such advice is an investment manager under the Employee Retirement Income Security Act of 1974, Pub. L. 103-66, Title IV, Subtitle D, Section 4301(a)-(c)(1993), with respect to the assets of each employee benefit plan allocated to the separate account; or

(c) The insurer has filed with the Commissioner and continues to file annually the following information and statements concerning the proposed advisor:

(1) The name and form of organization, state of organization, and its principal place of business;

(2) The names and addresses of its partners, officers, directors and persons performing similar functions or, if such an investment advisory be an individual, of such individual;

(3) A written Standard of Conduct complying in substance with the requirements of Section 2726 of this chapter which has been adopted by the investment advisor and is applicable to the investment advisor, its officers, directors, and affiliates;

(4) A statement provided by the proposed advisor as to whether the advisor or any person associated therewith:

(A) Has been convicted within ten (10) years of any felony or misdemeanor arising out of such person's conduct as an employee, salesman, officer or director of an insurance company, a banker, an insurance agent, a securities broker or an investment advisor involving embezzlement, fraudulent conversion, or misappropriation of funds or securities, or involving the violation of Sections 1341, 1342, or 1343 of Title 18 of United States Codes;

(B) Has been permanently or temporarily enjoined by an order, judgment or decree of any court of competent jurisdiction from acting as an investment advisor, underwriter, broker or dealer, or as an affiliated person or as an employee of any investment company, bank or insurance company, or from engaging in or continuing any conduct or practice in connection with any such activity;

(C) Has been found by federal or state regulatory authorities to have willfully

violated or have acknowledged willful violation of any provision of federal or state securities laws or District insurance laws or of any rule or regulation under any such laws; or

(D) Has been censured, denied an investment advisor registration, had a registration as an investment advisor revoked or suspended, or been barred or suspended from being associated with an investment advisor by order of federal or District regulatory authorities; and

(d) Such investment advisory contract shall be in writing and provide that it may be terminated by the insurer without penalty to the insurer or the separate account upon no more than sixty (60) days' written notice to the investment advisor.

2728.2 The Commissioner may, after notice and opportunity for hearing, by order require such investment advisory contract to be terminated if he deems continued operation thereunder to be hazardous to the public or the insurer's policyholders.

History

• SOURCE: Final Rulemaking published at 42 DCR 1047 (February 24, 1995).

26-A DCMR § 2729 INFORMATION FURNISHED TO APPLICANTS

2729.1 An insurer delivering or issuing for delivery in the District any variable life insurance policies shall deliver to the applicant for such policy, and obtain a written acknowledgement of receipt from such applicant coincident with or prior to the execution of the application, the following information. The requirements of this chapter shall be deemed to have been satisfied to the extent that a disclosure containing information required by this chapter is delivered, either in the form of (1) a prospectus included in the requirements of the Securities Act of 1933, Pub. L. 101-429, Title I, Section 101, 102 (1990) and which was declared effective by the Securities Exchange Commission; or (2) all information and reports required by the Employee Retirement Income Security Act of 1974 if the policies are exempted from the registration requirements of the Securities Act of 1933 pursuant to Section 3(a)(2) thereof.

2729.2 A summary explanation, in non-technical terms, of the principal features of the policy, including a description of the manner in which the variable benefits will reflect the investment experience of the separate account and the factors which affect such variation. Such explanation must include notices of the provision required by Sections 2712.1 (a)(5) and 2711.1(f) of this chapter;

2729.3 A statement of the investment policy of the separate account, including:

(a) A description of the investment objectives intended for the separate account and the principal types of investments intended to be made; and

(b) Any restrictions or limitations on the manner in which the operations of the separate account are intended to be conducted;

2729.4 A statement of the net investment return of the separate account for each of the last ten (10) years or such lesser period as the separate account has been in existence.

2729.5 A statement of the charges levied against the separate account during the previous year.

2729.6 A summary of the method to be used in valuing assets held by the separate account.

2729.7 A summary of the federal income tax aspects of the policy applicable to the insured, the policyholder, and the beneficiary.

2729.8 If the applicant is furnished illustrations of benefits payable under the variable life insurance contract, these illustrations shall be prepared by the insurer and may not include projections of past investment experience into the future or attempted predictions of future investments experience, provided that nothing contained herein prohibits use of hypothetical assumed rates of return to illustrate possible levels of benefits if it is made clear that such assumed rates are hypothetical only.

History

• SOURCE: Final Rulemaking published at 42 DCR 1047(February 24, 1995).

26-A DCMR § 2730 APPLICATIONS

2730.1 The application for a variable life insurance policy shall contain:

(a) A prominent statement that the death benefit may be variable or fixed under specified conditions;

(b) A prominent statement that cash values may increase or decrease in accordance with the experience of the separate account (subject to any specified minimum guarantees);

(c) Questions designed to elicit information which enables the insurer to determine the suitability of variable life insurance for the applicant.

History

• SOURCE: Final Rulemaking published at 42 DCR 1047(February 24, 1995).

26-A DCMR § 2731 REPORTS TO POLICYHOLDERS

2731.1 Any insurer delivering or issuing for delivery in the District any variable life insurance policies shall mail to each variable life insurance policyholder at this or her last known address the following reports:

(a) Within thirty (30) days after each anniversary of the policy, a statement or statements of the cash surrender value, death benefit, any partial withdrawal or policy loan, any interest charge, any optional payments allowed pursuant to Section 2713 under the policy computed as of the policy anniversary date. Provided, however, that such statement may be furnished within thirty (30) days after a specified date in each policy year so long as the information contained therein is computed as of a date not more than sixty (60) days prior to the mailing of such notice. This statement shall state that, in accordance with the investment experience of the separate account, the cash values and the variable death benefit may increase or decrease, and shall prominently identify any value described therein which may be recomputed prior to the next statement required by this section. If the policy guarantees that the variable death benefit on the next policy anniversary date will not be less than the variable death benefit in such statement, the statement shall be modified to so indicate.

(b) For flexible premium policies the report must contain a reconciliation of the change since the previous report in cash value and cash surrender value, if different, because of payments made (less deductions for expense charges), withdrawals, investment experience, insurance charges, and any other charges made against the cash value. In addition, the report must show the projected cash value and cash surrender, if different, as of one year from the end of the period covered by the report assuming that: (i) planned periodic premiums, if any, are paid as scheduled; (ii) guaranteed costs of insurance are deducted; and (iii) the net return is equal to the guaranteed rate or, in the absence of a guaranteed rate, is not greater than zero. If the projected value is less than zero a warning message must be included that states that the policy may be in danger of terminating without value in the next 12 months unless additional premium is paid.

(c) Annually, a statement or statements including:

(1) A summary of the financial statement of the separate account based on the annual statement last filed with the Commissioner;

(2) The net investment return of the separate account for the last year and, for each year after the first, a comparison of the investment rate of the separate account during the last year with the investment rate during prior years, up to a total of not less than five (5) years when available;

(3) A list of investments held by the separate account as of a date not earlier than the end of the last year for which an annual statement was filed with the Commissioner;

(4) Any charges levied against the separate account during the previous year.

(5) A statement of any change, since the last report, in the investment objective and orientation of the separate account, in any investment restriction or material quantitative or qualitative investment requirement applicable to the separate account or in the investment advisor of the separate account;

(d) For flexible premium policies, a report must be sent to the policyholder if the amounts available under the policy on any policy processing day to pay the charges authorized by the policy are less than the amount necessary to keep the policy in force until the next following policy processing day. The report must indicate the minimum payment required under the terms of the policy to keep it in force and the length of the grace period for payment of such amount.

History

• SOURCE: Final Rulemaking published at 42 DCR 1047 (February 24, 1995).

26-A DCMR § 2732 FOREIGN COMPANIES

2732.1 If the law or regulation in the place of domicile of a foreign company provides a degree of protection to the policyholders and the public which is substantially similar to that provided by these regulations, the Commissioner, to the extent deemed appropriate by him in his discretion, may consider compliance with such law or regulation as compliance with these regulations.

History

• SOURCE: Final Rulemaking published at 42 DCR 1047 (February 24, 1995).

26-A DCMR § 2733 QUALIFICATIONS OF AGENTS FOR THE SALE OF VARIABLE LIFE INSURANCE

2733.1 No person may sell or offer for sale in the District any variable life insurance policy unless such person is an agent and has filed with the Commissioner, in a form satisfactory to the Commissioner, evidence that such person holds any license or authorization which may be required for the solicitation or sale of variable life insurance.

2733.2 Any examination administered by the Department for the purpose of determining the eligibility of any person for licensing as an agent shall, after the effective date of this regulation, include such questions concerning the history, purpose, regulation, and sale of variable life insurance as the Commissioner deems appropriate.

History

• SOURCE: Final Rulemaking published at 42 DCR 1047 (February 24, 1995).

26-A DCMR § 2734 REPORTS OF DISCIPLINARY ACTIONS

2734.1 Any person qualified in the District under this chapter to sell or offer to sell variable life insurance

(a) Any suspension or revocation of his agent's license in any other state or territory of the United States;

(b) The imposition of any disciplinary sanction, including suspension or expulsion from membership, suspension, or revocation of or denial of registration, imposed upon him by any national securities exchange, or national securities association, or any federal, state, or territorial agency with jurisdiction over securities or variable life insurance;

(c) Any judgment or injunction entered against him on the basis of conduct deemed to have involved fraud, deceit, misrepresentation, or violation of any insurance or securities law, or regulation.

History

• SOURCE: Final Rulemaking published at 42 DCR 1047 (February 24, 1995).

26-A DCMR § 2735 REFUSAL TO QUALIFY AGENT TO SELL VARIABLE LIFE INSURANCE: SUSPENSION, REVOCATION, OR NONRENEWAL OF QUALIFICATION

2735.1 The Commissioner may reject any application or suspend or revoke or refuse to renew any agent's qualification under this chapter to sell or offer to sell variable life insurance upon any ground that would bar such applicant or such agent from being licensed to sell other life insurance contracts in the District. The rules governing any proceeding relating to the suspension or revocation of an agent's license shall also govern any proceeding for suspension or revocation of an agent's qualification to sell or offer to sell variable life insurance.

History

• SOURCE: Final Rulemaking published at 42 DCR 1047 (February 24, 1995).

26-A DCMR § 2736 SEPARABILITY ARTICLE

2736.1 If any provision of this regulation or the application thereof to any person or circumstances is for any reason held to be invalid, the remainder of the regulation and the application of such provision to other persons or circumstances shall not be affected thereby.

History

• SOURCE: Final Rulemaking published at 42 DCR 1047 (February 24, 1995).

26-A DCMR § 2799 DEFINITIONS

2799.1 As used in this chapter, the following words and phrases shall have the meanings ascribed:

Affiliate of an insurer - any person, directly or indirectly, controlling, controlled by, or under common control with such insurer; any person who regularly furnishes investment advice to such insurer with respect to its separate accounts for which a specific fee or commission is charged; or any director, officer, partner or employee of such insurer, controlling or controlled person, or person providing investment advice or any member of the immediate family of such person.

Agent - any person, corporation, partnership or other legal entity which is licensed by the District as a life insurance agent.

Assumed investment rate - the rate of investment return which would be required to be credited to a variable life insurance policy, after deduction of charges for taxes, investment expenses and mortality and expense guarantees to maintain the variable death benefit equal at all times to the amount of death benefit, other than incidental insurance benefits, which would be payable under the plan of insurance if the death benefit did not vary according to the investment experience of the separate account.

Benefit base - the amount to which the net investment return is applied.

Commissioner - the Insurance Commissioner of the District of Columbia.

Control - (including the terms "controlling, " "controlled by" and "under common control with") the possession, direct or indirect of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract other than a commercial contract for goods or non-management services, or otherwise, unless the power is the result of an official position with or corporate office held by the person. Control shall be presumed to exist if any person, directly or indirectly, owns, controls, holds with the power to vote, or holds proxies representing more than ten percent (10%) of the voting securities of any other person. This presumption may be rebutted by a showing made to the satisfaction of the Commissioner that control does not exist in fact. The Commissioner may determine, after furnishing to all persons in interest notice and opportunity to be heard and making specific findings of fact to support such determination, that control exists in fact, notwithstanding the absence of a presumption to that effect.

Flexible premium policy - any variable life insurance policy other than a scheduled premium policy.

General account - all assets of the insurer other than assets in separate accounts established pursuant to Section 639 of the D.C. Code pursuant to the corresponding section of the insurance laws of the state of domicile of a foreign or alien insurer, whether or not for variable life insurance.

Incidental insurance benefit - all insurance benefits in a variable life insurance policy, other than the variable death benefit and the minimum death benefit, including but not limited to accidental death and dismemberment benefits, disability benefits, guaranteed insurability options, family income or term riders.

May - is permissive.

Minimum death benefit - the amount of the guaranteed death benefit, other than incidental insurance benefits, payable under a variable life insurance policy regardless of the investment performance of the separate account.

Net Investment Return - the rate of investment return in a separate account to be applied to the benefit base.

Person - an individual, corporation, partnership, association, trust or fund.

Policy processing day - the day on which charges authorized in the policy are deducted from the policy's cash value.

Scheduled premium policy - any variable life insurance policy under which both the amount and timing of premium payments are fixed by the insurer.

Separate account - a separate account established pursuant to the Insurance Laws of the District or pursuant to the corresponding Section of the Insurance Laws of the state of domicile of a foreign or alien insurer.

Shall - is mandatory.

Variable death benefit - the amount of the death benefit, other than incidental insurance benefits, payable under a variable life insurance policy dependent on the investment performance of the separate account, which the insurer would have to pay in the absence of any minimum death benefit.

Variable life insurance policy - any individual policy which provides for life insurance the amount or duration of which varies according to the investment experience of any separate account or accounts established and maintained by the insurer as to such policy, pursuant to the Insurance Laws of the District or pursuant to the corresponding section of the insurance laws of the state of domicile of a foreign or alien insurer.

History

• SOURCE: Final Rulemaking published at 42 DCR 1047 (February 24, 1995).

26-A28 CREDIT FOR REINSURANCE AND LIFE INSURANCE RESERVE FINANCING

26-A DCMR § 2800 [REPEALED]

History

• SOURCE: Final Rulemaking published at 43 DCR 2318 (May 3, 1996); as amended by Final Rulemaking published at 68 DCR 6518 (June 25, 2021). District of Columbia Municipal Regulations Insurance 26-A DCMR § 2800

26-A DCMR § 2801 CREDIT FOR REINSURANCE - REINSURER LICENSED IN THE DISTRICT OF COLUMBIA

2801.1 Pursuant to section 2(a) (1)of the act, D.C. Code section 35-3301(a) (1),the Commissioner shall allow credit for reinsurance ceded by a domestic insurer to assuming insurers which were licensed in the District of Columbia as of the date of the ceding insurer's statutory financial statement.

History

• SOURCE: Final Rulemaking published at 43 DCR 2318 (May 3, 1996).

26-A DCMR § 2802 CREDIT FOR REINSURANCE – ACCREDITED REINSURERS

2802.1 Pursuant to section 2(a)(2) of the act, D.C. Code section 35-3301(a)(2), the Commissioner shall allow credit for reinsurance ceded by a domestic insurer to an assuming insurer which is accredited as a reinsurer in the District of Columbia as of the date of the ceding insurer's statutory financial statement. An accredited reinsurer is one which:

(a) Files a properly executed Form AR-1 set forth in attached Appendix 28-1 to chapter as evidence of its submission to the District of Columbia's jurisdiction and to the District of Columbia's authority to examine its books and records; and

(b) Files with the Commissioner a certified copy of a letter or a certificate of authority or of compliance as evidence that it is licensed to transact insurance or reinsurance in at least one state, or, in the case of a United States branch of an alien assuming insurer, is entered through and licensed to transact insurance or reinsurance in at least one state; and

(c) Files annually with the Commissioner a copy of its annual statement filed with the insurance department of its state of domicile or, in the case of an alien assuming insurer, with the state through which it is entered and in which it is licensed to transact insurance or reinsurance, and a copy of its most recent audited financial statement; and

(d) Maintains a surplus as regards policyholders in an amount not less than $20,000,000 or obtain the affirmative approval of the Commissioner upon a finding that it has adequate financial capacity to meet its reinsurance obligations and is otherwise qualified to assume reinsurance from domestic insurers.

2802.2 If the Commissioner determines that the assuming insurer has failed to meet or maintain any of these qualifications, he may upon written notice and opportunity for hearing, suspend or revoke the accreditation. Credit shall not be allowed a domestic ceding insurer under this section with respect to reinsurance ceded after March 3, 1993 if the assuming insurer's accreditation has been denied or revoked by the Commissioner after notice and hearing, or if the reinsurance was ceded while the assuming insurer’s accreditation was under suspension by the Commissioner.

History

• SOURCE: Final Rulemaking published at 43 DCR 2318 (May 3, 1996); as amended by Final Rulemaking published at 68 DCR 6518 (June 25, 2021). District of Columbia Municipal Regulations Insurance 26-A DCMR § 2802

26-A DCMR § 2803 CREDIT FOR REINSURANCE - REINSURER DOMICILED AND LICENSED IN ANOTHER STATE

2803.1 Pursuant to section 2(a)(3)(A) and (B) of the act, D.C. Code section 35-3301(a)(3)(A) and (B) the Commissioner shall allow credit for reinsurance ceded by a domestic insurer to an assuming insurer which as of the date of the ceding insurer's statutory financial statement:

(a) Is domiciled and licensed in (or, in the case of a United States branch of an alien assuming insurer, is entered through and licensed in) a state which employs standards regarding credit for reinsurance substantially similar to those applicable under the Act and this regulation;

(b) Maintains a surplus as regards policyholders in an amount not less than $20,000,000; and

(c) Files a properly executed Form AR-1 with the Commissioner as evidence of its submission to the District of Columbia's authority to examine its books and records.

2803.2 The provisions of this section relating to surplus as regards policyholders shall not apply to reinsurance ceded and assumed pursuant to pooling arrangements among insurers in the same holding company system. As used in this section, "substantially similar" standards means credit for reinsurance standards which the Commissioner determines equal or exceed the standards of the act and this regulation.

History

• SOURCE: Final Rulemaking published at 43 DCR 2318 (May 3, 1996).

26-A DCMR § 2804 CREDIT FOR REINSURANCE - REINSURANCE MAINTAINING TRUST FUNDS

2804.1 Pursuant to section 4 of the act, D.C. Code section 35-3301(a)(4), the Commissioner shall allow credit for reinsurance ceded by a domestic insurer to an assuming insurer which, as of the date of the ceding insurer's statutory financial statement maintains a trust fund in an amount prescribed below in a qualified United States financial institution as defined in section 4(b) of the act, D.C. Code section 35-3303(b), for the payment of the valid claims of its United States policyholders and ceding insurers, their assigns and successors in interest. The assuming insurer shall report annually to the Commissioner substantially the same information as that required to be reported on the NAIC annual statement form by licensed insurers, to enable the Commissioner to determine the sufficiency of the trust fund.

2804.2 The following requirements apply to the following categories of assuming insurer:

(a) The trust fund for a single assuming insurer shall consist of funds in trust in an amount not less than the assuming insurer's liabilities attributable to business written in the United States, and in addition, a trusteed surplus of not less than $20,000,000, except as provided in paragraph (d) of this subchapter.

(b) The trust fund for a group of individual unincorporated underwriters shall consist of funds in trust in an amount not less than the group's aggregate liabilities attributable to business written in the United States and, in addition, the group shall maintain a trusteed surplus of which $100,000,000 shall be held jointly for the benefit of the United States ceding insurers of any member of the group. The group shall make available to the Commissioner annual certifications by the group's domiciliary regulator and its independent public accountants of the solvency of each underwriter member of the group.

(c) The trust fund for a group of incorporated insurers under common administration, whose members possess aggregate policyholders surplus of $10,000,000,000 (calculated and reported in substantially the same manner as prescribed by the annual statement instructions and Accounting Practices and Procedures Manual of the National Association of Insurance Commissioners) and which has continuously transacted an insurance business outside the United States for at least three (3) years immediately prior to making application for accreditation, shall consist of funds in trust in an amount not less than the assuming insurers' liabilities attributable to business ceded by United States ceding insurers to any members of the group pursuant to reinsurance contracts issued in the name of such group and, in addition, the group shall maintain a joint trusteed surplus of which $100,000,000 shall be held jointly for the benefit of United States ceding insurers of any member of the group. The group shall file a properly executed Form AR-1 as evidence of the submission to the District's authority to examine the books and records of any of its members and shall certify that any member examined will bear the expense of any such examination. The group shall make available to the Commissioner annual certifications by the members' domiciliary regulators and their independent public accountants of the solvency of each member of the group.

(d) At any time after the assuming insurer has permanently discontinued underwriting new business secured by the trust for at least three full years, the Commissioner with principal regulatory oversight of the trust may authorize a reduction in the required trusteed surplus, but only after a finding, based on an assessment of the risk, that the new required surplus level is adequate for the protection of U.S. ceding insurers, policyholders and claimants in light of reasonably foreseeable adverse loss development. The risk assessment may involve an actuarial review, including an independent analysis of reserves and cash flows, and shall consider all material risk factors, including when applicable the lines of business involved, the stability of the incurred loss estimates and the effect of the surplus requirements on the assuming insurer’s liquidity or solvency. The minimum required trusteed surplus may not be reduced to an amount less than thirty percent (30%) of the assuming insurer’s liabilities attributable to reinsurance ceded by U.S. ceding insurers covered by the trust.

2804.3 The trust shall be established in a form approved by the Commissioner and complying with Section 2 of the act, D.C. Code section 35-3301, and this section. The trust instrument shall provide that:

(a) Contested claims shall be valid and enforceable out of funds in trust to the extent remaining unsatisfied thirty (30) days after entry of the final order of any court of competent jurisdiction in the United States.

(b) Legal title to the assets of the trust shall be vested in the trustee for the benefit of the grantor's United States policyholders and ceding insurers, their assigns and successors in interest.

(c) The trust shall be subject to examination as determined by the Commissioner.

(d) The trust shall remain in effect for as long as the assuming insurer, or any member or former member of a group of insurers, shall have outstanding obligations under reinsurance agreements subject to the trust.

(e) No later than February 28 of each year the trustees of the trust shall report to the Commissioner in writing setting forth the balance in the trust and listing the trust's investments at the preceding year end, and shall certify the date of termination of the trust, if so planned, or certify that the trust shall not expire prior to the next following December 31.

(f) No amendment to the trust shall be effective unless reviewed and approved in advance by the Commissioner.

History

• SOURCE: Final Rulemaking published at 43 DCR 2318 (May 3, 1996); as amended by Final Rulemaking published at 68 DCR 6518 (June 25, 2021). District of Columbia Municipal Regulations Insurance 26-A DCMR § 2804

26-A DCMR § 2805 CREDIT FOR REINSURANCE – CERTIFIED REINSURERS

2805.1 Pursuant to Section 2 of the Law on Credit for Reinsurance Act of 1993, D.C. Code § 31-501, the Commissioner shall allow credit for reinsurance ceded by a domestic insurer to an assuming insurer that has been certified as a reinsurer in the District of Columbia at all times for which statutory financial statement credit for reinsurance is claimed under this section. The credit allowed shall be based upon the security held by or on behalf of the ceding insurer in accordance with a rating assigned to the certified reinsurer by the Commissioner. The security shall be in a form consistent with Sections 2808, 2809, and 2810 of this Chapter. The amount of security required in order for full credit to be allowed shall correspond with the following requirements:

Ratings

Security Required

Secure – 1

0%

Secure – 2

10%

Secure – 3

20%

Secure – 4

50%

Secure – 5

75%

Vulnerable – 6

100%

2805.2 Affiliated reinsurance transactions shall receive the same opportunity for reduced security requirements as all other reinsurance transactions.

2805.3 The Commissioner shall require the certified reinsurer to post one hundred percent (100%), for the benefit of the ceding insurer or its estate, security upon the entry of an order of rehabilitation, liquidation or conservation against the ceding insurer.

2805.4 In order to facilitate the prompt payment of claims, a certified reinsurer shall not be required to post security for catastrophe recoverables for a period of one year from the date of the first instance of a liability reserve entry by the ceding company as a result of a loss from a catastrophic occurrence as recognized by the Commissioner. The one-year deferral period is contingent upon the certified reinsurer continuing to pay claims in a timely manner. Reinsurance recoverables for the deferral may include the following lines of business as reported on the National Association of Insurance Commissioners (NAIC) annual financial statement related specifically to the catastrophic occurrence:

Line 1: Fire;

Line 2: Allied Lines;

Line 3: Farmowners multiple peril;

Line 4: Homeowners multiple peril;

Line 5: Commercial multiple peril;

Line 9: Inland Marine;

Line 12: Earthquake; and

Line 21: Auto physical damage.

2805.5 Credit for reinsurance under this section shall apply only to reinsurance

contracts entered into or renewed on or after the effective date of the certification of the assuming insurer. Any reinsurance contract entered into prior to the effective date of the certification of the assuming insurer that is subsequently amended after the effective date of the certification of the assuming insurer, or a new reinsurance contract, covering any risk for which collateral was provided previously, shall only be subject to this section with respect to losses incurred and reserves reported from and after the effective date of the amendment or new contract.

2805.6 Nothing in this section shall prohibit the parties to a reinsurance agreement from agreeing to provisions establishing security requirements that exceed the minimum security requirements established for certified reinsurers under this section.

2805.7 The Commissioner shall post notice on the Department of Insurance, Securities and Banking website promptly upon receipt of any application for certification, including instructions on how members of the public may respond to the application. The Commissioner may not take final action on the application until at least thirty (30) days after posting the notice required by this paragraph.

2805.8 Unless otherwise prohibited by law, the Commissioner shall issue written notice to an assuming insurer that has made application and been approved as a certified reinsurer. Included in such notice shall be the rating assigned the certified reinsurer in accordance with Subsection 2805.1 of this section. The Commissioner shall publish a list of all certified reinsurers and their ratings.

2805.9 In order to be eligible for certification, the assuming insurer shall meet the

following requirements:

The assuming insurer must be domiciled and licensed to transact insurance or reinsurance in a qualified jurisdiction, as determined by the Commissioner pursuant to Subsection 2805.20 of this section;

The assuming insurer must maintain capital and surplus, or its equivalent, of no less than $250,000,000 calculated in accordance with Subsection 2805.11(h) of this section. This requirement may also be satisfied by an association including incorporated and individual unincorporated underwriters having minimum capital and surplus equivalents (net of liabilities) of at least $250,000,000 and a central fund containing a balance of at least $250,000,000; and

The assuming insurer must maintain financial strength ratings from at least two (2) rating agencies that the Commissioner deems acceptable. These ratings shall be based on interactive communication between the rating agency and the assuming insurer and shall not be based solely on publicly available information. These financial strength ratings will be one factor used by the Commissioner in determining the rating that is assigned to the assuming insurer. Acceptable rating agencies include the following:

Standard & Poor’s;

Moody’s Investors Service;

Fitch Ratings;

A.M. Best Company; or

Any other nationally recognized statistical rating organization registered with the U.S. Securities and Exchange Commission.

2805.10 The certified reinsurer must comply with any other requirements reasonably imposed by the Commissioner.

2805.11 Each certified reinsurer shall be rated on a legal entity basis, with due consideration being given to the group rating where appropriate, except that an association including incorporated and individual unincorporated underwriters that has been approved to do business as a single certified reinsurer may be evaluated on the basis of its group rating. Factors that may be considered as part of the evaluation process include, but are not limited to, the following:

(a) The certified reinsurer’s financial strength rating from an acceptable rating agency. The maximum rating that a certified reinsurer may be assigned will correspond to its financial strength rating as outlined in the table below. The Commissioner shall use the lowest financial strength rating received from an approved rating agency in establishing the maximum rating of a certified reinsurer. A failure to obtain or maintain at least two financial strength ratings from acceptable rating agencies will result in loss of eligibility for certification;

Ratings

Best

S&P

Moody’s

Fitch

Secure – 1

A++

AAA

Aaa

AAA

Secure – 2

A+

AA+, AA, AA-

Aa1, Aa2, Aa3

AA+, AA, AA-

Secure – 3

A

A+, A

A1, A2

A+, A

Secure – 4

A-

A-

A3

A-

Secure – 5

B++, B+

BBB+, BBB, BBB-

Baa1, Baa2, Baa3

BBB+, BBB, BBB-

Vulnerable – 6

B, B-, C++, C+, C, C-, D, E, F

BB+, BB, BB-, B+, B, B-, CCC, CC, C, D, R

Ba1, Ba2, Ba3, B1, B2, B3, Caa, Ca, C

BB+, BB, BB-, B+, B, B-, CCC+, CC, CCC-, DD

(b) The business practices of the certified reinsurer in dealing with its ceding insurers, including its record of compliance with reinsurance contractual terms and obligations;

(c) For certified reinsurers domiciled in the U.S., a review of the most recent applicable NAIC Annual Statement Blank Schedule F (for property/casualty reinsurers), or Schedule S (for life and health reinsurers) available at http://www.naic.org/prod_serv_alpha_listing.htm#ast_blanks.

For certified reinsurers not domiciled in the U.S., an annual review of

NAIC Form CR-F (for property/casualty reinsurers) or Form CR-S

(for life and health reinsurers), available at

http://www.naic.org/store/free/MDL-786.pdf?904.

The reputation of the certified reinsurer for prompt payment of claims under reinsurance agreements, based on an analysis of ceding insurers’ Schedule F reporting of overdue reinsurance recoverables, including the proportion of obligations that are more than 90 days past due or are in dispute, with specific attention given to obligations payable to companies that are in administrative supervision or receivership;

Regulatory actions against the certified reinsurer;

The report of the independent auditor on the financial statements of the insurance enterprise, on the basis described in paragraph (h) below;

For certified reinsurers not domiciled in the U.S., audited financial statements, regulatory filings, and actuarial opinion (as filed with the non-U.S. jurisdiction supervisor, with a translation into English). Upon the initial application for certification, the Commissioner will consider audited financial statements for the last two (2) years filed with its non-U.S. jurisdiction supervisor;

The liquidation priority of obligations to a ceding insurer in the certified reinsurer’s domiciliary jurisdiction in the context of an insolvency proceeding;

A certified reinsurer’s participation in any solvent scheme of arrangement, or similar procedure, which involves U.S. ceding insurers. The Commissioner shall receive prior notice from a certified reinsurer that proposes participation by the certified reinsurer in a solvent scheme of arrangement; and

(k) Any other information deemed relevant by the Commissioner.

2805.12 Based on the analysis conducted under Subsection 2805.11(e) of a certified reinsurer’s reputation for prompt payment of claims, the Commissioner may make appropriate adjustments in the security the certified reinsurer is required to post to protect its liabilities to U.S. ceding insurers, provided that the Commissioner shall, at a minimum, increase the security the certified reinsurer is required to post by one rating level specified in Subsection 2805.11(a) if the Commissioner finds that:

more than fifteen percent (15%) of the certified reinsurer’s ceding insurance clients have overdue reinsurance recoverables on paid losses of ninety (90) days or more which are not in dispute and which exceed $100,000 for each cedent; or

(b) the aggregate amount of reinsurance recoverables on paid losses

which are not in dispute that are overdue by ninety (90) days or more exceeds $50,000,000.

2805.13 The assuming insurer must submit a properly executed District of Columbia Form CR-1, as shown in § 2805.28, as evidence of its submission to the jurisdiction of the District of Columbia, appointment of the Commissioner as an agent for service of process in the District of Columbia, and agreement to provide security for one hundred percent (100%) of the assuming insurer’s liabilities attributable to reinsurance ceded by ceding insurers licensed in the United States if it resists enforcement of a final judgment of a state or federal court of competent jurisdiction. The Commissioner shall not certify any assuming insurer that is domiciled in a jurisdiction that the Commissioner has determined does not adequately and promptly enforce final U.S. judgments or arbitration awards.

2805.14 The certified reinsurer must agree to meet applicable information filing requirements as determined by the Commissioner, both with respect to an initial application for certification and on an ongoing basis. All information submitted by certified reinsurers which is not a public record subject to disclosure shall be exempted from disclosure under D.C. Official Code § 2-534 and shall be withheld from public disclosure. The applicable information filing requirements are, as follows:

Notification within ten (10) days of any regulatory actions taken against the certified reinsurer, any change in the provisions of its domiciliary license or any change in rating by an approved rating agency, including a statement describing such changes and the reasons therefore;

Annually, NAIC Form CR-F or CR-S, as applicable, available at http://www.naic.org/store/free/MDL-786.pdf?904;

Annually, the report of the independent auditor on the financial statements of the insurance enterprise, on the basis described in paragraph (d) below;

Annually, the most recent audited financial statements, regulatory filings, and actuarial opinion (as filed with the certified reinsurer’s supervisor, with a translation into English). Upon the initial certification, audited financial statements for the last two (2) years filed with the certified reinsurer’s supervisor;

At least annually, an updated list of all disputed and overdue reinsurance claims regarding reinsurance assumed from U.S. domestic ceding insurers;

A certification from the certified reinsurer’s domestic regulator that the certified reinsurer is in good standing and maintains capital in excess of the jurisdiction’s highest regulatory action level; and

(g) Any other information that the Commissioner may reasonably require to implement the Law on Credit for Reinsurance Act of 1993.

2805.15 In the case of a downgrade by a rating agency or other disqualifying circumstance, the Commissioner shall upon written notice assign a new rating to the certified reinsurer in accordance with the requirements of Subsection 2805.11(a).

2805.16 The Commissioner shall have the authority to suspend, revoke, or otherwise modify a certified reinsurer’s certification at any time if the certified reinsurer fails to meet its obligations or security requirements under this section, or if other financial or operating results of the certified reinsurer, or documented significant delays in payment by the certified reinsurer, lead the Commissioner to reconsider the certified reinsurer’s ability or willingness to meet its contractual obligations.

2805.17 If the rating of a certified reinsurer is upgraded by the Commissioner, the certified reinsurer may meet the security requirements applicable to its new rating on a prospective basis, but the Commissioner shall require the certified reinsurer to post security under the previously applicable security requirements as to all contracts in force on or before the effective date of the upgraded rating. If the rating of a certified reinsurer is downgraded by the Commissioner, the Commissioner shall require the certified reinsurer to meet the security requirements applicable to its new rating for all business it has assumed as a certified reinsurer.

2805.18 Upon revocation of the certification of a certified reinsurer by the Commissioner, the assuming insurer shall be required to post security in accordance with Section 2807 in order for the ceding insurer to continue to take credit for reinsurance ceded to the assuming insurer. If funds continue to be held in trust in accordance with Section 2804, the Commissioner may allow additional credit equal to the ceding insurer’s pro rata share of such funds, discounted to reflect the risk of uncollectibility and anticipated expenses of trust administration. Notwithstanding the change of a certified reinsurer’s rating or revocation of its certification, a domestic insurer that has ceded reinsurance to that certified reinsurer may not be denied credit for reinsurance for a period of 3 months for all reinsurance ceded to that certified reinsurer, unless the reinsurance is found by the Commissioner to be at high risk of uncollectibility.

2805.19 If, upon conducting an evaluation under this section with respect to the reinsurance supervisory system of any non-U.S. assuming insurer, the Commissioner determines that the jurisdiction qualifies to be recognized as a qualified jurisdiction, the Commissioner shall publish notice and evidence of such recognition in an appropriate manner. The Commissioner may establish a procedure to withdraw recognition of those jurisdictions that are no longer qualified.

2805.20 In order to determine whether the domiciliary jurisdiction of a non-U.S. assuming insurer is eligible to be recognized as a qualified jurisdiction, the Commissioner shall evaluate the reinsurance supervisory system of the non-U.S. jurisdiction, both initially and on an ongoing basis, and consider the rights, benefits and the extent of reciprocal recognition afforded by the non-U.S. jurisdiction to reinsurers licensed and domiciled in the U.S. The Commissioner shall determine the appropriate approach for evaluating the qualifications of such jurisdictions and create and publish a list of jurisdictions whose reinsurers may be approved by the Commissioner as eligible for certification. A qualified jurisdiction must agree to share information and cooperate with the Commissioner with respect to all certified reinsurers domiciled within that jurisdiction. Additional factors to be considered in determining whether to recognize a qualified jurisdiction, in the discretion of the Commissioner, include but are not limited to the following:

The framework under which the assuming insurer is regulated;

The structure and authority of the domiciliary regulator with regard to solvency regulation requirements and financial surveillance;

The substance of financial and operating standards for assuming insurers in the domiciliary jurisdiction;

The form and substance of financial reports required to be filed or made publicly available by reinsurers in the domiciliary jurisdiction and the accounting principles used;

The domiciliary regulator’s willingness to cooperate with U.S. regulators in general and the Commissioner in particular;

The history of performance by assuming insurers in the domiciliary jurisdiction;

Any documented evidence of substantial problems with the enforcement of final U.S. judgments in the domiciliary jurisdiction. A jurisdiction will not be considered to be a qualified jurisdiction if the Commissioner has determined that it does not adequately and promptly enforce final U.S. judgments or arbitration awards;

(h) Any relevant international standards or guidance with respect to mutual recognition of reinsurance supervision adopted by the

International Association of Insurance Supervisors or successor

organization; and

(i) Any other matters deemed relevant by the Commissioner.

2805.21 A list of qualified jurisdictions shall be published through the NAIC Committee Process. The Commissioner shall consider this list in determining qualified jurisdictions. If the Commissioner approves a jurisdiction as qualified that does not appear on the list of qualified jurisdictions, the Commissioner shall provide thoroughly documented justification with respect to the criteria provided under Subsection 2805.20(a)-(i).

2805.22 U.S. jurisdictions that meet the requirements for accreditation under the NAIC financial standards and accreditation program shall be recognized as qualified jurisdictions.

2805.23 If an applicant for certification has been certified as a reinsurer in an NAIC accredited jurisdiction, the Commissioner has the discretion to defer to that jurisdiction’s certification and, subject to § 2805.25, to defer to the rating assigned by that jurisdiction, if the assuming insurer submits a properly executed District of Columbia Form CR-1 and such additional information as the Commissioner requires. The assuming insurer shall be considered to be a certified reinsurer in the District of Columbia.

2805.24 Any change in the certified reinsurer’s status or rating in the other jurisdiction shall apply automatically in the District of Columbia as of the date it takes effect in the other jurisdiction. The certified reinsurer shall notify the Commissioner of any change in its status or rating within ten (10) days after receiving notice of the change.

2805.25 The Commissioner may withdraw recognition of the other jurisdiction’s rating at any time and assign a new rating in accordance with Subsection 2805.15 of this section.

2805.26 The Commissioner may withdraw recognition of the other jurisdiction’s certification at any time, with written notice to the certified reinsurer. Unless the Commissioner suspends or revokes the certified reinsurer’s certification in accordance with Subsection 2805.16 of this section, the certified reinsurer’s certification shall remain in good standing in the District of Columbia for a period of three months, which shall be extended if additional time is necessary to consider the assuming insurer’s application for certification in the District of Columbia.

2805.27 In addition to the clauses required under Section 2812, reinsurance contracts entered into or renewed under this section shall include a proper funding clause, which requires the certified reinsurer to provide and maintain security in an amount sufficient to avoid the imposition of any financial statement penalty on the ceding insurer under this section for reinsurance ceded to the certified reinsurer.

2805.28 Unless otherwise prohibited by law, the Commissioner may comply with all reporting and notification requirements that may be established by the NAIC with respect to certified reinsurers and qualified jurisdictions.

2805.29 District of Columbia Form CR-1.

DISTRICT OF COLUMBIA

DEPARTMENT OF INSURANCE, SECURITIES, AND BANKING

CERTIFICATE OF CERTIFIED REINSURER

(FORM CR-1)

I,___________________________________________,_____________________________

(name of officer) (title of officer)

of __________________________________________________________, the assuming insurer

(name of assuming insurer)

under a reinsurance agreement with one or more insurers domiciled in the District of Columbia, in order to be considered for approval in the District of Columbia, hereby certify that

___________________________________________________________ (“Assuming Insurer”):

(name of assuming insurer)

Submits to the jurisdiction of any court of competent jurisdiction in the District of Columbia for the adjudication of any issues arising out of the reinsurance agreement, agrees to comply with all requirements necessary to give such court jurisdiction, and will abide by the final decision of such court or any appellate court in the event of an appeal. Nothing in this paragraph constitutes or should be understood to constitute a waiver of Assuming Insurer’s rights to commence an action in any court of competent jurisdiction in the United States, to remove an action to a United States District Court, or to seek a transfer of a case to another court as permitted by the laws of the United States, the District of Columbia, or of any state in the United States. This paragraph is not intended to conflict with or override the obligation of the parties to the reinsurance agreement to arbitrate their disputes if such an obligation is created in the agreement.

Designates the Commissioner of the Department of Insurance, Securities, and Banking as its lawful attorney upon whom may be served any lawful process in any action, suit or proceeding arising out of the reinsurance agreement instituted by or on behalf of the ceding insurer.

Agrees to provide security in an amount equal to 100% of liabilities attributable to U.S. ceding insurers if it resists enforcement of a final U.S. judgment or properly enforceable arbitration award.

Agrees to provide notification within 10 days of any regulatory actions taken against it, any change in the provisions of its domiciliary license or any change in its rating by an approved rating agency, including a statement describing such changes and the reasons therefore.

Agrees to annually file information comparable to relevant provisions of the NAIC financial statement for use by insurance markets in accordance with 26-A DCMR § 2805.11.

Agrees to annually file the report of the independent auditor on the financial statements of the insurance enterprise.

Agrees to annually file audited financial statements, regulatory filings, and actuarial opinions in accordance with 26-A DCMR § 2805.14.

Agrees to annually file an updated list of all disputed and overdue reinsurance claims regarding reinsurance assumed from U.S. domestic ceding insurers.

Is in good standing as an insurer or reinsurer with the supervisor of its domiciliary jurisdiction.

Dated: ___________________________ _________________________________________

(name of assuming insurer)

BY: _____________________________________

(signature of officer)

---

(title of officer)

History

• SOURCE: Final Rulemaking published at 68 DCR 6518 (June 25, 2021); as amended by Final Rulemaking published at 69 DCR 015557 (December 30, 2022). District of Columbia Municipal Regulations Insurance 26-A DCMR § 2805

26-A DCMR § 2806 CREDIT FOR REINSURANCE REQUIRED BY LAW

2806.1 Pursuant to § 2(g) of the Law on Credit for Reinsurance Act of 1993 (D.C. Official Code § 31-501(g)), the Commissioner shall allow credit for reinsurance ceded by a domestic insurer to an assuming insurer not meeting the requirements of § 2(a), (b), (c), (d), or (e) of that Act, but only with respect to the insurance of risks located in jurisdictions where such reinsurance is required by the applicable law or regulation of that jurisdiction. As used in this section, “jurisdiction” means any state, district or territory of the United States and any lawful national government.

History

• SOURCE: Final Rulemaking published at 43 DCR 2318 (May 3, 1996); as amended by Final Rulemaking published at 68 DCR 6518 (June 25, 2021); as amended by Final Rulemaking published at 69 DCR 015557 (December 30, 2022). District of Columbia Municipal Regulations Insurance 26-A DCMR § 2806

26-A DCMR § 2807 REDUCTION FROM LIABILITY FOR REINSURANCE CEDE TO AN UNAUTHORIZED ASSUMING INSURER

2807.1 Pursuant to Section 3 of the act, D.C. Code section 35 3302, the Commissioner shall allow a reduction from liability for reinsurance ceded by a domestic insurer to an assuming insurer not meeting the requirements of section 2 of the act, D.C. Code section 35-3301 in an amount not exceeding the liabilities carried by the ceding insurer. Such reduction shall be in the amount of funds held by or on behalf of the ceding insurer, including funds held in trust for the exclusive benefit of the ceding insurer, under a reinsurance contract with such assuming insurer as security for the payment of obligations thereunder. Such security must be held in the United States subject to withdrawal solely by, and under the exclusive control of, the ceding insurer or, in the case of a trust, held in a qualified United States financial institution as defined in section 4(b) of the act, D.C. Code section 35-3303(b). This security may be in the form of any of the following:

(a) Cash.

(b) Securities listed by the Securities Valuation Office of the National Association of Insurance Commissioners and qualifying as admitted assets.

(c) Clean, irrevocable, unconditional and "evergreen" letters of credit issued or confirmed by a qualified United States institution, as defined in section 4(a) of the act, effective no later than December 31 of the year for which filing is being made, and in the possession of the ceding company on or before the filing date of its annual statement. Letters of credit meeting applicable standards of issuer acceptability as of the dates of their issuance (or confirmation)shall, notwithstanding the issuing (or confirming) institution's subsequent failure to meet applicable standards of issuer acceptability, continue to be acceptable as security until their expiration, extension, renewal, modification or amendment, whichever first occurs.

(d) Any other form of security acceptable to the Commissioner.

2807.2 An admitted asset or a reduction from liability for reinsurance ceded to an unauthorized assuming insurer pursuant to Section 2806.1(a), (b) and (c) shall be allowed only when the requirements of Sections 2807, 2808, or 2809 of this title are met.

History

• SOURCE: Final Rulemaking published at 43 DCR 2318 (May 3, 1996); as amended by Final Rulemaking published at 68 DCR 6518 (June 25, 2021). District of Columbia Municipal Regulations Insurance 26-A DCMR § 2807

26-A DCMR § 2808 TRUST AGREEMENTS QUALIFIED UNDER SECTION 2807

2808.1 As used in this section:

(a) "Beneficiary" means the entity for whose sole benefit the trust has been established and any successor of the beneficiary by operation of law. If a court of law appoints a successor in interest to the named beneficiary, then the named beneficiary includes and is limited to the court appointed domiciliary receiver (including conservator, rehabilitator or liquidator).

(b) "Grantor" means the entity that has established a trust for the sole benefit of the beneficiary. When established in conjunction with a reinsurance agreement, the grantor is the unlicensed, unaccredited assuming insurer.

(c) "Obligations", as used in subsection 2807.7(k) of this section, means:

(1) Reinsured losses and allocated loss expenses paid by the ceding company, but not recovered from the assuming insurer;

(2) Reserves for reinsured losses reported and outstanding;

(3) Reserves for reinsured losses incurred but not reported; and

(4) Reserves for allocated reinsured loss expenses and unearned premiums.

2808.2 The trust agreement shall be entered into between the beneficiary, the grantor and a trustee which shall be a qualified United States financial institution as defined in section 4(b) of the act, D.C. Code section 35-3303(b).

2808.3 The trust agreement shall create a trust account into which assets shall be deposited.

2808.4 All assets in the trust account shall be held by the trustee at the trustee's office in the United States, except that a bank may apply for the Commissioner's permission to use a foreign branch office of such bank as trustee for trust agreements established pursuant to this section. If the Commissioner approves the use of such foreign branch office as trustee, then its use must be approved by the beneficiary in writing and the trust agreement must provide that the written notice described in subsection 2807.5(a) of this section must also be presentable, as a matter of legal right, at the trustee's principal office in the United States.

2808.5 The trust agreement shall provide that:

(a) The beneficiary shall have the right to withdraw assets from the trust account at any time, without notice to the grantor, subject only to written notice from the beneficiary to the trustee;

(b) No other statement or document is required to be presented in order to withdraw assets, except that the beneficiary may be required to acknowledge receipt of withdrawn assets;

(c) It is not subject to any conditions or qualifications outside of the trust agreement; and

(d) It shall not contain references to any other agreements or documents except as provided for under Paragraph 2809.7(k) of this subsection.

2808.6 The trust agreement shall be established for the sole benefit of the beneficiary.

2808.7 The trust agreement shall require the trustee to:

(a) Receive assets and hold all assets in a safe place;

(b) Determine that all assets are in such form that the beneficiary, or the trustee upon direction by the beneficiary, may whenever necessary negotiate any such assets, without consent or signature from the grantor or any other person or entity;

(c) Furnish to the grantor and the beneficiary a statement of all assets in the trust account upon its inception and at intervals no less frequent than the end of each calendar quarter;

(d) Notify the grantor and the beneficiary within ten (10) days, of any deposits to or withdrawals from the trust account;

(e) Upon written demand of the beneficiary, immediately take any and all steps necessary to transfer absolutely and unequivocally all right, title and interest in the assets held in the trust account to the beneficiary and deliver physical custody of the assets to the beneficiary; and

(f) Allow no substitutions or withdrawals of assets from the trust account, except on written instructions from the beneficiary, except that the trustee may, without the consent of but with notice to the beneficiary, upon call or maturity of any trust asset, withdraw such asset upon condition that the proceeds are paid into the trust account.

(g) The trust agreement shall provide that at least thirty (30) days, but not more than forty-five (45) days, prior to termination of the trust account, written notification of termination shall be delivered by the trustee to the beneficiary.

(h) The trust agreement shall be made subject to and governed by the laws of the state in which the trust is established.

(i) The trust agreement shall prohibit invasion of the trust corpus for the purpose of paying compensation to, or reimbursing the expenses of, the trustee.

(j) The trust agreement shall provide that the trustee shall be liable for its own negligence, willful misconduct or lack of good faith.

(k) Notwithstanding other provisions of this regulation, when a trust agreement is established in conjunction with a reinsurance agreement covering risks other than life, annuities and accident and health, where it is customary practice to provide a trust agreement for a specific purpose, such a trust agreement may, notwithstanding any other conditions in this regulation, provide that the ceding insurer shall undertake to use and apply amounts drawn upon the trust account, without diminution because of the insolvency of the ceding insurer or the assuming insurer, for the following purposes:

(1) To pay or reimburse the ceding insurer for the assuming insurer's share under the specific reinsurance agreement regarding any losses and allocated loss expenses paid by the ceding insurer, but not recovered from the assuming insurer, or for unearned premiums due to the ceding insurer if not otherwise paid by the assuming insurer;

(2) To make payment to the assuming insurer of any amounts held in the trust account that exceed 102 percent of the actual amount required to fund the assuming insurer's obligations under the specific reinsurance agreement; or

(3) Where the ceding insurer has received notification of termination of the trust account and where the assuming insurer's entire obligations under the specific reinsurance agreement remain unliquidated and undischarged ten (10) days prior to the termination date, to withdraw amounts equal to the obligations and deposit those amounts in a separate account, in the name of the ceding insurer in any qualified United States financial institution as defined in Section 4(b) of the act, D.C. Code section 35-3303(b), apart from its general assets, in trust for such uses and purposes specified in Subparagraphs (1) and (2) above as may remain executory after such withdrawal and for any period after the termination date.

(l) The reinsurance agreement entered into in conjunction with the trust agreement may, but need not, contain the provisions required by Subsection 2807.16(b) of this section, so long as these required conditions are included in the trust agreement.

2808.8 The trust agreement may provide that the trustee may resign upon delivery of a written notice of resignation, effective not less than ninety (90) days after receipt by the beneficiary and grantor of the notice and that the trustee may be removed by the grantor by delivery to the trustee and the beneficiary of a written notice of removal, effective not less than ninety (90) days after receipt by the trustee and the beneficiary of the notice, provided that no such resignation or removal shall be effective until a successor trustee has been duly appointed and approved by the beneficiary and the grantor and all assets in the trust have been duly transferred to the new trustee.

2808.9 The grantor may have the full and unqualified right to vote any shares of stock in the trust account and to receive from time to time payments of any dividends or interest upon any shares of stock or obligations included in the trust account. Any such interest or dividends shall be either forwarded promptly upon receipt to the grantor or deposited in a separate account established in the grantor's name.

2808.10 The trustee may be given authority to invest, and accept substitutions of, any funds in the account, provided that no investment or substitution shall be made without prior approval of the beneficiary, unless the trust agreement specifies categories of investments acceptable to the beneficiary and authorizes the trustee to invest funds and to accept substitutions which the trustee determines are at least equal in market value to the assets withdrawn and that are consistent with the restrictions in Subsection 2807.14(b) of this section.

2808.11 The trust agreement may provide that the beneficiary may at any time designate a party to which all or part of the trust assets are to be transferred. Such transfer may be conditioned upon the trustee receiving, prior to or simultaneously, other specified assets.

2808.12 The trust agreement may provide that, upon termination of the trust account, all assets not previously withdrawn by the beneficiary shall, with written approval by the beneficiary, be delivered over to the grantor.

2808.13 A reinsurance agreement, which is entered into in conjunction with a trust agreement and the establishment of a trust account, may contain provisions that:

(a) Require the assuming insurer to enter into a trust agreement and to establish a trust account for the benefit of the ceding insurer, and specifying what the agreement is to cover;

(b) Stipulate that assets deposited in the trust account shall be valued according to their current fair market value and shall consist only of cash (United States legal tender), certificates of deposit (issued by a United States bank and payable in United States legal tender), and investments of the types permitted by the Insurance Code or any combination of the above, provided that such investments are issued by an institution that is not the parent, subsidiary or affiliate of either the grantor or the beneficiary. The reinsurance agreement may further specify the types of investments to be deposited. Where a trust agreement is entered into in conjunction with a reinsurance agreement covering risks other than life, annuities and accident and health, then the trust agreement may contain the provisions required by this paragraph in lieu of including such provisions in the reinsurance agreement;

(c) Require the assuming insurer, prior to depositing assets with the trustee, to execute assignments or endorsements in blank, or to transfer legal title to the trustee of all shares, obligations or any other assets requiring assignments, in order that the ceding insurer, or the trustee upon the direction of the ceding insurer, may whenever necessary negotiate these assets without consent or signature from the assuming insurer or any other entity;

(d) Require that all settlements of account between the ceding insurer and the assuming insurer be made in cash or its equivalent; and

(e) Stipulate that the assuming insurer and the ceding insurer agree that the assets in the trust account, established pursuant to the provisions of the reinsurance agreement, may be withdrawn by the ceding insurer at any time, notwithstanding any other provisions in the reinsurance agreement, and shall be utilized and applied by the ceding insurer or its successors in interest by operation of law, including without limitation any liquidator, rehabilitator, receiver or conservator of such company, without diminution because of insolvency on the part of the ceding insurer or the assuming insurer, only for the following purposes:

(1) To reimburse the ceding insurer for the assuming insurer's share of premiums returned to the owners of policies reinsured under the reinsurance agreement because of cancellations of such policies;

(2) To reimburse the ceding insurer for the assuming insurer's share of surrenders and benefits or losses paid by the ceding insurer pursuant to the provisions of the policies reinsured under the reinsurance agreement;

(3) To fund an account with the ceding insurer in an amount at least equal to the deduction, for reinsurance ceded, from the ceding insurer liabilities for policies ceded under the agreement. The account shall include, but not be limited to, amounts for policy reserves, claims and, losses incurred (including losses incurred but not reported), loss adjustment expenses and unearned premium reserves; and

(4) To pay any other amounts the ceding insurer claims are due under the reinsurance agreement.

2808.14 The reinsurance agreement may also contain provisions that:

(a) Give the assuming insurer the right to seek approval from the ceding insurer to withdraw from the trust account all or any part of the trust assets and transfer those assets to the assuming insurer, provided:

(1) The assuming insurer shall, at the time of withdrawal, replace the withdrawn assets with other qualified assets having a market value equal to the market value of the assets withdrawn so as to maintain at all times the ,deposit in the required amount, or

(2) After withdrawal and transfer, the market value of the trust account is no less than 102 percent of the required amount.

The ceding insurer shall not unreasonably or arbitrarily withhold its approval.

(b) Provide for:

(1) The return of any amount withdrawn in excess of the actual amounts required for subsections 2807.13(e),(1), (2), and (3) or in the case of subsection 2807.13(e)(4), any amounts that are subsequently determined not to be due; and

(2) Interest payments, at a rate not in excess of the prime rate of interest, on the amounts held pursuant to subsection 2807.13(e)(3).

(3) Permit the award by any arbitration panel or court of competent jurisdiction of:

(A) Interest at a rate different from that provided in subparagraph (b)(2),

(B) Court of arbitration costs,

(C) Attorney's fees, and

(D) Any other reasonable expenses.

(c) Financial reporting. A trust agreement may be used to reduce any liability for reinsurance ceded to an unauthorized assuming insurer in financial statements required to be filed with this department in compliance with the provisions of this regulation when established on or before the date of filing of the financial statement of the ceding insurer. Further, the reduction for the existence of an acceptable trust account may be up to the current fair market value of acceptable assets available to be withdrawn from the trust account at that time, but such reduction shall be no greater than the specific obligations under the reinsurance agreement that the trust account was established to secure.

(d) Existing agreements. Notwithstanding the effective date of this regulation, any trust agreement or underlying reinsurance agreement in existence prior to December 31, 1993 will continue to be acceptable until April 1, 1995, at which time the agreements will have to be in full compliance with this regulation for the trust agreement to be acceptable.

(e) The failure of any trust agreement to specifically identify the beneficiary as defined in Subsection 2807.1 of this section shall not be construed to affect any actions or rights which the Commissioner may take or possess pursuant to the provisions of the laws of the District.

History

• SOURCE: Final Rulemaking published at 43 DCR 2318 (May 3, 1996); as amended by Final Rulemaking published at 68 DCR 6518 (June 25, 2021). District of Columbia Municipal Regulations Insurance 26-A DCMR § 2808

26-A DCMR § 2809 LETTERS OF CREDIT QUALIFIED UNDER SECTION 2807

2809.1 The letter of credit must be clean, irrevocable and unconditional and issued or confirmed by a qualified United States financial institution as defined in section 4(a) of the act, D.C. Code section 35-3303(a). The letter of credit shall contain an issue date and date of expiration and shall stipulate that the beneficiary need only draw a sight draft under the letter of credit and present it to obtain funds and that no other document need be presented. The letter of credit shall also indicate that it is not subject to any condition or qualifications outside of the letter of credit. In addition, the letter of credit itself shall not contain reference to any other agreements, documents or entities, except as provided in subsection 2808.9 below. As used in this section, "beneficiary" means the domestic insurer for whose benefit the letter of credit has been established and any successor of the beneficiary by operation of law. If a court of law appoints a successor in interest to the named beneficiary, then the named beneficiary includes and is limited to the court appointed domiciliary receiver (including conservator, rehabilitator or liquidator).

2809.2 The heading of the letter of credit may include a boxed section which contains the name of the applicant and other appropriate notations to provide a reference for the letter of credit. The boxed section shall be clearly marked to indicate that such information is for internal identification purposes only.

2809.3 The letter of credit shall contain a statement to the effect that the obligation of the qualified United States financial institution under the letter of credit is in no way contingent upon reimbursement with respect thereto.

2809.4 The term of the letter of credit shall be for at least one year and shall contain an "evergreen clause" which prevents the expiration of the letter of credit without due notice from the issuer. The "evergreen clause" shall provide for a period of no less than thirty (30) days' notice prior to expiration date or nonrenewal.

2809.5 The letter of credit shall state whether it is subject to and governed by the laws of the District or the Uniform Customs and Practice for Documentary Credits of the International Chamber of Commerce (Publication 5600), (UCP 600) or International Standby Practices of the International Chamber of Commerce Publication 590 (ISP98) and all drafts drawn thereunder shall be presentable at an office in the United States of a qualified United States financial institution.

2809.6 If the letter of credit is made subject to the Uniform Customs and Practice for Documentary Credits of the International Chamber of Commerce (Publication 400), then the letter of credit shall specifically address and make provision for an extension of time to draw against the letter of credit in the event that one or more of the occurrences specified in Article 19 of Publication 400 occur.

2809.7 [REPEALED].

2809.8 If the letter of credit is issued by a qualified United States financial institution authorized to issue letters of credit, other than a qualified United States financial institution as described in 2810.7 of this section, then the following additional requirements shall be met:

(a) The issuing qualified United States financial institution shall formally designate the confirming qualified United States financial institution as its agent for the receipt and payment of the drafts, and

(b) The "evergreen clause" shall provide for thirty (30) days' notice prior to expiration date for nonrenewal.

2809.9 The reinsurance agreement in conjunction with which the letter of credit is obtained may contain provisions which:

(a) Require the assuming insurer to provide letters of credit to the ceding insurer and specify what they are to cover.

(b) Stipulate that the assuming insurer and ceding insurer agree that the letter of credit provided by the assuming insurer pursuant to the provisions of the reinsurance agreement may be drawn upon at any time, notwithstanding any other provisions in the agreement, and shall be utilized by the ceding insurer or its successors in interest only for one or more of the following reasons:

(1) To reimburse the ceding insurer for the assuming insurer's share of premiums returned to the owners of policies reinsured under the reinsurance agreement on account of cancellations of such policies;

(2) To reimburse the ceding insurer for the assuming insurer's share of surrenders and benefits or losses paid by the ceding insurer under the terms and provisions of the policies reinsured under the reinsurance agreement;

(3) To fund an account with the ceding insurer in an amount at least equal to the deduction, for reinsurance ceded, from the ceding insurer's liabilities for policies ceded under the agreement (such amount shall include, but not be limited to, amounts for policy reserves, claims and losses incurred and unearned premium reserves); and

(4) To pay any other amounts the ceding insurer claims are due under the reinsurance agreement.

(5) All of the foregoing provisions of Paragraph 2808.9 of this subsection should be applied without diminution because of insolvency on the part of the ceding insurer or assuming insurer.

(c) Nothing contained in Paragraph 2808.9 of this subsection shall preclude the ceding insurer and assuming insurer from providing for:

(1) An interest payment, at a rate not in excess of the prime rate of interest, on the amounts held pursuant to Paragraph 2808.9(b)(3) of this subsection; and/or

(2) The return of any amounts drawn down on the letters of credit in excess of the actual amounts required for the above or, in the case of Paragraph 2808.9(b)(4) of this subsection, any amounts that are subsequently determined not to be due.

(d) When a letter of credit is obtained in conjunction with a reinsurance agreement covering risks other than life, annuities and health, where it is customary practice to provide a letter of credit for a specific purpose, then the reinsurance agreement may, in lieu of Paragraph 2808.9(b)(4) of this subsection, require that the parties enter into a "Trust Agreement" which may be incorporated into the reinsurance agreement or be a separate document.

2809.10 A letter of credit may not be used to reduce any liability for reinsurance ceded to an unauthorized assuming insurer in financial statements required to be filed with this department unless an acceptable letter of credit with the filing ceding insurer as beneficiary has been issued on or before the date of filing of the financial statement. Further, the reduction for the letter of credit may be up to the amount available under the letter of credit but no greater than the specific obligation under the reinsurance agreement which the letter of credit was intended to secure.

History

• SOURCE: Final Rulemaking published at 43 DCR 2318 (May 3, 1996); as amended by Final Rulemaking published at 68 DCR 6518 (June 25, 2021). District of Columbia Municipal Regulations Insurance 26-A DCMR § 2809

26-A DCMR § 2810 OTHER SECURITY

2810.1 A ceding insurer may take credit for unencumbered funds withheld by the ceding insurer in the United States subject to withdrawal solely by the ceding insurer and under its exclusive control.

History

• SOURCE: Final Rulemaking published at 43 DCR 2318 (May 3, 1996); as amended by Final Rulemaking published at 68 DCR 6518 (June 25, 2021). District of Columbia Municipal Regulations Insurance 26-A DCMR § 2810

26-A DCMR § 2811 REINSURANCE CONTRACT

2811.1 Credit will not be granted to a ceding insurer for reinsurance effected with assuming insurers meeting the requirements of Sections 2801, 2802, 2803, 2804 or 2806 of this regulation or otherwise in compliance with section 2 of the Law on Credit for Reinsurance Act of 1993, D.C. Code Official Code section 31-501, after the adoption of this regulation unless the reinsurance agreement:

(a) Includes a proper insolvency clause, which stipulates that reinsurance is payable directly to the liquidator successor without diminution regardless of the status of the ceding company;

(b) Includes a provision pursuant to Section 2(h) of the Law on Credit for Reinsurance Act of 1993, D.C. Official Code Section 31-501(h),whereby the assuming insurer, if an unauthorized assuming insurer, has submitted to the jurisdiction of an alternative dispute resolution panel or court of competent jurisdiction within the United States, has agreed to comply with all requirements necessary to give such court or panel jurisdiction, has designated an agent upon whom service of process may be effected, and has agreed to abide by the final decision of such court or panel; and

(c) Includes a proper reinsurance intermediary clause, if applicable, which stipulates that the credit risk for the intermediary is carried by the assuming insurer.

History

• SOURCE: Final Rulemaking published at 43 DCR 2318 (May 3, 1996); as amended by Final Rulemaking published at 68 DCR 6518 (June 25, 2021). District of Columbia Municipal Regulations Insurance 26-A DCMR § 2811

26-A DCMR § 2812 CONTRACTS AFFECTED

2812.1 All new and renewal reinsurance transactions entered into after the effective date of these regulations shall conform to the requirements of the act and this regulation if credit is to be given to the ceding insurer for such reinsurance.

APPENDIX 28-1

FORM AR-1

CERTIFICATE OF ASSUMING INSURER

I, ,

(name of officer) (title of officer)

of , the

(name of assuming insurer)

assuming insurer under a reinsurance agreement(s) with one or more insurers domiciled in

, hereby certify that

(name of state)

("Assuming Insurer"):

(name of assuming insurer)

1. Submits to the jurisdiction of any court of competent jurisdiction in

(ceding insurer's state of domicile)

for the adjudication of any issues arising out of the reinsurance agreement(s), agrees to comply with all requirements necessary to give such court jurisdiction, and will abide by the final decision of such court or any appellate court in the event of an appeal. Nothing in this paragraph constitutes or should be understood to constitute a waiver of Assuming Insurer's rights to commence an action in any court of competent jurisdiction in the United States, to remove an action to a United States District Court, or to seek a transfer of a case to another court as permitted by the laws of the United States or of any state in the United States. This paragraph is not intended to conflict with or override the obligation of the parties to the reinsurance agreement(s) to arbitrate their disputes if such an obligation is created in the agreement(s).

2. Designates the Insurance Commissioner of

to examine its books

(ceding insurer's state of domicile) as its lawful attorney upon whom may be served any lawful process in any action, suit or proceeding arising out of the reinsurance agreement(s) instituted by or on behalf of the ceding insurer.

3. Submits to the authority of the Insurance Commissioner of

to examine its books

(ceding insurer's state of domicile) and records and agrees to bear the expense of any such examination.

4. Submits with this form a current list of insurers domiciled in

reinsured by Assuming Insurer

(ceding insurer's state of domicile)

and undertakes to submit additions to or deletions from the list to the Insurance Commissioner at least once per calendar quarter.

Dated:

(name of assuming insurer)

BY:

(name of officer)

(title of officer)

History

• SOURCE: Final Rulemaking published at 43 DCR 2318 (May 3, 1996); as amended by Final Rulemaking published at 68 DCR 6518 (June 25, 2021). District of Columbia Municipal Regulations Insurance 26-A DCMR § 2812

26-A DCMR § 2813 CREDIT FOR REINSURANCE—RECIPROCAL JURISDICTIONS

2813.1 The Commissioner shall allow credit for reinsurance ceded by a domestic insurer to an assuming insurer that is licensed to write reinsurance by, and has its head office or is domiciled in, a Reciprocal Jurisdiction and which meets the other requirements of this regulation.

2813.2 A “Reciprocal Jurisdiction” is a jurisdiction, as designated by the Commissioner pursuant to § 2813.4, that meets one of the following:

(a) A non-U.S. jurisdiction that is subject to an in-force covered agreement with the United States, each within its legal authority, or, in the case of a covered agreement between the United States and the European Union, is a member state of the European Union. For purposes of this subsection, a “covered agreement” is an agreement entered into pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, 31 U.S.C. §§ 313 and 314, that is currently in effect or in a period of provisional application and addresses the elimination, under specified conditions, of collateral requirements as a condition for entering into any reinsurance agreement with a ceding insurer domiciled in this state or for allowing the ceding insurer to recognize credit for reinsurance;

(b) A U.S. jurisdiction that meets the requirements for accreditation under the NAIC financial standards and accreditation program; or

(c) A qualified jurisdiction, as determined by the Commissioner pursuant to § 2(f)(4) of the Law on Credit for Reinsurance Act of 1993 (D.C. Official Code § 31-501(f)(4)) and § 2805.20, which is not otherwise described in paragraph (a) or (b) above and which the Commissioner determines meets the following additional requirements:

(1) Provides that an insurer which has its head office or is domiciled in such qualified jurisdiction shall receive credit for reinsurance ceded to a U.S.-domiciled assuming insurer in the same manner as credit for reinsurance is received for reinsurance assumed by insurers domiciled in such qualified jurisdiction;

(2) Does not require a U.S.-domiciled assuming insurer to establish or maintain a local presence as a condition for entering into a reinsurance agreement with any ceding insurer subject to regulation by the non-U.S. jurisdiction or as a condition to allow the ceding insurer to recognize credit for such reinsurance;

(3) Recognizes the U.S. state regulatory approach to group supervision and group capital, by providing written confirmation by a competent regulatory authority, in such qualified jurisdiction, that insurers and insurance groups that are domiciled or maintain their headquarters in this state or another jurisdiction accredited by the NAIC shall be subject only to worldwide prudential insurance group supervision including worldwide group governance, solvency and capital, and reporting, as applicable, by the Commissioner or the Commissioner of the domiciliary state and will not be subject to group supervision at the level of the worldwide parent undertaking of the insurance or reinsurance group by the qualified jurisdiction; and

(4) Provides written confirmation by a competent regulatory authority in such qualified jurisdiction that information regarding insurers and their parent, subsidiary, or affiliated entities, if applicable, shall be provided to the Commissioner in accordance with a memorandum of understanding or similar document between the Commissioner and such qualified jurisdiction, including but not limited to the International Association of Insurance Supervisors Multilateral Memorandum of Understanding or other multilateral memoranda of understanding coordinated by the NAIC.

2813.3 Credit shall be allowed when the reinsurance is ceded from an insurer domiciled in the District of Columbia to an assuming insurer meeting each of the following conditions:

(a) The assuming insurer must be licensed to transact reinsurance by, and have its head office or be domiciled in, a Reciprocal Jurisdiction;

(b) The assuming insurer must have and maintain on an ongoing basis minimum capital and surplus, or its equivalent, calculated on at least an annual basis as of the preceding December 31 or at the annual date otherwise statutorily reported to the Reciprocal Jurisdiction, and confirmed as set forth in § 2813.3(g) according to the methodology of its domiciliary jurisdiction, in the following amounts:

(1) No less than $250,000,000; or

(2) If the assuming insurer is an association, including incorporated and individual unincorporated underwriters:

(A) Minimum capital and surplus equivalents (net of liabilities) or own funds of the equivalent of at least $250,000,000; and

(B) A central fund containing a balance of the equivalent of at least $250,000,000;

(c) The assuming insurer must have and maintain on an ongoing basis a minimum solvency or capital ratio, as applicable, as follows:

(1) If the assuming insurer has its head office or is domiciled in a Reciprocal Jurisdiction as defined in § 2813.2(a), the ratio specified in the applicable covered agreement;

(2) If the assuming insurer is domiciled in a Reciprocal Jurisdiction as defined in § 2813.2(b), a risk-based capital (RBC) ratio of three hundred percent (300%) of the authorized control level, calculated in accordance with the formula developed by the NAIC; or

(3) If the assuming insurer is domiciled in a Reciprocal Jurisdiction as defined in § 2813.2(c), after consultation with the Reciprocal Jurisdiction and considering any recommendations published through the NAIC Committee Process, such solvency or capital ratio as the Commissioner determines to be an effective measure of solvency;

(d) The assuming insurer must agree to and provide adequate assurance, in the form of a properly executed Form RJ-1, of its agreement to the following:

(1) The assuming insurer must agree to provide prompt written notice and explanation to the Commissioner if it falls below the minimum requirements set forth in paragraphs (b) and (c) of this subsection, or if any regulatory action is taken against it for serious noncompliance with applicable law;

(2) The assuming insurer must consent in writing to the jurisdiction of the courts of this state and to the appointment of the Commissioner as agent for service of process; provided, the Commissioner may also require that such consent be provided and included in each reinsurance agreement under the Commissioner’s jurisdiction, and nothing in this provision shall limit or in any way alter the capacity of parties to a reinsurance agreement to agree to alternative dispute resolution mechanisms, except to the extent such agreements are unenforceable under applicable insolvency or delinquency laws;

(3) The assuming insurer must consent in writing to pay all final judgments, wherever enforcement is sought, obtained by a ceding insurer, that have been declared enforceable in the territory where the judgment was obtained;

(4) Each reinsurance agreement must include a provision requiring the assuming insurer to provide security in an amount equal to one hundred percent (100%) of the assuming insurer’s liabilities attributable to reinsurance ceded pursuant to that agreement if the assuming insurer resists enforcement of a final judgment that is enforceable under the law of the jurisdiction in which it was obtained or a properly enforceable arbitration award, whether obtained by the ceding insurer or by its legal successor on behalf of its estate, if applicable;

(5) The assuming insurer must confirm that it is not presently participating in any solvent scheme of arrangement, which involves this state’s ceding insurers, and agrees to notify the ceding insurer and the Commissioner and to provide one hundred percent (100%) security to the ceding insurer consistent with the terms of the scheme, should the assuming insurer enter into such a solvent scheme of arrangement. Such security shall be in a form consistent with the provisions of §§ 2(c) and 3 of the Law on Credit for Reinsurance Act of 1993 (D.C. Official Code §§ 31-501(c) and § 31-503), and §§ 28082810. For purposes of this Regulation, the term “solvent scheme of arrangement” means a foreign or alien statutory or regulatory compromise procedure subject to requisite majority creditor approval and judicial sanction in the assuming insurer’s home jurisdiction either to finally commute liabilities of duly noticed classed members or creditors of a solvent debtor, or to reorganize or restructure the debts and obligations of a solvent debtor on a final basis, and which may be subject to judicial recognition and enforcement of the arrangement by a governing authority outside the ceding insurer’s home jurisdiction; and

(6) The assuming insurer must agree in writing to meet the applicable information filing requirements as set forth in paragraph (e) of this subsection;

(e) The assuming insurer or its legal successor must provide, if requested by the Commissioner, on behalf of itself and any legal predecessors, the following documentation to the Commissioner:

(1) For the two years preceding entry into the reinsurance agreement and on an annual basis thereafter, the assuming insurer’s annual audited financial statements, in accordance with the applicable law of the jurisdiction of its head office or domiciliary jurisdiction, as applicable, including the external audit report;

(2) For the two years preceding entry into the reinsurance agreement, the solvency and financial condition report or actuarial opinion, if filed with the assuming insurer’s supervisor;

(3) Prior to entry into the reinsurance agreement and not more than semi-annually thereafter, an updated list of all disputed and overdue reinsurance claims outstanding for 90 days or more, regarding reinsurance assumed from ceding insurers domiciled in the United States; and

(4) Prior to entry into the reinsurance agreement and not more than semi-annually thereafter, information regarding the assuming insurer’s assumed reinsurance by ceding insurer, ceded reinsurance by the assuming insurer, and reinsurance recoverable on paid and unpaid losses by the assuming insurer to allow for the evaluation of the criteria set forth in paragraph (f) of this subsection.

(f) The assuming insurer must maintain a practice of prompt payment of claims under reinsurance agreements. The lack of prompt payment will be evidenced if any of the following criteria is met:

(1) More than fifteen percent (15%) of the reinsurance recoverables from the assuming insurer are overdue and in dispute as reported to the Commissioner;

(2) More than fifteen percent (15%) of the assuming insurer’s ceding insurers or reinsurers have overdue reinsurance recoverable on paid losses of 90 days or more which are not in dispute and which exceed for each ceding insurer $100,000, or as otherwise specified in a covered agreement; or

(3) The aggregate amount of reinsurance recoverable on paid losses which are not in dispute, but are overdue by 90 days or more, exceeds $50,000,000, or as otherwise specified in a covered agreement; and

(g) The assuming insurer’s supervisory authority must confirm to the Commissioner on an annual basis that the assuming insurer complies with the requirements set forth in paragraphs (b) and (c) of this subsection.

(h) Nothing in this subsection precludes an assuming insurer from providing the Commissioner with information on a voluntary basis.

2813.4 The Commissioner shall timely create and publish a list of Reciprocal Jurisdictions.

2813.5 The Commissioner’s list shall include any Reciprocal Jurisdictions as defined under § 2813.2(a) and (b) of this section and shall consider any other Reciprocal Jurisdictions included on the list of Reciprocal Jurisdictions published through the National Association of Insurance Commissioners’ (NAIC) Committee Process.

2813.6 The Commissioner may remove a jurisdiction from the list of Reciprocal Jurisdictions upon a determination that the jurisdiction no longer meets one or more of the requirements of a Reciprocal Jurisdiction, as provided by applicable law, regulation, or in accordance with a process published through the NAIC Committee Process, except that the Commissioner shall not remove from the list a Reciprocal Jurisdiction as defined under § 2813.2(a) and (b) of this section.

2813.7 Upon removal of a Reciprocal Jurisdiction from the list, credit for reinsurance ceded to an assuming insurer domiciled in that jurisdiction shall be allowed, if otherwise allowed pursuant to the Law on Credit for Reinsurance Act of 1993 (D.C. Official Code § 31-501 et seq.) or this chapter.

2813.8 The Commissioner shall timely create and publish a list of assuming insurers that have satisfied the conditions set forth in this section and to which cessions shall be granted credit in accordance with this section.

2813.9 If an NAIC-accredited jurisdiction has determined that the conditions set forth in § 2813.3 of this section have been met, the Commissioner has the discretion to defer to that jurisdiction’s determination and add such assuming insurer to the list of assuming insurers to which cessions shall be granted credit in accordance with this subsection. The Commissioner may accept financial documentation filed with another NAIC-accredited jurisdiction or with the NAIC in satisfaction of the requirements of § 2813.3 of this section.

2813.10 When requesting that the Commissioner defer to another NAIC-accredited jurisdiction’s determination, an assuming insurer must submit a properly executed Form RJ-1 and additional information as the Commissioner may require. A state that has received such a request will notify other states through the NAIC committee process and provide relevant information with respect to the determination of eligibility.

2813.11 If the Commissioner determines that an assuming insurer no longer meets one or more of the requirements under this section, the Commissioner may revoke or suspend the eligibility of the assuming insurer for recognition under this section.

2813.12 While an assuming insurer’s eligibility is suspended, no reinsurance agreement issued, amended, or renewed after the effective date of the suspension qualifies for credit except to the extent that the assuming insurer’s obligations under the contract are secured in accordance with § 2807 of this chapter.

2813.13 If an assuming insurer’s eligibility is revoked, no credit for reinsurance may be granted after the effective date of the revocation with respect to any reinsurance agreements entered into by the assuming insurer, including reinsurance agreements entered into prior to the date of revocation, except to the extent that the assuming insurer’s obligations under the contract are secured in a form acceptable to the Commissioner and consistent with the provisions of § 2807 of this chapter.

2813.14 Before denying statement credit or imposing a requirement to post security with respect to § 2813.11 or adopting any similar requirement that will have substantially the same regulatory impact as security, the Commissioner shall:

(a) Communicate with the ceding insurer, the assuming insurer, and the assuming insurer’s supervisory authority that the assuming insurer no longer satisfies one of the conditions listed in § 2813.3 of this section;

(b) Provide the assuming insurer with 30 days from the initial communication to submit a plan to remedy the defect, and 90 days from the initial communication to remedy the defect, except in exceptional circumstances in which a shorter period is necessary for policyholder and other consumer protection;

(c) After the expiration of 90 days or less, as set out in paragraph (b) of this subsection, if the Commissioner determines that no or insufficient action was taken by the assuming insurer, the Commissioner may impose any of the requirements as set out in this section; and

(d) Provide a written explanation to the assuming insurer of any of the requirements set out in this section.

2813.15 If subject to a legal process of rehabilitation, liquidation, or conservation, the ceding insurer, or its representative, may seek and, if determined appropriate by the court in which the proceedings are pending, may obtain an order requiring that the assuming insurer post security for all outstanding liabilities.

History

• SOURCE: Final Rulemaking published at 69 DCR 015557 (December 30, 2022). District of Columbia Municipal Regulations Insurance 26-A DCMR § 2813

26-A DCMR § 2850 TERM AND UNIVERSAL LIFE INSURANCE RESERVE FINANCING – PURPOSE AND INTENT

2850.1 The purpose and intent of §§ 2850-2855 is to implement within the District of Columbia uniform, national standards governing reserve financing arrangements pertaining to life insurance policies containing guaranteed nonlevel gross premiums or guaranteed nonlevel benefits, and universal life insurance policies with secondary guarantees; and to ensure that, with respect to each such financing arrangement, funds consisting of Primary Security and Other Security, as defined in § 2899, are held by or on behalf of ceding insurers in the forms and amounts required herein.

2850.2 In general, reinsurance ceded for reserve financing purposes requires that some or all of the assets used to secure the reinsurance treaty or to capitalize the reinsurer:

(a) Are issued by the ceding insurer or its affiliates;

(b) Are not unconditionally available to satisfy the general account obligations of the ceding insurer; or

(c) Create a reimbursement, indemnification or other similar obligation on the part of the ceding insurer or any if its affiliates (other than a payment obligation under a derivative contract acquired in the normal course and used to support and hedge liabilities pertaining to the actual risks in the policies ceded pursuant to the reinsurance treaty).

History

• SOURCE: Final Rulemaking published at 69 DCR 015557 (December 30, 2022). District of Columbia Municipal Regulations Insurance 26-A DCMR § 2850

26-A DCMR § 2851 APPLICABILITY

2851.1 The provisions of this chapter shall apply to reinsurance treaties that cede liabilities pertaining to Covered Policies, as that term is defined in § 2899, issued by any life insurance company domiciled in this state; provided, that in the event of a direct conflict between the provisions of §§ 2850-2855 and §§ 2801-2813, the provisions of §§ 2850-2855 shall apply, but only to the extent of the conflict.

History

• SOURCE: Final Rulemaking published at 69 DCR 015557 (December 30, 2022). District of Columbia Municipal Regulations Insurance 26-A DCMR § 2851

26-A DCMR § 2852 TERM AND UNIVERSAL LIFE INSURANCE RESERVE FINANCING - THE ACTUARIAL METHOD

2852.1 The Actuarial Method to establish the Required Level of Primary Security for each reinsurance treaty subject to this chapter shall be VM-20, applied on a treaty-by-treaty basis, including all relevant definitions, from the Valuation Manual as then in effect, applied as follows:

(a) For Covered Policies that are life insurance policies with guaranteed nonlevel gross premiums and/or guaranteed nonlevel benefits, except for flexible premium universal life insurance policies, the Actuarial Method is the greater of the Deterministic Reserve or the Net Premium Reserve (NPR) regardless of whether the criteria for exemption testing can be met.

(b) If the Covered Policies do not meet the requirements of the Stochastic Reserve exclusion test in the Valuation Manual, then the Actuarial Method is the greatest of the Deterministic Reserve, the Stochastic Reserve, or the NPR.

(c) If such Covered Policies are reinsured in a reinsurance treaty that also contains Covered Policies that are flexible premium universal life insurance policies with provisions resulting in the ability of a policyholder to keep a policy in force over a secondary guarantee period, the ceding insurer may elect to instead use paragraph (d) of this subsection as the Actuarial Method for the entire reinsurance agreement. The Actuarial Method must comply with any requirements or restrictions that the Valuation Manual imposes when aggregating these policy types for purposes of principle-based reserve calculations.

(d) For Covered Policies that are flexible premium universal life insurance policies with provisions resulting in the ability of a policyholder to keep a policy in force over a secondary guarantee period, the Actuarial Method is the greatest of the Deterministic Reserve, the Stochastic Reserve, or the NPR regardless of whether the criteria for exemption testing can be met.

2852.2 Except as provided in § 2852.3, the Actuarial Method is to be applied on a gross basis to all risks with respect to the Covered Policies as originally issued or assumed by the ceding insurer.

2852.3 If the reinsurance treaty cedes less than one hundred percent (100%) of the risk with respect to the Covered Policies then the Required Level of Primary Security may be reduced as follows:

(a) If a reinsurance treaty cedes only a quota share of the risks pertaining to the Covered Policies, the Required Level of Primary Security, as well as any adjustment under paragraph (c) of this subsection, may be reduced to a pro rata portion in accordance with the percentage of the risk ceded;

(b) If the reinsurance treaty in a non-exempt arrangement cedes only the risks pertaining to a secondary guarantee, the Required Level of Primary Security may be reduced by an amount determined by applying the Actuarial Method on a gross basis to all risks, other than risks related to the secondary guarantee, pertaining to the Covered Policies, except that for Covered Policies for which the ceding insurer did not elect to apply the provisions of VM-20 to establish statutory reserves, the Required Level of Primary Security may be reduced by the statutory reserve retained by the ceding insurer on those Covered Policies, where the retained reserve of those Covered Policies should be reflective of any reduction pursuant to the cession of mortality risk on a yearly renewable term basis in an exempt arrangement;

(c) If a portion of the Covered Policy risk is ceded to another reinsurer on a yearly renewable term basis in an exempt arrangement, the Required Level of Primary Security may be reduced by the amount resulting by applying the Actuarial Method including the reinsurance section of VM-20 to the portion of the Covered Policy risks ceded in the exempt arrangement, except that for Covered Policies issued prior to Jan 1, 2017, this adjustment is not to exceed [cx/ (2 * number of reinsurance premiums per year)] where cx is calculated using the same mortality table used in calculating the Net Premium Reserve; and

(d) For any other treaty ceding a portion of risk to a different reinsurer, including but not limited to stop loss, excess of loss and other non-proportional reinsurance treaties, there will be no reduction in the Required Level of Primary Security.

2852.4 It is possible for any combination of paragraphs (a)-(d) of § 2852.3 to apply. Such adjustments to the Required Level of Primary Security will be done in the sequence that accurately reflects the portion of the risk ceded via the treaty. The ceding insurer shall document the rationale and steps taken to accomplish the adjustments to the Required Level of Primary Security due to the cession of less than one hundred percent (100%) of the risk.

2852.5 The adjustments for other reinsurance will be made only with respect to reinsurance treaties entered into directly by the ceding insurer. The ceding insurer will make no adjustment as a result of a retrocession treaty entered into by the assuming insurers.

2852.6 In no event will the Required Level of Primary Security resulting from application of the Actuarial Method exceed the amount of statutory reserves ceded.

2852.7 If the ceding insurer cedes risks with respect to Covered Policies, including any riders, in more than one reinsurance treaty subject to this Regulation, in no event will the aggregate Required Level of Primary Security for those reinsurance treaties be less than the Required Level of Primary Security calculated using the Actuarial Method as if all risks ceded in those treaties were ceded in a single treaty subject to this chapter.

2852.8 If a reinsurance treaty subject to this chapter cedes risk on both Covered and Non-Covered Policies, credit for the ceded reserves shall be determined as follows:

(a) The Actuarial Method shall be used to determine the Required Level of Primary Security for the Covered Policies, and the reinsurance credit for the Covered Policy reserves shall be determined in accordance with § 2853; and

(b) Credit for the Non-Covered Policy reserves shall be granted only to the extent that security, in addition to the security held to satisfy the requirements of paragraph (a), is held by or on behalf of the ceding insurer in accordance with §§ 2 and 3 of the Law on Credit for Reinsurance Act of 1993 (D.C. Official Code §§ 31-501 and 502). Any Primary Security used to meet the requirements of this Subparagraph may not be used to satisfy the Required Level of Primary Security for the Covered Policies.

2852.9 For the purposes of both calculating the Required Level of Primary Security pursuant to the Actuarial Method and determining the amount of Primary Security and Other Security, as applicable, held by or on behalf of the ceding insurer, the following shall apply:

(a) For assets, including any such assets held in trust, that would be admitted under the NAIC Accounting Practices and Procedures Manual if they were held by the ceding insurer, the valuations are to be determined according to statutory accounting procedures as if such assets were held in the ceding insurer’s general account and without taking into consideration the effect of any prescribed or permitted practices; and

(b) For all other assets, the valuations are to be those that were assigned to the assets for the purpose of determining the amount of reserve credit taken. In addition, the asset spread tables and asset default cost tables required by VM-20 shall be included in the Actuarial Method if adopted by the NAIC’s Life Actuarial (A) Task Force no later than the Dec. 31st on or immediately preceding the valuation date for which the Required Level of Primary Security is being calculated. The tables of asset spreads and asset default costs shall be incorporated into the Actuarial Method in the manner specified in VM-20.

History

• SOURCE: Final Rulemaking published at 69 DCR 015557 (December 30, 2022). District of Columbia Municipal Regulations Insurance 26-A DCMR § 2852

26-A DCMR § 2853 REQUIREMENTS APPLICABLE TO COVERED POLICIES TO OBTAIN CREDIT FOR REINSURANCE

2853.1 Subject to the exemptions described in § 2855 and the provisions of § 2854, credit for reinsurance shall be allowed with respect to ceded liabilities pertaining to Covered Policies pursuant to §§ 2 and 3 of the Law on Credit for Reinsurance Act of 1993 (D.C. Official Code §§ 31-501 and 502) only if, in addition to all other requirements imposed by law or regulation, the following requirements are met on a treaty-by-treaty basis:

(a) The ceding insurer’s statutory policy reserves with respect to the Covered Policies are established in full and in accordance with the applicable requirements of § 1 of Chapter V of the Life Insurance Act, approved June 19, 1934 (48 Stat. 1156; D.C. Official Code § 31-4701), and related regulations and actuarial guidelines, and credit claimed for any reinsurance treaty subject to this regulation does not exceed the proportionate share of those reserves ceded under the contract;

(b) The ceding insurer determines the Required Level of Primary Security with respect to each reinsurance treaty subject to this regulation and provides support for its calculation as determined to be acceptable to the Commissioner;

(c) Funds consisting of Primary Security, in an amount at least equal to the Required Level of Primary Security, are held by or on behalf of the ceding insurer, as security under the reinsurance treaty within the meaning of § 2 of the Law on Credit for Reinsurance Act of 1993 (D.C. Official Code § 31-502), on a funds withheld, trust, or modified coinsurance basis;

(d) Funds consisting of Other Security, in an amount at least equal to any portion of the statutory reserves as to which Primary Security is not held pursuant to Paragraph (c) above, are held by or on behalf of the ceding insurer as security under the reinsurance treaty within the meaning of § 2 of the Law on Credit for Reinsurance Act of 1993 (D.C. Official Code § 31-502);

(e) Any trust used to satisfy the requirements of this section shall comply with all of the conditions and qualifications of § 2808, except that:

(1) Funds consisting of Primary Security or Other Security held in trust, shall for the purposes identified in § 2852.9, be valued according to the valuation rules set forth in § 2852.9, as applicable;

(2) There are no affiliate investment limitations with respect to any security held in such trust if such security is not needed to satisfy the requirements of paragraph (c) of this subsection;

(3) The reinsurance treaty must prohibit withdrawals or substitutions of trust assets that would leave the fair market value of the Primary Security within the trust (when aggregated with Primary Security outside the trust that is held by or on behalf of the ceding insurer in the manner required by paragraph (c) of this subsection) below 102% of the level required by paragraph (c) of this subsection at the time of the withdrawal or substitution; and

(4) The determination of reserve credit under § 2808.14(c) shall be determined according to the valuation rules set forth in § 2852.9, as applicable; and

(f) The reinsurance treaty has been approved by the Commissioner.

History

• SOURCE: Final Rulemaking published at 69 DCR 015557 (December 30, 2022). District of Columbia Municipal Regulations Insurance 26-A DCMR § 2853

26-A DCMR § 2854 REQUIREMENTS AT INCEPTION DATE AND ON AN ONGOING BASIS AND OPPORTUNITY FOR REMEDIATION

2854.1 The requirements of § 2853 must be satisfied as of the date that risks under Covered Policies are ceded (if such date is on or after the effective date of this regulation) and on an ongoing basis thereafter. Under no circumstances shall a ceding insurer take or consent to any action or series of actions that would result in a deficiency under § 2853.1(c) or (d) with respect to any reinsurance treaty under which Covered Policies have been ceded, and in the event that a ceding insurer becomes aware at any time that such a deficiency exists, it shall use its best efforts to arrange for the deficiency to be eliminated as expeditiously as possible.

2854.2 Prior to the due date of each Quarterly or Annual Statement, each life insurance company that has ceded reinsurance within the scope of § 2851 shall perform an analysis, on a treaty-by-treaty basis, to determine, as to each reinsurance treaty under which Covered Policies have been ceded, whether as of the end of the immediately preceding calendar quarter (the valuation date) the requirements of § 2853.1(c) and (d) were satisfied. The ceding insurer shall establish a liability equal to the excess of the credit for reinsurance taken over the amount of Primary Security actually held pursuant to § 2853.1(c), unless:

(a) The requirements of § 2853.1(c) and (d) were fully satisfied as of the valuation date as to such reinsurance treaty; or

(b) Any deficiency has been eliminated before the due date of the Quarterly or Annual Statement to which the valuation date relates through the addition of Primary Security and/or Other Security, as the case may be, in such amount and in such form as would have caused the requirements of § 2853.1(c) and (d) to be fully satisfied as of the valuation date.

2854.3 Nothing in § 2854.2 shall be construed to allow a ceding company to maintain any deficiency under § 2853.1(c) or (d) for any period of time longer than is reasonably necessary to eliminate the deficiency.

History

• SOURCE: Final Rulemaking published at 69 DCR 015557 (December 30, 2022). District of Columbia Municipal Regulations Insurance 26-A DCMR § 2854

26-A DCMR § 2855 EXEMPTIONS

2855.1 The provisions of §§ 2850 – 2854 shall not apply to reinsurance of:

(a) Policies that satisfy the criteria for exemption set forth in §§ 3002.11 or 3002.12 of Title 26-A; and which are issued before the effective date of these regulations;

(b) Portions of policies that satisfy the criteria for exemption set forth in § 3002.10 of Title 26-A and which are issued before the effective date of these regulations;

(c) Any universal life policy that meets the following requirements:

(1) Secondary guarantee period, if any, is five (5) years or less;

(2) Specified premium for the secondary guarantee period is not less than the net level reserve premium for the secondary guarantee period based on the Commissioners Standard Ordinary (CSO) valuation tables and valuation interest rate applicable to the issue year of the policy; and

(3) The initial surrender charge is not less than one hundred percent (100%) of the first year annualized specified premium for the secondary guarantee period;

(d) Credit life insurance;

(e) Any variable life insurance policy that provides for life insurance, the amount or duration of which varies according to the investment experience of any separate account or accounts; or

(f) Any group life insurance certificate unless the certificate provides for a stated or implied schedule of maximum gross premiums required in order to continue coverage in force for a period in excess of one year.

2855.2 The provisions of §§ 2850-2854 shall not apply to reinsurance ceded to an assuming insurer that meets the applicable requirements of § 2(e) of the Law on Credit for Reinsurance Act of 1993 (D.C. Official Code § 31-501(e).

2855.3 The provisions of §§ 2850-2854 shall not apply to Reinsurance ceded to an assuming insurer that meets the applicable requirements of § 2(b), (c), or (d) of the Law on Credit for Reinsurance Act of 1993 (D.C. Official Code § 31-501(b), (c), or (d)), and that, in addition:

(a) Prepares statutory financial statements in compliance with the NAIC Accounting Practices and Procedures Manual, without any departures from NAIC statutory accounting practices and procedures pertaining to the admissibility or valuation of assets or liabilities that increase the assuming insurer’s reported surplus and are material enough that they need to be disclosed in the financial statement of the assuming insurer pursuant to Statement of Statutory Accounting Principles No. 1 (“SSAP 1”); and

(b) Is not in a Company Action Level Event, Regulatory Action Level Event, Authorized Control Level Event, or Mandatory Control Level Event as those terms are defined in the Risk-Based Capital Act of 1996, effective April 9, 1997 (D.C. Law 11-233; D.C. Official Code § 31-2001 et seq.), when its RBC is calculated in accordance with the life risk-based capital report including overview and instructions for companies, as the same may be amended by the NAIC from time to time, without deviation.

2855.4 The provisions of this Chapter shall not apply to reinsurance ceded to an assuming insurer that meets the applicable requirements of § 2(b), (c), and (d) of the Law on Credit for Reinsurance Act of 1993 (D.C. Official Code § 31-501(b), (c), and (d)), and that, in addition:

(a) Is not an affiliate, as that term is defined in § 2(1) of the Holding Company System Act of 1993, effective Oct. 21, 1993 (D.C. Law 10-44; D.C. Official Code § 31-701(1)), of:

(1) The insurer ceding the business to the assuming insurer; or

(2) Any insurer that directly or indirectly ceded the business to that ceding insurer;

(b) Prepares statutory financial statements in compliance with the NAIC Accounting Practices and Procedures Manual;

(c) Is both:

(1) Licensed or accredited in at least 10 states (including its state of domicile), and

(2) Not licensed in any state as a captive, special purpose vehicle, special purpose financial captive, special purpose life reinsurance company, limited purpose subsidiary, or any other similar licensing regime; and

(d) Is not, or would not be, below 500% of the Authorized Control Level RBC as that term is defined in § 2(13)(C) of the Risk-Based Capital Act of 1996, effective April 9, 1997 (D.C. Law 11-233; D.C. Official Code § 31-2001(13)(C)), when its Risk-Based Capital (RBC) is calculated in accordance with the life risk-based capital report including overview and instructions for companies, as the same may be amended by the NAIC from time to time, without deviation, and without recognition of any departures from NAIC statutory accounting practices and procedures pertaining to the admission or valuation of assets or liabilities that increase the assuming insurer’s reported surplus.

2855.5 The provisions of this Chapter shall not apply to reinsurance ceded to an assuming insurer that meets the requirements of § 5(b)(4) of the Law on Credit for Reinsurance Act of 1993 (D.C. Official Code § 31-504(b)(4)).

2855.6 The provisions of this Chapter shall not apply to reinsurance not otherwise exempt under this section if the Commissioner, after consulting with the NAIC Financial Analysis Working Group (FAWG) or other group of regulators designated by the NAIC, as applicable, determines under all the facts and circumstances that the following apply:

(a) The risks are clearly outside of the intent and purpose of this regulation (as described in § 2850);

(b) The risks are included within the scope of this regulation only as a technicality; and

(c) The application of this regulation to those risks is not necessary to provide appropriate protection to policyholders. The Commissioner shall publicly disclose any decision made pursuant to this subsection to exempt a reinsurance treaty from this regulation, as well as the general basis therefore (including a summary description of the treaty).

History

• SOURCE: Final Rulemaking published at 69 DCR 015557 (December 30, 2022). District of Columbia Municipal Regulations Insurance 26-A DCMR § 2855

26-A DCMR § 2899 DEFINITIONS

2899.1 When used in this chapter, the following terms and phrases shall have the meanings ascribed:

Actuarial method – the methodology used to determine the Required Level of Primary Security, as described in § 2851.

Covered policies – those policies, other than Grandfathered policies, of the following policy types:

Life insurance policies with guaranteed nonlevel gross premiums and/or guaranteed nonlevel benefits, except for flexible premium universal life insurance policies; or

(2) Flexible premium universal life insurance policies with provisions resulting in the ability of a policyholder to keep a policy in force over a secondary guarantee period.

Grandfathered policies – policies that would be covered policies except that they were issued prior to January 1, 2015, and were ceded, as of December 31, 2014, as part of a reinsurance treaty that would not have met one of the exemptions set forth in § 2855 had that section then been in effect.

Law on Credit for Reinsurance Act of 1993 – the Law on Credit for Reinsurance Act of 1993, effective October 15, 1993 (D.C. Law 10-36; D.C. Official Code § 31-501 et seq.).

NAIC – the National Association of Insurance Commissioners.

Non-covered policies – any policy that does not meet the definition of covered policies.

Other security – any security acceptable to the Commissioner other than security meeting the definition of primary security.

Primary security – the following forms of security:

(1) Cash meeting the requirements of § 3(b)(1) of the Law on Credit for Reinsurance Act of 1993 (D.C. Official Code § 31-502(b)(1));

(2) Securities listed by the Securities Valuation Office of the National Association of Insurance Commissioners meeting the requirements of § 3(b)(2) of the Law on Credit for Reinsurance Act of 1993 (D.C. Official Code § 31-502(b)(2)), but excluding any synthetic letter of credit, contingent note, credit-linked note or other similar security that operates in a manner similar to a letter of credit, and excluding any securities issued by the ceding insurer or any of its affiliates; and

(3) For security held in connection with funds-withheld and modified coinsurance reinsurance treaties:

(a) Commercial loans in good standing of CM3 quality or higher;

(b) Policy Loans; and

(c) Derivatives acquired in the normal course and used to support the hedge liabilities, pertaining to the actual risks in the policies ceded pursuant to the reinsurance treaty.

Required level of primary security – the dollar amount determined by applying the actuarial method to the risks ceded with respect to covered policies, but not more than the total reserve ceded.

Valuation manual – the valuation manual adopted by the NAIC as described in Section 11(B)(1) of the Standard Valuation Law, with all amendments adopted by the NAIC that are effective for the financial statement date on which credit for reinsurance is claimed.

VM-20 – “Requirements for Principle-Based Reserves for Life Products,” including all relevant definitions, from the Valuation Manual.

FORM RJ-1

CERTIFICATE OF REINSURER DOMICILED IN RECIPROCAL JURISDICTION

I, ________________________________________________________,

(name of officer) (title of officer)

of __________________________________________________________, the assuming insurer

(name of assuming insurer)

under a reinsurance agreement with one or more insurers domiciled in____________________,

(name of state)

in order to be considered for approval in this state, hereby certify that

_____________________________________ (“Assuming Insurer”):

(name of assuming insurer)

1. Submits to the jurisdiction of any court of competent jurisdiction in [Name of State] for the adjudication of any issues arising out of the reinsurance agreement, agrees to comply with all requirements necessary to give such court jurisdiction, and will abide by the final decision of such court or any appellate court in the event of an appeal. The assuming insurer agrees that it will include such consent in each reinsurance agreement, if requested by the commissioner. Nothing in this paragraph constitutes or should be understood to constitute a waiver of assuming insurer’s rights to commence an action in any court of competent jurisdiction in the United States, to remove an action to a United States District Court, or to seek a transfer of a case to another court as permitted by the laws of the United States or of any state in the United States. This paragraph is not intended to conflict with or override the obligation of the parties to the reinsurance agreement to arbitrate their disputes if such an obligation is created in the agreement, except to the extent such agreements are unenforceable under applicable insolvency or delinquency laws.

2. Designates the Insurance Commissioner of [Name of State] as its lawful attorney in and for the [Name of State] upon whom may be served any lawful process in any action, suit or proceeding in this state arising out of the reinsurance agreement instituted by or on behalf of the ceding insurer.

3. Agrees to pay all final judgments, wherever enforcement is sought, obtained by a ceding insurer, that have been declared enforceable in the territory where the judgment was obtained.

4. Agrees to provide prompt written notice and explanation if it falls below the minimum capital and surplus or capital or surplus ratio, or if any regulatory action is taken against it for serious noncompliance with applicable law.

5. Confirms that it is not presently participating in any solvent scheme of arrangement, which involves insurers domiciled in [Name of State]. If the assuming insurer enters into such an arrangement, the assuming insurer agrees to notify the ceding insurer and the commissioner, and to provide 100% security to the ceding insurer consistent with the terms of the scheme.

6. Agrees that in each reinsurance agreement it will provide security in an amount equal to 100% of the assuming insurer’s liabilities attributable to reinsurance ceded pursuant to that agreement if the assuming insurer resists enforcement of a final U.S. judgment, that is enforceable under the law of the territory in which it was obtained, or a properly enforceable arbitration award whether obtained by the ceding insurer or by its resolution estate, if applicable.

7. Agrees to provide the documentation in accordance with [cite relevant provision of the state equivalent of Section 9C(5) of the Credit for Reinsurance Model Regulation], if requested by the commissioner.

Dated: ___________________________

---

(name of assuming insurer)

BY: ______________________________________________

(name of officer)

---

(title of officer)

History

• SOURCE: Final Rulemaking published at 68 DCR 6518 (June 25, 2021); as amended by Final Rulemaking published at 69 DCR 015557 (December 30, 2022). District of Columbia Municipal Regulations Insurance 26-A DCMR § 2899

26-A29 STATEMENTS OF ACTUARIAL OPINION AND MEMORANDUM REGULATION

26-A DCMR § 2900 SCOPE

2900.1 This chapter shall apply to all life insurance companies and fraternal benefit societies doing business in the District of Columbia and to all life insurance companies and fraternal benefit societies that are authorized to reinsure life insurance, annuities or accident and health insurance business in the District of Columbia. This chapter shall be applied in a manner that allows the appointed actuary to utilize his or her professional judgment in performing the asset analysis and developing the actuarial opinion and supporting memoranda, consistent with relevant actuarial standards of practice. However, the Commissioner shall have the authority to specify specific methods of actuarial analysis and actuarial assumptions when, in the Commissioner's judgment, these specifications are necessary for an acceptable opinion to be rendered relative to the adequacy of reserves and related items. This chapter shall be applicable to all annual statements filed with the Commissioner after the effective date of this regulation. A statement of opinion on the adequacy of the reserves and related actuarial items based on an asset adequacy analysis in accordance with section 2902 of this chapter, and a memorandum in support thereof in accordance with section 2903 of this chapter, shall be required each year.

History

• SOURCE: Final Rulemaking published at 52 DCR 2438(March 11, 2005).

26-A DCMR § 2901 GENERAL REQUIREMENTS

2901.1 There is to be included on or attached to page 1 of the annual statement for each year, beginning with the year in which this chapter becomes effective, the statement of an appointed actuary, entitled "Statement of Actuarial Opinion," setting forth an opinion relating to reserves and related actuarial items held in support of policies and contracts, in accordance with section 2902 of this chapter.

2901.2 Upon written request by the company, the Commissioner may grant an extension of the date for submission of the statement of actuarial opinion.

2901.3 A "qualified actuary" is an individual who:

(a) Is a member in good standing of the American Academy of Actuaries;

(b) Is qualified to sign statements of actuarial opinion for life and health insurance company annual statements in accordance with the American Academy of Actuaries qualification standards for actuaries signing such statements;

(c) Is familiar with the valuation requirements applicable to life and health insurance companies;

(d) Has not been found by the Commissioner (or if so found has subsequently been reinstated as a qualified actuary), following appropriate notice and hearing to have:

(1) Violated any provision of or any obligation imposed by, the Insurance Law or other law in the course of his or her dealings as a qualified actuary;

(2) Been found guilty of fraudulent or dishonest practices;

(3) Demonstrated his or her incompetency, lack of cooperation, or untrustworthiness to act as a qualified actuary;

(4) Submitted to the Commissioner during the past five (5) years, pursuant to this chapter, an actuarial opinion or memorandum that the Commissioner rejected because it did not meet the provisions of this chapter including standards set by the Actuarial Standards Board; or

(5) resigned or been removed as an actuary within the past five (5) years as a result of acts or omissions indicated in any adverse report on examination or as a result of failure to adhere to generally acceptable actuarial standards; and

(e) Has not failed to notify the Commissioner of any action taken by any agency or official of any other state or foreign jurisdiction similar to that under paragraph (d) above.

2901.4 An "appointed actuary" is a qualified actuary who is appointed or retained to prepare the Statement of Actuarial Opinion required by this chapter, either directly by or by the authority of the board of directors through an executive officer of the company other than the qualified actuary. The company shall give the Commissioner timely written notice of the name, title (and, in the case of a consulting actuary, the name of the firm) and manner of appointment or retention of each person appointed or retained by the company as an appointed actuary and shall state in the notice that the person meets the requirements set forth in subsection 2901.3. Once notice is furnished, no further notice is required with respect to this person, provided that the company shall give the Commissioner timely written notice in the event the actuary ceases to be appointed or retained as an appointed actuary or to meet the requirements set forth in subsection 2901.2. If any person appointed or retained as an appointed actuary replaces a previously appointed actuary, the notice shall so state and give the reasons for replacement.

2901.5 The asset adequacy analysis required by this chapter:

(a) Shall conform to the Standards of Practice as promulgated from time to time by the Actuarial Standards Board and on any additional standards under this chapter, which standards are to form the basis of the statement of actuarial opinion in accordance with this chapter; and

(b) Shall be based on methods of analysis as are deemed appropriate for such purposes by the Actuarial Standards Board.

2901.6 Under authority of Section 2 of the Life Insurance Actuarial Opinion of Reserves Act of 1993, effective October 21, 1993 (D.C. Law 10-50; D.C. Official Code § 31-4901 et seq.) (2001) (hereinafter the "Act"), the statement of actuarial opinion shall apply to all in force business on the statement date, whether directly issued or assumed, regardless of when or where issued, e.g., reserves of Exhibits 8, 9 and 10, and claim liabilities in Exhibit 11, Part 1 and equivalent items in the separate account statement or statements.

2901.7 If the appointed actuary determines as the result of asset adequacy analysis that a reserve should be held in addition to the aggregate reserve held by the company and calculated in accordance with methods set forth in the Act, the company shall establish the additional reserve.

2901.8 Additional reserves established under subsection 2901.7 above and deemed not necessary in subsequent years may be released. Any amounts released shall be disclosed in the actuarial opinion for the applicable year. The release of such reserves would not be deemed an adoption of a lower standard of valuation.

History

• SOURCE: Final Rulemaking published at 52 DCR 2438 (March 11, 2005).

26-A DCMR § 2902 STATEMENT OF ACTUARIAL OPINION BASED ON AN ASSET ADEQUACY ANALYSIS

2902.1 The statement of actuarial opinion submitted in accordance with this section shall consist of:

(a) A paragraph identifying the appointed actuary and his or her qualifications (see paragraph 2902.2(a));

(b) A scope paragraph identifying the subjects on which an opinion is to be expressed and describing the scope of the appointed actuary's work, including a tabulation delineating the reserves and related actuarial items that have been analyzed for asset adequacy and the method of analysis, (see paragraph 2902.2(b)) and identifying the reserves and related actuarial items covered by the opinion that have not been so analyzed;

(c) A reliance paragraph describing those areas, if any, where the appointed actuary has deferred to other experts in developing data, procedures or assumptions, (e.g., anticipated cash flows from currently owned assets, including variation in cash flows according to economic scenarios (see paragraph 2902.2(c)), supported by a statement of each such expert in the manner prescribed by subsection 2902.5;

(d) An opinion paragraph expressing the appointed actuary's opinion with respect to the adequacy of the supporting assets to mature the liabilities (see paragraph 2902.2(g)); and

(e) One or more additional paragraphs will be needed in individual company cases as follows:

(1) If the appointed actuary considers it necessary to state a qualification of his or her opinion;

(2) If the appointed actuary must disclose an inconsistency in the method of analysis or basis of asset allocation used at the prior opinion date with that used for this opinion;

(3) If the appointed actuary must disclose whether additional reserves as of the prior opinion date are released as of this opinion date, and the extent of the release; and

(4) If the appointed actuary chooses to add a paragraph briefly describing the assumptions that form the basis for the actuarial opinion.

2902.2 The following paragraphs are to be included in the statement of actuarial opinion in accordance with this section. Language is that which in typical circumstances should be included in a statement of actuarial opinion. The language may be modified as needed to meet the circumstances of a particular case, but the appointed actuary should use language that clearly expresses his or her professional judgment. However, in any event the opinion shall retain all pertinent aspects of the language provided in this section:

(a) The opening paragraph should generally indicate the appointed actuary's relationship to the company and his or her qualifications to sign the opinion. For a company actuary, the opening paragraph of the actuarial opinion should include a statement such as:

"I, [name], am [title] of [insurance company name] and a member of the American Academy of Actuaries. I was appointed by, or by the authority of the Board of Directors of said insurer to render this opinion as stated in the letter to the Commissioner dated [insert date]. I meet the Academy qualification standards for rendering the opinion and am familiar with the valuation requirements applicable to life and health insurance companies."

For a consulting actuary, the opening paragraph should include a statement such as:

"I, [name], a member of the American Academy of Actuaries, am associated with the firm of [name of consulting firm]. I have been appointed by, or by the authority of the Board of Directors of [name of company] to render this opinion as stated in the letter to the Commissioner dated [insert date]. I meet the Academy qualification standards for rendering the opinion and am familiar with the valuation requirements applicable to life and health insurance companies';

(b) The scope paragraph should include a statement such as:

"I have examined the actuarial assumptions and actuarial methods used in determining reserves and related actuarial items listed below, as shown in the annual statement of the company, as prepared for filing with state regulatory officials, as of December 31, 20 .Tabulated below are those reserves and related actuarial items; which have been subjected to asset adequacy analysis.";

Asset Adequacy Tested Amounts-Reserves and Liabilities

Statement Item

Formula Reserves

(1)

Additional Actuarial Reserves (a) (2)

Analysis Method (b)

Other Amount (3)

Total Amount (1)+(2)+(3)+(4)

Aggregate

Reserve for Life Contracts

A. Life Insurance

B. Annuities

C. Supplementary Contracts Involving Life Contingencies

D. Accidental Death

Benefit

E. Disability -

Active

F. Disability- Disabled

G. Miscellaneous

Total

(Item 1, Page3)

Aggregate

Reserves for Accident &

Health Contracts

A. Activate Life Reserve

B. Claim Reserve

Total

(Item2, Page 3)

Deposit Type Contracts

Premium and Other

Deposit Funds (Column 5, Line 14)

Guaranteed

Interest

Contracts

(Column 2, Line 14)

Other

(Column 6, Line 14)

Supplemental Contracts and Annuities Certain (Column 3, Line 14)

Dividend Accumulations Or Refunds (Column 4, Line 14)

Total.(Column 1, Line 14)

Claims for Life and Accident & Health Contracts Part I

1 Life (Page3, Line 4.1)

2 Health (Page 3, Line 4.2)

Total Part 1

Separate Accounts (Page 3 of the Annual Statement of the Separate Accounts, Lines 1,

2, 3.1, 3.2, 3.3)

TOTAL RESERVES

IMR (General Account, Page Line )

Separate Accounts, Page Line )

AVR (Page Line )

(c)

Net Deferred and Uncollected Premium

Notes:

(a) The additional actuarial reserves are the reserves established under subsection 2901.7.

(b) The appointed actuary should indicate the method of analysis, determined in accordance with the standards for asset adequacy analysis referred to in subsection 2901.5 of this chapter, by means of symbols that should be defined in footnotes to the table.

(c) Allocated amount of Asset Valuation Reserve (AVR).

(c) If the appointed actuary has relied on other experts to develop certain portions of the analysis, the reliance paragraph should include a statement such as:

"I have relied on [name], [title] for [e.g., "anticipated cash flows from currently owned assets, including variations in cash flows according to economic scenarios" or "certain critical aspects of the analysis performed in conjunction with forming my opinion"], as certified in the attached statement. I have reviewed the information relied upon for reasonableness.";

(d) If an expert will be relying on other experts, a statement of reliance thereto shall accompany the statement of actuarial opinion in the manner prescribed by subsection 2902.5;

(e) If the appointed actuary has examined the underlying asset and liability records, the reliance paragraph should include a statement such as:

"My examination included such review of the actuarial assumptions and actuarial methods and of the underlying basic asset and liability records and such tests of the actuarial calculations as I considered necessary. I also reconciled the underlying basic asset and liability records to [exhibits and schedules listed as applicable] of the company's current annual statement.";

(f) If' the appointed actuary has not examined the underlying records, but has relied upon data (e.g., listings and summaries of policies in force or asset records) prepared by the company, the reliance paragraph should include a statement such as:

"In forming my opinion on [specify types of reserves] I relied upon data prepared by [name and title of company officer certifying in force records or other data] as certified in the attached statements. I evaluated that data for reasonableness and consistency. I also reconciled that data to [exhibits and schedules to be listed as applicable] of the company's current annual statement. In other respects, my examination included review of the actuarial assumptions and actuarial methods used and tests of the calculations I considered necessary.";

Such a statement shall be accompanied by a statement by each person relied upon in the manner prescribed by subsection 2902.5;

(g) The opinion paragraph should include a statement such as:

"In my opinion the reserves and related actuarial values concerning the statement items identified above:

(1) Are computed in accordance with presently accepted actuarial standards consistently applied and are fairly stated, in accordance with sound actuarial principles;

(2) Are based on actuarial assumptions that produce reserves at least as great as those called for in any contract provision as to reserve basis and method, and are in accordance with all other contract provisions;

(3) Meet the requirements of the insurance laws and regulations of the state of [state of domicile]; and are at least as great as the minimum aggregate amounts required by the state in which this statement is filed;

(4) Are computed on the basis of assumptions consistent with those used in computing the corresponding items in the annual statement of the preceding year-end (with any exceptions noted below); and

(5) Include provision for all actuarial reserves and related statement items, which ought to be established:

The reserves and related items, when considered in light of the assets held by the company with respect to such reserves and related actuarial items including, but not limited to, the investment earnings on the assets, and the considerations anticipated to be received and retained under the policies and contracts, make 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 company. (At the discretion of the Commissioner, this language may be omitted for an opinion filed on behalf of a company doing business only in this state and in no other state.)

The actuarial methods, considerations and analyses used in forming my opinion conform to the appropriate Standards of Practice as promulgated by the Actuarial Standards Board, which standards form the basis of this statement of opinion.

applicable date of the annual statement to the date of the rendering of this opinion which should be considered in reviewing this opinion.

or

The following material changes which occurred between the date of the statement for which this opinion is applicable and the date of this opinion should be considered in reviewing this opinion:

(Describe the change or changes.)

The impact of unanticipated events subsequent to the date of this opinion is beyond the scope of this opinion. The analysis of asset adequacy portion of this opinion should be viewed recognizing that the company's future experience may not follow all the assumptions used in the analysis.

---

Signature of Appointed Actuary

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Address of Appointed Actuary

---

Telephone Number of Appointed Actuary

---

Date"

2902.3 The adoption for new issues or new claims or other new liabilities of an actuarial assumption that differs from a corresponding assumption used for prior new issues or new claims or other new liabilities is not a change in actuarial assumptions within the meaning of this section.

2902.4 If the appointed actuary is unable to form an opinion, then he or she shall refuse to issue a statement of actuarial opinion. If the appointed actuary's opinion is adverse or qualified, then he or she shall issue an adverse or qualified actuarial opinion explicitly stating the reasons for the opinion. This statement should follow the scope paragraph and precede the opinion paragraph.

2902.5 If the appointed actuary relies on the certification of others on matters concerning the accuracy or completeness of any data underlying the actuarial opinion, or the appropriateness of any other information used by the appointed actuary in forming the actuarial opinion, the actuarial opinion should so indicate the persons the actuary is relying upon and a precise identification of the items subject to reliance. In addition, the persons on whom the appointed actuary relies shall provide a certification that precisely identifies the items on which the person is providing information and a statement as to the accuracy, completeness or reasonableness, as applicable, of the items. This certification shall include the signature, title, company, address and telephone number of the person rendering the certification, as well as the date on which it is signed.

2902.6 The Standard Valuation Law gives the Commissioner broad authority to accept the valuation of a foreign insurer when that valuation meets the requirements applicable to a company domiciled in the District of Columbia in the aggregate. As an alternative to the requirements of subparagraph 2902.2(g)(3), the Commissioner may make one or more of the following additional approaches available to the opining actuary:

(a) A statement that the reserves "meet the requirements of the insurance laws and regulations of the state of domicile and the formal written standards and conditions of the District of Columbia for filing an opinion based on the law of state where the company is domiciled." If the Commissioner chooses to allow this alternative, a formal written list of standards and conditions shall be made available. If a company chooses to use this alternative, the standards and conditions in effect on July 1 of a calendar year shall apply to statements for that calendar year, and they shall remain in effect until they are revised or revoked. If no list is available, this alternative is not available;

(b) A statement that the reserves "meet the requirements of the insurance laws and regulations of the state of domicile and I have verified that the company's request to file an opinion based on the law of the state of its domicile has been approved and, that any conditions required by the Commissioner for approval of that request have been met." If the Commissioner chooses to allow this alternative, a formal written statement of such allowance shall be issued no later than March 31 of the year it is first effective. It shall remain valid until rescinded or modified by the Commissioner. The rescission or modifications shall be issued no later than March 31 of the year they are first effective. Subsequent to that statement being issued, if a company chooses to use this alternative, the company shall file a request to do so, along with justification for its use, no later than April 30 of the year of the opinion to be filed. The request shall be deemed approved on October 1 of that year if the Commissioner has not denied the request by that date;

(c) A statement that the reserves "meet the requirements of the insurance laws and regulations of the state of domicile and I have submitted the required comparison as specified by the District of Columbia," and:

(1) If the Commissioner chooses to allow this alternative, a formal written list of products (to be added to the table in subparagraph 2902.6(c)(2) below) for which the required comparison shall be provided will be published;

(2) If a company chooses to use this alternative, the list in effect on July 1 of a calendar year shall apply to statements for that calendar year, and it shall remain in effect until it is revised or revoked. If no list is available, this alternative is not available;

(3) If a company desires to use this alternative, the appointed actuary shall provide a comparison of the gross nationwide reserves held to the gross nationwide reserves that would be held under NAIC codification standards; Gross nationwide reserves are the total reserves calculated for the total company in force business directly sold and assumed, indifferent to the state in which the risk resides, without reduction for reinsurance ceded.

(4) The information shall be presented in a table as shown below;

(1)

Product Type

(2)

Death Benefit or

Account Value

(3)

Reserves Held

(4)

Codification

Reserves

(5)

Codification

Standard

(5) The information listed shall include all products identified by either the state of filing or any other states subscribing to this alternative;

(6) If there is no codification standard for the type of product or risk in force or if the codification standard does not directly address the type of product or risk in force, the appointed actuary shall provide detailed disclosure of the specific method and assumptions used in determining the reserves held; and

(7) The comparison provided by the company is to be kept confidential to the same extent and under the same conditions as the actuarial memorandum.

2902.7 Notwithstanding the above, the Commissioner may reject an opinion based on the laws and regulations of the company's state of domicile and require an opinion based on the laws of the District of Columbia. If a company is unable to provide the opinion within sixty (60) days of the request or such other period of time determined by the Commissioner after consultation with the company, the Commissioner may contract an independent actuary at the company's expense to prepare and file the opinion.

History

• SOURCE: Final Rulemaking published at 52 DCR 2438(March 11, 2005).

26-A DCMR § 2903 DESCRIPTION OF ACTUARIAL MEMORANDUM INCLUDING AN ASSET ADEQUACY ANALYSIS AND REGULATORY ASSEST ADEQUACY ISSUES SUMMARY

2903.1 In accordance with the Act, the appointed actuary shall prepare a memorandum to the company describing the analysis done in support of his or her opinion regarding the reserves. The memorandum shall be made available for examination by the Commissioner upon his or her request but shall be returned to the company after such examination and shall not be considered a record of the Department or subject to automatic filing with the Commissioner.

2903.2 In preparing the memorandum, the appointed actuary may rely on, and include as a part of his or her own memorandum, memoranda prepared and signed by other actuaries who are qualified within the meaning of subsection 2901.3 of this chapter, with respect to the areas covered in such memoranda, and so state in their memoranda.

2903.3 If the Commissioner requests a memorandum and no such memorandum exists or if the Commissioner finds that the analysis described in the memorandum fails to meet the standards of the Actuarial Standards Board or the standards and requirements of this chapter, the Commissioner may designate a qualified actuary to review the opinion and prepare such supporting memorandum as is required for review. The reasonable and necessary expense of the independent review shall be paid by the company but shall be directed and controlled by the Commissioner.

2903.4 The reviewing actuary shall have the same status as an examiner for purposes of obtaining data from the company and the work papers and documentation of the reviewing actuary shall be retained by the Commissioner; provided, however, that any information provided by the company to the reviewing actuary and included in the work papers shall be considered as material provided by the company to the Commissioner and shall be kept confidential to the same extent as is prescribed by the Act with respect to other material provided by the company to the Commissioner. The reviewing actuary shall not be an employee of a consulting firm involved with the preparation of any prior memorandum or opinion for the insurer pursuant to this chapter for either the current year or the preceding three (3) years.

2903.5 In accordance with the Act, the appointed actuary shall prepare a regulatory asset adequacy issues summary, the contents of which are specified in subsection 2903.7. The regulatory asset adequacy issues summary will be submitted no later than March 15 of the year following the year for which a statement of actuarial opinion based on asset adequacy is required. The regulatory asset adequacy issues summary is to be kept confidential to the same extent and under the same conditions as the actuarial memorandum.

2903.6 When an actuarial opinion is provided, the memorandum shall demonstrate that the analysis has been done in accordance with the standards for asset adequacy referred to in subsection 2901.5 of this chapter and any additional standards under this chapter. It shall specify:

(a) For reserves:

(1) Product descriptions including market description, underwriting and other aspects of a risk profile and the specific risks the appointed actuary deems significant;

(2) Source of liability in force;

(3) Reserve method and basis;

(4) Investment reserves;

(5) Reinsurance arrangements;

(6) Identification of any explicit or implied guarantees made by the general account in support of benefits provided through a separate account or under a separate account policy or contract and the methods used by the appointed actuary to provide for the guarantees in the asset adequacy analysis;

(7) Documentation of assumptions to test reserves for the following:

(A) Lapse rates (both base and excess);

(B) Interest crediting rate strategy;

(C) Mortality;

(D) Policyholder dividend strategy;

(E) Competitor or market interest rate;

(F) Annuitization rates;

(G) Commissions and expenses; and

(H) Morbidity;

(8) The documentation of the assumptions shall be such that an actuary reviewing the actuarial memorandum could form a conclusion as to the reasonableness of the assumptions;

(b) For assets:

(1) Portfolio descriptions, including a risk profile disclosing the quality, distribution and types of assets;

(2) Investment and disinvestment assumptions;

(3) Source of asset data;

(4) Asset valuation bases;

(5) Documentation of assumptions made for:

(A) Default costs;

(B) Bond call function;

(C) Mortgage prepayment function;

(D) Determining market value for assets sold due to disinvestment strategy; and

(E) Determining yield on assets acquired through the investment strategy;

(6) The documentation of the assumptions shall be such that an actuary reviewing the actuarial memorandum could form a conclusion as to the reasonableness of the assumptions;

(c) For the analysis basis:

(1) Methodology;

(2) Rationale for inclusion or exclusion of different blocks of business and how pertinent risks were analyzed;

(3) Rationale for degree of rigor in analyzing different blocks of business (include in the rationale the level of "materiality" that was used in determining how rigorously to analyze different blocks of business);

(4) Criteria for determining asset adequacy (include in the criteria the precise basis for determining if assets are adequate to cover reserves under "moderately adverse conditions" or other conditions as specified in relevant actuarial standards of practice); and

(5) Whether the impact of federal income taxes was considered and the method of treating reinsurance in the asset adequacy analysis;

(d) Summary of material changes in methods, procedures, or assumptions from prior years asset adequacy analysis;

(e) Summary of results; and

(f) Conclusions.

2903.7 The regulatory asset adequacy issues summary shall include:

(a) Descriptions of the scenarios tested (including whether those scenarios are stochastic or deterministic) and the sensitivity testing done relative to those scenarios. If a negative ending surplus results under certain scenarios tested in the aggregate, the actuary should describe those scenarios tested and the amount of additional reserve as of the valuation date which, if held, would eliminate the negative aggregate surplus values. Ending surplus values shall be determined by either:

1. Extending the projection period until the in force and associated assets and liabilities at the end of the projection period are immaterial; or

2. By adjusting the surplus amount at the end of the projection period by an amount that appropriately estimates the value that can reasonably be expected to arise from the assets and liabilities remaining in force;

(b) The extent to which the appointed actuary uses assumptions in the asset adequacy analysis that is materially different than the assumptions used in the previous asset adequacy analysis;

(c) The amount of reserves and the identity of the product lines that had been subjected to asset adequacy analysis in the prior opinion but were not subject to analysis for the current opinion;

(d) Comments on any interim results that may be of significant concern to the appointed actuary;

(e) The methods used by the actuary to recognize the impact of reinsurance on the company's cash flows, including both assets and liabilities, under each of the scenarios tested; and

(f) Whether the actuary has been satisfied that all options, whether explicit or embedded in any asset or liability (including but not limited to those affecting cash flows embedded in fixed income securities), and equity-like features in any investments, have been appropriately considered in the asset adequacy analysis.

2903.8 The regulatory asset adequacy issues summary shall contain the name of the company for which the regulatory asset adequacy issues summary is being supplied and shall be signed and dated by the appointed actuary rendering the actuarial opinion.

2903.9 The memorandum shall include a statement:

"Actuarial methods, considerations and analyses used in the preparation of this memorandum conform to the appropriate Standards of Practice as promulgated by the Actuarial Standards Board, which standards form the basis for this memorandum"

2903.10 An appropriate allocation of assets in the amount of the interest maintenance reserve ("IMR"), whether positive or negative, shall be used in any asset adequacy analysis. Analysis of risks regarding asset default may include an appropriate allocation of assets supporting the asset valuation reserve ("AVR"); these AVR assets may not be applied for any other risks with respect to reserve adequacy. Analysis of these and other risks may include assets supporting other mandatory or voluntary reserves available to the extent not used for risk analysis and reserve support.

2903.11 The amount of the assets used for the AVR shall be disclosed in the table of reserves and liabilities of the opinion and in the memorandum. The method used for selecting particular assets or allocated portions of assets shall be disclosed in the memorandum.

2903.12 The appointed actuary shall retain on file, for at least seven (7) years, sufficient documentation so that it will be possible to determine the procedures followed, the analyses performed, the basis for assumptions, and the results obtained.

History

• SOURCE: Final Rulemaking published at 52 DCR 2438 (March 11, 2005).

26-A DCMR § 2999 DEFINITIONS

"Act" means section 2 of the Life Insurance Actuarial Opinion of Reserves Act of 1993, effective October 21, 1993 (D.C. Law 10-50; D.C. Official Code § 31-4901 et seq.) (2001).

"Actuarial Opinion" means the opinion of an appointed actuary regarding the adequacy of the reserves and related actuarial items based on an asset adequacy analysis in accordance with section 2902 of this chapter and with applicable Actuarial Standards of Practice.

"Actuarial Standards Board" means the board established by the American Academy of Actuaries to develop and promulgate standards of actuarial practice.

"Annual statement" means that statement required by the Act, which is to be filed by the company with the Commissioner annually.

"Appointed actuary" means an individual who is appointed or retained in accordance with the requirements set forth in subsection 2901.3 of this chapter to provide the actuarial opinion and supporting memorandum as required by the Act.

"Asset adequacy analysis" means an analysis that meets the standards and other requirements referred to in subsection 2901.5 of this chapter.

"Commissioner" means the District of Columbia Department of Insurance, Securities, and Banking Commissioner.

"Company" means a life insurance company, fraternal benefit society or reinsurer subject to the provisions of the Act and this chapter.

"Department" means the District of Columbia Department of Insurance, Securities and Banking.

"Qualified actuary" means an individual who meets the requirements set forth in subsection 2901.3 of this chapter.

"Standard Valuation Law" means section 31-4701 of the D.C. Official Code (2001).

History

• SOURCE: Final Rulemaking published at 52 DCR 2438 (March 11, 2005).

26-A30 VALUATION OF LIFE INSURANCE POLICIES

26-A DCMR § 3000 APPLICABILITY

3000.1 These regulations shall apply to all life insurance policies, with or without nonforfeiture values, issued on or after the effective date of this regulation, subject to exceptions and conditions set forth in these rules.

3000.2 These regulations shall not apply to:

(a) Any individual life insurance policy issued on or after the effective date of this regulation if the policy is issued in accordance with and as a result of the exercise of a reentry provision contained in the original life insurance policy of the same or greater face amount, issued before the effective date of this regulation, that guarantees the premium rates of the new policy.

This regulation also shall not apply to subsequent policies issued as a result of the exercise of such a provision, or a derivation of the provision, in the new policy.

(b) Any universal life policy that meets all the following requirements:

1. The secondary guarantee period, if any, is five (5) years or less;

2. The specified premium for the secondary guarantee period is not less than the net level reserve premium for the secondary guarantee period based on the CSO valuation tables as defined in subsection 3004 and the applicable valuation interest rate; and

3. The initial surrender charge is not less than 100 percent of the first year annualized specified premium for the secondary guarantee period.

(c) Any variable life insurance policy that provides for life insurance, the amount or duration of which varies according to the investment experience of any separate account or accounts.

(d) Any variable universal life insurance policy that provides for life insurance, the amount or duration of which varies according to the investment experience of any separate account or accounts.

(e) A group life insurance certificate unless the certificate provides for a stated or implied schedule of maximum gross premiums required in order to continue coverage in force for a period in excess of one year.

3000.3 The following conditions shall apply with respect to insurance policies affected by these regulations:

(a) Calculation of the minimum valuation standard for policies with guaranteed nonlevel gross premiums or guaranteed nonlevel benefits (other than universal life policies), or both, shall be in accordance with the provisions of section 3002.

(b) Calculation of the minimum valuation standard for flexible premium and fixed premium universal life insurance policies, that contain provisions resulting in the ability of a policyholder to keep a policy in force over a secondary guarantee period shall be in accordance with the provisions of section 3003.

History

• SOURCE: Final Rulemaking published at 47 DCR 2914 (April 28, 2000).

26-A DCMR § 3001 GENERAL CALCULATION REQUIREMENTS FOR BASIC RESERVES AND PREMIUM DEFICIENCY RESERVES PRIOR TO JANUARY 1, 2005.

3001.1 At the election of the company for any one or more specified plans of life insurance, the minimum mortality standard for basic reserves may be calculated using the 1980 CSO valuation tables with select mortality factors (or any other valuation mortality table adopted by the National Association of Insurance Commissioners after the effective date of this regulation and promulgated by regulation by the commissioner for this purpose). If select mortality factors are elected, they may be:

(a) The ten-year select mortality factors incorporated into the 1980 amendments to the National Association of Insurance Commissioners Standard Valuation Law;

(b) The select mortality factors in the Appendix; or

(c) Any other table of select mortality factors adopted by the National Association of Insurance Commissioners after the effective date of this regulation and promulgated by regulation by the commissioner for the purpose of calculating basic reserves.

3001.2 Deficiency reserves, if any, are calculated for each policy as the excess, if greater than zero, of the quantity A over the basic reserve. The quantity A is obtained by recalculating the basic reserve for the policy using guaranteed gross premiums instead of net premiums when the guaranteed gross premiums are less than the corresponding net premiums. At the election of the company for any one or more specified plans of insurance, the quantity A and the corresponding net premiums used in the determination of quantity A may be based upon the 1980 CSO valuation tables with select mortality factors (or any other valuation mortality table adopted by the National Association of Insurance Commissioners after the effective date of this regulation and promulgated by regulation by the Commissioner). If select mortality factors are elected, they may be:

(a) The ten-year select mortality factors incorporated into the 1980 amendments to the National Association of Insurance Commissioners Standard Valuation Law;

(b) The select mortality factors in the Appendix of this chapter;

(c) For durations in the first segment, X percent of the select mortality factors in the Appendix of this chapter, subject to the following:

(1) X may vary by policy year, policy form, underwriting classification, issue age, or any other policy factor expected to affect mortality experience;

(2) X shall not be less than twenty percent (20%);

(3) X shall not decrease in any successive policy years;

(4) X is such that, when using the valuation interest rate used for basic reserves, item (A), as set forth below, is greater than or equal to Item (B):

(A) The actuarial present value of future death benefits, calculated using mortality rates resulting from the application of X, or,

(B) The actuarial present value of future death benefits calculated using anticipated mortality experience without recognition of mortality improvement beyond the valuation date;

(5) X is such that the mortality rates resulting from the application of X are at least as great as the anticipated mortality experience, without recognition of mortality improvement beyond the valuation date, in each of the first five (5) years after the valuation date;

(6) The appointed actuary shall increase X at any valuation date where it is necessary to continue to meet all the requirements of Subsection 3001.2(c);

(7) The appointed actuary may decrease X at any valuation date as long as X does not decrease any successive policy years and as long as it continues to meet all the requirements of Subsection 3001.2(c);

(8) The appointed actuary shall specifically take into account the adverse effect on expected mortality and lapsation of any anticipated or actual increase in gross premiums; and

(9) If X is less than 100 percent at any duration for any policy, the following requirements shall be met:

(A) The appointed actuary shall annually prepare an actuarial opinion and memorandum for the company in conformance with the requirements of D.C. Code § 35-501; and

(B) The appointed actuary shall annually opine for all policies subject to this regulation as to whether the mortality rates resulting from the application of X meet the requirements of Subsection 3001.2(c). This opinion shall be supported by an actuarial report, subject to appropriate Actuarial Standards of Practice promulgated by the Actuarial Standards Board of the American Academy of Actuaries. The X factors shall reflect anticipated future mortality, without recognition of mortality improvement beyond the valuation date, taking into account relevant emerging experience.

(d) Any other table of select mortality factors adopted by the National Association of Insurance Commissioners after the effective date of this regulation and promulgated by regulation by the Commissioner for the purpose of calculating deficiency reserves.

3001.3 This subsection applies to both basic reserves and deficiency reserves. Any set of select mortality factors may be used only for the first segment. However, if the first segment is less than ten (10) years, the appropriate ten-year select mortality factors incorporated into the 1980 amendments to the National Association of Insurance Commissioners Standard Valuation Law may be used thereafter through the tenth policy year from the date of issue.

3001.4 In determining basic reserves or deficiency reserves, guaranteed gross premiums without policy fees may be used where the calculation involves the guaranteed gross premium but only if the policy fee is a level dollar amount after the first policy year. In determining deficiency reserves, policy fees may be included in guaranteed gross premiums, even if not included in the actual calculation of basic reserves.

3001.5 Reserves for policies that have changes to guaranteed gross premiums, guaranteed benefits, guaranteed charges, or guaranteed credits that are unilaterally made by the insurer after issue and that are effective for more than one year after the date of the change shall be the greatest of the following:

(a) Reserves calculated ignoring the guarantee;

(b) Reserves assuming the guarantee was made at issue; or

(c) Reserves assuming that the policy was issued on the date of the guarantee.

3001.6 The Commissioner may require that the company document the extent of the adequacy of reserves for specified blocks, including but not limited to policies issued prior to the effective date of this regulation. This documentation may include a demonstration of the extent to which aggregation with other non-specified blocks of business is relied upon in the formation of the appointed actuary opinion pursuant to and consistent with the requirements of D.C. Code § 35-501.

History

• SOURCE: Final Rulemaking published at 47 DCR 2914 (April 28, 2000).

26-A DCMR § 3002 CALCULATION OF MINIMUM VALUATION STANDARD FOR POLICIES WITH GUARANTEED NONLEVEL GROSS PREMIUMS OR GUARANTEED NONLEVEL BENEFITS (OTHER THAN UNIVERSAL LIFE POLICIES)

3002.1 Basic reserves shall be calculated as the greater of the segmented reserves and the unitary reserves. Both the segmented reserves and the unitary reserves for any policy shall use the same valuation mortality table and selection factors. At the option of the insurer, in calculating segmented reserves and net premiums, either of the adjustments described in paragraph (a) or (b) below may be made:

(a) Treat the unitary reserve, if greater than zero, applicable at the end of each segment as a pure endowment and subtract the unitary reserve, if greater than zero, applicable at the beginning of each segment from the present value of guaranteed life insurance and endowment benefits for each segment.

(b) Treat the guaranteed cash surrender value, if greater than zero, applicable at the end of each segment as a pure endowment and subtract the guaranteed cash surrender value, if greater than zero, applicable at the beginning of each segment from the present value of guaranteed life insurance and endowment benefits for each segment.

3002.2 The deficiency reserve at any duration shall be calculated on a unitary basis if the corresponding basic reserve determined by § 3002.1 is unitary, on a segmented basis if the corresponding basic reserve determined by § 3002.1 is segmented, or on the segmented basis if the corresponding basic reserve determined by § 3002.1 is equal to both the segmented reserve and the unitary reserve.

3002.3 Subsection 3002.3 shall apply to any policy for which the guaranteed gross premium at any duration is less than the corresponding modified net premium calculated by the method used in determining the basic reserves, but using the minimum valuation standards of mortality (specified in § 3001.2) and rate of interest.

3002.4 Deficiency reserves, if any, shall be calculated for each policy as the excess if greater than zero, for the current and all remaining periods, of the quantity A over the basic reserve, where A is obtained as indicated in § 3001.2.

3002.5 For deficiency reserves determined on a segmented basis, the quantity A is determined using segment lengths equal to those determined for segmented basic reserves.

3002.6 Basic reserves may not be less than the tabular cost of insurance for the balance of the policy year, if mean reserves are used. Basic reserves may not be less than the tabular cost of insurance for the balance of the current modal period or to the paid-to-date, if the paid-to-date is later than the current modal period. If mid-terminal reserves are used, basic reserves may not be less than the tabular cost of insurance for the balance of the current modal period or to the paid-to-date if the paid-to-date is later, but not beyond the next policy anniversary. The tabular cost of insurance shall use the same valuation mortality table and interest rates as that used for the calculation of the segmented reserves. However, if selected mortality factors are used, they shall be the ten-year select factors incorporated into the 1980 amendments of the National Association of Insurance Commissioners Standard Valuation Law. In no case may total reserves (including basic reserves, deficiency reserves and any reserves held for supplemental benefits that would expire upon contract termination) be less than the amount that the policyowner would receive (including the cash surrender value of the supplemental benefits, if any, referred to above), exclusive of any deduction for policy loans, upon termination of the policy.

3002.7 For any policy with an unusual pattern of guaranteed cash surrender values, the reserves actually held prior to the first unusual guaranteed cash surrender value shall not be less than the reserves calculated by treating the first unusual guaranteed cash surrender value as a pure endowment and treating the policy as an n year policy providing term insurance plus a pure endowment equal to the unusual cash surrender value, where n is the number of years from the date of issue to the date the unusual cash surrender value is scheduled.

3002.8 The reserves actually held subsequent to any unusual guaranteed cash surrender value shall not be less than the reserves calculated by treating the policy as an n year policy providing term insurance plus a pure endowment equal to the next unusual guaranteed cash surrender value, and treating any unusual guaranteed cash surrender value at the end of the prior segment as a net single premium, where:

(a) n is the number of years from the date of the last unusual guaranteed cash surrender value prior to the valuation date to the earlier of:

(1) The date of the next unusual guaranteed cash surrender value, if any, that is scheduled after the valuation date; or

(2) The mandatory expiration date of the policy;

(b) The net premium for a given year during the n year period is equal to the product of the net to gross ratio and the respective gross premium; and

(c) The net to gross ratio is equal to item (1) below divided by item (2) as follows:

(1) The present value, at the beginning of the n year period, of death benefits payable during the n year period plus the present value, at the beginning of the n year period, of the next unusual guaranteed cash surrender value, if any, minus the amount of the last unusual guaranteed cash surrender value, if any, scheduled at the beginning of the n year period.

(2) The present value, at the beginning of the n year period, of the scheduled gross premiums payable during the n year period.

3002.9 For purposes of this subsection, a policy is considered to have an unusual pattern of guaranteed cash surrender values if any future guaranteed cash surrender value exceeds the prior year's guaranteed cash surrender value by more than the sum of:

(a) One hundred ten percent (110%) of the scheduled gross premium for that year;

(b) One hundred ten percent (110%) of one year's accrued interest on the sum of the prior year's guaranteed cash surrender value and the scheduled gross premium using the nonforfeiture interest rate used for calculating policy guaranteed cash surrender values; and

(c) Five percent (5%) of the first policy year surrender charge, if any.

3002.10 At the option of the company, the following approach for reserves on yearly renewable term reinsurance is applicable:

(a) Calculate the valuation net premium for each future policy year as the tabular cost of insurance for that future year.

(b) Basic reserves shall never be less than the tabular cost of insurance for the appropriate period, as defined in § 3002.3.

(c) Deficiency reserves shall be calculated as follows:

(1) For each policy year, calculate the excess, if greater than zero, of the valuation net premium over the respective maximum guaranteed gross premium.

(2) Deficiency reserves shall never be less than the sum of the present values, at the date of valuation, of the excesses determined in accordance with subparagraph (1) above.

(d) For purposes of this subsection, the calculations use the maximum valuation interest rate and the 1980 CSO mortality tables with or without ten-year select mortality factors, or any other table adopted after the effective date of this regulation by the National Association of Insurance Commissioners and promulgated by regulation by the Commissioner for this purpose.

(e) A reinsurance agreement shall be considered yearly renewable term reinsurance for purposes of this subsection if only the mortality risk is reinsured.

(f) If the assuming company chooses this optional exemption, the ceding company's reinsurance reserve credit shall be limited to the amount of reserve held by the assuming company for the affected policies.

3002.11 At the option of the company, the following approach for reserves for attained-age-based yearly renewable term life insurance policies may be used:

(a) Calculate the valuation net premium for each future policy year as the tabular cost of insurance for that future year.

(b) Basic reserves shall never be less than the tabular cost of insurance for the appropriate period, as defined in § 3002.3.

(c) Deficiency reserves shall be calculated as follows:

(1) For each policy year, calculate the excess, if greater than zero, of the valuation net premium over the respective maximum guaranteed gross premium.

(2) Deficiency reserves shall never be less than the sum of the present values, at the date of valuation, of the excesses determined in accordance with subparagraph (1) above.

(d) For purposes of this subsection, the calculations use the maximum valuation interest rate and the 1980 CSO valuation tables with or without ten-year select mortality factors, or any other table adopted after the effective date of this regulation by the National Association of Insurance Commissioners and promulgated by regulation by the commissioner for this purpose.

(e) A policy shall be considered an attained-age-based yearly renewable term life insurance policy for purposes of this subsection if:

(1) The premium rates (on both the initial current premium scale and the guaranteed maximum premium scale) are based upon the attained age of the insured such that the rate for any given policy at a given attained age of the insured is independent of the year the policy was issued; and

(2) The premium rates (on both the initial current premium scale and the guaranteed maximum premium scale) are the same as the premium rates for policies covering all insureds of the same sex, risk class, plan of insurance and attained age.

(f) For policies that become attained-age-based yearly renewable term policies after an initial period of coverage, the approach of this subsection may be used after the initial period if:

(1) The initial period is constant for all insureds of the same sex, risk class and plan of insurance; or

(2) The initial period runs to a common attained age for all insureds of the same sex, risk class and plan of insurance; and

(3) After the initial period of coverage, the policy meets the conditions of paragraph (e) above.

(g) If this election is made, this approach shall be applied in determining reserves for all attained-age-based yearly renewable term life insurance policies issued on or after the effective date of this regulation.

3002.12 Unitary basic reserves and unitary deficiency reserves need not be calculated for a policy if the following conditions are met:

(a) The policy consists of a series of n-year periods, including the first period and all renewal periods, where n is the same for each period, except that for the final renewal period, n may be truncated or extended to reach the expiry age, provided that this final renewal period is less than 10 years and less than twice the size of the earlier n-year periods, and for each period, the premium rates on both the initial current premium scale and the guaranteed maximum premium scale are level;

(b) The guaranteed gross premiums in all n-year periods are not less than the corresponding net premiums based upon the 1980 CSO Table with or without the ten-year select mortality factors; and

(c) There is no cash surrender value in any policy year.

3002.13 Unitary basic reserves and unitary deficiency reserves need not be calculated for a policy if the following conditions are met, based upon the initial current premium scale at issue:

(a) The insured is age twenty-four (24) or younger;

(b) Until the insured reaches the end of the juvenile period, which must occur at or before age twenty-five (25), the gross premiums and death benefits are level, and there are no cash surrender values; and

(c) After the end of the juvenile period, gross premiums are level for the remainder of the premium paying period, and death benefits are level for the remainder of the life of the policy.

History

• SOURCE: Final Rulemaking published at 47 DCR 2914 (April 28, 2000).

26-A DCMR § 3003 CALCULATION OF MINIMUM VALUATION STANDARD FOR FLEXIBLE PREMIUM AND FIXED PREMIUM UNIVERSAL LIFE INSURANCE POLICIES THAT CONTAIN PROVISIONS RESULTING IN THE ABILITY OF A POLICYOWNER TO KEEP A POLICY IN FORCE OVER A SECONDARY GUARANTEE PERIOD

3003.1 Policies with a secondary guarantee include:

(a) A policy with a guarantee that the policy will remain in force at the original schedule of benefits, subject only to the payment of specified premiums;

(b) A policy in which the minimum premium at any duration is less than the corresponding one year valuation premium, calculated using the maximum valuation interest rate and the 1980 CSO valuation tables with or without ten-year select mortality factors, or any other table adopted after the effective date of this regulation by the National Association of Insurance Commissioners and promulgated by regulation by the commissioner for this purpose; or

(c) A policy with any combination of subparagraph (a) and (b) above.

3003.2 A secondary guarantee period is the period for which the policy is guaranteed to remain in force subject only to a secondary guarantee. When a policy contains more than one secondary guarantee, the minimum reserve shall be the greatest of the respective minimum reserves at that valuation date of each unexpired secondary guarantee, ignoring all other secondary guarantees. Secondary guarantees that are unilaterally changed by the insurer after issue shall be considered to have been made at issue. Reserves described in §§ 3003.7 and 3003.8 below shall be recalculated from issue to reflect these changes.

3003.3 Specified premiums mean the premiums specified in the policy, the payment of which guarantees that the policy will remain in force at the original schedule of benefits, but which otherwise would be insufficient to keep the policy in force in the absence of the guarantee if maximum mortality and expense charges and minimum interest credits were made and any applicable surrender charges were assessed.

3003.4 For purposes of this section, the minimum premium for any policy year is the premium that, when paid into a policy with a zero account value at the beginning of the policy year, produces a zero account value at the end of the policy year. The minimum premium calculation shall use the policy cost factors (including mortality charges, loads and expense charges) and the interest crediting rate, which are all guaranteed at issue.

3003.5 The one-year valuation premium means the net one-year premium based upon the original schedule of benefits for a given policy year. The one-year valuation premiums for all policy years are calculated at issue. The select mortality factors defined in §§ 3001.2(b), (c), and (d) may not be used to calculate the one-year valuation premiums.

3003.6 The one-year valuation premium should reflect the frequency of fund processing, as well as the distribution of deaths assumption employed in the calculation of the monthly mortality charges to the fund.

3003.7 Basic reserves for the secondary guarantees shall be the segmented reserves for the secondary guarantee period. In calculating the segments and the segmented reserves, the gross premiums shall be set equal to the specified premiums, if any, or otherwise to the minimum premiums, that keep the policy in force and the segments will be determined according to the contract segmentation method as defined in § 3004.

3003.8 Deficiency reserves, if any, for the secondary guarantees shall be calculated for the secondary guarantee period in the same manner as described in §§ 3002.2, 3002.3, 3002.4, and 3002.5 with gross premiums set equal to the specified premiums, if any, or otherwise to the minimum premiums that keep the policy in force.

3003.9 The minimum reserves during the secondary guarantee period are the greater of:

(a) The basic reserves for the secondary guarantee plus the deficiency reserve, if any, for the secondary guarantees; or

(b) The minimum reserves required by other rules or regulations governing universal life plans.

History

• SOURCE: Final Rulemaking published at 47 DCR 2914 (April 28, 2000).

26-A DCMR § 3004 DEFINITIONS

3004.1 The definition of terms found in D.C. Official Code §§ 31-4701 et seq. (2001 and 2007 Supp.) shall apply to this chapter. For purposes of this chapter, the following terms shall have the meanings ascribed below:

"2001 CSO Mortality Table" means that mortality table, consisting of separate rates of mortality for male and female lives, developed by the American Academy of Actuaries CSO Task Force from the Valuation Basic Mortality Table developed by the Society of Actuaries Individual Life Insurance Valuation Mortality Task Force, and adopted by the National Association of Insurance Commissioners ("NAIC") in December 2002 and supplemented by the NAIC in September 2006. The 2001 CSO Mortality Table is included in the Proceedings of the National Association of Insurance Commissioners (2nd Quarter 2002) and is supplemented by the 2001 CSO Preferred Class Structure Mortality Table included in the Proceedings of the NAIC (3rd Quarter 2006). Unless the context indicates otherwise, the 2001 CSO Mortality Table includes both the ultimate form of that table and the select and ultimate form of that table and includes both the smoker and nonsmoker mortality tables and the composite mortality tables. It also includes both the age-nearest-birthday and age-last-birthday bases of the mortality tables.

"2001 CSO Mortality Table (F)" means that mortality table consisting of the rates of mortality for female lives from the 2001 CSO Mortality Table.

"2001 CSO Mortality Table (M)" means that mortality table consisting of the rates of mortality for male lives from the 2001 CSO Mortality Table.

"2001 CSO Preferred Class Structure Mortality Table" means mortality tables with separate rates of mortality for the super preferred nonsmokers, preferred nonsmokers, residual standard nonsmokers, preferred smokers, and residual standard smoker splits of the 2001 CSO nonsmoker and smoker tables as adopted by the NAIC in September 2006 and published in the Proceedings of the NAIC (3rd Quarter 2006). Unless the context indicates otherwise, the phrase "2001 CSO Preferred Class Structure Mortality Table" includes: both the ultimate form of that table and the select and ultimate form of that table; both the smoker and nonsmoker mortality tables; both the male and female mortality tables and the gender composite mortality tables; and both the age-nearest-birthday and age-last-birthday bases of the mortality table.

"Basic reserves" means reserves calculated in accordance with D.C. Code § 35-501 et seq.

"Composite mortality tables" means mortality tables with rates of mortality that do not distinguish between smokers and nonsmokers.

"Contract segmentation method" means the method of dividing the period from issue to mandatory expiration of a policy into successive segments, with the length of each segment being defined as the period from the end of the prior segment (from policy inception, for the first segment) to the end of the latest policy year as determined below. All calculations are made using the 1980 CSO valuation tables, as defined in this section, (or any other valuation mortality table adopted by the National Association of Insurance Commissioners after the effective date of this regulation and promulgated by regulation by the commissioner for this purpose), and, if elected, the optional minimum mortality standard for deficiency reserves stipulated in § 3001.2 of this chapter.

The length of a particular contract segment shall be set equal to the minimum of the value t for which G[t] is greater than R[t] (if G[t] never exceeds R[t] the segment length is deemed to be the number of years from the beginning of the segment to the mandatory expiration date of the policy), where G[t] and R[t] are defined as follows:

G[t]= (GP[x+k+t]) / (GP[x+k+t-l])

where:

x= original issue age;

k= the number of years from the date of issue to the beginning of the segment;

t= 1, 2, . . .; t is reset to 1 at the beginning of each segment;

GP[x+k+t-l]= Guaranteed gross premium per thousand of face amount for year t of the segment, ignoring policy fees only if level for the premium paying period of the policy.

R[t]= (q[x+k+t]) / (q[x+k+t-1]), However, R[t] may be increased or decreased by one percent in any policy year, at the company's option, but R[t] shall not be less than one;

where:

x, k and t are as defined above, and

q[x+k+t-l]= valuation mortality rate for deficiency reserves in policy year k+t but using the mortality of § 3001.2(b) if § 3001.2(c) is elected for deficiency reserves.

However, if GP[x+k+t] is greater than 0 and GP[x+k+t-l] is equal to 0, G[t] shall be deemed to be 1000. If GP[x+k+t] and GP[x+k+t-1] are both equal to 0, G[t] shall be deemed to be 0.

"Deficiency reserves" means the excess, if greater than zero, of

(a) Minimum reserves calculated in accordance with D.C. Code § 35-501 over basic reserves.

"Guaranteed gross premiums" means the premiums under a policy of life insurance that are guaranteed and determined at issue.

"Maximum valuation interest rates" means the interest rates defined in D.C. Code § 35-501 et seq. (Computation of Minimum Standard by Calendar Year of Issue) that are to be used in determining the minimum standard for the valuation of life insurance policies.

"1980 CSO valuation tables" means the Commissioners' 1980 Standard Ordinary Mortality Table (1980 CSO Table) without ten-year selection factors, incorporated into the 1980 amendments to the National Association of Insurance Commissioners Standard Valuation Law, and variations of the 1980 CSO Table approved by the National Association of Insurance Commissioners such as the smoker and nonsmoker versions approved in December 1983.

"Scheduled gross premium" means the smallest illustrated gross premium at issue for other than universal life insurance policies. For universal life insurance policies, scheduled gross premium means the smallest specified premium described in § 3003.3, if any, or else the minimum premium described in § 3003.4.

"Segmented reserves" means reserves, calculated using segments produced by the contract segmentation method, equal to the present value of all future guaranteed benefits less the present value of all future net premiums to the mandatory expiration of a policy, where the net premiums within each segment are a uniform percentage of the respective guaranteed gross premiums within the segment. The uniform percentage for each segment is such that, at the beginning of the segment, the present value of the net premiums within the segment equals the present value of the death benefits within the segment, plus the present value of any unusual guaranteed cash value (see § 3002.7) occurring at the end of the segment, less any unusual guaranteed cash value occurring at the start of the segment, plus for the first segment only, the excess of the item (a) over item (b), as follows:

(a) A net level annual premium equal to the present value, at the date of issue, of the benefits provided for in the first segment after the first policy year, divided by the present value, at the date of issue, of an annuity of one per year payable on the first and each subsequent anniversary within the first segment on which a premium falls due. However, the net level annual premium shall not exceed the net level annual premium on the nineteen-year premium whole life plan of insurance of the same renewal year equivalent level amount at an age one year higher than the age at issue of the policy.

(b) A net one-year term premium for the benefits provided for in the first policy year. The length of each segment is determined by the "contract segmentation method," as defined in this section. The interest rates used in the present value calculations for any policy may not exceed the maximum valuation interest rate, determined with a guarantee duration equal to the sum of the lengths of all segments of the policy. For both basic reserves and deficiency reserves computed by the segmented method, present values shall include future benefits and net premiums in the current segment and in all subsequent segments.

"Smoker and nonsmoker mortality tables" means mortality tables with separate rates of mortality for smokers and nonsmokers.

"Statistical agent" means an entity with: proven systems for protecting the confidentiality of individual insured and insurer information; demonstrated resources for and history of ongoing electronic communications and data transfer ensuring data integrity with insurers, which are its members or subscribers; and a history of and means for aggregation of data and accurate promulgation of the experience modifications in a timely manner.

"Tabular cost of insurance" means the net single premium at the beginning of a policy year for one year term insurance in the amount of the guaranteed death benefit in that policy year.

"Ten-year select factors" means the select factors adopted with the 1980 amendments to the National Association of Insurance Commissioners Standard Valuation Law.

"Unitary reserves" means the present value of all future guaranteed benefits less the present value of all future modified net premiums, where:

(a) Guaranteed benefits and modified net premiums are considered to the mandatory expiration of the policy; and

(b) Modified net premiums are a uniform percentage of the respective guaranteed gross premiums, where the uniform percentage is such that, at issue, the present value of the net premiums equals the present value of all death benefits and pure endowments, plus the excess of item (1) over item (2), as follows:

(1) A net level annual premium equal to the present value, at the date of issue, of the benefits provided for after the first policy year, divided by the present value, at the date of issue, of an annuity of one per year payable on the first and each subsequent anniversary of the policy on which a premium falls due. However, the net level annual premium shall not exceed the net level annual premium on the nineteen-year premium whole life plan of insurance of the same renewal year equivalent level amount at an age one year higher than the age at issue of the policy.

(2) A net one-year term premium for the benefits provided for in the first policy year.

(3) The interest rates used in the present value calculations for any policy may not exceed the maximum valuation interest rate, determined with a guarantee duration equal to the length from issue to the mandatory expiration of the policy.

"Universal life insurance policy" means any individual life insurance policy under the provisions of which separately identified interest credits (other than in connection with dividend accumulations, premium deposit funds, or other supplementary accounts) and mortality or expense charges are made to the policy.

History

• SOURCE: Final Rulemaking published at 47 DCR 2914 (April 28, 2000). Appendix BASE SELECT MORTALITY FACTORS This appendix contains tables of select mortality factors that are the bases to which the respective percentages of Sections 3001.1(b), 3001.2(b) and 3001.2(c) are applied. The six tables of select mortality factors contained herein include: (1) male aggregate, (2) male nonsmokers, (3) male smoker, (4) female aggregate, (5) female nonsmoker, and (6) female smoker. These tables apply to both age last birthday and age nearest birthday mortality tables. For sex-blended mortality tables, compute select mortality factors in the same proportion as the underlying mortality. For example, for the 1980 CSO-B Table, the calculated select mortality factors are eighty percent (80%) of the appropriate male table in this Appendix, plus twenty percent (20%) of the appropriate female table in this Appendix. Appendix SELECT MORTALITY FACTORS Male, Aggregate Issue Duration Age 1 2 3 4 5 6 7 8 9 10 0-15 100 100 100 100 100 100 100 100 100 100 16 100 100 100 100 100 100 100 100 100 100 17 100 100 100 100 100 100 100 100 100 100 18 96 98 98 99 99 100 100 90 92 92 19 83 84 84 87 87 87 79 79 79 81 20 69 71 71 74 74 69 69 67 69 70 21 66 68 69 71 66 66 67 66 67 70 22 65 66 66 63 63 64 64 64 65 68 23 62 63 59 60 62 62 63 63 64 65 24 60 56 56 59 59 60 61 61 61 64 25 52 53 55 56 58 58 60 60 60 63 26 51 52 55 56 58 58 57 61 61 62 27 51 52 55 57 58 60 61 61 60 63 28 49 51 56 58 60 60 61 62 62 63 29 49 51 56 58 60 61 62 62 62 64 30 49 50 56 58 60 60 62 63 63 64 31 47 50 56 58 60 62 63 64 64 62 32 46 49 56 59 60 62 63 66 62 63 33 43 49 56 59 62 63 64 62 65 66 34 42 47 56 60 62 63 61 63 66 67 35 40 47 56 60 63 61 62 65 67 68 36 38 42 56 60 59 61 63 65 67 68 37 38 45 56 57 61 62 63 65 67 68 38 37 44 53 58 61 62 65 66 67 69 39 37 41 53 58 62 63 65 65 66 68 40 34 40 53 58 62 63 65 65 66 68 41 34 41 53 58 62 63 65 64 64 66 42 34 43 53 58 61 62 63 63 63 64 43 34 43 54 59 60 61 63 62 62 64 44 34 44 54 58 59 60 61 60 61 62 45 34 45 53 58 59 60 60 60 59 60 46 31 43 52 56 57 58 59 59 59 60 47 32 42 50 53 55 56 57 58 59 60 48 32 41 47 52 54 56 57 57 57 61 49 30 40 46 49 52 54 55 56 57 61 50 30 38 44 47 51 53 54 56 57 61 51 28 37 42 46 49 53 54 56 57 61 52 28 35 41 45 49 51 54 56 57 61 53 27 35 39 44 48 51 53 55 57 61 54 27 33 38 44 48 50 53 55 57 61 55 25 32 37 43 47 50 53 55 57 61 56 25 32 37 43 47 49 51 54 56 61 57 24 31 38 43 47 49 51 54 56 59 58 24 31 38 43 48 48 50 53 56 59 59 23 30 39 43 48 48 51 53 55 58 60 23 30 39 43 48 47 50 52 53 57 61 23 30 39 43 49 49 50 52 53 75 62 23 30 39 44 49 49 51 52 75 75 63 22 30 39 45 50 50 52 75 75 75 64 22 30 39 45 50 51 75 75 75 75 65 22 30 39 45 50 65 70 70 70 70 66 22 30 39 45 60 65 70 70 70 70 67 22 30 39 60 60 65 70 70 70 70 68 23 32 55 60 60 65 70 70 70 70 69 23 52 55 60 60 65 70 70 70 70 70 48 52 55 60 60 65 70 70 70 70 71 48 52 55 60 60 65 70 70 70 70 72 48 52 55 60 60 65 70 70 70 70 73 48 52 55 60 60 65 70 70 70 70 74 48 52 55 60 60 65 70 70 70 70 75 48 52 55 60 60 65 70 70 70 70 76 48 52 55 60 60 65 70 70 70 100 77 48 52 55 60 60 65 70 70 100 100 78 48 52 55 60 60 65 70 100 100 100 79 48 52 55 60 60 65 100 100 100 100 80 48 52 55 60 60 100 100 100 100 100 81 48 52 55 60 100 100 100 100 100 100 82 48 52 55 100 100 100 100 100 100 100 83 48 52 100 100 100 100 100 100 100 100 84 48 100 100 100 100 100 100 100 100 100 85+ 100 100 100 100 100 100 100 100 100 100 Age 11 12 13 14 15 16 17 18 19 20+ 0-15 100 100 100 100 100 100 100 100 100 100 16 100 100 100 100 100 100 100 100 100 100 17 100 100 100 100 100 100 100 100 100 100 18 92 92 93 93 96 97 98 98 99 100 19 81 82 82 82 85 88 91 94 97 100 20 71 71 71 71 74 79 84 90 95 100 21 70 70 70 71 71 77 83 88 94 100 22 68 68 68 69 71 77 83 88 94 100 23 65 67 67 69 70 76 82 88 94 100 24 64 64 66 67 70 76 82 88 94 100 25 62 63 64 67 69 75 81 88 94 100 26 63 64 66 69 66 73 80 86 93 100 27 63 64 67 66 67 74 80 87 93 100 28 64 66 65 66 68 74 81 87 94 100 29 64 62 66 67 70 76 82 88 94 100 30 62 63 67 68 71 77 83 88 94 100 31 63 66 68 70 72 78 83 89 94 100 32 66 67 70 72 73 78 84 89 95 100 33 67 70 72 73 75 80 85 90 95 100 34 70 71 73 75 76 81 86 90 95 100 35 71 73 74 76 76 81 86 90 95 100 36 70 72 74 76 77 82 86 91 95 100 37 70 72 74 76 76 81 86 90 95 100 38 69 73 75 76 77 82 86 91 95 100 39 69 72 74 76 76 81 86 90 95 100 40 68 71 75 76 77 82 86 91 95 100 41 68 70 74 76 77 82 86 91 95 100 42 66 69 72 75 77 82 86 91 95 100 43 66 67 72 74 77 82 86 91 95 100 44 64 67 71 74 77 82 86 91 95 100 45 63 66 71 74 77 82 86 91 95 100 46 63 67 71 74 75 80 85 90 95 100 47 65 68 71 74 75 80 85 90 95 100 48 65 68 72 73 74 79 84 90 95 100 49 66 69 72 73 74 79 84 90 95 100 50 66 71 72 73 75 80 85 90 95 100 51 66 71 72 73 75 80 85 90 95 100 52 66 71 72 74 75 80 85 90 100 100 53 67 71 74 75 76 81 86 100 100 100 54 67 72 74 75 76 81 100 100 100 100 55 68 72 74 75 78 100 100 100 100 100 56 67 70 73 74 100 100 100 100 100 100 57 66 69 72 100 100 100 100 100 100 100 58 64 67 100 100 100 100 100 100 100 100 59 63 100 100 100 100 100 100 100 100 100 60 100 100 100 100 100 100 100 100 100 100 61 100 100 100 100 100 100 100 100 100 100 62 100 100 100 100 100 100 100 100 100 100 63 100 100 100 100 100 100 100 100 100 100 64 100 100 100 100 100 100 100 100 100 100 65 100 100 100 100 100 100 100 100 100 100 66 100 100 100 100 100 100 100 100 100 100 67 100 100 100 100 100 100 100 100 100 100 68 100 100 100 100 100 100 100 100 100 100 69 100 100 100 100 100 100 100 100 100 100 70 100 100 100 100 100 100 100 100 100 100 71 100 100 100 100 100 100 100 100 100 100 72 100 100 100 100 100 100 100 100 100 100 73 100 100 100 100 100 100 100 100 100 100 74 100 100 100 100 100 100 100 100 100 100 75 100 100 100 100 100 100 100 100 100 100 76 100 100 100 100 100 100 100 100 100 100 77 100 100 100 100 100 100 100 100 100 100 78 100 100 100 100 100 100 100 100 100 100 79 100 100 100 100 100 100 100 100 100 100 80 100 100 100 100 100 100 100 100 100 100 81 100 100 100 100 100 100 100 100 100 100 82 100 100 100 100 100 100 100 100 100 100 83 100 100 100 100 100 100 100 100 100 100 84 100 100 100 100 100 100 100 100 100 100 85+ 100 100 100 100 100 100 100 100 100 100 Male, Non-Smoker Issue Duration Age 1 2 3 4 5 6 7 8 9 10 0-15 100 100 100 100 100 100 100 100 100 100 16 100 100 100 100 100 100 100 100 100 100 17 100 100 100 100 100 100 100 100 100 100 18 93 95 96 98 99 100 100 90 92 92 19 80 81 83 86 87 87 79 79 79 81 20 65 68 69 72 74 69 69 67 69 70 21 63 66 68 71 66 66 67 66 67 70 22 62 65 66 62 63 64 64 64 67 68 23 60 62 58 60 62 62 63 63 64 67 24 59 55 56 58 59 60 61 61 63 65 25 52 53 55 56 58 58 60 60 61 64 26 51 53 55 56 58 60 61 61 61 63 27 51 52 55 58 60 60 61 61 62 63 28 49 52 57 58 60 61 63 62 62 64 29 49 51 57 60 61 61 62 62 63 64 30 49 51 57 60 61 62 63 63 63 64 31 47 50 57 60 60 62 63 64 64 62 32 46 50 57 60 62 63 64 64 62 63 33 45 49 56 60 62 63 64 62 63 65 34 43 48 56 62 63 64 62 62 65 66 35 41 47 56 62 63 61 62 63 66 67 36 40 47 56 62 59 61 62 63 66 67 37 38 45 56 58 59 61 62 63 66 67 38 38 45 53 58 61 62 63 65 65 67 39 37 41 53 58 61 62 63 64 65 67 40 34 41 53 58 61 62 63 64 64 66 41 34 41 53 58 61 61 62 62 63 65 42 34 43 53 58 60 61 62 61 61 63 43 32 43 53 58 60 61 60 60 60 60 44 32 44 52 57 59 60 60 59 59 58 45 32 44 52 57 59 60 59 57 57 57 46 32 42 50 54 56 57 57 56 55 56 47 30 40 48 52 54 55 55 54 54 55 48 30 40 46 49 51 52 53 53 54 55 49 29 39 43 48 50 51 50 51 53 54 50 29 37 42 45 47 48 49 50 51 54 51 27 35 40 43 45 47 48 50 51 53 52 27 34 39 42 44 45 48 49 50 53 53 25 31 37 41 44 45 47 49 50 51 54 25 30 36 39 43 44 47 48 49 51 55 24 29 35 38 42 43 45 48 49 50 56 23 29 35 38 42 42 44 47 48 50 57 23 28 35 38 42 42 43 45 47 49 58 22 28 33 37 41 41 43 45 45 47 59 22 26 33 37 41 41 42 44 44 46 60 20 26 33 37 41 40 41 42 42 45 61 20 26 33 37 41 40 41 42 42 75 62 19 25 32 38 40 40 41 42 75 75 63 19 25 33 36 40 40 41 75 75 75 64 18 24 32 36 39 40 75 75 75 75 65 18 24 32 36 39 65 70 70 70 70 66 18 24 32 36 60 65 70 70 70 70 67 18 24 32 60 60 65 70 70 70 70 68 18 24 55 60 60 65 70 70 70 70 69 18 52 55 60 60 65 70 70 70 70 70 48 52 55 60 60 65 70 70 70 70 71 48 52 55 60 60 65 70 70 70 70 72 48 52 55 60 60 65 70 70 70 70 73 48 52 55 60 60 65 70 70 70 70 74 48 52 55 60 60 65 70 70 70 70 75 48 52 55 60 60 65 70 70 70 70 76 48 52 55 60 60 65 70 70 70 100 77 48 52 55 60 60 65 70 70 100 100 78 48 52 55 60 60 65 70 100 100 100 79 48 52 55 60 60 65 100 100 100 100 80 48 52 55 60 60 100 100 100 100 100 81 48 52 55 60 100 100 100 100 100 100 82 48 52 55 100 100 100 100 100 100 100 83 48 52 100 100 100 100 100 100 100 100 84 48 100 100 100 100 100 100 100 100 100 85+ 100 100 100 100 100 100 100 100 100 100 Age 11 12 13 14 15 16 17 18 19 20+ 0-15 100 100 100 100 100 100 100 100 100 100 16 100 100 100 100 100 100 100 100 100 100 17 100 100 100 100 100 100 100 100 100 100 18 92 92 95 95 96 97 98 98 99 100 19 81 82 83 83 86 89 92 94 97 100 20 71 71 72 72 75 80 85 90 95 100 21 70 70 71 71 73 78 84 89 95 100 22 68 68 70 70 73 78 84 89 95 100 23 68 68 67 69 71 77 83 88 94 100 24 67 66 66 69 71 77 83 88 94 100 25 64 64 64 67 70 76 82 88 94 100 26 64 64 66 69 67 74 80 87 93 100 27 64 66 67 66 67 74 80 87 93 100 28 66 66 63 66 68 74 81 87 94 100 29 66 63 65 67 68 74 81 87 94 100 30 62 63 66 68 70 76 82 88 94 100 31 63 65 67 70 71 77 83 88 94 100 32 65 66 68 71 72 78 83 89 94 100 33 66 68 71 73 74 79 84 90 95 100 34 67 70 72 74 74 79 84 90 95 100 35 68 70 72 74 75 80 85 90 95 100 36 68 70 72 74 75 80 85 90 95 100 37 67 69 71 73 74 79 84 90 95 100 38 68 70 72 74 73 78 84 89 95 100 39 68 70 71 73 73 78 84 89 95 100 40 67 69 71 73 72 78 83 89 94 100 41 65 67 69 71 71 77 83 88 94 100 42 64 66 67 69 71 77 83 88 94 100 43 62 64 66 68 69 75 81 88 94 100 44 60 62 65 67 69 75 81 88 94 100 45 59 61 63 66 68 74 81 87 94 100 46 59 61 63 65 67 74 80 87 93 100 47 59 61 62 63 66 73 80 86 93 100 48 57 61 62 63 63 70 78 85 93 100 49 57 61 61 62 62 70 77 85 92 100 50 57 61 61 61 61 69 77 84 92 100 51 57 60 61 61 62 70 77 85 92 100 52 56 60 60 62 62 70 77 85 100 100 53 56 59 61 61 62 70 77 100 100 100 54 55 59 59 61 62 70 100 100 100 100 55 56 58 59 61 62 100 100 100 100 100 56 55 57 58 59 100 100 100 100 100 100 57 53 55 56 100 100 100 100 100 100 100 58 51 53 100 100 100 100 100 100 100 100 59 50 100 100 100 100 100 100 100 100 100 60 100 100 100 100 100 100 100 100 100 100 61 100 100 100 100 100 100 100 100 100 100 62 100 100 100 100 100 100 100 100 100 100 63 100 100 100 100 100 100 100 100 100 100 64 100 100 100 100 100 100 100 100 100 100 65 100 100 100 100 100 100 100 100 100 100 66 100 100 100 100 100 100 100 100 100 100 67 100 100 100 100 100 100 100 100 100 100 68 100 100 100 100 100 100 100 100 100 100 69 100 100 100 100 100 100 100 100 100 100 70 100 100 100 100 100 100 100 100 100 100 71 100 100 100 100 100 100 100 100 100 100 72 100 100 100 100 100 100 100 100 100 100 73 100 100 100 100 100 100 100 100 100 100 74 100 100 100 100 100 100 100 100 100 100 75 100 100 100 100 100 100 100 100 100 100 76 100 100 100 100 100 100 100 100 100 100 77 100 100 100 100 100 100 100 100 100 100 78 100 100 100 100 100 100 100 100 100 100 79 100 100 100 100 100 100 100 100 100 100 80 100 100 100 100 100 100 100 100 100 100 81 100 100 100 100 100 100 100 100 100 100 82 100 100 100 100 100 100 100 100 100 100 83 100 100 100 100 100 100 100 100 100 100 84 100 100 100 100 100 100 100 100 100 100 85+ 100 100 100 100 100 100 100 100 100 100 Male, Smoker Issue Duration Age 1 2 3 4 5 6 7 8 9 10 0-15 100 100 100 100 100 100 100 100 100 100 16 100 100 100 100 100 100 100 100 100 100 17 100 100 100 100 100 100 100 100 100 100 18 100 100 100 100 100 100 100 100 100 100 19 100 100 100 100 100 100 100 100 100 100 20 98 100 100 100 100 100 100 99 99 99 21 95 98 99 100 95 96 96 95 96 97 22 92 95 96 90 90 93 93 92 93 95 23 90 92 85 88 88 89 89 89 90 90 24 87 81 82 85 84 86 88 86 86 88 25 77 78 79 82 81 83 83 82 83 85 26 75 77 79 82 82 83 83 82 83 84 27 73 75 78 82 82 83 83 82 82 82 28 71 73 79 82 81 82 83 81 81 82 29 69 72 78 81 81 82 82 81 81 81 30 68 71 78 81 81 81 82 81 81 81 31 65 70 77 81 79 81 82 81 81 76 32 63 67 77 78 79 81 81 81 76 77 33 60 65 74 78 79 79 81 76 77 77 34 57 62 74 77 79 79 75 76 77 79 35 53 60 73 77 79 75 75 76 77 79 36 52 59 71 75 74 75 75 76 77 79 37 49 58 70 71 74 74 75 76 77 78 38 48 55 66 70 72 74 74 75 76 78 39 45 50 65 70 72 72 74 74 75 77 40 41 49 63 68 71 72 73 74 74 76 41 40 49 63 68 71 72 72 72 73 75 42 40 49 62 68 70 71 71 71 71 73 43 39 50 62 67 69 69 70 70 70 71 44 39 50 60 66 68 69 68 69 69 69 45 37 50 60 66 68 68 68 67 67 67 46 37 48 58 63 65 67 66 66 66 67 47 36 47 55 61 63 64 64 64 65 67 48 35 46 53 58 60 62 63 63 65 67 49 34 45 51 56 58 59 61 62 63 67 50 34 43 49 53 55 57 60 61 63 67 51 32 42 47 52 55 57 60 61 63 67 52 32 40 46 50 54 56 60 61 63 67 53 30 37 44 49 54 56 59 61 65 67 54 30 36 43 48 53 55 59 61 65 67 55 29 35 42 47 53 55 59 61 65 67 56 28 35 42 47 53 55 57 60 63 68 57 28 35 42 47 53 54 57 60 64 67 58 26 33 43 48 54 54 56 59 63 67 59 26 33 43 48 54 53 57 59 63 66 60 25 33 43 48 54 53 56 58 62 66 61 25 33 43 49 55 55 57 59 63 75 62 25 33 43 50 56 56 58 61 75 75 63 24 33 45 51 56 56 59 75 75 75 64 24 34 45 51 57 57 75 75 75 75 65 24 34 45 52 57 65 70 70 70 70 66 24 35 45 53 60 65 70 70 70 70 67 25 35 45 60 60 65 70 70 70 70 68 25 36 55 60 60 65 70 70 70 70 69 27 52 55 60 60 65 70 70 70 70 70 48 52 55 60 60 65 70 70 70 70 71 48 52 55 60 60 65 70 70 70 70 72 48 52 55 60 60 65 70 70 70 70 73 48 52 55 60 60 65 70 70 70 70 74 48 52 55 60 60 65 70 70 70 70 75 48 52 55 60 60 65 70 70 70 70 76 48 52 55 60 60 65 70 70 70 100 77 48 52 55 60 60 65 70 70 100 100 78 48 52 55 60 60 65 70 100 100 100 79 48 52 55 60 60 65 100 100 100 100 80 48 52 55 60 60 100 100 100 100 100 81 48 52 55 60 100 100 100 100 100 100 82 48 52 55 100 100 100 100 100 100 100 83 48 52 100 100 100 100 100 100 100 100 84 48 100 100 100 100 100 100 100 100 100 85+ 100 100 100 100 100 100 100 100 100 100 Age 11 12 13 14 15 16 17 18 19 20+ 0-15 100 100 100 100 100 100 100 100 100 100 16 100 100 100 100 100 100 100 100 100 100 17 100 100 100 100 100 100 100 100 100 100 18 100 100 100 100 100 100 100 100 100 100 19 100 100 100 100 100 100 100 100 100 100 20 100 99 99 99 100 100 100 100 100 100 21 97 96 96 96 96 97 98 98 99 100 22 95 93 93 92 93 94 96 97 99 100 23 90 90 89 90 92 94 95 97 98 100 24 88 86 86 88 89 91 93 96 98 100 25 84 84 84 85 86 89 92 94 97 100 26 84 84 84 85 81 85 89 92 96 100 27 82 84 84 80 81 85 89 92 96 100 28 82 82 80 80 81 85 89 92 96 100 29 81 77 80 80 81 85 89 92 96 100 30 76 77 80 80 81 85 89 92 96 100 31 77 79 81 81 83 86 90 93 97 100 32 77 80 83 83 85 88 91 94 97 100 33 79 80 83 85 85 88 91 94 97 100 34 79 81 83 85 87 90 92 95 97 100 35 80 82 84 86 88 90 93 95 98 100 36 79 81 83 85 87 90 92 95 97 100 37 79 81 84 86 86 89 92 94 97 100 38 79 81 83 85 87 90 92 95 97 100 39 79 81 84 86 86 89 92 94 97 100 40 78 80 83 85 86 89 92 94 97 100 41 76 78 81 84 85 88 91 94 97 100 42 75 76 81 83 85 88 91 94 97 100 43 73 76 79 83 85 88 91 94 97 100 44 71 74 79 81 85 88 91 94 97 100 45 69 73 78 81 85 88 91 94 97 100 46 71 74 78 81 84 87 90 94 97 100 47 71 75 79 81 84 87 90 94 97 100 48 72 75 79 81 83 86 90 93 97 100 49 72 77 80 81 83 86 90 93 97 100 50 73 78 80 81 81 85 89 92 96 100 51 73 78 80 83 84 87 90 94 97 100 52 73 78 81 84 85 88 91 94 100 100 53 74 79 83 85 87 90 92 100 100 100 54 74 80 84 85 89 91 100 100 100 100 55 75 80 84 86 90 100 100 100 100 100 56 74 79 83 85 100 100 100 100 100 100 57 74 78 81 100 100 100 100 100 100 100 58 73 78 100 100 100 100 100 100 100 100 59 73 100 100 100 100 100 100 100 100 100 60 100 100 100 100 100 100 100 100 100 100 61 100 100 100 100 100 100 100 100 100 100 62 100 100 100 100 100 100 100 100 100 100 63 100 100 100 100 100 100 100 100 100 100 64 100 100 100 100 100 100 100 100 100 100 65 100 100 100 100 100 100 100 100 100 100 66 100 100 100 100 100 100 100 100 100 100 67 100 100 100 100 100 100 100 100 100 100 68 100 100 100 100 100 100 100 100 100 100 69 100 100 100 100 100 100 100 100 100 100 70 100 100 100 100 100 100 100 100 100 100 71 100 100 100 100 100 100 100 100 100 100 72 100 100 100 100 100 100 100 100 100 100 73 100 100 100 100 100 100 100 100 100 100 74 100 100 100 100 100 100 100 100 100 100 75 100 100 100 100 100 100 100 100 100 100 76 100 100 100 100 100 100 100 100 100 100 77 100 100 100 100 100 100 100 100 100 100 78 100 100 100 100 100 100 100 100 100 100 79 100 100 100 100 100 100 100 100 100 100 80 100 100 100 100 100 100 100 100 100 100 81 100 100 100 100 100 100 100 100 100 100 82 100 100 100 100 100 100 100 100 100 100 83 100 100 100 100 100 100 100 100 100 100 84 100 100 100 100 100 100 100 100 100 100 85+ 100 100 100 100 100 100 100 100 100 100 Female, Aggregate Issue Duration Age 1 2 3 4 5 6 7 8 9 10 0-15 100 100 100 100 100 100 100 100 100 100 16 100 100 100 100 100 100 100 100 100 100 17 99 100 100 100 100 100 100 100 93 95 18 83 83 84 84 84 84 86 78 78 79 19 65 66 68 68 68 68 63 63 64 66 20 48 50 51 51 51 47 48 48 49 51 21 47 48 50 51 47 47 48 49 51 53 22 44 47 48 45 47 47 48 49 53 54 23 42 45 44 45 47 47 49 51 53 54 24 39 40 42 44 47 47 50 51 54 56 25 34 38 41 44 47 47 50 53 56 57 26 34 38 41 45 49 49 51 56 58 59 27 34 38 41 47 50 51 54 57 59 60 28 34 37 43 47 53 53 56 59 62 63 29 34 38 43 49 54 56 58 60 63 64 30 35 38 43 50 56 56 59 63 66 67 31 35 38 43 51 56 58 60 64 67 65 32 35 39 45 51 56 59 63 66 65 66 33 36 39 44 52 58 62 64 65 66 67 34 36 40 45 52 58 63 63 66 67 68 35 36 40 45 53 59 61 65 67 68 70 36 36 40 45 53 55 62 65 67 68 70 37 36 41 47 52 57 62 65 67 68 69 38 34 41 44 52 57 63 66 68 69 70 39 34 40 45 53 58 63 66 68 69 69 40 32 40 45 53 58 65 65 67 68 69 41 32 40 45 53 57 63 64 67 68 68 42 32 40 45 52 56 61 63 65 66 68 43 31 39 45 51 55 59 61 65 65 66 44 31 39 45 50 54 58 61 63 64 66 45 31 38 44 49 53 56 59 62 63 65 46 29 37 43 48 51 54 59 62 63 65 47 28 35 41 46 49 54 57 61 62 66 48 28 35 41 44 49 52 57 61 63 66 49 26 34 39 43 47 52 55 61 63 67 50 25 32 38 41 46 50 55 61 63 67 51 25 32 38 41 45 50 55 61 63 66 52 23 30 36 41 45 51 56 61 62 65 53 23 30 36 41 47 51 56 61 62 63 54 22 29 35 41 47 53 57 61 61 62 55 22 29 35 41 47 53 57 61 61 61 56 22 29 35 41 45 51 56 59 60 61 57 22 29 35 41 45 50 54 56 58 59 58 22 30 36 41 44 49 53 56 57 57 59 22 30 36 41 44 48 51 53 55 56 60 22 30 36 41 43 47 50 51 53 55 61 22 29 35 39 42 46 49 50 52 80 62 20 28 33 39 41 45 47 49 80 80 63 20 28 33 38 41 44 46 80 80 80 64 19 27 32 36 40 42 80 80 80 80 65 19 25 30 35 39 72 75 75 80 80 66 19 25 30 35 72 72 75 75 80 80 67 19 25 30 72 72 72 75 75 80 80 68 19 25 68 72 72 72 75 75 80 80 69 19 64 68 72 72 72 75 75 80 80 70 60 60 64 68 68 72 75 75 80 80 71 60 60 64 68 68 72 75 75 80 80 72 60 60 64 68 68 72 75 75 80 80 73 60 60 64 68 68 72 75 75 80 80 74 60 60 64 68 68 72 75 75 80 80 75 60 60 64 68 68 72 75 75 80 80 76 60 60 64 68 68 72 75 75 80 100 77 60 60 64 68 68 72 75 75 100 100 78 60 60 64 68 68 72 75 100 100 100 79 60 60 64 68 68 72 100 100 100 100 80 60 60 64 68 68 100 100 100 100 100 81 60 60 64 68 100 100 100 100 100 100 82 60 60 64 100 100 100 100 100 100 100 83 60 60 100 100 100 100 100 100 100 100 84 60 100 100 100 100 100 100 100 100 100 85+ 100 100 100 100 100 100 100 100 100 100 Age 11 12 13 14 15 16 17 18 19 20+ 0-15 100 100 100 100 100 100 100 100 100 100 16 100 100 100 100 100 100 100 100 100 100 17 96 97 97 100 100 100 100 100 100 100 18 82 84 85 88 88 90 93 95 98 100 19 69 71 72 74 75 80 85 90 95 100 20 56 57 58 61 63 70 78 85 93 100 21 57 60 61 64 64 71 78 86 93 100 22 60 61 63 64 66 73 80 86 93 100 23 61 64 64 67 69 75 81 88 94 100 24 64 64 66 69 70 76 82 88 94 100 25 64 67 69 71 73 78 84 89 95 100 26 66 69 70 73 70 76 82 88 94 100 27 69 70 73 70 71 77 83 88 94 100 28 70 73 70 72 74 79 84 90 95 100 29 73 70 72 74 75 80 85 90 95 100 30 70 71 74 75 76 81 86 90 95 100 31 71 72 74 75 76 81 86 90 95 100 32 72 72 75 76 76 81 86 90 95 100 33 72 74 75 76 76 81 86 90 95 100 34 74 74 76 76 76 81 86 90 95 100 35 75 74 75 76 75 80 85 90 95 100 36 74 74 74 75 75 80 85 90 95 100 37 72 72 73 75 74 79 84 90 95 100 38 72 71 72 74 75 80 85 90 95 100 39 70 70 70 73 74 79 84 90 95 100 40 70 69 70 73 73 78 84 89 95 100 41 69 69 69 73 74 79 84 90 95 100 42 69 68 70 74 75 80 85 90 95 100 43 68 69 69 74 77 82 86 91 95 100 44 67 68 71 75 78 82 87 91 96 100 45 67 68 71 77 79 83 87 92 96 100 46 67 69 71 77 78 82 87 91 96 100 47 68 69 71 77 77 82 86 91 95 100 48 68 71 72 75 77 82 86 91 95 100 49 69 71 72 75 75 80 85 90 95 100 50 69 72 72 75 74 79 84 90 95 100 51 68 69 71 74 74 79 84 90 95 100 52 66 68 68 73 73 78 84 89 100 100 53 65 66 68 72 72 78 83 100 100 100 54 62 66 66 69 70 76 100 100 100 100 55 62 63 64 68 69 100 100 100 100 100 56 62 63 64 67 100 100 100 100 100 100 57 61 62 63 100 100 100 100 100 100 100 58 61 62 100 100 100 100 100 100 100 100 59 59 100 100 100 100 100 100 100 100 100 60 100 100 100 100 100 100 100 100 100 100 61 100 100 100 100 100 100 100 100 100 100 62 100 100 100 100 100 100 100 100 100 100 63 100 100 100 100 100 100 100 100 100 100 64 100 100 100 100 100 100 100 100 100 100 65 100 100 100 100 100 100 100 100 100 100 66 100 100 100 100 100 100 100 100 100 100 67 100 100 100 100 100 100 100 100 100 100 68 100 100 100 100 100 100 100 100 100 100 69 100 100 100 100 100 100 100 100 100 100 70 100 100 100 100 100 100 100 100 100 100 71 100 100 100 100 100 100 100 100 100 100 72 100 100 100 100 100 100 100 100 100 100 73 100 100 100 100 100 100 100 100 100 100 74 100 100 100 100 100 100 100 100 100 100 75 100 100 100 100 100 100 100 100 100 100 76 100 100 100 100 100 100 100 100 100 100 77 100 100 100 100 100 100 100 100 100 100 78 100 100 100 100 100 100 100 100 100 100 79 100 100 100 100 100 100 100 100 100 100 80 100 100 100 100 100 100 100 100 100 100 81 100 100 100 100 100 100 100 100 100 100 82 100 100 100 100 100 100 100 100 100 100 83 100 100 100 100 100 100 100 100 100 100 84 100 100 100 100 100 100 100 100 100 100 85+ 100 100 100 100 100 100 100 100 100 100 Female, Non-Smoker Issue Duration Age 1 2 3 4 5 6 7 8 9 10 0-15 100 100 100 100 100 100 100 100 100 100 16 100 100 100 100 100 100 100 100 100 100 17 96 98 98 98 98 99 99 99 92 92 18 78 80 80 80 80 81 81 74 75 75 19 60 62 63 63 63 65 59 59 60 60 20 42 44 45 45 45 42 42 42 45 45 21 41 42 44 45 41 42 42 44 47 47 22 39 41 44 41 41 42 44 45 49 49 23 38 41 38 40 41 42 44 46 49 50 24 36 36 38 40 41 42 46 47 50 51 25 32 34 37 40 41 43 46 49 51 53 26 32 34 37 41 43 45 47 50 53 53 27 32 34 38 43 46 47 49 51 53 55 28 30 34 39 43 47 49 51 53 56 58 29 30 35 40 45 50 51 52 55 58 59 30 31 35 40 46 51 52 53 56 59 60 31 31 35 40 46 51 53 55 58 60 58 32 32 35 40 45 51 53 56 59 57 58 33 32 36 41 47 52 55 58 55 58 59 34 33 36 41 47 52 55 55 57 58 59 35 33 36 41 47 52 53 57 58 59 61 36 33 36 41 47 49 53 57 58 59 61 37 32 36 41 44 49 53 57 58 59 60 38 32 37 39 45 50 54 57 58 60 60 39 30 35 39 45 50 54 57 58 60 59 40 28 35 39 45 50 54 56 57 59 59 41 28 35 39 45 49 52 55 55 58 57 42 27 35 39 44 49 52 54 55 56 57 43 27 34 39 44 47 50 53 53 55 55 44 26 34 38 42 47 50 52 53 54 55 45 26 33 38 42 45 48 51 51 52 53 46 24 32 37 40 43 47 49 51 52 53 47 24 30 35 39 42 45 47 49 51 53 48 23 30 35 37 40 44 47 49 50 53 49 23 29 33 35 39 42 45 48 50 53 50 21 27 32 34 37 41 44 48 50 53 51 21 26 30 34 37 41 44 48 49 51 52 20 25 30 33 37 41 44 47 48 50 53 19 24 29 32 37 41 43 47 48 48 54 18 24 29 32 37 41 43 45 47 47 55 18 23 28 32 37 41 43 45 45 45 56 18 23 28 32 36 39 42 44 44 45 57 18 23 28 31 35 38 41 42 44 44 58 17 23 26 31 35 36 38 41 41 42 59 17 23 26 30 33 35 38 39 40 41 60 17 23 26 30 32 34 36 38 39 40 61 17 22 25 29 32 33 35 36 38 80 62 16 22 25 28 30 32 34 35 80 80 63 16 20 24 28 30 32 34 80 80 80 64 14 21 24 27 29 30 80 80 80 80 65 15 19 23 25 28 72 75 75 80 80 66 15 19 23 25 72 72 75 75 80 80 67 15 19 22 72 72 72 75 75 80 80 68 13 18 68 72 72 72 75 75 80 80 69 13 64 68 72 72 72 75 75 80 80 70 60 60 64 68 68 72 75 75 80 80 71 60 60 64 68 68 72 75 75 80 80 72 60 60 64 68 68 72 75 75 80 80 73 60 60 64 68 68 72 75 75 80 80 74 60 60 64 68 68 72 75 75 80 80 75 60 60 64 68 68 72 75 75 80 80 76 60 60 64 68 68 72 75 75 80 100 77 60 60 64 68 68 72 75 75 100 100 78 60 60 64 68 68 72 75 100 100 100 79 60 60 64 68 68 72 100 100 100 100 80 60 60 64 68 68 100 100 100 100 100 81 60 60 64 68 100 100 100 100 100 100 82 60 60 64 100 100 100 100 100 100 100 83 60 60 100 100 100 100 100 100 100 100 84 60 100 100 100 100 100 100 100 100 100 85+ 100 100 100 100 100 100 100 100 100 100 Age 11 12 13 14 15 16 17 18 19 20+ 0-15 100 100 100 100 100 100 100 100 100 100 16 100 100 100 100 100 100 100 100 100 100 17 93 95 95 97 99 99 99 100 100 100 18 78 79 82 83 85 88 91 94 97 100 19 64 67 67 70 72 78 83 89 94 100 20 50 51 53 56 58 66 75 83 92 100 21 51 53 54 57 59 67 75 84 92 100 22 54 56 57 58 60 68 76 84 92 100 23 56 57 58 60 62 70 77 85 92 100 24 58 59 60 62 63 70 78 85 93 100 25 59 60 62 63 64 71 78 86 93 100 26 60 62 63 64 62 70 77 85 92 100 27 62 63 64 62 62 70 77 85 92 100 28 63 63 61 62 63 70 78 85 93 100 29 64 61 62 63 63 70 78 85 93 100 30 62 62 63 65 65 72 79 86 93 100 31 62 62 63 65 65 72 79 86 93 100 32 62 63 63 65 64 71 78 86 93 100 33 63 63 65 65 65 72 79 86 93 100 34 63 65 64 65 64 71 78 86 93 100 35 63 64 64 64 64 71 78 86 93 100 36 63 64 63 64 63 70 78 85 93 100 37 62 62 61 62 63 70 78 85 93 100 38 61 61 61 62 61 69 77 84 92 100 39 60 60 59 60 61 69 77 84 92 100 40 60 59 59 59 60 68 76 84 92 100 41 58 59 58 59 60 68 76 84 92 100 42 57 57 58 60 61 69 77 84 92 100 43 56 57 56 60 61 69 77 84 92 100 44 55 55 56 61 62 70 77 85 92 100 45 54 55 56 61 62 70 77 85 92 100 46 54 55 56 60 61 69 77 84 92 100 47 54 55 56 59 60 68 76 84 92 100 48 54 55 55 59 57 66 74 83 91 100 49 54 55 55 57 56 65 74 82 91 100 50 54 55 55 56 55 64 73 82 91 100 51 53 53 54 55 55 64 73 82 91 100 52 50 51 51 55 53 62 72 81 100 100 53 49 49 51 52 52 62 71 100 100 100 54 47 49 49 51 51 61 100 100 100 100 55 46 46 47 50 50 100 100 100 100 100 56 46 46 46 49 100 100 100 100 100 100 57 45 45 46 100 100 100 100 100 100 100 58 45 45 100 100 100 100 100 100 100 100 59 44 100 100 100 100 100 100 100 100 100 60 100 100 100 100 100 100 100 100 100 100 61 100 100 100 100 100 100 100 100 100 100 62 100 100 100 100 100 100 100 100 100 100 63 100 100 100 100 100 100 100 100 100 100 64 100 100 100 100 100 100 100 100 100 100 65 100 100 100 100 100 100 100 100 100 100 66 100 100 100 100 100 100 100 100 100 100 67 100 100 100 100 100 100 100 100 100 100 68 100 100 100 100 100 100 100 100 100 100 69 100 100 100 100 100 100 100 100 100 100 70 100 100 100 100 100 100 100 100 100 100 71 100 100 100 100 100 100 100 100 100 100 72 100 100 100 100 100 100 100 100 100 100 73 100 100 100 100 100 100 100 100 100 100 74 100 100 100 100 100 100 100 100 100 100 75 100 100 100 100 100 100 100 100 100 100 76 100 100 100 100 100 100 100 100 100 100 77 100 100 100 100 100 100 100 100 100 100 78 100 100 100 100 100 100 100 100 100 100 79 100 100 100 100 100 100 100 100 100 100 80 100 100 100 100 100 100 100 100 100 100 81 100 100 100 100 100 100 100 100 100 100 82 100 100 100 100 100 100 100 100 100 100 83 100 100 100 100 100 100 100 100 100 100 84 100 100 100 100 100 100 100 100 100 100 85+ 100 100 100 100 100 100 100 100 100 100 Female, Smoker Issue Duration Age 1 2 3 4 5 6 7 8 9 10 0-15 100 100 100 100 100 100 100 100 100 100 16 100 100 100 100 100 100 100 100 100 100 17 100 100 100 100 100 100 100 100 100 100 18 99 100 100 100 100 100 100 95 96 97 19 87 89 92 92 92 92 84 84 86 86 20 74 77 80 80 80 73 73 73 75 77 21 71 74 78 78 71 71 73 74 77 79 22 68 71 75 70 71 71 73 74 78 79 23 65 69 67 70 70 70 73 77 79 81 24 62 60 64 69 70 70 74 77 79 81 25 53 58 63 67 69 70 74 78 81 82 26 53 58 63 69 71 72 75 79 82 82 27 52 56 63 70 74 74 78 81 82 84 28 52 56 64 71 75 77 79 82 85 86 29 51 56 64 71 78 78 81 84 86 88 30 51 56 64 72 79 79 82 85 88 89 31 51 56 64 72 78 81 84 84 88 84 32 51 56 64 71 78 81 85 86 84 85 33 51 57 62 71 78 82 85 83 84 85 34 51 56 62 71 78 82 81 83 85 86 35 51 56 62 71 78 79 83 84 85 86 36 49 56 62 71 74 79 83 84 85 86 37 48 55 62 67 74 79 83 84 85 86 38 47 55 57 66 72 77 81 84 86 86 39 45 50 57 66 72 77 81 83 85 86 40 41 50 57 66 72 77 81 83 84 85 41 40 50 57 65 71 76 79 81 83 84 42 40 49 57 65 69 74 77 80 82 83 43 39 49 55 63 69 73 76 78 80 82 44 39 48 55 62 67 71 75 78 80 80 45 37 47 55 61 65 70 73 76 78 80 46 36 46 53 59 63 68 71 75 77 79 47 34 44 51 57 62 66 70 75 77 80 48 34 44 50 54 60 64 69 74 77 80 49 33 42 48 53 58 63 68 74 77 81 50 31 41 46 51 57 61 67 74 77 81 51 30 39 45 51 56 61 67 74 75 80 52 29 38 45 50 56 62 68 74 75 79 53 28 37 43 49 57 62 68 73 74 77 54 28 36 43 49 57 63 69 73 74 75 55 26 35 42 49 57 63 69 73 73 74 56 26 35 42 49 56 62 67 71 72 74 57 26 35 42 49 55 61 66 69 72 73 58 28 36 43 49 55 59 63 68 69 72 59 28 36 43 49 54 57 63 67 68 70 60 28 36 43 49 53 57 61 64 67 69 61 26 35 42 48 52 56 59 63 66 80 62 26 33 41 47 51 55 58 62 80 80 63 25 33 41 46 51 55 57 80 80 80 64 25 33 40 45 50 53 80 80 80 80 65 24 32 39 44 49 72 75 75 80 80 66 24 32 39 44 72 72 75 75 80 80 67 24 32 39 72 72 72 75 75 80 80 68 24 32 68 72 72 72 75 75 80 80 69 24 64 68 72 72 72 75 75 80 80 70 60 60 64 68 68 72 75 75 80 80 71 60 60 64 68 68 72 75 75 80 80 72 60 60 64 68 68 72 75 75 80 80 73 60 60 64 68 68 72 75 75 80 80 74 60 60 64 68 68 72 75 75 80 80 75 60 60 64 68 68 72 75 75 80 80 76 60 60 64 68 68 72 75 75 80 100 77 60 60 64 68 68 72 75 75 100 100 78 60 60 64 68 68 72 75 100 100 100 79 60 60 64 68 68 72 100 100 100 100 80 60 60 64 68 68 100 100 100 100 100 81 60 60 64 68 100 100 100 100 100 100 82 60 60 64 100 100 100 100 100 100 100 83 60 60 100 100 100 100 100 100 100 100 84 60 100 100 100 100 100 100 100 100 100 85+ 100 100 100 100 100 100 100 100 100 100 Age 11 12 13 14 15 16 17 18 19 20+ 0-15 100 100 100 100 100 100 100 100 100 100 16 100 100 100 100 100 100 100 100 100 100 17 100 100 100 100 100 100 100 100 100 100 18 100 100 100 100 100 100 100 100 100 100 19 92 93 95 96 99 99 99 100 100 100 20 83 83 86 88 90 92 94 96 98 100 21 85 86 88 89 90 92 94 96 98 100 22 88 90 89 89 92 94 95 97 98 100 23 89 90 90 92 92 94 95 97 98 100 24 92 90 92 93 93 94 96 97 99 100 25 92 93 93 95 95 96 97 98 99 100 26 93 93 95 96 90 92 94 96 98 100 27 93 95 95 90 90 92 94 96 98 100 28 95 95 90 92 92 94 95 97 98 100 29 95 90 90 92 92 94 95 97 98 100 30 90 90 92 93 93 94 96 97 99 100 31 90 90 92 93 93 94 96 97 99 100 32 90 90 92 94 93 94 96 97 99 100 33 90 92 93 93 93 94 96 97 99 100 34 90 92 92 94 93 94 96 97 99 100 35 90 91 91 93 93 94 96 97 99 100 36 90 90 91 93 92 94 95 97 98 100 37 89 90 89 92 91 93 95 96 98 100 38 87 88 88 90 91 93 95 96 98 100 39 86 87 86 89 90 92 94 96 98 100 40 86 86 86 89 89 91 93 96 98 100 41 85 86 85 89 90 92 94 96 98 100 42 84 85 86 90 92 94 95 97 98 100 43 83 84 85 92 93 94 96 97 99 100 44 82 84 86 93 96 97 98 98 99 100 45 81 84 86 94 97 98 98 99 99 100 46 83 85 86 93 96 97 98 98 99 100 47 83 85 86 93 94 95 96 98 99 100 48 84 86 87 92 92 94 95 97 98 100 49 84 86 87 92 91 93 95 96 98 100 50 85 87 87 91 90 92 94 96 98 100 51 83 85 85 90 90 92 94 96 98 100 52 81 83 84 90 90 92 94 96 100 100 53 79 81 83 89 89 91 93 100 100 100 54 78 80 81 87 89 91 100 100 100 100 55 76 78 79 86 87 100 100 100 100 100 56 76 78 79 85 100 100 100 100 100 100 57 76 78 79 100 100 100 100 100 100 100 58 76 78 100 100 100 100 100 100 100 100 59 76 100 100 100 100 100 100 100 100 100 60 100 100 100 100 100 100 100 100 100 100 61 100 100 100 100 100 100 100 100 100 100 62 100 100 100 100 100 100 100 100 100 100 63 100 100 100 100 100 100 100 100 100 100 64 100 100 100 100 100 100 100 100 100 100 65 100 100 100 100 100 100 100 100 100 100 66 100 100 100 100 100 100 100 100 100 100 67 100 100 100 100 100 100 100 100 100 100 68 100 100 100 100 100 100 100 100 100 100 69 100 100 100 100 100 100 100 100 100 100 70 100 100 100 100 100 100 100 100 100 100 71 100 100 100 100 100 100 100 100 100 100 72 100 100 100 100 100 100 100 100 100 100 73 100 100 100 100 100 100 100 100 100 100 74 100 100 100 100 100 100 100 100 100 100 75 100 100 100 100 100 100 100 100 100 100 76 100 100 100 100 100 100 100 100 100 100 77 100 100 100 100 100 100 100 100 100 100 78 100 100 100 100 100 100 100 100 100 100 79 100 100 100 100 100 100 100 100 100 100 80 100 100 100 100 100 100 100 100 100 100 81 100 100 100 100 100 100 100 100 100 100 82 100 100 100 100 100 100 100 100 100 100 83 100 100 100 100 100 100 100 100 100 100 84 100 100 100 100 100 100 100 100 100 100 85+ 100 100 100 100 100 100 100 100 100 100
• SOURCE: Final Rulemaking published at 47 DCR 2914 (April 28, 2000); Final Rulemaking published at 51 DCR 10218 (November 5, 2004); Final Rulemaking published at55 DCR 9734 (September 26, 2008).

26-A DCMR § 3005 2001 CSO MORTALITY TABLE FOR DETERMINING MINIMUM RESERVE LIABILITIES AND NONFORFEITURE BENEFITS AFTER JANUARY 1, 2005

3005.1 The regulations in this section shall have the following applicability:

(a) At the election of the company for any one or more specified plans of insurance and subject to the conditions stated in § 3005.2, the 2001 CSO Mortality Table may be used as the minimum standard for policies issued on or after January 1, 2005 and before the date specified in paragraph (b) and pursuant to D.C. Official Code §§ 31 -4701(c)(2)(A) and 31 -4705 .02(e)(16)(A)(i). If the company elects to use the 2001 CSO Mortality Table, it shall do so for both valuation and nonforfeiture purposes.

(b) Subject to the conditions stated in § 3005.2 through § 3005.5, the 2001 CSO Mortality Table shall be used in determining minimum standards for policies issued on and after January 1, 2009 and pursuant to D.C. Official Code §§ 31-4701(c)(2)(A) and 31-4705.02(e)(16)(A)(i).

(c) The 2001 CSO Mortality Table may be applied to Chapter 30 of Title 26, DCMR, in the following manner and subject to the transition dates in this section:

(1) For § 3001.1, the 2001 CSO Mortality Table shall be the minimum standard for basic reserves;

(2) For § 3001.2, the 2001 CSO Mortality Table shall be the minimum standard for deficiency reserves. If select mortality rates are used, they may be multiplied by X percent for durations in the first segment, subject to the conditions specified in §§ 3001.2(c)(1) to 3001.2(c)(9). In demonstrating compliance with those conditions, the demonstrations may not combine the results of tests that utilize the 1980 CSO Mortality Table with those tests that utilize the 2001 CSO Mortality Table, unless the combination is explicitly required by regulation or necessary to be in compliance with relevant Actuarial Standards of Practice;

(3) For § 3000.2(b)(2), the net level reserve premium shall be based on the ultimate mortality rates in the 2001 CSO Mortality Table;

(4) For § 3002.6, the valuation mortality table used in determining the tabular cost of insurance shall be the ultimate mortality rates in the 2001 CSO Mortality Table;

(5) For § 3002.10(d), the calculations specified in § 3002.10 shall use the ultimate mortality rates in the 2001 CSO Mortality Table;

(6) For § 3002.11(d), the calculations specified in § 3002.11 shall use the ultimate mortality rates in the 2001 CSO Mortality Table;

(7) For § 3002.12(b), the calculations specified in § 3002.12 shall use the ultimate mortality rates in the 2001 CSO Mortality Table;

(8) For § 3003.1(b), the one-year valuation premium shall be calculated using the ultimate mortality rates in the 2001 CSO Mortality Table; and

(9) For § 3004.1, all calculations shall be made using the 2001 CSO Mortality Rate, and, if elected, the optional minimum mortality standard for deficiency reserves stipulated in § 3005.1(c)(4). The value of "qx+k+t-l" is the valuation mortality rate for deficiency reserves in policy year k+t, but using the unmodified select mortality rates if modified select mortality rates are used in the computation of deficiency reserves.

(d) Nothing in this section shall be construed to expand the applicability of Chapter 30 of Title 26, DCMR, to include life insurance policies exempted under § 3000.2.

3005.2 The following conditions shall apply with respect to the use of the 2001 CSO mortality table under § 3005.1:

(a) For each plan of insurance with separate rates for smokers and nonsmokers, an insurer may use:

(1) Composite mortality tables to determine minimum reserve liabilities and minimum cash surrender values and amounts of paid-up nonforfeiture benefits;

(2) Smoker and nonsmoker mortality tables to determine the valuation net premiums and additional minimum reserves, if any, required by D.C. Official Code. § 31-4720 and use composite mortality tables to determine the basic minimum reserves, minimum cash surrender values and amounts of paid-up nonforfeiture benefits; or

(3) Smoker and nonsmoker mortality to determine minimum reserve liabilities and minimum cash surrender values and amounts of paid-up nonforfeiture benefits.

(b) For plans of insurance without separate rates for smokers and nonsmokers, the composite mortality tables shall be used.

(c) For the purpose of determining minimum reserve liabilities and minimum cash surrender values and amounts of paid-up nonforfeiture benefits, the 2001 CSO Mortality Table may, at the option of the company for each plan of insurance, be used in its ultimate or select and ultimate form, subject to the restrictions in § 3001.

(d) When the 2001 CSO Mortality Table is the minimum reserve standard for any plan for a company, the actuarial opinion in the annual statement filed with the Commissioner shall be based on an asset adequacy analysis as specified in 26 DCMR § 2900 et seq. The Commissioner may exempt a company from this requirement if its business is conducted exclusively in the District.

3005.3 Gender-Blended Tables shall apply in the following circumstances:

(a) For any ordinary life insurance policy delivered or issued for delivery in the District on and after January 1, 2005, that utilizes the same premium rates and charges for male and female lives or is issued in circumstances where applicable law does not permit distinctions on the basis of gender, a mortality table that is a blend of the 2001 CSO Mortality Table (M) and the 2001 CSO Mortality Table (F) may, at the option of the company for each plan of insurance, be substituted for the 2001 CSO Mortality Table for use in determining minimum cash surrender values and amounts of paid-up nonforfeiture benefits. No change in minimum valuation standards is implied by this paragraph.

(b) When a company is choosing among the blended tables developed by the American Academy of Actuaries CSO Task Force and adopted by the National Association of Insurance Commissioners in December 2002.

(c) It shall not be a violation of D.C. Official Code § 31-2231.01 et seq. for an insurer to issue the same kind of life insurance policy on both a gender-specific and gender-neutral basis.

3005.4 At the election of the company, for each calendar year of issue, for any one or more specified plans of insurance and subject to satisfying the conditions set forth in this section, the 2001 CSO Preferred Class Structure Mortality Table may be substituted in place of the 2001 CSO Smoker or Nonsmoker Mortality Table as the minimum valuation standard for policies issued on or after January 1, 2007. No such election shall be made until the company demonstrates at least 20% of the business to be valued on this table is in one or more of the preferred classes. A table from the 2001 CSO Preferred Class Structure Mortality Table used in place of a 2001 CSO Mortality Table, pursuant to the requirements of this section, shall be treated as part of the 2001 CSO Mortality Table only for purposes of reserve valuation pursuant to this section.

3005.5 The following conditions shall apply to the use of the 2001 CSO Preferred Class Structure Mortality Table:

(a) For each plan of insurance with separate rates for preferred and standard nonsmoker lives, an insurer may use the super preferred nonsmoker, preferred nonsmoker, and residual standard nonsmoker tables to substitute for the nonsmoker mortality table found in the 2001 CSO Mortality Table to determine minimum reserves. At the time of election and annually thereafter, except for business valued under the residual standard nonsmoker table, the appointed actuary shall certify that:

(1) The present value of death benefits over the next 10 years after the valuation date, using the anticipated mortality experience without recognition of mortality improvement beyond the valuation date for each class, is less than the present value of death benefits using the valuation basic table corresponding to the valuation table being used for that class; and

(2) The present value of death benefits over the future life of the contracts, using anticipated mortality experience without recognition of mortality improvement beyond the valuation date for each class, is less than the present value of death benefits using the valuation basic table corresponding to the valuation table being used for that class.

(b) For each plan of insurance with separate rates for preferred and standard smoker lives, an insurer may use the preferred smoker and residual standard smoker tables to substitute for the smoker mortality table found in the 2001 CSO Mortality Table to determine minimum reserves. At the time of election and annually thereafter, for business valued under the preferred smoker table, the appointed actuary shall certify that:

(1) The present value of death benefits over the next ten (10) years after the valuation date, using the anticipated mortality experience without recognition of mortality improvement beyond the valuation date for each class, is less than the present value of death benefits using the preferred smoker valuation basic table corresponding to the valuation table being used for that class; and

(2) The present value of death benefits over the future life of the contracts, using anticipated mortality experience without recognition of mortality improvement beyond the valuation date for each class, is less than the present value of death benefits using the Preferred Smoker valuation basic table.

(c) Unless exempted by the Commissioner, every authorized insurer using the 2001 CSO Preferred Class Structure Table shall annually file with the Commissioner, with the NAIC, or with a statistical agent designated by the NAIC and acceptable to the Commissioner, statistical reports showing mortality and such other information as the Commissioner may deem necessary or expedient for the administration of the provisions of this subsection. The form of the reports shall be established by the Commissioner or the Commissioner may require the use of a form established by the NAIC or by a statistical agent designated by the NAIC and acceptable to the Commissioner.

3005.6 If any provision of these regulations or its application to any person or circumstance is for any reason held to be invalid, the remainder of the regulation and the application of the provision to other persons or circumstances shall not be affected.

History

• SOURCE: Final Rulemaking published at 47 DCR 2914 (April 28, 2000); Final Rulemaking published at 51 DCR 10218 (November 5, 2004); as Final Rulemaking published at 55 DCR 9734 (ERRATA published at 55 DCR 9999); as Final Rulemaking published at 55 DCR 9734 (September 26, 2008).

26-A31 INVESTMENT GUIDELINES FOR HEALTH MAINTENANCE ORGANIZATIONS (HMOS)

26-A DCMR § 3101 GENERAL REQUIREMENTS AND LIMITATIONS

3101.1 An HMO may invest its funds only as provided under this Chapter. Notwithstanding the provisions of these regulations, the Commissioner may, after notice and opportunity for a hearing, order an HMO to limit or withdraw from certain investments, or discontinue certain investment practices, to the extent the Commissioner finds that such investments or investment practices are hazardous to the financial condition of the HMO.

3101.2 No investment or loan, shall be made or engaged in by an HMO unless the investment or loan has been authorized by the board of directors, or by a committee thereof charged with the duty of supervising investments and loans. Nothing contained in this Chapter shall prevent the board of directors of an HMO from depositing any of its securities with:

(a) A committee appointed for the purpose of protecting the interest of security holders; or

(b) The authorities of any state or the District where it is necessary to do so in order to secure permission to transact business therein.

3101.3 Nothing contained in this Chapter shall prevent the board of directors of an HMO from depositing any securities as collateral for the securing of any bond required for the business of the HMO.

3101.4 An HMO shall not pay any commission or brokerage fee for the purchase or sale of property whether real or personal, in excess of an amount that is usual and customary in the locality where such purchases or sales are made, and the HMO shall maintain information regarding payments of commissions and brokerage fees shall be maintained for at least three (3) years.

3101.5 No HMO shall knowingly invest in or make a loan secured by any property, directly or indirectly, whether real or personal, in which any officer or director of such HMO has a financial interest, nor shall an HMO make a loan of any kind to any officer or director of such HMO, except that this subsection shall not apply in circumstances where the financial interest of such officer or director, if any, is so remote as to not give rise to a conflict of interest. Notwithstanding the provisions of this subsection, the Commissioner may approve a transaction between an HMO and its officers or directors under this section if he or she is satisfied that:

(a) The transaction is entered into in good faith for the advantage and benefit of the company;

(b) The amount of the proposed investment or loan does not violate any other provision of this Chapter, and the loan does not exceed the fair market normal value of the property securing the loan, or the amount of the investment does not exceed the interest which the HMO proposes to acquire, and the transaction is otherwise fair and reasonable; and

(c) The transaction will not adversely affect the liquidity of the HMO's investments, its ability to comply with requirements of this Chapter, or the payment of its claims and obligations.

History

• SOURCE: Final Rulemaking published at 46 DCR 5925(July 16, 1999).

26-A DCMR § 3102 VALUATION OF INVESTMENTS

3102.1 In applying the percentage limitations imposed by this Chapter, there shall be used as a base the total of all assets which would be admitted by this Chapter without regard to percentage limitations. All legal measurements used as a base in the determination of all qualified investments shall consist of the amounts determined at the most recent year end as adjusted for the subsequent acquisition and disposition of such investments.

3102.2 Investments shall be valued in accordance with the published valuation standards of the National Association of Insurance Commissioners (NAIC). Investments in securities for which the NAIC has not published valuation standards in its Valuations of Securities manual, or its successor publication, shall be valued as set forth in subsections 3102.3 through 3102.7.

3102.3 All obligations having a fixed term and rate shall, if not in default as to principal or interest, be valued as follows:

(a) If purchased at par, at the par value; or

(b) If purchased above or below par, on the basis of the purchase price adjusted so as to bring the value to par at maturity and so as to yield in the meantime the effective rate of interest at which the purchase was made.

3102.4 Common, preferred or guaranteed stocks shall be valued at market value.

3102.5 Other security investments shall be valued at market value.

3102.6 Other investments, including real property, shall not be valued at more than the purchase price. The purchase price for real property includes capitalized permanent improvements, less depreciation spread evenly over the life of the property or, at the option of the company, less depreciation computed on any basis permitted under section 301 of the Internal Revenue Code, 26 U.S.C. §301 et seq., and regulations adopted thereunder. Such investments that have been affected by permanent declines in value shall be valued at not more than market value.

3102.7 Any investment, including real property, not purchased by an HMO but acquired in satisfaction of a debt or otherwise shall be valued in accordance with the applicable procedures for that type of investment contained in this Chapter. For purposes of applying the valuation procedures in the case of any investment acquired in satisfaction of debt, the purchase price shall be deemed to be the market value at the time the investment is acquired or the amount of the debt (including interest, taxes and expenses), whichever amount is less.

History

• SOURCE: Final Rulemaking published at 46 DCR 5925(July 16, 1999).

26-A DCMR § 3103 AUTHORIZED INVESTMENTS

3103.1 Any HMO may acquire the assets set forth in subsections 3103.2 through 3103.18, inclusive. Any restriction, exclusion or provision appearing in any subsection shall apply only with respect to the authorization of the particular subsection in which it appears and shall not constitute a general prohibition and shall not be applicable to any other subsection. The qualifications or disqualifications of an investment under one subsection shall not prevent its qualification in whole or in part under another subsection, and an investment authorized by more than one subsection may be held under whichever authorizing subsection the HMO elects. An investment which qualified under any subsection at the time it was acquired or entered into by an HMO shall continue to be qualified under that subsection. An investment in whole or in part may be transferred from time to time, at the election of the HMO, to the authority of any subsection under which it qualifies, whether originally qualifying thereunder or not.

3103.2 Direct obligations of the United States for the payment of money, or obligations for the payment of money, to the extent guaranteed or insured as to the payment of principal and interest by the United States.

3103.3 Direct obligations for the payment of money, issued by an agency or instrumentality of the United States, or obligations for the payment of money to the extent guaranteed or insured as to the payment of principal and interest by an agency or instrumentality of the United States.

3103.4 Direct, general obligations of the District or any state of the United States for the payment of money, or obligations for the payment of money to the extent guaranteed or insured as to the payment of principal and interest by the District or any state of the United States, on the following conditions:

(a) The state or the District has the power to levy taxes for the prompt payment of the principal and interest of such obligations; and

(b) The state or the District shall not be in default in the payment of principal or interest on any of its direct, guaranteed or insured general obligations at the date of such investment.

3103.5 Direct, general obligations of any political subdivision of any state of the United States for the payment of money, or obligations for the payment of money to the extent guaranteed as to the payment of principal and interest by any political subdivision of any state of the United States, on the following conditions:

(a) The obligations are payable or guaranteed from ad valorem taxes;

(b) Such political subdivision is not in default in the payment of principal or interest on any of its direct or guaranteed obligations;

(c) No investment shall be made under this section in obligations which are secured only by special assessments for local improvements; and

(d) An HMO shall not invest under this section more than two percent (2%) of its admitted assets in obligations issued or guaranteed by any one such political subdivision.

3103.6 Anticipation obligations of any political subdivision of any state of the United States, including but not limited to bond anticipation notes, tax anticipation notes, preliminary loan anticipation notes, revenue anticipation notes and construction anticipation notes, for the payment of money within twelve (12) months from the issuance of the obligation on the following conditions:

(a) Such anticipation notes must be a direct obligation of the issuer under the conditions set forth in subsection 3103.5.

(b) Such political subdivision is not in default in the payment of the principal or interest on any of its direct general obligations or any obligation guaranteed by such political subdivision;

(c) The anticipated funds must be specifically pledged to secure the obligations; and

(d) An HMO shall not invest under this subsection more than two percent (2%) of its admitted assets in the anticipation obligations issued by any one such political subdivision.

3103.7 Obligations of any state of the United States, a political subdivision thereof, or a public instrumentality of any one or more of the foregoing, for the payment of money, on the following conditions:

(a) The obligations are payable from revenues or earnings of a public utility of such state, political subdivision, or public instrumentality which are specifically pledged therefor;

(b) The law under which the obligations are issued requires rates for service to be charged and collected at all times such that they will produce sufficient revenues, in addition to the revenues needed to pay all operating and maintenance charges of the public utility, to pay all principal and interest on such obligations;

(c) No prior or parity obligations payable from the revenues or earning of that public utility are in default at the date of such investment;

(d) An HMO shall not invest more than twenty percent (20%) of its admitted assets under this section; and

(e) An HMO shall not invest under this section more than two percent (2%) of its admitted assets in the revenue obligations issued in connection with any one facility.

3103.8 Obligations of any state of the United States, a political subdivision thereof, or a public instrumentality of any one or more of the foregoing, for the payment of money, on the following conditions:

(a) The obligations are payable from revenues or earnings, excluding revenues or earnings from public utilities, specifically pledged therefor by such state, political subdivision, or public instrumentality;

(b) No prior or parity obligation of the same issuer payable from revenues or earnings from the same source has been in default as to principal or interest during the five (5) years preceding the date of such investment, but such issuer need not have been in existence for that period, and obligations acquired under this section may be newly issued;

(c) An HMO shall not invest in excess of twenty percent (20%) of its admitted assets under this subsection;

(d) An HMO shall not invest under this section more than two percent (2%) of its admitted assets in the revenue obligations issued in connection with any one facility; and

(e) An HMO shall not invest under this section more than two percent (2%) of its admitted assets in revenue obligations payable from revenue or earning sources which are the contractual responsibility of any one single credit risk.

3103.9 Direct, unconditional obligations of a solvent business corporation for the payment of money, including obligations to pay rent for equipment used in this business on the following conditions:

(a) The corporation shall be incorporated under the laws of the District, the United States or any state thereof;

(b) The corporation shall have tangible net worth of not less than $1,000,000;

(c) No such obligation of the corporation has been in default as to principal or interest during the five (5) years preceding the date of investment, but the corporation need not have had obligations, guarantees, or insurance outstanding during that period and need not have been in existence for that period, and obligations acquired under this subsection may be newly issued;

(d) An HMO shall not invest more than two percent (2%) of its admitted assets in obligations issued, guaranteed, or insured by any one such corporation;

(e) An HMO may invest under this subsection up to an additional two percent (2%) of its admitted assets in obligations which:

(1) are issued, guaranteed or insured by any one or more such corporations, each having a tangible net worth of not less than $25,000,000; and

(2) mature within twelve (12) months from the date of acquisition;

(f) An HMO may invest not more than one-half (1/2) of one percent (1%) of its admitted assets in such obligations of corporations which do not meet the condition of paragraph (b) of this subsection; and

(g) An HMO shall not invest more than seventy-five percent (75%) of its admitted assets under this subsection.

3103.10 Direct, unconditional obligations for the payment of money to the extent guaranteed as to principal and interest by a solvent not-for-profit corporation on the following conditions:

(a) The corporation shall be incorporated under the laws of the District, the United States or any state thereof;

(b) The corporation shall have been in existence for at least five (5) years and shall have assets of at least $2,000,000;

(c) Revenues or other income from such assets and the services or commodities dispensed by the corporation shall be pledged for the payment of the obligations or guarantees;

(d) No such obligation or guarantee of the corporation has been in default as to principal or interest during the five (5) years preceding the date of such investment, but the corporation need not have had obligations or guarantees outstanding during that period and obligations acquired under this subsection may be newly issued;

(e) An HMO shall not invest more than fifteen percent (15%) of its admitted assets under this section; and

(f) An HMO shall not invest under this subsection more than two percent (2%) of its admitted assets in the obligations issued or guaranteed by any one such corporation.

3103.11 Direct, unconditional non-demand obligations for the payment of money issued by a solvent bank, savings bank, or trust company on the following conditions:

(a) The bank, savings bank, or trust company shall have tangible net worth of not less than $1,000,000;

(b) Such obligations must be of the type which are insured by an agency of the United States or have a maturity of no more than one (1) day;

(c) An HMO shall not invest under this subsection more than the amount which is fully insured by an agency of the United States plus two percent (2%) of its admitted assets in non-demand obligations issued by any one such financial institution; and

(d) An HMO may invest under this subsection up to an additional eight percent (8%) of its admitted assets in non-demand obligations which:

(1) are issued by any such banks, savings banks or trust companies, each having a tangible net worth of not less than $25,000,000; and

(2) mature within twelve (12) months from the date of acquisition.

3103.12 Preferred or guaranteed stocks issued or guaranteed by a solvent business corporation incorporated under the laws of the District, the United State or any state thereof, on the following conditions:

(a) The corporation shall have tangible net worth of not less than $1,000,000;

(b) If such stocks have been outstanding prior to purchase, an HMO shall not invest under this subsection in such stock if prescribed current or cumulative dividends are in arrears;

(c) An HMO shall not invest more than thirty-three and one-third percent (33 1/3%) of its admitted assets under this subsection and an HMO shall not invest more than fifteen percent (15%) of its admitted assets under this subsection in stocks which, at the time of purchase, are not sinking fund stocks. An issue of preferred or guaranteed stock shall be a sinking fund stock when:

(1) such issue is subject to a one hundred percent (100%) mandatory sinking fund or similar arrangement which will provide for the redemption of the entire issue over a period not longer than forty (40) years from the date of purchase;

(2) annual mandatory sinking fund installments on each issue commence not more than ten (10) years from the date of issue; and

(3) each annual sinking fund installment provides for the purchase or redemption of at least two and one-half percent (2 1/2%) of the original number of shares of such issue; and

(d) An HMO shall not invest under this subsection more than two percent (2%) of its admitted assets in the preferred or guaranteed stocks of any one such corporation.

3103.13 Common stock issued by any solvent business corporation incorporated under the laws of the District, the United States or any state thereof, on the following conditions:

(a) The issuing corporation must have tangible net worth of $1,000,000 or more;

(b) An HMO may not invest more than an amount equal to its net worth under this section;

(c) An HMO may not invest under this subsection an amount equal to more than ten percent (10%) of its net worth in the common stock of any one corporation;

3103.14 Shares of common stock or units of beneficial interest issued by a solvent business corporation or trust incorporated or organized under the laws of the District, the United States or any state thereof, on the following conditions:

(a) If the issuing corporation or trust is advised by an investment advisor which is the HMO or an affiliate of the HMO, the issuing corporation or trust shall have net assets of $100,000 or more, or if the corporation or trust has an unaffiliated investment advisor, the issuing corporation or trust shall have net assets of $10,000,000 or more;

(b) The issuing corporation or trust is registered as an investment company with the Securities and Exchange Commission pursuant to the Investment Company Act of 1940, as amended, 15 U.S.C. §§ 80a-1 et seq.;

(c) An HMO shall not invest under this subsection more than the greater of $100,000 or ten percent (10%) of its admitted assets in any one bond fund, municipal bond fund, or money market fund;

(d) An HMO shall not invest under this subsection more than ten percent (10%) of its net worth in any one common stock fund, balanced fund, or income fund;

(e) An HMO shall not invest more than fifty percent (50%) of its admitted assets in bond funds, municipal bond funds, and money market funds under this subsection; and

(f) An HMO's investments in common stock funds, balanced funds or income funds when combined with its investments in common stocks made under subsection 3103.13 shall not exceed the aggregate limitation provided by subsection 3103.13(b).

3103.15 Shares of, or accounts or deposits with, savings and loan associations or building and loan associations, on the following conditions:

(a) The shares, accounts, or deposits, or investments in any form legally issuable shall be of a withdrawable type and issued by an association which has the insurance protection afforded by the Federal Savings and Loan Insurance Corporation. Nonwithdrawable accounts which are not eligible for insurance by the Federal Savings and Loan Insurance Corporation shall not be eligible for investment under this subsection;

(b) The association shall have tangible net worth of not less than $1,000,000;

(c) The investment shall be in the name of and owned by the HMO, unless the account is under a trusteeship with the HMO named as the beneficiary;

(d) An HMO shall not invest more than fifty percent (50%) of its admitted assets under this subsection; and

(e) Under this subsection, an HMO shall not invest in any one such association an amount in excess of two percent (2%) of its admitted assets or an amount which is fully insured by the Federal Savings and Loan Insurance Corporation, whichever is greater.

3103.16 Direct, unconditional obligations for the payment of money secured by the pledge of any investment which is authorized by any of the preceding subsections, on the following conditions:

(a) The investment pledged shall by its terms be legally assignable and shall be validly assigned to the HMO;

(b) The investment pledged shall have a fair market value which is at least twenty-five percent (25%) greater than the amount invested under this subsection, except that a loan may be made up to 100% of the full fair market value of the collateral that would qualify as an investment under subsection 3103.2 provided it qualifies under paragraph (a) of this subsection; and

(c) An HMO's investment under this subsection when added to its investment of the category of the collateral pledged shall not cause the sum to exceed the limits provided by the subsection authorizing that category of investments.

3103.17 Real estate (including leasehold estates and leasehold improvements) for the convenient accommodation of the HMO's business operations, including home office, branch office, medical facilities and field office operations, on the following conditions:

(a) Any parcel of real estate acquired under this subsection may include excess space for rent to others, if it is reasonably anticipated that such excess will be required by the HMO for expansion or if the excess is reasonably required in order to have one or more buildings that will function as an economic unit; and

(b) Such real estate may be subject to a mortgage.

3103.18 Investments of any kind, in the complete discretion of the HMO, without regard to any condition of, restriction in, or exclusion from subsections 3103.2 through 3103.17, inclusive, and regardless of whether the same or a similar type of investment has been included in or omitted from any such subsection; provided that an HMO shall not invest under this subsection more than the lesser of: (1) ten percent (10%) of its admitted assets; or (2) 50% of the amount by which its net worth exceeds the minimum requirements of a new HMO to qualify for a certificate of authority.

History

• SOURCE: Final Rulemaking published at 46 DCR 5925(July 16, 1999).

26-A DCMR § 3104 DEPOSIT OF SECURITIES IN CLEARING CORPORATIONS.

3104.1 An HMO may deposit or arrange for the deposit of securities held in or purchased for its general account in a clearing corporation.

3104.2 When securities are deposited with a clearing corporation, certificates representing securities of the same class of the same issuer may be merged and held in bulk in the name of the nominee of the clearing corporation with any other securities deposited with the clearing corporation by any person, regardless of the ownership of the securities, and certificates representing securities of small denominations may be merged into one or more certificates of larger denominations.

3104.3 The records of a custodian through which an HMO holds securities in a clearing corporation shall at all times show that the securities are held for the HMO and shall show the accounts for or in which the securities are held.

3104.4 Ownership of, and other interests in, the securities in a clearing corporation may be transferred by bookkeeping entry on the books of the clearing corporation without physical delivery of certificates representing the securities.

History

• SOURCE: Final Rulemaking published at 54 DCR 5597 (June 8, 2007).

26-A DCMR § 3199 DEFINITIONS

3199.1 "Admitted asset" means the investments authorized or permitted under this chapter, and in addition, includes only the following:

(a) Petty cash and other cash funds in the HMO's principal or official branch office(s) and under the control of the HMO;

(b) Immediately withdrawable funds on deposit in demand accounts, in a bank, savings bank, or trust company as defined in subsection 3199.4, or like funds actually in the principal or any official branch office at statement date, and in transit to such bank, savings bank or trust company with authentic deposit credit given prior to the close of business on the fifth (5th) bank working day following the statement date;

(c) The amount fairly estimated as recoverable on cash deposited in a closed bank, savings bank, or trust company, if qualifying under subsection 3199.4 prior to the suspension of such bank, savings bank or trust company;

(d) Bills and accounts receivable collateralized by securities of the kind in which the HMO is authorized to invest;

(e) Premiums receivable from: (1) groups or individuals which are not more than sixty (60) days past due; and (2) the District, the United States, any state of the United States or any political subdivision thereof which is not more than ninety (90) days past due;

(f) Amounts due under insurance policies or reinsurance arrangements from insurance companies authorized to do business in the District;

(g) Tax refunds due from the District, the United States, any state of the United States or any political subdivision thereof;

(h) The interest accrued on mortgage loans conforming to the requirements of this chapter, not exceeding in aggregate amount on an individual loan of one year's total due and accrued interest;

(i) The rents accrued and owing to the HMO on real and personal property, directly or beneficially owned, not exceeding on each individual property the amount of one year's total due and accrued rent;

(j) Interest or rents accrued on conditional sales agreements, security interests, chattel mortgages, and real or personal property under lease to other corporations, all conforming to the provisions of this chapter, and not exceeding on any individual investment, the amount of one year's total due and accrued rent;

(k) The fixed and required interest due and accrued on bonds and other like evidences of indebtedness, conforming to the provisions of this chapter, and not in default;

(l) Dividends receivable on shares of stock conforming to the provisions of this chapter, provided that the market price taken for valuation purposes does not include the value of the dividend;

(m) The interest or dividends due and payable, but not credited, on deposits in banks, savings banks and trust companies, or on accounts with savings and loan associations;

(n) Interest accrued on secured loans conforming to the provisions of this chapter, not exceeding the amount of one year's interest on any loan;

(o) Interest accrued on tax anticipation warrants;

(p) The amortized value of electronic computer or data processing machines or systems purchased for use in connection with the business of the HMO, including software purchased and developed specifically for the HMO's use and purposes;

(q) Amounts due from affiliates pursuant to management contracts or service agreements which meet the requirements of D.C. Code § 35-3003 to the extent that the affiliate has liquid assets with which to pay the balance and maintain its accounts on a current basis; provided that the aggregate amount due from affiliates may not exceed the lesser of ten percent (10%) of the organization's admitted assets or twenty-five percent (25%) of the HMO's net worth as defined in this chapter. Any amount outstanding more than three (3) months shall be deemed not current. For purpose of this paragraph "affiliates" shall have the same meaning are as that term is defined in D.C. Code § 35-3701;

(r) Intangible assets, including, but not limited to, organization good will and purchased good will, to the extent reported in the most recent annual or quarterly financial statement filed with the Commissioner after April 9, 1997. However, such assets shall be amortized, by the straight-line method, to a value of zero no later than December 31, 1999; provided, however, that no HMO shall be required pursuant to the foregoing provision to amortize such assets in an amount greater than $ 300,000 in any one year, and in cases where amortization of such assets by December 31, 1999 would otherwise require amortization of an annual amount in excess of $ 300,000, the HMO shall be required only to amortize such assets at a rate of $ 300,000 per year until all such assets have been amortized to a value of zero, unless the continuation of the current amortization schedule would result in an earlier zero value, in which case the current amortization schedule shall be applied;

(s) Amounts due from patients or enrollees for health care services rendered which are not more than sixty (60) days past due;

(t) Amounts advanced to providers under contract to the organization for services to be rendered to enrollees pursuant to the contract. Amounts advanced must be for a period of not more than three (3) months and must be based on historical or estimated utilization patterns with the provider and must be reconciled against actual incurred claims at least semi-annually. Amounts due in the aggregate may not exceed fifty percent (50%) of the organization's net worth as defined in subsection 3199.13. Amounts due from a single provider may not exceed the lesser of five percent (5%) of the HMO's admitted assets or ten percent (10%) of the HMO's net worth;

(u) Cost reimbursement due from the Health Care Financing Administration of the U.S. Department of Health and Human Services, for furnishing covered medicare services to medicare enrollees which are not more than twelve (12) months past due; and

(v) Prepaid rent or lease payments no greater than three (3) months in advance, on real property used for the administration of the HMO's business or for the delivery of medical care.

3199.2 "Bank, savings bank or trust company" means any bank, savings bank or trust company organized and supervised under the laws of the District, the United States or any state thereof, if the bank, savings bank or trust company has the insurance protection afforded by an agency of the United States.

3199.3 "Business corporation" means a corporation organized for other than not-for-profit purposes.

3199.4 "Business entity" means a sole proprietorship, a corporation, an association, a partnership, a limited partnership, a business trust, or a limited liability company.

3199.5 "Capital" means capital stock paid up, if any, and its use in a provision does not imply that a not for profit HMO without stated capital stock is excluded from the provision. The capital of such an HMO will be zero.

3199.6 "Clearing corporation" means:

(a) A clearing corporation as defined in section 28:8-102(a)(5) of the District of Columbia Official Code;

(b) With respect to securities issued by institutions organized or existing under the laws of a foreign country or securities used to meet the deposit requirements pursuant to the laws of a foreign country as a condition of doing business in the foreign country, a corporation that is organized or existing under the laws of a foreign country and that is legally qualified under those laws to effect transactions in securities by computerized book-entry; and

(c) The Treasury/Reserve Automated Debt Entry System and the Treasury Direct book-entry securities system described in part 357 of title 31 of the U.S. Code of Federal Regulations.

3199.7 "Custodian" means a national bank, state bank, trust company, or broker/dealer that participates in a clearing corporation.".

3199.8 "Direct" when used in connection with "obligation" means that the designated obligor shall be primarily liable on the instrument representing the obligation.

3199.9 "District" means the District of Columbia.

3199.10 "Facility" means and includes real estate and any and all forms of tangible personal property and services used constituting an operating unit.

3199.11 "Guaranteed or insured" means that the guarantor or insurer will perform or insure the obligation of the obligator or will purchase the obligation to the extent of the guaranty or insurance.

3199.12 "Mortgage" shall include a trust deed or other lien on real property securing an obligation for the payment of money.

3199.13 "Security" has the same meaning as in section 28:8-102(a)(15) of the District of Columbia Official Code.

3199.14 "Servicer" means a business entity that has a contractual obligation to service a pool of mortgage loans. The service provided shall include, but is not limited to, collection of principal and interest, keeping the accounts current, maintaining or confirming in force hazard insurance and tax status and providing supportive accounting services.

3199.15 "Single credit risk" means the direct, guaranteed or insured obligations of any one business entity including affiliates thereof.

3199.16 "Surplus" means the amount properly shown as total net worth on a company's balance sheet, plus all voluntary reserves, but not including capital paid-up.

3199.17 "Tangible net worth" means the par value of all issued and outstanding capital stock of a corporation (or in the case of shares having no par value, the stated value) and the amounts of all surplus accounts less the sum of:

(a) Such intangible assets as deferred charges, organization and development expense, discount and expense incurred in securing capital, good will, trademarks, trade names and patents;

(b) Leasehold improvements; and

(c) Any reserves carried by the corporation and not otherwise deducted from assets.

3199.18 "Unconditional" when used in connection with the term "obligation" means that nothing remains to be done or to occur to make the designated obligor liable on the instrument, and that the legal holder shall have the status at least equal to that of general creditor of the obligor.".

History

• SOURCE: Final Rulemaking published at 46 DCR 5925(July 16, 1999); as Final Rulemaking published at 54 DCR 5597 (June 8, 2007).

26-A35 HEALTH MAINTENANCE ORGANIZATIONS (HMOS)

26-A DCMR § 3500 ESTABLISHMENT OF HEALTH MAINTENANCE ORGANIZATIONS AND RENEWAL OF CERTIFICATE OF AUTHORITY

3500.1 Any person seeking to operate an HMO in the District of Columbia shall file an application for a certificate of authority accompanied by the required supporting documentation with the Commissioner of Insurance and Securities Regulation ("Commissioner"), and is responsible for paying the following fees:

(a) An initial filing fee in the amount of five hundred dollars ($ 500.00).

(b) The renewal fee for certificates of authority in the amount of two hundred dollars ($200.00).

(c) The renewal fee must be received by the Commissioner by April 1 of each renewal year.

3500.2 The application for a certificate of authority shall be accompanied by the following supporting ducumentation:

(a) A copy of the organizational documents of the applicant such as the articles of incorporation, articles of association, partnership agreement, trust agreement, or other applicable documents and all amendments thereto;

(b) A copy of the by-laws, rules and regulations or similar documents regulating the conduct of the internal affairs of the applicant;

(c) A list of the names, addresses, official positions and biographical information for those persons responsible for the conduct of the affairs and day-to-day operations of the applicant, including:

(1) the members of the board of directors, board of trustees, executive committee, or other governing body; and

(2) the principal officers in the case of a corporation, or partners or members in the case of a partnership or association;

(d) A sample of any contract form made, or to be made, between any class of providers and the HMO and a copy of any contract form made, or to be made, between third party administrators, marketing consultants or persons listed in paragraph (c) and the HMO;

(e) A copy of the form of evidence of coverage to be issued to the enrollees;

(f) A copy of the form of group contract, if any, to be issued to employers, unions, trustees or organizations;

(g) Financial statements showing the applicant's assets, liabilities, and sources of financial support, including both a copy of the applicant's most recent certified financial statement and an unaudited current financial statement;

(h) A financial feasibility plan (except for a person that holding an unencumbered certificate of authority to operate an HMO in Maryland or Virginia) which shall include:

(1) detailed enrollment projections;

(2) methodology for determining dues to be charged during the first 12 months of operation as certified by an actuary;

(3) projection of balance sheets;

(4) cash flow statements showing any capital expenditures;

(5) purchase/sale of investments and deposits with the District government;

(6) income and expense statements anticipated from the start of operations until the organization has had net income for at least one (1) year; and

(7) sources of working capital as well as any other sources of funding.

(i) If not domiciled in the District, the applicant shall execute a power of attorney appointing the Commissioner, or his or her successors in office and duly authorized deputies, as the true and lawful attorney of the applicant in and for the District upon whom all lawful process in any legal action or proceeding against the HMO on a cause of action arising in the District may be served;

(j) A statement and map of the geographical area or areas to be served;

(k) A description of the proposed quality assurance program;

(l) A description of procedures to be implemented which meet the requirements for protection against insolvency as required under section 13 of the Act, D.C. Code § 35-4512;

(m) A list of the names, addresses and license numbers of providers that have agreements with the HMO, provided that:

(1) the license numbers of the providers shall be maintained in the HMO's administrative office; and

(2) the list of the license numbers shall be available for review by the Commissioner during on-site visits;

(n) The method of determining situs of each group contract;

(o) Any other information the Commissioner deems necessary to make the determination whether to issue a certificate of authority.

3500.3 After receiving its certificate of authority, an HMO shall submit to the Commissioner information concerning any modification or amendment to the information contained in its orignal application for a certificate of authority and supporting documentation prior to effecting a modification or amendment for the items listed in subsection 3500.2(a) through (f), (h) (5), and (o). Information or supporting documentation for an amendment for items not listed in this subsection shall be provided to the Commissioner at the next succeeding site visit or examination.

3500.4 The Commissioner shall have thirty (30) days to approve a modification or amendment when his or her approval is required. On written notice to the applicant, an additional thirty (30) days may be taken by the Commissioner, if additional time is needed to properly consider the modification or amendment. If the Commissioner fails to disapprove the modification or amendment within the original thirty (30) day period, as extended by any additional period of thirty (30) days, the application will be considered approved.

3500.5 Licensure packages may be requested from the Department of Insurance and Securities Regulation, Insurance Bureau, Consumer and Professional Services Division.

History

• SOURCE: Final Rulemaking published at 46 DCR 7291(September 17, 1999); as Final Rulemaking published at 50 DCR 5576(July 11, 2003).

26-A DCMR § 3501 ISSUANCE OF CERTIFICATE OF AUTHORITY

3501.1 The Commissioner, in consultation with the Director of the Department of Health, shall determine whether the applicant has complied with the District's quality assurance program, pursuant to section 7 of the Act, D.C. Code § 35-4506, with reference to health care services.

3501.2 Within forty-five (45) days of the receipt of an application for a certificate of authority, the Commissioner shall certify that the proposed HMO meets the District's quality assurance program.

3501.3 The forty-five (45) day review period to determine whether an applicant complies with the District's quality assurance program will be tolled when additional information is requested.

3501.4 Written notice shall be given informing an applicant when it does not meet the requirements of the District's quality assurance program. The notice shall specify the deficiencies.

3501.5 The Commissioner shall issue a certificate of authority when the following requirements are satisfied:

(a) A completed application is filed;

(b) Prescribed fees are paid;

(c) Persons responsible for the conduct of the affairs of the applicant are: competent, trustworthy, and operate an organization in good standing in the jurisdiction in which the organization currently conducts business; and have not been convicted of any criminal offense or engaged in fraudulent activity;

(d) All deficiencies identified by the Commissioner have been corrected and the HMO's proposed plan of operation meets the District's quality assurance program requirements;

(e) The HMO provides or arranges for the provision of basic health care services on a prepaid basis, through insurance or otherwise, except for copayments and deductibles;

(f) The HMO is in compliance with the protection against insolvency provisions under section 13 of the Act, D.C. Code § 35-4512; and

(g) The HMO complies with the enrollment period and replacement coverage provisions under section 15 of the Act, D.C. Code § 35-4512, in the event of insolvency.

History

• SOURCE: Final Rulemaking published at 46 DCR 7291(September 17, 1999).

26-A DCMR § 3502 POWERS OF HMOS

3502.1 The powers of an HMO include, but are not limited to, the following:

(a) The purchase, lease, construction, renovation, operation or maintenance of hospitals, medical facilities, or both, and their ancillary equipment, and such property and equipment as may be reasonably required by the HMO for its principal office or for such purposes as may be necessary for transacting the organization's business;

(b) Conducting transactions between affiliated entities; and

(c) Contracting with any person for the performance of marketing, enrollment and administration functions.

3502.2 The exercise of any power under subsection 3502.1 which does not have a monetary value in excess of ten percent (10%) of the admitted assets or 25% of the HMO's net worth as reflected on the most recent quarterly report filed with the Commissioner shall be deemed "de minimus" and no approval shall be required from the Commissioner.

3502.3 A request by the HMO to exercise a power is considered approved if the Commissioner fails to disapprove the request within thirty (30) days of the filing of the notice.

3502.4 Joint marketing with an insurance company is permissible as long as each product is clearly identified with the company making the offer.

History

• SOURCE: Final Rulemaking published at 46 DCR 7291(September 17, 1999).

26-A DCMR § 3503 QUALITY ASSURANCE PROGRAM

3503.1 An HMO shall continually maintain an internal quality assurance program. This program shall monitor and evaluate the services provided by the HMO, including primary and specialist physician services, and ancillary and preventive health care services, across all institutional and noninstitutional settings.

3503.2 At a minimum the internal quality assurance program shall include at a minimum, the following items:

(a) A written statement of goals and objectives that emphasizes improved health status in evaluating the quality of care rendered to enrollees;

(b) A written quality assurance plan that describes:

(1) the HMO's scope and purpose in quality assurance;

(2) the organizational structure responsible for quality assurance activities;

(3) contractual arrangements for delegation of quality assurance activities;

(4) policies and procedures for confidentiality;

(5) a system of ongoing evaluation activities;

(6) a system of focused evaluation activities;

(7) a system for credentialing providers and performing peer review activities; and

(8) the duties and responsibilities of the designated physician responsible for quality assurance activities;

(c) A written description of the system of ongoing quality assurance activities which shall include:

(1) problem assessment, identification, selection, and study;

(2) corrective action, monitoring, evaluation, and reassessment; and

(3) interpretation and analysis of patterns of care rendered to individual patients by individual providers;

(d) A written statement describing the system focused quality assurance activities based on representative samples of the enrolled population which identifies the method of topic selection, study, data collection, analysis, interpretation, and report format; and

(e) A written plan for taking appropriate corrective action whenever inappropriate or substandard services have been provided to enrollees or services that should have been provided to enrollees have not been provided.

3503.3 The HMO shall record proceedings of formal quality assurance program activities and maintain documentation in a confidential manner.

3503.4 Minutes from the quality assurance program shall be available to the Commissioner.

3503.5 The HMO shall ensure the use and maintenance of a patient record system to facilitate the documentation and retrieval of clinical information for the purpose of evaluating the continuity and coordination of patient care, and assessing the quality of the health and medical care rendered to enrollees.

3503.6 The Commissioner or his or her authorized designee may review the clinical records of an enrollee to determine whether the HMO has complied with this section or for any other purposes he or she considers necessary.

3503.7 The HMO shall establish a mechanism for the governing body, providers, and appropriate staff to receive periodic reports on quality assurance program activities.

3503.8 Quality assurance programs approved by the States of Maryland or Virginia, or by the District of Columbia Medicaid Program shall be deemed approved.

3503.9 When an applicant has received a certificate of authority from Maryland or Virginia, a Quality Assurance Program Inquiry form shall be filed with the initial application for certificate of authority in the District. The HMO shall submit a copy of the quality assurance report.

3503.10 The discussions between a patient and provider concerning medical treatment options and the financial coverage of those options shall not be prohibited, impeded or interfered with by the provider's contract with the HMO.

3503.11 The contract between the HMO and the provider shall permit the provider to discuss medical treatment options with its patients.

3503.12 An HMO's decision to terminate or refuse to contract with a provider shall not be based in whole or in part on the fact that the provider discussed medical treatment options with the enrollee.

History

• SOURCE: Final Rulemaking published at 46 DCR 7291(September 17, 1999).

26-A DCMR § 3504 REQUIREMENTS FOR CONTRACTS AND EVIDENCE OF COVERAGE

3504.1 Each enrollee shall be entitled to receive an individual contract, evidence of coverage, or other description of covered services in a form that has been approved by the Commissioner. Each group contract holder shall be entitled to receive a group contract as approved by the Commissioner. Group contracts, individual contracts and evidences of coverage shall be delivered or issued for delivery to enrollees or group contract holders within a reasonable time after enrollment, but not more than fifteen (15) days from the later of the effective date of coverage or the date on which the HMO is notified of enrollment.

3504.2 The group or individual contract and evidence of coverage shall contain the name, address and telephone number of the HMO, and where and in what manner information is available as to how services may be obtained. A telephone number within the service area for calls, without charge to members, to the HMO's administrative office shall be made available and disseminated to enrollees to adequately provide telephone access for enrollee services, problems or questions.

3504.3 An HMO must provide a method by which the enrollee may contact the HMO, at no cost to the enrollee. This may be done through the use of toll-free or collect telephone calls. The enrollee must be informed of the method by notice in the handbook, newsletter, or flyer. The group or individual contract or evidence of coverage may indicate the manner in which the number will be disseminated rather than list the number itself.

3504.4 The group or individual contract and evidence of coverage shall contain eligibility requirements indicating the conditions that must be met to enroll as a enrollee or eligible dependent, the limiting age for enrollees and eligible dependents including the effects of Medicare eligibility, and a clear statement regarding coverage of newborn children.

3504.5 The group or individual contract and evidence of coverage shall contain a specific description of benefits and services available for emergencies twenty-four (24) hours a day, seven (7) days a week, including disclosure of any restrictions on emergency care services. No group or individual contract or evidence of coverage shall limit the coverage of emergency services within the service area to affiliated providers only.

3504.6 The group or individual contract and evidence of coverage shall contain a description of any limitations or exclusions on the services, kind of services, benefits, or kind of benefits, including any limitations or exclusions due to preexisting conditions, waiting periods or an enrollee's refusal of treatment.

3504.7 No HMO shall cancel or terminate coverage of services provided an enrollee under an HMO group or individual contract except for one or more of the following reasons:

(a) Failure to pay the amounts due under the group or individual contract;

(b) Fraud or material misrepresentation in enrollment or in the use of services or facilities;

(c) Material violation of the terms of the group or individual contract;

(d) Failure to meet the eligibility requirements under a group contract;

(e) Termination of the group contract under which the enrollee was covered;

(f) Failure of the enrollee and the provider to establish a satisfactory patient-provider relationship if:

(1) it is shown that the HMO has, in good faith, provided the enrollee with the opportunity to select an alternative provider;

(2) the enrollee has repeatedly refused to follow the plan of treatment ordered by the provider; and

(3) the enrollee is notified in writing at least thirty (30) days in advance that the HMO considers the patient-provider relationship to be unsatisfactory and specific changes are necessary in order to avoid termination; or

(g) Such other good cause agreed upon in the group or individual contract and approved by the Commissioner.

3504.8 Coverage shall not be cancelled or terminated on the basis of the status of the enrollee's health or because the enrollee has exercised his or her rights under the HMO's grievance procedure by registering a grievance against the HMO.

3504.9 No HMO shall cancel, fail to continue, or terminate an enrollee's coverage for services provided under an HMO group or individual contract without giving the enrollee at least fifteen (15) days written notice of such termination. Notice will be considered given on the date of mailing or, if not mailed, on the date of delivery. This notice shall include the reason. If this action is due to nonpayment of premium, the grace period required in subsections 3504.28 through 3504.30 shall apply.

3504.10 No HMO shall terminate coverage of a dependent child upon attainment of the limiting age stated in the contract if the child is and continues to be both:

(a) Unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment(s) which can be expected to result in death or which has lasted for a continuous period of not less than twelve (12) months; and

(b) Chiefly dependent upon the subscriber for support and maintenance. The term "chiefly dependent" means the certificate holder has listed such child as a dependent on his or her most recent federal and District personal income tax return, and the certificate holder is responsible for providing more than fifty percent (50%) of the child's support.

3504.11 Proof of such incapacity and dependency shall be furnished to the HMO by the enrollee within thirty-one (31) days of the child's attainment of the limiting age and subsequently as reasonably required by the HMO.

3504.12 If an HMO permits reinstatement of an enrollee's coverage, the group or individual contract and evidence of coverage must include any terms and conditions concerning reinstatement. The contract and evidence of coverage may state that all reinstatements are at the option of the HMO and that the HMO is not obligated to reinstate any terminated coverage.

3504.13 The group contract or individual contract and evidence of coverage shall contain procedures for filing claims that include:

(a) Any required notice to the HMO;

(b) If any claim forms are required, how, when and where to obtain and submit them;

(c) Any requirements for filing proper proofs of loss;

(d) Any time limit of payment of claims;

(e) Notice of any provisions for resolving disputed claims, including arbitration; and

(f) A statement of restrictions, if any, on assignment of sums payable to the enrollee by the HMO.

3504.14 A group contract and evidence of coverage shall contain a conversion provision which provides that each enrollee has the right to convert coverage to an individual HMO contract in the following circumstances:

(a) Upon termination of eligibility for coverage under the group contract; or

(b) Upon termination of the group contract.

3504.15 To obtain the conversion contract, an enrollee shall submit a written application and the applicable premium payment to the HMO within thirty-one (31) days after the date the enrollee's eligibility for coverage terminates.

3504.16 A conversion contract shall not be required to be made available if:

(a) The enrollee's termination of coverage occurred for any of the reasons listed in subsection 3504.7(a), (b), (c), (f) or (g);

(b) The enrollee is covered by or is eligible for benefits under Title XVIII of the United States Social Security Act (Medicare);

(c) The enrollee is covered by or is eligible for similar hospital, medical or surgical benefits under District or federal law;

(d) The enrollee is covered by or is eligible for similar hospital, medical or surgical benefits under any arrangement of coverage for individuals in a group;

(e) The enrollee is covered for similar benefits by an individual policy or contract; or

(f) The enrollee has not been continuously covered during the three (3) -month period immediately preceding that person's termination of coverage.

3504.17 The conversion contract shall provide basic health care services to its enrollees as a minimum.

3504.18 The conversion contract shall begin coverage of the enrollee formerly covered under the group contract on the date of termination from such group contract.

3504.19 Coverage shall be provided without requiring evidence of insurability and shall not impose any preexisting condition limitations or exclusions as described in subsections 3513.1 through 3513.3 other than those remaining unexpired under the contract from which conversion is exercised. Any probationary or waiting period set forth in the conversion contract shall be deemed to commence on the effective date of the enrollee's coverage under the prior group contract.

3504.20 If an HMO does not issue individual or conversion contracts, the HMO may use a non-cancelable group contract to provide coverage for enrollees who are eligible for conversion coverage.

3504.21 The group or individual contract and evidence of coverage may contain a provision for coordination of benefits that shall be consistent with that applicable to other carriers in the jurisdiction. Any provisions or rules for coordination of benefits established by an HMO shall not relieve an HMO of its duty to provide or arrange for a covered health care service to any enrollee where the enrollee is entitled to coverage under any other contract, policy or plan, including coverage provided under government programs. The HMO shall be required to provide covered health care services first and then, at its option, seek coordination of benefits.

3504.22 The group or individual contract and evidence of coverage shall not contain any provisions concerning subrogation for injuries caused by third parties unless the wording has been approved by the Commissioner.

3504.23 The group or individual contract shall contain a statement that the contract, all applications and any amendments thereto shall constitute the entire agreement between the parties. No portion of the charter, bylaws or other document of the HMO shall be part of such a contract unless set forth in full in the contract or attached thereto. However, the evidence of coverage may be attached to and made a part of the group contract.

3504.24 The group or individual contract and evidence of coverage shall state the time and date or the occurrence upon which coverage takes effect, including any applicable waiting periods, or describe how the time and date or occurrence upon which coverage takes effect is determined. The contract and evidence of coverage shall also state the time and date or the occurrence upon which coverage will terminate.

3504.25 The group or individual contract shall contain the conditions upon which cancellation or termination may be effected by the HMO, the group contract holder, or the enrollee.

3504.26 The group or individual contract and evidence of coverage shall contain the conditions for, and any restrictions upon, the enrollee's right to renewal.

3504.27 If an HMO permits reinstatement of a group or individual, the contract and evidence of coverage must include any terms and conditions concerning reinstatement. The contract and evidence of coverage may state that all reinstatements are at the option of the HMO and that the HMO is not obligated to reinstate any terminated contract.

3504.28 The group or individual contract shall provide for a grace period of not less than thirty (30) days for the payment of any premium except the first, during which time the coverage shall remain in effect if payment is made during the grace period. The evidence of coverage shall include notice that a grace period exists under the group contract and that coverage continues in force during the grace period.

3504.29 During the grace period the following shall occur:

(a) The HMO shall remain liable for providing the services and benefits contracted for;

(b) The contract holder shall remain liable for the payment of premium for coverage during the grace period; and

(c) The enrollee shall remain liable for any copayments and deductibles.

3504.30 During the grace period, if the premium is not paid and coverage is terminated in accordance with the provisions of the contract, then the contract holder shall be liable for services rendered on a fee for service basis under the usual terms of the contract.

3504.31 If the premium is not paid during the grace period, coverage shall be terminated per the terms of the contract. Following the effective date of such termination, the HMO shall deliver written notice thereof to the contract holder.

3504.32 An individual contract shall contain a provision stating that a person who has entered into an individual contract with a health maintenance organization shall be permitted to return the contract within ten (10) days of receiving it and to receive a refund of the premium paid if the person is not satisfied with the contract for any reason. If the contract is returned to the HMO or to the agent through whom it was purchased, it is considered void from the beginning. However, if services are rendered or claims are paid for such person by the HMO during the ten (10) -day examination period and the person returns the contract to receive a refund of the premium paid, the person shall be required to pay for such services.

History

• SOURCE: Final Rulemaking published at 46 DCR 7291(September 17, 1999).

26-A DCMR § 3505 (RESERVED)

History

• SOURCE: Final Rulemaking published at 46 DCR 7291(September 17, 1999).

26-A DCMR § 3506 PROTECTION AGAINST INSOLVENCY - NET WORTH AND DEPOSIT REQUIREMENTS, LIABILITIES, AND HOLD HARMLESS

3506.1 An HMO shall have an initial net worth of one million five hundred thousand dollars ($ 1,500,000) prior to the issuance of the certificate of authority.

3506.2 After the issuance of the certificate of authority an HMO shall maintain a minimum net worth equal to the greater of:

(a) One million dollars ($ 1,000,000);

(b) Two percent (2%) of the annual dues revenues as reported on the most recent annual statement filed with the Commissioner on the first one hundred fifty million dollars ($ 150,000,000) of dues plus one percent (1%) of the annual dues in excess of one hundred fifty million dollars ($ 150,000,000);

(c) An amount equal to the sum of three (3) months uncovered health care expenditures as reported on the most recent financial statement filed with the Commissioner; or

(d) An amount equal to the sum of:

(1) eight percent (8%) of annual health care expenditures except those paid on a capitated basis or a managed hospital payment basis as reported on the most recent financial statement filed with the Commissioner; and

(2) four percent (4%) of annual hospital expenditures paid on a managed hospital payment basis as reported on the most recent financial statement filed with the Commissioner.

3506.3 In determining minimum net worth, no debt shall be considered fully subordinated unless the subordination clause is in a form acceptable to the Commissioner. An interest obligation relating to the repayment of subordinated debt must be similariy subordinated. The interest expenses relating to the repayment of any fully subordinated debt shall be considered covered expenses. A debt incurred by a note meeting the requirements of section 13 of the Act, D.C. Code § 35-4512, and otherwise acceptable to the Commissioner shall not be considered a liability and shall be recorded as equity.

3506.4 An HMO shall deposit with the Commissioner or, at the discretion of the Commissioner, with any organization or trustee acceptable to the Commissioner through which a custodial or controlled account is utilized, cash, securities, or any combination of these items or other measures that are acceptable to the Commissioner which at all times shall have a value of not less than three hundred thousand dollars ($ 300,000).

3506.5 The deposit shall be considered an admitted asset of the HMO for purposes of determining its net worth.

3506.6 All income from deposits shall be an asset of the HMO.

3506.7 An HMO that has made a deposit of securities may withdraw the deposit or any part thereof, after making a substitute deposit of cash, securities, or any combination of these or other measures of equal amount and value.

3506.8 All securities must be approved by the Commissioner before being deposited or substituted.

3506.9 The deposit shall be used to offset administrative costs directly related to receivership or liquidation and shall be considered an asset for purposes of liquidation.

3506.10 The HMO's deposit requirement may be reduced or eliminated by the Commissioner if the HMO makes a deposit for the protection of all enrollees with the Commissioner, District treasurer or other District official body, or with the jurisdiction of the HMO's domicile. The deposit shall consist of cash, acceptable securities, or surety and the HMO shall deliver a certificate to that effect to the Commissioner. The certificate shall be authenticated by the regulatory authority of the HMO's domiciliary, or by the appropriate District official holding the deposit.

3506.11 Every HMO shall, when determining liabilities, include an estimated amount in the aggregate to provide for any unearned dues and for the payment of all claims for health care expenditures which have been incurred, whether reported or unreported, which are unpaid and for which the organization is or may be liable, and to provide for the expense of adjustment or settlement of such claims. Such liabilities may be computed in accordance with generally accepted accounting principles.

3506.12 Every contract between an HMO and participating provider of health care services shall be in writing and shall provide that in the event an HMO fails to pay for health care services as set forth in the contract, the enrollee will not be liable to the provider for any sums owed by the HMO.

3506.13 In the event that the participating provider contract is not in writing or the contract fails to include the prohibition described in subsection 3506.12, the participating provider shall not collect or attempt to collect from the enrollee sums owed by an HMO.

3506.14 No action at law can be brought by the participating provider, agent, trustee or assignee against the enrollee to collect sums owed by the HMO.

3506.15 An HMO shall have an insolvency plan which allows for the continuation of benefits for the duration of the contract period for which premiums have been paid and continuation benefits to members who are confined on the date of insolvency in an inpatient facility until their discharge or expiration of benefits.

3506.16 The Commissioner may require the following item(s) when considering an HMO's insolvency plan:

(a) Insurance to cover the expenses to be paid for continued benefits after insolvency;

(b) Provisions in provider contracts that obligate the provider to provide services for the duration of the period after an HMO's insolvency for which premium payment has been made and until the enrollee's discharge from inpatient facilities;

(c) Insolvency reserves;

(d) Acceptable letters of credit; and

(e) Any other arrangements that to assure a continuation of benefits.

History

• SOURCE: Final Rulemaking published at 46 DCR 7291(September 17, 1999).

26-A DCMR § 3507 UNCOVERED HEALTH CARE EXPENDITURES INSOLVENCY DEPOSIT

3507.1 An HMO shall place an uncovered health care expenditures insolvency deposit with the Commissioner, or with any organization or trustee acceptable to the Commissioner, when uncovered health care expenditures are more than ten percent (10%) of its total health care expenditures.

3507.2 The uncovered health care expenditures insolvency deposit shall be placed with the Commissioner or in a custodial or controlled account acceptable to the Commissioner.

3507.3 The deposit shall be in the form of cash or securities that are acceptable to the Commissioner.

3507.4 The fair market value of the deposit shall at all times have a fair market value in an amount of one hundred twenty percent (120%) of the HMO's outstanding liability for uncovered health care expenditures for District enrollees. This includes claims incurred, but not reported. The deposit must be calculated as of the first day of each month and maintained for the remainder of the month. If it is not otherwise required to file a quarterly report, the HMO must file a report within forty-five (45) days of the end of the calendar quarter with information sufficient to demonstrate compliance with this section.

3507.5 The deposit required in this section is in addition to the deposit required under section 3506.

3507.6 In determining the net worth of the HMO, the deposit under subsection 3507.4 shall be considered an admitted asset. All income earned from the deposit, or trust accounts established as an alternative to a deposit, is an asset of the HMO. With the approval of the Commissioner, this income may be withdrawn from the deposit or trust account quarterly.

3507.7 The Commissioner shall give prior written approval for all deposits, substitutions or withdrawals.

3507.8 An HMO that has made a deposit may withdraw the entire deposit, or any part of the deposit, if the Commissioner gives prior written approval and if:

(a) A substitute deposit of cash or securities of equal amount and value is made;

(b) The fair market value of the assets and deposit exceeds the amount of the required deposit; or

(c) The required deposit under subsection 3507.4 is reduced or eliminated.

3507.9 The insolvency deposit is in trust and may be used only as approved by the Commissioner. The Commissioner may use the deposit of an insolvent HMO for administrative costs associated with administering the deposit and payment claims of enrollees of the District for uncovered expenditures. Claims for uncovered expenditures must be paid on a pro rata basis based on assets available to pay such ultimate liability for incurred expenditures.

3507.10 Partial distributions may be made pending final distribution. Any amount of the deposit remaining shall be paid into the liquidation or receivership of the HMO.

History

• SOURCE: Final Rulemaking published at 46 DCR 7291(September 17, 1999).

26-A DCMR § 3508 MAINTENANCE OF INSUFFICIENT NET WORTH

3508.1 When the Commissioner finds that the net worth maintained by any HMO is less than the minimum net worth required to be maintained under section 3506, the Commissioner shall give written notice to the HMO indicating the amount of the deficiency and require it to file a plan to correct the deficiency. The plan shall be acceptable to the Commissioner. The HMO shall correct the deficiency within a reasonable time not to exceed sixty (60) days, unless the Commissioner grants an extension of time to correct the deficiency.

3508.2 A deficiency in an HMO's net worth will be considered an impairment. An impairment will be grounds for placing the HMO in conservation, rehabilitation, or liquidation, or suspending or revoking its certificate of authority. Noncompliance with the requirements in section 3506 is a prerequisite to suspending or revoking a certificate of authority, denying an application for a certificate of authority or imposing an administrative penalty.

3508.3 When an HMO is impaired and the fact of impairment is known by the HMO or to the person acting on its behalf, no HMO or the person acting on its behalf may, directly or indirectly, renew, issue, or deliver any certificate, agreement, or contract of coverage in the District, for which a premium dues is charged or collected, except for newborn children, other newly acquired dependents of existing enrollees, other newly eligible individuals, or as otherwise allowed by the Commissioner.

3508.4 The existence of an impairment shall not prevent the issuance or renewal of a certificate, agreement or contract when an enrollee exercises an option granted under the plan to obtain new, renewed, or converted coverage.

3508.5 Suspension or revocation of a certificate of authority, the denial of an application or imposition of an administrative penalty shall be by written order and shall be sent to the HMO by certified or registered mail.

3508.6 The written order shall state the grounds, charges or conduct on which the suspension, revocation, denial of an application, or administrative penalty is based.

3508.7 An HMO or applicant has thirty (30) days from the date of mailing of the order to make a written request for a hearing.

3508.8 An order under subsection 3508.6 shall be final upon the expiration of the thirty (30) days.

3508.9 The procedural requirements for hearings shall be the same as prescribed in section 10 of the District of Columbia Administrative Procedure Act, D.C. Code § 1-1509.

3508.10 When the certificate of authority of an HMO is suspended, the HMO shall not enroll any additional enrollees (except for newborn children, other newly acquired dependents of existing enrollees, or other newly eligible individuals), and shall not engage in any advertising or solicitation whatsoever.

3508.11 When an HMO's certificate of authority is revoked, the HMO shall, immediately following the effective date of the order of revocation:

(a) Immediately wind up its affairs in the District;

(b) Conduct no further business in the District except as may be essential to the orderly conclusion of the HMO's affairs in the District;

(c) Cease advertising or soliciting customers for its services in the District; and

(d) If permitted by written order of the Commissioner, may further operate its business if the Commissioner finds it to be in the best interest of the HMO's enrollees.

History

• SOURCE: Final Rulemaking published at 46 DCR 7291(September 17, 1999).

26-A DCMR § 3509 SERVICES

3509.1 An HMO shall establish and maintain adequate arrangements to provide health services for its enrollees, including:

(a) Reasonable proximity to the business or personal residences of the enrollees so as not to result in unreasonable barriers to accessibility;

(b) Reasonable hours of operation;

(c) Emergency care services available and accessible within the service area twenty-four (24) hours a day, seven (7) days a week; and

(d) Sufficient providers, personnel, administrators and support staff to assure that all services contracted for will be accessible to enrollees on an appropriate basis without delays detrimental to the health of enrollees.

3509.2 An HMO shall make available to each enrollee a primary care provider and provide accessibility to medically necessary specialists through staffing, contracting or referral. An HMO shall provide for continuity of care for enrollees referred to specialists.

3509.3 An HMO shall have written procedures governing the availability of services utilized by enrollees, including at least the following:

(a) Well-patient examinations and immunizations;

(b) Emergency telephone consultation on a twenty-four (24) hours per day, seven (7) days per week basis;

(c) Treatment of emergencies;

(d) Treatment of minor illnesses; and

(e) Treatment of chronic illnesses.

3509.4 An HMO shall provide, or arrange for basic health care services, which shall include preventive care, emergency care, inpatient and outpatient hospital and physician care, diagnostic laboratory and diagnostic and therapeutic radiological services, and services mandated under the:

(a) Drug Abuse, Alcohol Abuse, and Mental Illness Insurance Coverage Act of 1986, D.C. Law 6-195, D.C. Code § 35-2301 et seq.;

(b) Newborn Health Insurance Act of 1979, D.C. Law 3-33, D.C. Code § 35-1101 et seq.; and

(c) District of Columbia Cancer Prevention Act of 1990, D.C. Law 8-225, D.C. Code § 35-1101 et seq.

3509.5 Out-of-area services shall be subject to the copayment requirements set forth in the group and individual contract and evidence of coverage.

3509.6 When an enrollee is temporarily out of an HMO's service area, the HMO shall provide benefits for reimbursement for emergency care services and emergency transportation which is medically necessary and appropriate under the circumstances, and in the event that emergency care services are provided and further inpatient care is medically necessary, once the enrollee is stabilized, the HMO shall provide benefits for reimbursement for transportation to return the enrollee to an HMO provider, subject to the following conditions:

(a) The condition could not reasonably have been foreseen;

(b) The enrollee could not reasonably arrange to return to the service area to receive treatment from the HMO's provider;

(c) The travel or temporary departure outside of the service area must be for some purpose other than the receipt of unapproved medical treatments; and

(d) The HMO is notified by telephone within twenty-four (24) hours of the commencement of such care unless it is shown that it was not reasonably possible to communicate with the HMO within such time limits, if the HMO requires such notification.

History

• SOURCE: Final Rulemaking published at 46 DCR 7291(September 17, 1999).

26-A DCMR § 3510 FILING REQUIREMENTS FOR RATING INFORMATION

3510.1 A schedule of enrollment fees or methodology for determining enrollment fees due must be filed and approved by the Commissioner before the fees can be used by the HMO.

3510.2 Either a specific schedule of fees, or a methodology for determining fees, shall be established in accordance with actuarial principles for various categories of enrollees, provided that the enrollment fees applicable to an enrollee shall not be individually determined based on the status of an enrollee's health.

3510.3 Enrollment fees shall not be excessive, inadequate or discriminatory.

3510.4 A statement by a qualified actuary or other qualified person acceptable to the Commissioner as to the appropriateness of the use of the methodology based on reasonable assumptions, shall accompany the schedule of fees along with adequate supporting information.

3510.5 When a schedule of enrollment fees or a method of determining enrollment fees filed by an HMO is disapproved by the Commissioner, written notice specifying the reasons for the disapproval shall be sent to the HMO. A hearing will be held within thirty (30) days after a request in writing for a hearing by the person submitting the fee schedule or methodology. The schedule or methodology is considered approved by the Commissioner if the Commissioner takes no action on the schedule or methodology within thirty (30) days of its filing.

History

• SOURCE: Final Rulemaking published at 46 DCR 7291(September 17, 1999).

26-A DCMR § 3511 READABILITY STANDARDS FOR INDIVIDUAL OR GROUP CONTRACTS AND EVIDENCE OF COVERAGE

3511.1 Each individual or group contract, or evidence of coverage, shall include a table of contents.

3511.2 Each section in the aforementioned documents shall be self-contained and independent, and any section may cross-reference another section or sections when necessary and appropriate. However, general provisions applicable to more than one section may be included in a common section.

3511.3 The group or individual contracts and the evidence of coverage shall be printed in ten (10) point type or more.

3511.4 The group or individual contract and evidence of coverage shall be printed in a legible type style with adequate contrast between ink and paper. Captions, headings, and spacing shall be used to increase overall legibility.

3511.5 The group or individual contracts and evidence of coverage shall be written in everyday conversational language.

3511.6 Technical terms and words with special meaning shall be avoided wherever possible. If a technical word is used, it should be clearly defined in the document.

3511.7 The group or individual contract and evidence of coverage must earn at least a score of forty on the Flesch Reading Ease Test or an equivalent score on any other comparable test, or a lower score on either if the Commissioner finds the policy or document reasonably easy to read.

3511.8 The Flesch Reading Ease Test will be scored by the following method:

(a) For a group or individual contract, or evidence of coverage, that contains ten thousand (10,000) words or less of text, the entire document will be analyzed. For a group or individual contract, or evidence of coverage, containing more than ten thousand (10,000) words, the readability of two one hundred (100) word samples per page may be analyzed instead. The samples must be separated by at least twenty (20) printed lines;

(b) The total number of words in the text or sample shall be divided by the total number of sentences. The figure so obtained shall then be multiplied by 1.015;

(c) The total number of syllables in the text or sample shall be divided by the total number of words. The figure so obtained shall then be multiplied by 84.6; and

(d) The sum of the figures computed under (b) and (c) shall then be subtracted from 206.835 to determine the Flesch Reading Ease Test score.

3511.9 For purposes of subsection 3511.8, the following procedures shall be used:

(a) A contraction, hyphenated word, numbers, and letters, when separated by spaces, shall be counted as one word.

(b) A unit of text ending with a period, semi-colon, or colon shall be counted as a sentence.

(c) A syllable means a unit of spoken language consisting of one or more letters of a word as identified in a recognized dictionary.

History

• SOURCE: Final Rulemaking published at 46 DCR 7291(September 17, 1999).

26-A DCMR § 3512 POINT OF SERVICE PLAN

3512.1 If an employer, association, or other private group arrangement offers health benefit plan coverage to employees or individuals only through an HMO, the HMO with which the employer, association, or other private group arrangement is contracting for the coverage shall offer, or contract with another carrier to offer, a point-of-service option to the employer, association, or other private group arrangement in conjunction with the HMO as an additional benefit for an employee or individual, at the employee's or individual's option to accept or reject.

3512.2 An employee or individual who accepts the point of service option may be required to pay a premium over the amount of the premium for the coverage offered by the HMO.

3512.3 Different cost-sharing provisions may be imposed by the HMO based on whether service is provided by the HMO's provider panel or by an out-of-network provider panel.

3512.4 This section only applies to renewal or new subscriber contracts issued after April 9, 1997.

3512.5 This section does not apply to individual subscriber contracts issued to a person who is not part of a contracted group of subscribers.

History

• SOURCE: Final Rulemaking published at 46 DCR 7291(September 17, 1999).

26-A DCMR § 3513 PROHIBITED PRACTICES

3513.1 An HMO may include in its individual contract a provision setting forth reasonable exclusions or limitations of services for preexisting conditions at time of enrollment. However, no such exclusions or limitations shall be for a period greater than twelve (12) months for enrollees or eighteen (18) months for late enrollees.

3513.2 No HMO shall exclude or limit services for a preexisting condition when the enrollee transfers coverage from one individual contract to another or when the enrollee converts coverage under his conversion option, except to the extent of a preexisting condition limitation or exclusion remaining unexpired under the prior contract. Any required probationary or waiting period shall be deemed to have commenced on the effective date of coverage under the prior contract. The HMO contract shall disclose any preexisting condition limitations or exclusions that are applicable when an enrollee transfers from a prior HMO contract.

3513.3 No HMO shall discriminate against any enrollee or applicant seeking enrollment for reasons other than that of the enrollee's or applicant's own merit. This includes, but is not limited to, discrimination by reason of race, color, religion, national origin, sex, age, marital status, personal appearance, sexual orientation, family responsibilities, matriculation, political affiliation, disability, source of income and place of residence or business, or because of the frequency of utilizatiion of services by an enrollee. Further, nothing shall prohibit an HMO from setting rates or establishing a schedule of charges in accordance with relevant actuarial data.

3513.4 No HMO shall expel or refuse to re-enroll any enrollee nor refuse to enroll individual members of a group on the basis of the health status or health care needs of the individuals or enrollees.

History

• SOURCE: Final Rulemaking published at 46 DCR 7291(September 17, 1999).

26-A DCMR § 3514 OTHER REQUIREMENTS

3514.1 An HMO shall provide its enrollees with a list of the names and locations of all of its participating providers no later than the time of enrollment or the time the group or individual contract and evidence of coverage are issued, whichever is later. An HMO shall also provide its enrollees with such a list upon reenrollment, if requested. If a primary care provider ceases to be affiliated with an HMO, the HMO shall provide notice of such cessation to its affected enrollees within thirty (30) days of its occurrence. Subject to the approval of the Commissioner, an HMO may provide its enrollees with a list of providers or provider groups for a segment of the service area. However, a list of all providers shall be made available to subscribers upon request.

3514.2 Any list of participating providers shall contain a notice regarding the availability of the listed primary care providers. Such notice shall be in not less than twelve (12) point type and be placed in a prominent place on the list of providers. The notice shall contain the following or similar language:

Enrolling in [name of HMO] does not guarantee services by a particular provider on this list. If you wish to receive care from specific providers listed, you should contact those providers to be sure that they are accepting additional patients for [name of HMO].

3514.3 An HMO may require copayments or deductibles of enrollees as a condition for the receipt of specific health care services. Copayments for basic health care services shall be shown in the group or individual contract and evidence of coverage as a specified dollar amount.

History

• SOURCE: Final Rulemaking published at 46 DCR 7291(September 17, 1999).

26-A DCMR § 3515 REGULATION OF HMO PRODUCERS

3515.1 No person shall act or hold himself to be an HMO producer unless duly licensed and appointed as such in accordance with these rules.

3515.2 No HMO doing business in the District of Columbia shall pay, directly or indirectly, any commission for any reason or purpose to any person, other than as may be permitted hereunder, nor shall any such HMO pay, directly or indirectly, any commission, or other valuable consideration, to any person for services as an HMO producer within the District of Columbia, unless such person shall hold a currently valid license to act as an HMO producer as required by the Act and these rules and is appointed by such HMO under that license. Neither shall any person, other than a duly licensed HMO producer or any person permitted hereunder, accept any such commission or other valuable consideration; provided, however, that the provisions of this section shall not prevent the payment or receipt of renewal or other deferred commissions to or by any person solely because such person has ceased to hold a license to act as an HMO producer.

3515.3 No HMO producer shall pay, allow, give or offer to pay, allow or give, directly or indirectly, any rebate of premiums or membership fees payable, any commission, any paid employment or contract for service of any kind, or any valuable consideration or inducement whatever, that is not specified in the policy or contract for health services, for or on account of the solicitation or negotiation of such contracts or policies, other than to another HMO producer.

3515.4 None of the following shall be required to hold an HMO producer license:

(a) Any regular salaried officer or employee of an HMO who devotes substantially all of his or her time to activities other than the taking or transmitting of applications or membership fees or premiums for HMO membership, and who receives no commission or other compensation directly dependent upon the business obtained and who does not solicit or accept from the public applications for HMO membership;

(b) Employers or their officers or employees, or the trustees of any employee benefit plan, to the extent that such employers, officers, employees, or trustees are engaged in the administration or operation of any program of employee benefits involving the use of HMO memberships; provided that such employers, officers, employees or trustees are not in any manner compensated directly or indirectly by the HMO issuing such HMO memberships;

(c) Banks or their officers and employees to the extent that such banks, officers and employees collect and remit charges by debiting the charges against accounts of depositors on the orders of such depositors; or

(d) Any person or the employee of any person who has contracted to provide administrative, management or health care services to an HMO and who is compensated for those services by the payment of an amount calculated as a percentage of the revenues, net income or profit of the HMO, if that method of compensation is the sole basis for subjecting that person or the employee of that person, to the licensure provisions of this Act.

3515.5 An individual applying for an HMO producer license shall pass a written examination to the satisfaction of the Commissioner for life and health licensure unless exempt pursuant to subsection 3515.10 or subsection 3515.24.

3515.6 The Commissioner may make arrangements, including contracting with an outside testing service, for administering examinations and collecting the fee for the examination.

3515.7 Each individual applying for an examination shall remit the fee as prescribed by the Commissioner in accordance with the provisions of subsection 3515.36.

3515.8 A new examination fee shall be paid for each examination. The examination fee shall not be returned for any reason other than for failure to appear and take the examination after the applicant has given at least twenty-four (24) hours notice to the Commissioner of an emergency situation and received the Commissioner's written approval.

3515.9 An individual who files a letter of clearance with the Commissioner certifying that he held a license in good standing to act as an HMO producer in his prior state of licensure, which license was obtained by passing a written examination relating to the conduct of HMO business, shall take an examination pertaining only to the District of Columbia's laws and rules relating to the conduct of HMO business.

3515.10 No examination shall be required of a partnership or a corporation.

3515.11 When any individual, partnership or corporation desires to obtain a license as an HMO producer, that person shall file an application with the Department.

3515.12 Upon receipt of an acceptable application for an HMO producer license, the Commissioner shall issue a license to the applicant, unless such application is denied under subsection 3510.37, if it finds that the applicant is:

(a) An individual who:

(1) is at least eighteen (18) years of age;

(2) has completed a prelicensing course of study approved by the Commissioner;

(3) has paid the fee as prescribed in subsection 3515.36; and

(4) has successfully passed the examination required under subsection 3515.5; or

(b) A general partnership, of which all persons interested as partners are duly licensed as HMO producers under the Act and these rules; or

(c) A District of Columbia corporation which:

(1) Is organized and existing under the District of Columbia corporation statutes;

(2) Has its principal place of business in the District of Columbia;

(3) Has as one of its purposes the authority to act as an HMO producer;

(4) Has each of its officers, directors and shareholders duly licensed as HMO producers;

(5) Has agreed to notify the Commissioner of any change in officers, directors or shareholders not later than thirty (30) days after the date on which the change becomes effective; and

(6) Has designated an officer responsible for demonstrating the corporation's compliance with the applicable laws of the District of Columbia relating to the conduct of HMO business.

3515.13 An HMO producer must demonstrate financial responsibility to the satisfaction of the Commissioner that the HMO producer has reasonably provided for the protection of its customers in the event of some negligent act, error or omission. Such financial responsibility may be demonstrated by a bond or a deposit.

3515.14 Nothing herein shall be construed to permit any unlicensed employee of any licensed individual, partnership or corporate HMO producer to perform any act of an HMO producer without such employee's first obtaining an HMO producer license.

3515.15 If at any time, any individual, partnership or corporation holding an HMO producer license does not maintain the qualifications necessary to obtain such a license, the HMO producer's license may be revoked under the provisions of subsection 3515.37; provided, however, that should any person who is not a licensed HMO producer obtain shares in such a corporation by devise or descent, the person shall have a period of thirty (30) days from date of acquisition within which to obtain a license as an HMO producer, unless exempted under subsection 3515.20.

3515.16 The Commissioner shall require any document reasonably necessary to verify the information contained in a person's application for licensure.

3515.17 The Commissioner shall cause to be issued to qualified HMO producers a license which shall contain the producer's legal name, address of record, license identification number and license expiration date.

3515.18 Persons holding an HMO producer's license shall inform the Department in writing promptly, not to exceed thirty (30) days, of any change in the address at which the Commissioner shall be able to send official notifications.

3515.19 Persons holding an HMO producer's license shall notify the Commissioner on a form specified by the Department of all office locations maintained for the purpose of operating as an HMO producer, and of all names other than such person's exact legal name in which such person intends to act as an HMO producer. A fee as specified in subsection 3510.36 shall accompany any such filing. No HMO producer may operate from any location or under any name other than the HMO producer's legal name prior to making the filing provided herein. An HMO producer shall promptly notify the Commissioner in writing when it ceases to do business under a particular trade name or from a particular location.

3515.20 In the event an individual who is duly licensed as an HMO producer conveys some or all of his interest in his business, while living, to his children or dependents or to a trust for such children or dependents or, upon death, to his surviving spouse, children or dependents or to a trust for such surviving spouse, children or dependents, such spouse, children, dependents or trusts may participate in the profits of such business during their lifetime without first qualifying as an HMO producer, subject to the following conditions:

(a) That such business shall be continued by a duly qualified and licensed HMO producer;

(b) That such surviving spouse, children, dependents or trusts shall perform no act of an HMO producer without first becoming duly licensed as an HMO producer;

(c) That all trustees of any trusts as described herein must be duly licensed as HMO producers; and

(d) That the individual HMO producer conveying such interest is either:

(1) A sole proprietor;

(2) A partner in a licensed partnership, where a written partnership agreement or, in the absence of such agreement, an agreement between the surviving partner or partners and the surviving children or dependents, as appropriate, provides for such conveyance; or

(3) A shareholder in a licensed corporation, where a contract entered into by and between all of the shareholders and the corporation provides for such conveyance.

3515.21 Unless suspended, revoked or cancelled pursuant to subsection 3515.37, each license issued to an HMO producer shall expire on the 30th day of April of each odd numbered year, unless an application for renewal of any such license is filed with the Commissioner and the required fee is paid on or before such date. Once such application for renewal is received, such license shall continue in full force unless, pursuant to subsection 3510.37, the application for renewal is denied.

3515.22 A request for license continuation which is received by the Commissioner within 30 days after the expiration date may be effectuated if accompanied by a continuation fee two (2) times the amount otherwise required, except that the Commissioner may waive imposition of the additional fee based on good cause shown for the delay.

3515.23 If a license has been expired for longer than one (1) year, it may not be renewed. A new license may be obtained by complying with the requirements and procedures for obtaining an original license, including passing the examination required in subsection 3515.5.

3515.24 A person who is not a resident of the District may apply for licensing as an HMO producer if such person otherwise complies with the Act and these rules.

(a) If the state in which such applicant resides requires HMO producers to hold a license and to qualify for such license by passing a written examination covering HMO topics, substantially similar to the examination required under section 3515.5 of these rules, the appropriate official of the other state must certify that the applicant holds a currently valid license to act as an HMO producer in such state by passing a written examination or holds a currently valid license issued because of the applicant's exemption from the requirements of an examination. If a person holds an HMO producer's license issued by another state in accordance with the requirements as set forth in this paragraph, such person shall be eligible to receive a license by waiver without taking the Commissioner's examination.

(b) If the state in which such applicant resides requires HMO producers to hold a license, but does not require such producers to qualify by passing a written examination covering HMO topics, the appropriate official of the other state must certify that the applicant holds a currently valid license to act as an HMO producer, and the applicant must pass the Commissioner's examination as prescribed in subsection 3515.5.

(c) If the state in which such applicant resides does not require HMO producers to hold a license, the applicant must pass the examination as prescribed in subsection 3515.5.

3515.25 The applicant shall file with the Commissioner the required forms appointing the Commissioner and his successor in office as such nonresident's agent upon whom all lawful process in any legal or administrative proceeding against the nonresident may be served, and shall agree that any such lawful process has the same legal force and validity as personal service of process upon such nonresident. The Commissioner shall, within five (5) working days after receiving process, forward a copy of such process by registered or certified mail to the person for whom he has received such process at the nonresident's address of record.

3515.26 The state in which the applicant resides shall permit a resident HMO producer of the District of Columbia to obtain a similar license in that other state under conditions substantially equivalent to the above, and without discrimination in favor of the residents of that other state; provided, however, that whenever, by the laws or regulations of any other state, any limitation of rights and privileges, conditions precedent, fees, or any other requirements are imposed upon residents of the District who are nonresidents or licensees of such other state in addition to, or in excess of, those imposed on nonresidents under this section, the same such requirements shall be imposed upon such residents of such other state. The Commissioner may enter into reciprocal agreements with the appropriate official of any state wherein such eligibilities are stipulated and recognized.

3515.27 No HMO producer shall claim to be a representative of, an authorized or appointed producer of, or other term implying a contractual relationship with a particular HMO or solicit or accept applications for HMO membership for such HMO, unless such HMO producer becomes appointed by that HMO pursuant to this section.

3515.28 In order to appoint an HMO producer the HMO shall, immediately upon executing a producer contract or upon accepting the first HMO membership application from a licensed HMO producer, whichever is earlier, file with the Commissioner a written notice of appointment on a form prescribed by the Commissioner.

(a) Two or more HMOs in an affiliated group may appoint a licensed HMO producer by filing a single notice of appointment on a form prescribed by the Department.

(b) Each notice of appointment delivered to the Commissioner shall be accompanied by an appointment fee, in the amount set forth in subsection 3510.36 for each HMO appointing the HMO producer.

(c) HMOs appointing an HMO producer under this subsection shall, not later than five (5) days after filing the required notice of appointment with the Commissioner, deliver a copy of such notice of appointment to the HMO producer.

3515.29 Upon receipt of the notice of appointment, the Commissioner shall, within thirty (30) business days, send written verification to the appointing HMO or HMOs of whether the licensed HMO producer is eligible for appointment; provided, however, that if such verification is not sent by the Commissioner within thirty (30) business days from the date the notice of appointment was received by the Department, the appointing HMO or HMOs may consider the appointment approved, and the licensed HMO producer, if so advised by the HMO or HMOs, may act as an appointed HMO producer of such HMO or HMOs unless and until subsequently advised that the appointment is disapproved.

3515.30 The appointing HMO or HMOs shall, within five (5) days of receipt of verification of an HMO producer's appointment status from the Commissioner, forward a copy of such verification to the licensed HMO producer. If the licensed HMO producer does not receive from the HMO a copy of verification of approval of such appointment or appointments within thirty (30) days from the date the notice of appointment is filed by the HMO, then the HMO producer shall immediately discontinue acting as an HMO producer on behalf of such HMO or HMOs until such verification of approval is received.

3515.31 Thirty (30) days prior to the renewal date, every HMO shall remit, in a manner prescribed by the Commissioner, a renewal appointment fee in the amount set forth in subsection 3510.36.

3515.32 An HMO producer's appointment with a specific HMO shall be terminated upon the filing of written notification in such form as the Commissioner may prescribe by:

(a) The HMO producer, upon delivering such notification to the Commissioner and to the HMO; or

(b) The HMO, upon delivering such notification to the Commissioner and to the HMO producer.

3515.33 Upon the termination of an appointed HMO producer by an HMO, the HMO shall provide the Commissioner with a statement of the facts relative to the termination of the appointment and the date and reason for such termination. If the HMO producer was terminated for cause, the HMO shall further provide such additional information, documents, records or other data pertaining to the termination which may be used by the Commissioner in any action taken pursuant to section 3510.37 of these rules.

3515.34 Any information, documents, records or statements provided to the Commissioner pursuant to this section shall be deemed to be a confidential and privileged communications unless or until introduced as evidence in an administrative hearing or admitted into evidence in a court action or proceeding pursuant to subpoena of a court of record.

3515.35 There shall be no liability on the part of, nor shall a cause of action of any nature arise against the Commissioner, the HMO or an authorized representative of either, or any other person, so long as they are acting in good faith and without malice, relative to the transmission of any information, documents, records or statements required to be disclosed pursuant to this section.

3515.36 The Commissioner shall collect the following nonrefundable fees:

(a) Initial HMO producer license fee, $ 100.00.

(b) Duplicate HMO producer license fee, $ 50.00.

(c) HMO producer license renewal fee, $ 100.00.

(d) Initial HMO producer appointment fee, $ 25.00.

(e) HMO producer appointment renewal fee, $ 25.00.

3515.37 The licensure of any HMO producer may be denied, or a license duly issued may be suspended or revoked or the renewal thereof denied by the Commissioner if, after notice and hearing as provided in section 10 of the District of Columbia Administrative Procedure Act, D.C. Code § 1-1509, the Commissioner finds that the applicant for or holder of such license, whether individually or through any officer, director, shareholder, partner or employee:

(a) Has violated any provision of District law, any federal law, any law of another state law, or any regulation or order of the Commissioner, except for violation which the Commissioner determines would be inappropriate reasons for suspending or revoking the producer's license;

(b) Has intentionally made a material misstatement in the application for such license;

(c) Has obtained, or attempted to obtain, such license by fraud or misrepresentation;

(d) Has misappropriated or converted to his, her, or an HMO's own use, or illegally withheld, money belonging to an applicant for HMO membership or to an HMO member or enrollee;

(e) Has shown himself or herself to be financially irresponsible or has otherwise demonstrated lack of trustworthiness or competence to act as an HMO producer;

(f) Has been guilty of fraudulent or dishonest practices relative to the conduct of HMO business;

(g) Has materially misrepresented the terms and conditions of HMO membership contracts;

(h) Has made or issued, or caused to be made or issued, any false statement or misrepresentation of a material nature regarding the terms or conditions of any health coverage contract issued by an insurer or HMO, for the purpose of inducing or attempting to induce the owner of such contract to forfeit or surrender such contract or allow it to lapse for the purpose of replacing such contract with an HMO membership contract;

(i) Has obtained, or attempted to obtain such license, not for the purpose of holding himself out to the public as an HMO agent, but primarily for the purpose of soliciting, negotiating or procuring HMO membership contracts covering himself or members of his family or his business associates; or

(j) Has been convicted of a felony.

3515.38 In lieu of, or in addition to suspension, revocation, or noncontinuation of a license, the Commissioner may impose a civil penalty of not more than $ 5,000 upon a licensee whose license is subject to suspension, revocation, or noncontinuation under this section, and may additionally require restitution to any person who has suffered financial injury or damage as a result of the violation of any provision of the Act.

3515.39 No applicant or licensee whose licensure has been denied, refused or revoked under subsection 3510.37 is entitled to file another application for a license as an HMO producer within three (3) years from the date on which such denial, refusal or revocation becomes final. Such application, when filed after three (3) years, may be denied by the Commissioner unless the applicant shows good cause why the denial, refusal or revocation of his license should not be considered a bar to the issuance of a new license.

3515.40 The Department shall adopt a procedure for certifying and shall certify continuing education programs for HMO producers by fiscal year 2000. No HMO producer shall be required to complete more than 16 hours of continuing education during any twenty-four month period for maintenance of its HMO producer license.

History

• SOURCE: Final Rulemaking published at 46 DCR 7291(September 17, 1999).

26-A DCMR § 3516 POWERS OF INSURANCE CORPORATIONS

3516.1 An insurance company licensed to do business in the District may organize and operate an HMO directly, through a subsidiary or affiliate, pursuant to section 18 of the Act, D.C. Code § 35-4517.

3516.2 Any two (2) or more insurance companies licensed to do business in the District, or subsidiaries or affiliates of these companies, may jointly organize and operate an HMO.

3516.3 An insurer may contract with an HMO to render insurance or similar protection against the costs of care provided through HMOs and to provide coverage in the event of the failure of an HMO to meet its obligations.

3516.4 Under such contracts, the insurer may make benefit payments to HMOs for health care services rendered by providers.

History

• SOURCE: Final Rulemaking published at 46 DCR 7291(September 17, 1999).

26-A DCMR § 3517 DENIAL, SUSPENSION OR REVOCATION OF THE CERTIFICATE OF AUTHORITY

3517.1 The Commissioner may deny an application for a certificate of authority, and suspend or revoke a certificate of authority issued under the Act and these rules, for the following reasons:

(a) The HMO is operating in a manner that is significantly inconsistent with its basic organizational documentation;

(b) The HMO fails to comply with section 8 of the Act, D.C. Code § 35-4507 (requirements for group contract, individual contract, and evidence of coverage) and section 16 of the Act, D.C. Code § 35-4515 (filing requirements for rating information);

(c) The HMO does not provide or arrange for basic health care services;

(d) The Commissioner certifies that the HMO does not meet the requirements for issuance of a certificate of authority under section 3501.5, or it is unable to meet its obligations to provide health care services;

(e) The HMO is no longer financially sound;

(f) The HMO does not correct any deficiency occurring due to the HMO's prescribed minimum net worth being impaired;

(g) The HMO has failed to implement the grievance procedure as required under section 11 of the Act, D.C. Code § 35-4510, in reasonable manner to resolve legitimate complaints;

(h) The HMO or any person authorized to act on its behalf, has advertised or merchandised its services in an untrue, misrepresentative, misleading, deceptive, or unfair manner;

(i) The HMO's continued operation would be dangerous to its enrollees; or

(j) The HMO has otherwise failed substantially to comply with the Act and these rules.

3517.2 In addition to, or in lieu of suspension or revocation of a certificate of authority, the applicant or HMO may be subject to an administrative penalty up to $ 1,000 a day for each cause for suspension or revocation.

History

• SOURCE: Final Rulemaking published at 46 DCR 7291(September 17, 1999).

26-A DCMR § 3518 INVESTMENTS

3518.1 The funds of an HMO shall be invested in accordance with section 5(a)(1) of the Act, D.C. Code § 35-4504(a)(1), or the HMO Investment Guidelines adopted by the Commissioner.

History

• SOURCE: Final Rulemaking published at 46 DCR 7291(September 17, 1999).

26-A DCMR § 3519 FORMS

3519.1 Each form submitted by an HMO for the purpose of receiving a certificate of authority must be in duplicate. It also must have a letter that lists each form with a brief description of it. The Commissioner will retain one copy of each submittal in the original form or on microfilm. The second copy will be returned to the HMO in a self-addressed, postage prepaid envelope. The forms returned to the HMO will have either a notation indicating approval or disapproval. The form disapproved by the Commissioner may not be used by the HMO. The approved forms must be maintained by the HMO.

History

• SOURCE: Final Rulemaking published at 46 DCR 7291(September 17, 1999).

26-A DCMR § 3520 REVIEW OF COMPLAINTS BY THE COMMISSIONER

3520.1 Any person, group, association, corporation, or other entity having exhausted the HMO's internal grievance and appeals procedure, unless no process exists, or exhaustion would be futile, may file a written complaint with the Commissioner regarding an HMO's compliance with the District of Columbia HMO laws and regulations. The complaint shall state the grounds and pertinent underlying facts, the names of all relevant persons involved, the status of all appropriate internal grievances and appeal procedures, and whether those procedures have been exhausted. This subsection shall not apply to appeals and grievances filed pursuant to the Health Benefits Plan Members Bill of Rights Act of 1998, effective April 27, 1999, D.C. Law 12-274, D.C. Code § 32-571.1 et seq.

3520.2 The Commissioner may initiate investigations when, based on a report, a complaint, or any other information, the Commissioner has reason to believe that an HMO or producer subject to the laws and regulations of the District is not in compliance such provisions. The Commissioner shall notify the HMO or producer in writing that an investigation has been initiated, and shall include in such notice a full statement of the pertinent facts, the matter being investigated, and a statement that the entity may submit a written report concerning such matters to the Commissioner within thirty (30) days from the date of the notice. The Commissioner will obtain any information considered necessary, and may employ site visits, public hearings, or any other procedures considered appropriate.

History

• SOURCE: Final Rulemaking published at 46 DCR 7291(September 17, 1999).

26-A DCMR § 3521 PUBLIC DOCUMENTS

All applications, filings, and reports required under the Act shall be treated as public documents, except those which are trade secrets, privileged or quality assurance, commercial, and financial information, other than any annual financial statement that may be required under section 9 of the Act, D.C. Code § 35-4508.

History

• SOURCE: Final Rulemaking published at 46 DCR 7291(September 17, 1999).

26-A DCMR § 3599 DEFINITIONS

3599.1 "Act" means the Health Maintenance Organization Act of 1996, effective April 9, 1997, D.C. Law 11-235, D.C. Code § 35-4500 et seq.

3599.2 "Annual Dues Revenues" means sources of income received by the Health Maintenance Organization (HMO) for health services provided to members or in certain situations, non-members. These balances are found in the National Association of Insurance Commissioners' (NAIC) HMO annual statement blank.

3599.3 "Annual Health Care Expenditures except those expenses paid on a capitated basis or managed hospital payment basis" means the health-related expenditures of the health maintenance organization which are paid on a fee-for-service or non-managed care basis annually. These balances are found in the National Association of Insurance Commissioners' (NAIC) HMO annual statement blank.

3599.4 "Annual Health Care Expenditures paid on a capitated basis or managed hospital payment basis" means the health expenditures of the HMO used to provide covered services to its enrollees which are included within the capitated or contractual arrangement the HMO has with its providers and participating hospitals. These balances are found in the National Association of Insurance Commissioners' (NAIC) HMO annual statement blank.

3599.5 "Annual Hospital Expenditures paid on a managed hospital payment basis" means the inpatient hospital costs of routine and ancillary services provided to members of the Health Maintenance Organization while confined to an acute care hospital. This excludes emergency room and out-of-area hospitalization. However, these expenditures may include and not be limited to capitation payments, diagnostic related group ("DRG") type payments, case rate type payments, discounted fee-for-service payments, per diem arrangements, and similar arrangements in which payment is not based on usual, reasonable and customary fees for services rendered. When filing rates, accompanied with an actuarial memorandum, the memorandum shall clearly state whether the definition of "annual hospital expenditures" is used in the rates that are filed. The actuary shall state which components of the definition are included and which are excluded from the rates that are filed. These balances are found in the National Association of Insurance Commissioners' (NAIC) HMO annual statement blank.

3599.6 "Appointed producer" means a licensed HMO producer who conducts business within the scope of his or her license and who is appointed by an HMO to solicit, negotiate, effect, procure, deliver, renew or continue HMO membership contracts on behalf of the appointing HMO or who takes or transmits a membership fee or premium for such contract, other than for himself, or a person who advertises or otherwise holds himself or herself out to the public as an appointed producer.

3599.7 "Basic Health Care Services" means preventive care, emergency care, inpatient and outpatient hospital and physician care, diagnostic laboratory and diagnostic and therapeutic radiological services, and services mandated under the Drug Abuse, Alcohol Abuse, and Mental Illness Insurance Coverage Act of 1986, effective February 28, 1987, D.C. Law 6-195, D.C. Code, § 35-2301 et seq.; the Newborn Health Insurance Act of 1979, effective October 20, 1979, D.C. Law 3-33, D.C. Code § 35-1101 et seq.; and the District of Columbia Cancer Prevention Act of 1990, effective March 7, 1991, D.C. Law 8-225, D.C. Code § 35-2402 et seq.

3599.8 "Copayment" means either a dollar or percentage amount an enrollee must pay in order to receive a specific covered service which is not fully prepaid.

3599.9 "Customer" means any person to whom an HMO producer sells or attempts to sell an HMO membership contract, or from whom an HMO producer accepts an application for such a contract.

3599.10 "Deductible" means the amount an enrollee is responsible to pay out-of-pocket before the HMO begins to pay the costs or provide the services associated with treatment.

3599.11 "Department" means the Department of Insurance and Securities Regulation.

3599.12 "Emergency Care Services" means:

(a) Health care services furnished in the emergency department of a hospital for the treatment of a medical emergency;

(b) Ancillary services routinely available to the emergency department of a hospital for the treatment of a medical emergency; and

(c) Emergency medical services transportation.

3599.13 "Enrollee" means an individual covered under a group or nongroup HMO contract.

3599.14 "Evidence of Coverage" means a statement of the essential features and services covered of the HMO which is given to the enrollee by the HMO or by the group contract holder.

3599.15 "Firm" means a health maintenance organization.

3599.16 "Group Contract" means a contract issued and delivered in the District for health care services which by its terms limits eligibility to members of a specified group. The group contract may include coverage for dependents.

3599.17 "Group Contract Holder" means the person to which a group contract has been issued.

3599.18 "Health Maintenance Organization" or "HMO" means any person that undertakes to provide or arrange for the delivery of basic health care services to enrollees on a prepaid basis, except for enrollee responsibility for copayments and/or deductibles.

3599.19 "HMO Producer" means a person who solicits, negotiates, effects, procures, delivers, renews or continues a policy or contract for HMO membership, or who takes or transmits a membership fee or premium for such a policy or contract, other than for himself or herself, or a person who advertises or otherwise holds himself or herself out to the public as an HMO Producer.

3599.20 "Hospital" means a duly licensed institution which provides general and specialized inpatient medical care. The term "hospital" shall not include a convalescent facility, nursing home, or any institution or part thereof which is used principally as a convalescent facility, rest facility, nursing facility or facility for the aged.

3599.21 "Individual" means a natural person.

3599.22 "Individual contract" means a contract delivered in the District for health care services issued to and covering an individual enrollee. The individual contract may include dependents of the enrollee.

3599.23 "License" means a document or certificate of authority issued by the Department authorizing a person to act as an HMO producer.

3599.24 "Participating provider" means a provider who, under an express or implied contract with the HMO or with its contractor or subcontractor, has agreed to provide covered services to enrollees with an expectation of receiving payment, other than copayments or deductibles, directly or indirectly from the HMO.

3599.25 "Person" means any natural person, corporation, association, partnership or other legal entity.

3599.26 "Primary care provider" means a participating provider whom the enrollee has selected, or who has otherwise been assigned responsibility, for the coordination of covered services to the enrollee.

3599.27 "Provider" means any hospital or health professional licensed or authorized by reciprocity or endorsement to practice a health occupation by the District pursuant to the Health Occupations Revision Act of 1985, effective March 25, 1986, D.C. Law 6-99, D.C. Code § 2-3301.1 et seq., or any state.

3599.28 "Service area" means the District of Columbia.

3599.29 "Subscriber contract" means an individual whose employment or other status, except family dependency, is the basis for eligibility for enrollment in the HMO, or in the case of an individual contract, the person in whose name the contract is issued.

3599.30 "Text" means all printed matter except: the name and address of the HMO; the name, number, or title of the documents; the table of contents or index; the heading and captions; the defined terms; the proper nouns; and the declarations pages, schedules or tables.

3599.31 "Uncovered Health Care Expenditures" means the cost of health-related expenditures that are the obligation of the health maintenance organization for which an enrollee may also be liable in the event of the HMO's insolvency.

History

• SOURCE: Final Rulemaking published at 46 DCR 7291(September 17, 1999).

26-A36 PRIVACY OF CONSUMER FINANCIAL INFORMATION

26-A DCMR § 3600 APPLICABILITY

3600.1 These regulations shall apply to the treatment of nonpublic personal information about individuals who obtain products or services from licensees primarily for personal, family, or household purposes.

3600.2 These regulations shall not apply to information about companies or individuals who obtain products or services for business, commercial, or agricultural purposes.

3600.3 These regulations shall not apply to the treatment of nonpublic personal health information about individuals who obtain products or services from licensees.

3600.4 A licensee domiciled in the District of Columbia that is in compliance with this regulation in a jurisdiction that has not enacted laws or regulations that meet the requirements of Title V of the Gramm-Leach-Bliley Act (PL 102-106) may nonetheless be deemed to be in compliance with Title V of the Gramm-Leach-Bliley Act in the other jurisdiction.

3600.5 The examples in this regulation are not exclusive. Compliance with an example or use of a sample clause, to the extent applicable, constitutes compliance with this regulation.

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001).

26-A DCMR § 3601 INITIAL PRIVACY NOTICE TO CONSUMERS REQUIRED

3601.1 A licensee shall provide a clear and conspicuous notice that accurately reflects the licensee's privacy policies and practices to:

(a) Any person who becomes a licensee's customer, not later than when the time that the licensee establishes a customer relationship, except as provided in § 3601.6; and

(b) A consumer, before a licensee discloses any nonpublic personal information about the consumer to any nonaffiliated third party, if a licensee makes such a disclosure other than as authorized by §§ 3607 and 3608.

3601.2 A licensee is not required to provide an initial notice to a consumer under § 3601.1(b) if:

(a) The licensee does not disclose any nonpublic personal information about the consumer to any nonaffiliated third party, other than as authorized by §§ 3607 and 3608; and

(b) The licensee does not have a customer relationship with the consumer.

(c) A notice has been provided by an affiliated licensee, as long as the notice clearly identifies all licensees to whom the notice applies and is accurate with respect to the licensee and the other institutions.

3601.3 A licensee establishes a customer relationship at the time the licensee and the consumer enter into a continuing relationship.

3601.4 A licensee establishes a customer relationship when the consumer:

(a) Agrees to obtain insurance related financial, economic or investment advisory services from the licensee for a fee; or

(b) Becomes a policyholder of the licensee that is an insurer when the insurer delivers an insurance policy or contract to the consumer, or in the case of a licensee that is an insurance producer or insurance broker, obtains insurance through that licensee.

3601.5 A licensee shall provide the privacy notice when required by § 3601.1(b) so that each consumer can reasonably be expected to receive actual notice in writing or, if the consumer agrees, in electronic form.

3601.6 A licensee may provide the initial notice required by § 3601.1 within a reasonable time after the licensee establishes a customer relationship if:

(a) A licensee purchases the right to the continuing income from an insurance policy or assumes a policy from another insurer and the customer of that policy does not have a choice about the purchase or assumption; or

(b) A licensee and the consumer orally agree to enter into a customer relationship and the consumer agrees to receive the notice thereafter.

3601.7 A licensee may not satisfy the initial notice requirement of § 3601.1 solely by orally explaining, either in person or over the telephone, the privacy policies and practices.

3601.8 For customers only, a licensee shall provide the initial notice required by § 3601.1 so that it can be retained or obtained at a later time by the customer, in a written form or, if the customer agrees, in electronic form.

3601.9 A licensee may reasonably expect that a consumer will receive actual notice of the licensee's privacy policies and practices if the licensee:

(a) Hand-delivers a printed copy of the notice to the consumer;

(b) Mails a printed copy of the notice to the last known address of the consumer separately, or in a policy, billing, or other written documentation; or

(c) For the consumer who conducts transactions electronically, posts the notice on the electronic site and requires the consumer to acknowledge receipt of the notice as a necessary step to obtaining a particular financial product or service.

3601.10 A licensee may not, however, reasonably expect that a consumer will receive actual notice of the licensee's privacy policies and practices if the licensee:

(a) Only posts a sign in the licensee's branch or office or generally publishes advertisements of its privacy policies and practices; or

(b) Sends the notice via electronic mail to a consumer who obtains a financial product or service with the licensee in person or through the mail and who does not agree to receive the notice electronically.

3601.11 A licensee or its affiliate provides the initial privacy notice to the customer so that it can be retained or obtained at a later time if the licensee,

(a) Hand-delivers a printed copy of the notice to the customer;

(b) Mails a printed copy of the notice to the last known address of the customer; or

(c) Maintains the notice on a web site (or makes the notice available on a link to another web site) for the customer who obtains a financial product or service electronically and who agrees to receive the notice electronically.

3601.12 The licensee shall have presented the information in the notice required in this section in clear, concise sentences, paragraphs and sections, if the notice is written:

(a) Using short explanatory sentences or bulleted lists, whenever possible;

(b) Using definite, concrete, everyday words and active voice whenever possible;

(c) Avoiding the use of multiple negatives;

(d) Avoiding the use of legal and highly technical business terminology whenever possible; and

(e) Avoiding the use of boilerplate explanations that are imprecise and readily subject to different interpretations.

3601.13 A licensee shall have designed its notice to call attention to the nature and significance of the information contained in the notice, if the notice is written:

(a) Using a plain-language heading to call attention to the notice;

(b) Using a typeface and type size that are easy to read; and

(c) Providing wide margins and ample line spacing.

3601.14 If a licensee provides a notice on the same form as another notice or other document, it shall have designed the notice to call attention to the nature and significance of the information contained in the notice, if the notice is written using:

(a) Larger type size, boldface or italics in the text;

(b) Wider margins and line spacing in the notice; and

(c) Shading or sidebars to highlight the notice, whenever possible.

3601.15 If a licensee provides a notice on a web page, it shall have designed the notice to call attention to the nature and significance of the information contained in the notice, if the notice is written:

(a) Using text or visual cues to encourage scrolling down the page if necessary to view the entire notice;

(b) Ensuring that other elements on the web site such as text, graphics, hyperlinks, or sound do not distract attention from the notice; and

(c) Placing the notice on a screen that consumers frequently access, such as a home page or a page on which transactions are conducted; or

(d) Placing a link on a screen that consumers frequently access, such as a home page or a page on which transactions are conducted, that connects directly to the notice and is labeled appropriately to convey the importance, nature, and relevance of the notice.

3601.16

(a) A licensee may satisfy the initial notice requirements in §§ 3601.1 (b) and 3605.7 for a consumer who is not a customer by providing a short-form initial notice at he same time as the licensee delivers an opt out notice as required by § 3605.

(b) A short-form notice shall:

(1) Be clear and conspicuous;

(2) State that the licensee's privacy notice is available on request; and

(3) Explain a reasonable means by which the consumer may obtain that notice.

(c) The licensee shall deliver its short form initial notice in the same manner as an initial or annual notice. The licensee is not required to deliver its privacy notice with its short-form initial notice. The licensee instead may simply provide the consumer a reasonable means to obtain its privacy notice. If a consumer who receives the licensee's short-form notice requests the licensee's privacy notice, the licensee shall deliver it in the same manner as applicable for an initial or annual notice.

(d) The licensee provides a reasonable means by which a consumer may obtain a copy of its privacy notice if the licensee:

(1) Provides a toll-free telephone number that the consumer may call to request the notice; or

(2) For a consumer who conducts business in person at the licensee's office, maintains copies of the notice on hand that the licensee provides to the consumer immediately upon request.

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001).

26-A DCMR § 3602 ANNUAL PRIVACY NOTICE TO CUSTOMERS REQUIRED

3602.1 A licensee shall provide a clear and conspicuous notice to all customers for whom the licensee possesses the name and address that accurately reflects the licensee's privacy policies and practices not less than annually during the continuation of the customer relationship. Annually means at least once during any period of 12 consecutive months during which that relationship exists. A licensee may define the 12 consecutive month period, but the licensee shall apply it to the customer on a consistent basis.

3602.2 A licensee shall provide the annual notice required by § 3602.1 to a customer using a means permitted for providing the initial notice to that customer under § 3601.

3602.3 A licensee is not required to provide an annual notice to a customer with whom it no longer has a continuing relationship.

3602.4 A licensee no longer has a continuing relationship with an individual if:

(a) The insurance policy has been declared dormant under the insurance company's policies;

(b) The licensee sells the insurance policy without retaining any continuing income;

(c) The licensee no longer provides any statements or notices to the consumer concerning that relationship;

(d) For other types of relationships, a licensee has not communicated with the consumer about the relationship for a period of 12 consecutive months, other than to provide annual notices of privacy policies and practices;

(e) For the purposes of this regulation, a licensee no longer has a continuing relationship with an individual if the individual's last known address according to the licensee's records is deemed invalid. An address of record is deemed invalid if mail sent to that address by the licensee has been returned by the postal authorities as undeliverable and if subsequent attempts by the licensee to obtain a current valid address for the individual have been unsuccessful; or

(f) A licensee no longer has a continuing relationship with a customer in the case of providing real estate settlement services, at the time the customer completes execution of all documents related to the real estate closing, payment for those services has been received, or the licensee has completed all of its responsibilities with respect to the settlement, including filing documents on the public record, whichever is later.

3602.5 The licensee shall have presented the information in the notice required in this section in clear, concise sentences, paragraphs and sections, if the notice is written:

(a) Using short explanatory sentences or bulleted lists, whenever possible;

(b) Using definite, concrete, everyday words and active voice whenever possible;

(c) Avoiding the use of multiple negatives;

(d) Avoiding the use of legal and highly technical business terminology whenever possible; and

(e) Avoiding the use of boilerplate explanations that are imprecise and readily subject to different interpretations.

3602.6 A licensee shall have designed its notice to call attention to the nature and significance of the information contained in the notice, if the notice is written:

(a) Using a plain-language heading to call attention to the notice;

(b) Using a typeface and type size that are easy to read; and

(c) Providing wide margins and ample line spacing.

3602.7 If a licensee provides a notice on the same form as another notice or other document, it shall have designed the notice to call attention to the nature and significance of the information contained in the notice, if the notice is written using:

(a) Larger type size(s), boldface or italics in the text;

(b) Wider margins and line spacing in the notice; and

(c) Shading or sidebars to highlight the notice, whenever possible.

3602.8 If a licensee provides a notice on a web page, it shall have designed the notice to call attention to the nature and significance of the information contained in the notice, the notice is written:

(a) Using text or visual cues to encourage scrolling down the page if necessary to view the entire notice;

(b) Ensuring that other elements on the web site such as text, graphics, hyperlinks, or sound do not distract attention from the notice; and

(c) Placing the notice on a screen that consumers frequently access, such as a home page or a page on which transactions are conducted; or

(d) Placing a link on a screen that consumers frequently access, such as a home page or a page on which transactions are conducted, that connects directly to the notice and is labeled appropriately to convey the importance, nature, and relevance of the notice.

3602.9 The annual notice required under this section may be provided by an affiliate as long as the notice clearly identifies all licensees or affiliates to which the notice applies, and complies with all other provisions of these regulations.

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001).

26-A DCMR § 3603 INFORMATION TO BE INCLUDED IN PRIVACY NOTICES

3603.1 The initial, annual and revised privacy notices that a licensee provides about its privacy policies and practices under §§ 3601 and 3602 shall include each of the following items of information:

(a) The categories of nonpublic personal information that the licensee collects;

(b) The categories of nonpublic personal information that the licensee discloses;

(c) The categories of affiliates and nonaffiliated third parties to whom the licensee discloses nonpublic personal information, other than those parties to whom the licensee discloses information under §§ 3607 and 3608;

(d) The categories of nonpublic personal information about the licensee's former customers that it discloses and the categories of affiliates and nonaffiliated third parties to whom the licensee discloses nonpublic personal information about its former customers, other than those parties to whom it discloses information under §§ 3607 and 3608;

(e) If a licensee discloses nonpublic personal information to a nonaffiliated third party under § 3606 (and no other exception applies to that disclosure), a separate description of the categories of information the licensee discloses and the categories of third parties with whom the licensee has contracted;

(f) An explanation of the right under §§ 3604.1 through 3604.4 of the consumer to opt out of the disclosure of nonpublic personal information to nonaffiliated third parties, including the methods by which the consumer may exercise that right at that time;

(g) Any disclosures that the licensee makes under section 603(d)(2)(A)(iii) of the Fair Credit Reporting Act (15 U.S.C. 1681a(d)(2)(A)(iii)) (that is, notices regarding the ability to opt out of disclosures of information among affiliates); and

(h) The licensee's policies and practices with respect to protecting the confidentiality, and security of nonpublic personal information.

3603.2 If a licensee discloses nonpublic personal information about a consumer to third parties as authorized under §§ 3607 and 3608, the licensee is not required to list those exceptions in the initial or annual privacy notices required by §§ 3601 and 3602. When describing the categories with respect to those parties to whom disclosure is made, a licensee is only required to state that it makes disclosures to other nonaffiliated third parties as permitted by law.

3603.3 A licensee's notice may include:

(a) Categories of nonpublic personal information that the licensee reserves the right to disclose in the future, but does not currently disclose; and

(b) Categories of affiliates or nonaffiliated third parties to whom the licensee reserves the right in the future to disclose, but to whom the licensee does not currently disclose, nonpublic personal information.

3603.4 A licensee adequately categorizes the nonpublic personal information it collects if the licensee categorizes it according to the source of the information, such as application information, information about transactions such as information regarding its financial product or service and consumer reports.

3603.5 A licensee adequately categorizes nonpublic personal information it discloses if the licensee categorizes the information according to source, and provides a few illustrative examples of the content of the information. These might include application information, such as assets and income; identifying information, such as name, address, and social security number; and transaction information, such as information about account balance, payment history, parties to the transaction, and information from consumer reports, such as a consumer's creditworthiness and credit history. The licensee does not adequately categorize the information that it discloses if the licensee uses only general terms, such as transaction information about the consumer.

3603.6 A licensee adequately categorizes the affiliates and nonaffiliated third parties to whom the licensee discloses nonpublic personal information about consumers if the licensee identifies the types of businesses that they engage in. Types of businesses may be described by general terms only if it uses a few illustrative examples of significant lines of business. For example, the licensee may use the term insurance products or services if it includes appropriate examples of significant lines of businesses, such as auto and homeowner's insurance, annuities, and life insurance. A licensee also may categorize the affiliated and nonaffiliated third parties to whom it discloses nonpublic personal information about consumers using more detailed categories.

3603.7 If a licensee does not disclose, and does not intend to disclose, nonpublic personal information to affiliates or nonaffiliated third parties, except as authorized under §§ 3607 and 3608, the licensee may simply state that fact, in addition to the information the licensee shall provide under §§ 3603.1(a), 3603.1(h), and 3603.2.

3603.8 A licensee describes its policies and practices with respect to protecting the confidentiality and security of nonpublic personal information if the licensee describes sufficiently who is authorized to have access to the information and the circumstances under which the information may be accessed. A licensee describes its policies and practices with respect to protecting the integrity of nonpublic personal information when the licensee discloses the measures it takes to protect against reasonably anticipated threats or hazards. A licensee is not required to describe technical information about the safeguards it uses.

3603.9 A licensee may satisfy the initial notice requirements in §§ 3601 and 3605.7 for a consumer who is not a customer by providing a short-form initial notice at the same time as the licensee delivers an opt notice as required in § 3605.

3603.10 A short-form notice shall:

(a) Be clear and conspicuous;

(b) State that the licensee's privacy notice is available upon request; and

(c) Explain a reasonable means by which the consumer may obtain that notice.

3603.11 The licensee shall deliver its short-form initial notice according to § 3605. The licensee is not required to deliver its privacy notice with its short-form initial notice. The licensee instead may simply provide the consumer with a reasonable means to obtain its privacy notice. If a consumer who receives the licensee's short-form notice requests the licensee's privacy notice, the licensee shall deliver its privacy notice according to § 3605.

3603.12 The licensee provides a reasonable means by which a consumer may obtain a copy of its privacy notice if the licensee:

(a) Provides a toll-free telephone number that the consumer may call to request the notice; or

(b) For a consumer who conducts business in person at the licensee's office, maintains copies of the notice on hand that the licensee provides to the consumer immediately upon request.

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001).

26-A DCMR § 3604 LIMITATION ON DISCLOSURE OF NONPUBLIC PERSONAL INFORMATION ABOUT CONSUMERS TO NONAFFILIATED THIRD PARTIES

3604.1 Except as otherwise authorized in this regulation, a licensee may not, directly or through any affiliate, disclose any nonpublic personal information about a consumer to a nonaffiliated third party unless:

(a) The licensee has provided to the consumer an initial notice as required under § 3601;

(b) The licensee has provided to the consumer an opt out notice as required in § 3605;

(c) The licensee has given the consumer a reasonable opportunity, before the time that it discloses the information to the nonaffiliated third party, to opt out of the disclosure; and

(d) The consumer does not opt out.

3604.2 Opt out means a direction by the consumer that the licensee shall not disclose nonpublic personal information about that consumer to a nonaffiliated third party, other than as permitted by §§ 3606, 3607 and 3608.

3604.3 A licensee provides a consumer with a reasonable opportunity to opt out if the licensee mails the notices required in § 3604.1 to the consumer and allows the consumer to opt out by mailing the form, calling a toll free number or any other reasonable means within a minimum of 30 days from the date the licensee distributed the notice.

3604.4 For an isolated transaction, such as the purchase of travel insurance for a single trip, or providing the consumer with an insurance quote, the licensee provides a reasonable opportunity to opt out if it provides the consumer with the required notices at the time of the transaction and request that the consumer decide, as a necessary part of the transaction, whether to opt out before completing the transaction.

3604.5 A licensee shall comply with the applicable opt out requirements, regardless of whether the licensee and the consumer have established a customer relationship.

3604.6 Unless a licensee complies with this section, the licensee may not, directly or through any affiliate, disclose any nonpublic personal information about a consumer that it has collected, regardless of whether the licensee collects it before or after receiving the direction to opt out from the consumer.

3604.7 A licensee may allow a partial opt out to a consumer to select certain nonpublic personal information or certain nonaffiliated third parties with respect to which the consumer wishes to opt out.

3604.8 A licensee may require each consumer to opt out through a specific means, as long as that means is reasonable for that consumer.

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001).

26-A DCMR § 3605 FORM AND METHOD OF PROVIDING OPT OUT NOTICE TO CONSUMERS; DELIVERY

3605.1 If a licensee is required to provide an opt out notice under § 3604.1 through § 3604.4, the licensee shall provide a clear and conspicuous notice to each of its consumers that accurately explains the right to opt out under § 3604.1. The notice shall state:

(a) That the licensee discloses or reserves the right to disclose nonpublic personal information about its consumer to a nonaffiliated third party;

(b) That the consumer has the right to opt out of that disclosure; and

(c) A reasonable means by which the consumer may exercise the opt out right.

3605.2 A licensee provides adequate notice that the consumer can opt out of the disclosure of nonpublic personal information to a nonaffiliated third party if the licensee identifies all of the categories of nonpublic personal information that the licensee discloses or reserves the right to disclose to nonaffiliated third parties as described in § 3603 and states that the consumer can opt out of the disclosure of that information.

3605.3 A licensee provides a reasonable means to exercise an opt out right if it:

(a) Designates check-off boxes in a prominent position on the relevant forms with the opt out notice;

(b) Includes a reply form together with the opt out notice;

(c) Provides an electronic means to opt out, such as a form that can be sent via electronic mail or a process at the licensee's web site, if the consumer agrees to the electronic delivery of information; or

(d) Provides a toll-free telephone number that consumers may call to opt out.

3605.4 A licensee does not provide a reasonable means of opting out if the only means of opting out is for the consumer to write his or her own letter to exercise the opt out right.

3605.5 A licensee may not provide the opt out notice solely by orally explaining, either in person or over the telephone, the right of the consumer to opt out.

3605.6 A licensee may provide the opt out notice together with or on the same written or electronic form as the initial notice it provides in accordance with § 3601.

3605.7 If a licensee provides the opt out notice at a later time than required for the initial notice in accordance with § 3601, it shall also include a copy of the initial notice in writing or, if the consumer agrees, in an electronic form with the opt out notice.

3605.8 Except as otherwise authorized in this regulation, a licensee shall not, directly or through any affiliate, disclose any nonpublic personal information about a consumer to a nonaffiliated third party other than as described in the initial notice that the licensee provided to the consumer under § 3601, unless:

(a) A licensee has provided to the consumer a revised notice that accurately describes its policies and practices;

(b) A licensee has provided to the consumer a new opt out notice;

(c) A licensee has given the consumer a reasonable opportunity before it discloses the information to the nonaffiliated third party, to opt out of the disclosure; and

(d) The consumer does not opt out.

3605.9 A licensee shall provide the revised notice of its policies and practices and opt out notice, if required under § 3605.8, to a consumer using the means permitted for providing the initial notice and opt out notice to that consumer under §§ 3601 and 3605, respectively.

3605.10 Except as otherwise permitted by §§ 3606, 3607 and 3708, a revised notice is required if the licensee:

(a) Discloses a new category of nonpublic personal information to any nonaffiliated third party; or

(b) Discloses nonpublic personal information to a new category of any nonaffiliated third party.

3605.11 A revised notice is not required if the licensee discloses nonpublic personal information to a new nonaffiliated third party that is adequately described by its prior notice.

3605.12 A consumer may exercise the right to opt out at any time, and the licensee shall comply with the consumer's direction as soon as reasonably practicable.

3605.13 A consumer's direction to opt out under this section is effective until revoked by the consumer in writing, or if the consumer agrees, in electronic form.

3605.14 If two or more consumers jointly obtain a financial product or service from a licensee, the licensee may provide a single opt out notice. The licensee's opt out notice shall explain how the licensee will treat an opt out direction by a joint consumer.

3605.15 Any of the joint consumers may exercise the right to opt out. The licensee may either:

(a) Treat an opt out direction by a joint consumer as applying to all of the associated joint consumers; or

(b) Permit each joint consumer to opt out separately.

3605.16 If the licensee permits each joint consumer to opt out separately, the licensee shall permit one of the joint consumers to opt out on behalf of all the joint consumers.

3605.17 A licensee may not require all joint consumers to opt out before the licensee implements any opt out direction.

3605.18 For example, if John and Mary are both named insureds on an insurance policy with a licensee and arrange for the licensee to send all correspondence about the policy to John's address, the licensee may do any of the following, but the licensee shall explain in its opt out notice which opt out policy it will follow:

(a) Send a single opt out notice to John's address, but the licensee shall accept an opt out direction from either John or Mary;

(b) Treat an opt out direction by either John or Mary as applying to the entire account. If the licensee does so, and John opts out, the licensee may not require Mary to opt out as well before implementing John's opt out direction; or

(c) Permit John and Mary to take different opt out directions. If a licensee does so, and both opt out, the licensee shall permit both to notify the licensee in a single response (such as on a form or through a telephone call). In addition, if John opts out but Mary does not, the licensee may disclose nonpublic personal information about Mary, but not about John and not about Mary and John jointly.

3605.19 A licensee shall provide any privacy notices and opt out notices, including short-form initial notices in § 3603.9, that this section requires so that each consumer can reasonably be expected to receive actual notice in writing or, if the consumer agrees, electronically.

3605.20 A licensee may reasonably expect that a consumer will receive actual notice if the licensee:

(a) Hand-delivers a printed copy to the notice to the consumer;

(b) Mails a printed copy of the notice to the last known address of the consumer separately, or in a policy, billing or other written communication;

(c) For the consumer who conducts transactions electronically, clearly and conspicuously posts the notice on the electronic site and requires the consumer to acknowledge receipt of the notice as a necessary step to obtaining a particular financial product or service; or

(d) For an isolated transaction with the consumer, such as the licensee providing an insurance quote or selling the consumer travel insurance, requires the consumer to acknowledge receipt of the notice as a necessary step to obtaining the particular financial product or service.

3605.21 A licensee may not reasonably expect that a consumer will receive actual notice of the licensee's privacy policies and practices if the licensee:

(a) Only posts a sign in its branch or office or generally publishes advertisements of its privacy policies and practices; or

(b) Sends the notice via electronic mail to a consumer who does not obtain a financial product or service from the licensee electronically.

3605.22 A licensee may reasonably expect that a customer will receive actual notice of the licensee's annual privacy notice if:

(a) The customer uses the licensee's web site to access financial products and services electronically and agrees to receive notices at the web site, and the licensee posts its current privacy notice continuously in a clear and conspicuous manner on the web site; or

(b) The customer has requested that the licensee refrain from sending any information regarding the customer relationship, and the licensee's current privacy notice remains available to the customer upon request.

3605.23 A licensee may not provide any notice required by § 3605 solely by orally explaining the notice, either in person or over the telephone.

3605.24 For customers only, a licensee shall provide the initial notice required by section 3601, the annual notice required by § 3602, and the revised notice required by § 3605.9, so that the customer can retain them or obtain them later in writing or, if the customer agrees, electronically.

3605.25 The licensee provides a privacy notice to the customer so that the customer can retain it or obtain it later if the licensee:

(a) Hand-delivers a printed copy of the notice to the customer;

(b) Mails a printed copy of the notice to the last known address of the customer; or

(c) Makes the licensee's current privacy notice available on a web site (or link to another web site) for the customers who obtains a financial product or service electronically and agrees to receive the notice at the web site.

3605.26 A licensee may provide a joint notice from the licensee and one or more of the licensee's affiliates or other financial institutions, as identified in the notice, as long as the notice is accurate with respect to the licensee and the other institutions. A licensee also may provide notice on behalf of another financial institution.

3605.27 Producers may deliver any notice required under this regulation on behalf of another licensee. A producer shall not otherwise be subject to the requirements of this section in any instance where the insurer, including affiliates, on whose behalf the producer is acting otherwise complies with the requirements contained herein, and the producer does not disclose any financial information to any person other than the insurer or its affiliates in a manner permitted by this regulation.

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001).

26-A DCMR § 3606 EXCEPTION TO OPT OUT REQUIREMENTS FOR SERVICE PROVIDERS AND JOINT MARKETING

3606.1 The opt out requirements in §§ 3604 and 3605 do not apply when a licensee provides nonpublic personal information about a consumer to a nonaffiliated third party to perform services for the licensee or functions on the licensee's behalf, if the licensee:

(a) Provides the initial notice in accordance with § 3601; and

(b) Enters into a contractual agreement with the third party that:

(1) Requires the third party to maintain the confidentiality of the information to at least the same extent that the licensee shall maintain that confidentiality under these regulations; and

(2) Limits the third party's use of information the licensee discloses solely to the purposes for which the information is disclosed, or as otherwise permitted by §§ 3607 and 3608.

3606.2 The services performed for the licensee by a nonaffiliated third party under § 3606.1 may include marketing of the licensee's own products or services or marketing of financial products or services offered pursuant to joint agreements between the licensee and one or more financial institutions.

3606.3 For purposes of this section, joint agreement means a written contract pursuant to which the licensee and one or more financial institutions jointly offer, endorse, or sponsor a financial product or service.

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001).

26-A DCMR § 3607 EXCEPTIONS TO NOTICE AND OPT OUT REQUIREMENTS FOR PROCESSING AND SERVICING TRANSACTIONS

3607.1 The requirements for initial notice to consumers in subsection 3601.1(b), the opt out notice in §§ 3604 and 3605 and service providers and joint marketing in § 3606 do not apply if the licensee discloses nonpublic personal information:

(a) As necessary to effect, administer, or enforce a transaction requested or authorized by the consumer;

(b) To service or process a financial product or service requested or authorized by the consumer;

(c) To maintain or service the consumer's account with the licensee, or with another entity;

(d) In connection with a proposed or actual securitization, secondary market sale, including sales of servicing rights, or similar transaction related to a transaction of the consumer; or

(e) Reinsurance, stop loss, or excess loss insurance.

3607.2 Necessary to effect, administer, or enforce a transaction means that the disclosure is:

(a) Required, or is one of the lawful or appropriate methods, to enforce the licensee's rights or the rights of other persons engaged in carrying out the financial transaction or providing the product or service; or

(b) Required, or is a usual, appropriate or acceptable method:

(1) To carry out the transaction or the product or service business of which the transaction is a part, and record, service, or maintain the consumer's account in the ordinary course of providing the financial service or financial product;

(2) To administer or service benefits or claims relating to the transaction or the product or service business of which it is a part;

(3) To provide a confirmation, statement or other record of the transaction, or information on the status or value of the insurance service or insurance product to the consumer or the consumer's agent or broker;

(4) To accrue or recognize incentives or bonuses associated with the transaction that are provided by the licensee or any other party;

(5) To underwrite insurance at the consumer's request or for reinsurance purposes, or for any of the following purposes as they relate to a consumer's insurance: account administration, reporting, investigating, or preventing fraud or material misrepresentation, processing premium payments, processing insurance claims, administering insurance benefits (including utilization review activities), participating in research projects, or as otherwise required or specifically permitted by Federal, State, or District of Columbia law or regulation; or

(6) In connection with settling a transaction, including:

(A) The authorization, billing, processing, clearing, transferring, reconciling or collection of amounts charged, debited, or otherwise paid using a debit, credit or other payment card, check or account number, or by other payment means;

(B) The transfer of receivables, accounts or interests therein; or

(C) The audit of debit, credit or other payment information.

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001).

26-A DCMR § 3608 OTHER EXCEPTIONS TO NOTICE AND OPT OUT REQUIREMENTS

3608.1 The requirements for initial notice to consumers in § 3601.1(b), the opt out in §§ 3604 and 3605, and service providers and joint marketing in § 3606 do not apply when the licensee discloses nonpublic personal information:

(a) With the consent or at the direction of the consumer, provided that the consumer has not revoked the consent or direction;

(b)

(1) To protect the confidentiality or security of the licensee's records pertaining to the consumer, service, product or transaction;

(2) To protect against or prevent actual or potential fraud, unauthorized transactions, claims or other liability;

(3) For required institutional risk control or for resolving consumer disputes or inquiries;

(4) To persons holding a legal or beneficial interest relating to the consumer; or

(5) To persons acting in a fiduciary or representative capacity on behalf of the consumer;

(c) To provide information to insurance rate advisory organizations, guaranty funds or agencies, agencies that are rating the licensee, persons that are assessing the licensee's compliance with industry standards, and the licensee's attorneys, accountants and auditors;

(d) To the extent specifically permitted or required under other provisions of law and in accordance with the Right to Financial Privacy Act of 1978 (12 U.S.C. 3401 et seq.), to law enforcement agencies (including government regulators), self-regulatory organizations, or for an investigation on a matter related to public safety;

(e)

(1) To a consumer reporting agency in accordance with the Fair Credit Reporting Act (15 U.S.C. 1681 et seq.), or

(2) From a consumer report reported by a consumer reporting agency;

(f) In connection with a proposed or actual sale, merger, transfer, or exchange of all or a portion of a business or operating unit if the disclosure of nonpublic personal information concerns solely consumers of such business or unit; or

(g)

(1) To comply with Federal, State, District of Columbia or local laws, rules and other applicable legal requirements;

(2) To comply with a properly authorized civil, criminal or regulatory investigation, or subpoena or summons by Federal, State, District of Columbia or local authorities; or

(3) To respond to judicial process or government regulatory authorities having jurisdiction over the licensee for examination, compliance or other purposes as authorized by law.

3608.2 A consumer may specifically consent to a licensee's disclosure to a nonaffiliated insurance company of the fact that the consumer has applied to the licensee for a financial service so that the unaffiliated insurance company can offer an insurance product loan to the consumer.

3608.3 A consumer may revoke consent by subsequently exercising the right to opt out of future disclosures of nonpublic personal information as permitted under § 3605.13.

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001).

26-A DCMR § 3609 LIMITS ON REDISCLOSURE AND REUSE OF INFORMATION

3609.1 Except as otherwise provided in this regulation, if a licensee receives nonpublic personal information about a consumer from a nonaffiliated financial institution, the licensee shall not, directly or through an affiliate, disclose the information to any other person that is not affiliated with either the financial institution or licensee, unless the disclosure would be lawful if the licensee made it directly to such other person.

3609.2 A licensee may disclose nonpublic personal information about a consumer that it receives from a nonaffiliated financial institution in accordance with an exception under §§ 3606, 3607 or 3608 only for the purpose of that exception.

3609.3 Except as otherwise provided in this regulation, if a licensee discloses nonpublic personal information about a consumer to a nonaffiliated financial institution, that party shall not, directly or through an affiliate, disclose the information to any other person that is a nonaffiliated third party of both the licensee and that party, unless the disclosure would be lawful if the licensee made it directly to such other person.

3609.4 A nonaffiliated third party may disclose nonpublic personal information about a consumer that it receives from the licensee in accordance with an exception under §§ 3606, 3607 or 3608 only for the purpose of that exception.

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001).

26-A DCMR § 3610 LIMITS ON SHARING OF ACCOUNT NUMBER INFORMATION FOR MARKETING PURPOSES

3610.1 A licensee shall not, directly or through an affiliate, disclose other than to a consumer reporting agency, an account number or similar form of access number or access code for consumer's credit card account, deposit account or transaction account of a consumer to any nonaffiliated third party for use in telemarketing, direct mail marketing or other marketing through electronic mail to the consumer.

3610.2 Section 3610.1 shall not apply if a licensee discloses an account number of similar form of access number or access code:

(a) To the licensee's service provider solely in order to perform marketing for the licensee's own products or services, as long as the service provider is not authorized to directly initiate charges to the account;

(b) To a licensee who is a producer solely in order to perform marketing for the licensee's own products or services; or

(c) To a participant in an affinity or similar program where the participants in the program are identified to the customer when the customer enters into the program.

3610.3 For the purposes of this section, a policy or transaction account is an account other than a deposit account or a credit card account. A policy or transaction account does not include an account to which third parties cannot initiate charges.

3610.4 For purposes of section, a policy number or similar form of access number or access code, does not include a number or code in an encrypted form, as long as the licensee does not provide the recipient with a means to decode the number or the code.

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001).

26-A DCMR § 3611 PROTECTION OF FAIR CREDIT REPORTING ACT

Nothing in this part shall be construed to modify, limit, or supersede the operation of the Fair Credit Reporting Act (15 U.S.C. 1681 et seq.), and no inference shall be drawn on the basis of the provisions of this part regarding whether information is transaction or experience information under § 603 of that Act.

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001).

26-A DCMR § 3612 GRANDFATHER PROVISION

Until July 1, 2002, a contract that a licensee has entered into with a nonaffiliated third party to perform services for the licensee has entered into with a nonaffiliated third party to perform services for the licensee or functions on the licensee's behalf satisfies the provisions of § 3606.1(b) of the regulation, even if the contract does not include a requirement that the third party maintain the confidentiality of nonpublic personal information, as long as the licensee entered into the agreement on or before July 1, 2001.

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001).

26-A DCMR § 3613 INFORMATION SECURITY PROGRAM

3613.1 Each licensee shall implement a comprehensive written information security program that includes administrative, technical and physical safeguards for the protection of customer information. The administrative, technical and physical safeguards included in the information security program shall be appropriate to the size and complexity of the licensee and the nature and scope of its activities.

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001); as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3614 OBJECTIVES OF INFORMATION SECURITY PROGRAM

3614.1 A licensee's information security program shall be designed to:

(a) Ensure the security and confidentiality of customer information;

(b) Protect against any anticipated threats or hazards to the security or integrity of the information; and

(c) Protect against unauthorized access to or use of the information that could result in substantial harm or inconvenience to any customer.

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001); as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3615 EXAMPLES OF METHODS OF DEVELOPMENT AND IMPLEMENTATION

3615.1 Actions and procedures described in §§ 3616 through 3619 of these rules are examples of methods of implementation of the requirements of §§ 3613 and 3614 of this regulation. These examples are non-exclusive illustrations of actions and procedures that licensees may follow to implement §§ 3613 and 3614 of these rules.

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001); as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3616 ASSESS RISK

3616.1 The licensee shall:

(a) Identify reasonably foreseeable internal or external threats that could result in unauthorized disclosure, misuse, alteration or destruction of customer information or customer information systems;

(b) Assess the likelihood and potential damage of these threats, taking into consideration the sensitivity of customer information; and

(c) Assess the sufficiency of policies, procedures, customer information systems and other safeguards in place to control risks.

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001); as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3617 MANAGE AND CONTROL RISK

3617.1 The licensee shall:

(a) Design its information security program to control the identified risks, commensurate with the sensitivity of the information, as well as the complexity and scope of the licensee's activities;

(b) Train staff, as appropriate, to implement the licensee's information security program; and

(c) Regularly tests or otherwise regularly monitors the key controls, systems and procedures of the information security program. The frequency and nature of these tests or other monitoring practices are determined by the licensee's risk assessment.

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001); as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3618 OVERSEE SERVICE PROVIDER ARRANGEMENTS

3618.1 The licensee shall:

(a) Exercise appropriate due diligence in selecting its service providers; and

(b) Require its service providers to implement appropriate measures designed to meet the objectives of this regulation, and, where indicated by the licensee's risk assessment, takes appropriate steps to confirm that its service providers have satisfied these obligations.

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3619 ADJUST THE PROGRAM

3619.1 The licensee shall monitor, evaluate and adjust, as appropriate, the information security program in light of any relevant changes in technology, the sensitivity of its customer information, internal or external threats to information, and the licensee's own changing business arrangements, such as mergers and acquisitions, alliances and joint ventures, outsourcing arrangements and changes to customer information systems.

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3620 DETERMINED VIOLATION

3620.1 Violation of these rules shall constitute an unfair trade practice under § 101(9) of the Insurance Trade and Economic Development Amendment Act of 2000, effective April 3, 2001 (D.C. Law 13-265, D.C. Official Code § 31-2231.01(9)).

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3621 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3622 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3623 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3624 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3625 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3626 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3627 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3628 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3629 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3630 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3631 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3632 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3633 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3634 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3635 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3636 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3637 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3638 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3639 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3640 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3641 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3642 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3643 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3644 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3645 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3646 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3647 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3648 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3649 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3650 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3651 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3652 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3653 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3654 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3655 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3656 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3657 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3658 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3659 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3660 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3661 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3662 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3663 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3664 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3665 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3666 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3667 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3668 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3669 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3670 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3671 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3672 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3673 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3674 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3675 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3676 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3677 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3678 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3679 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3680 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3681 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3682 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3683 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3684 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3685 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3686 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3687 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3688 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3689 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3690 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3691 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3692 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3693 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3694 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3695 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3696 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3697 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3698 RESERVED

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001) ; as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A DCMR § 3699 DEFINITIONS

Affiliate means any company that controls, is controlled by, or is under common control with another company.

Clear and conspicuous means that a notice is reasonably understandable and designed to call attention to the nature and significance of the information in the notice.

Collect means to obtain information that the licensee organizes or can retrieve on a personally identifiable basis, irrespective of the source of the underlying information.

Company means any corporation, limited liability company, business trust, general or limited partnership, association or similar organization.

Consumer means an individual who obtains, or has obtained an insurance product or service from a licensee that is to be used primarily for personal, family or household purposes, and about whom the licensee has nonpublic personal information, or that individual's legal representative. Examples of a consumer includes:

(a) An individual who provides nonpublic personal information in connection with obtaining or seeking to obtain financial, investment or economic advisory services relating to an insurance product or service to be used primarily for personal, family or household purposes is a consumer regardless of whether the licensee establishes an ongoing relationship. However, such an individual is not a "consumer" if the nonpublic personal information obtained by the licensee is not otherwise used, compiled, or transferred.

(b) An applicant for insurance prior to the inception of insurance coverage;

(c) An individual who has an insurance policy even if the licensee:

(1) Hires an agent to collect on the policy,

(2) Sells the rights to service the insurance policy, or

(3) Bought the insurance policy from the company that originated the insurance policy.

An individual is a licensee's consumer if:

(a)

(1) The individual is a beneficiary of a life insurance policy underwritten by the licensee;

(2) The individual is a claimant under an insurance policy issued by the licensee;

(3) The individual is an insured or an annuitant under an insurance policy or an annuity, respectively, issued by the licensee; or

(4) The individual is a mortgagor of a mortgage covered under a mortgage insurance policy; and

(b) The licensee discloses nonpublic personal information about the individual other than as permitted under §§ 3606, 3607 and 3608 of this regulation.

An individual is not a consumer solely because the licensee processes information about the individual on behalf of a financial institution that issued the insurance policy to the individual.

An individual is not a consumer if the licensee provides benefits to the individual as beneficiary or participant of a commercial insurance policy, workers compensation policy professional liability insurance policy, an employee benefit plan, group or blanket insurance policy or group annuity contract.

Consumer reporting agency has the same meaning as in section 603(f) of the Fair Credit Reporting Act (15 U.S.C. 1681a(f)).

Control of a company means:

(a) Ownership, control, or power to vote 25 percent or more of the outstanding shares of any class of voting security of the company, directly or indirectly, or acting through one or more other persons;

(b) Control in any manner over the election of a majority of the directors, trustees or general partners (or individuals exercising similar functions) of the company; or

(c) The power to exercise, directly or indirectly, a controlling influence over the management or policies of the company, as determined by the Commissioner.

Customer means a consumer who has a customer relationship with a licensee. In no event, however shall a beneficiary or claimant under a policy of insurance solely by virtue of their status as a beneficiary or claimant, be deemed to be a customer for the purposes of this regulation.

Customer information means the same as nonpublic personal information, and applies whether in paper, electronic or other form, that is maintained by or on behalf of the licensee.

Customer information systems means the electronic or physical methods used to access, collect, store, use, transmit, protect or dispose of customer information.

Customer relationship means a continuing relationship between a consumer and a licensee under which the licensee provides one or more insurance products or services to the consumer that are to be used primarily for personal, family or household purposes. A consumer has a continuing relationship with a licensee if the consumer:

(a) Is a current policyholder of an insurance product or other product from or through a licensee;

(b) Holds an investment product through a licensee; or

(c) Obtains financial, insurance, investment or economic advisory services from a licensee for a fee.

A consumer does not, however, have a continuing relationship with a licensee if:

(a) The consumer only obtains an insurance policy or service in an isolated transaction, such as an inquiry about a claims handling phone number for an insurance policy not issued, sold, or supported in any way by a licensee;

(b) A licensee sells the consumer's insurance policy and does not retain the rights to service the policy;

(c) A licensee sells the consumer travel insurance in an isolated transaction;

(d) A consumer applies for insurance, but does not purchase the insurance;

(e) The consumer is a beneficiary or claimant under a policy and has submitted a claim under a policy choosing a settlement option involving an ongoing relationship with a licensee;

(f) The consumer is a beneficiary or claimant under a policy and has submitted a claim under that policy choosing a lump sum settlement option;

(g) The customer's policy is lapsed, expired, or otherwise inactive or dormant under the licensee's business practices, and the licensee has not communicated with the customer about the relationship for a period of twelve (12) consecutive months, other than annual privacy notices, material required by law or regulation, communication at the direction of a state or federal authority, or promotional materials;

(h) The individual is an insured or annuitant under an insurance policy or annuity, respectively, but is not the policyholder or owner of the insurance policy or annuity;

(i) For the purposes of this regulation, the individual's last known address according to the licensee's records is deemed invalid. An address of record is deemed invalid if mail sent to that address by the licensee has been returned by the postal authorities as undeliverable and if subsequent attempts by the licensee to obtain a current valid address for the individual have been unsuccessful; or

(j) The individual is no longer a current policyholder of an insurance product or no longer obtains insurance services with or through the licensee.

Financial institution means any institution the business of which is engages in activities that are financial in nature or incidental to such financial activities as described in Section 4(k) of the Bank Holding Company Act of 1956 (12 U.S. C. 1843(k)).

Financial institution does not include:

(a) Any person or entity with respect to any financial activity that is subject tot he jurisdiction of the commodity Futures Trading Commission under the Commodity exchange Act (7 U.S. C. 1 et seq.);

(b) The Federal Agricultural Mortgage Corporation or any entity charged and operating under the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.); or

(c) Institutions chartered by Congress specifically to engage in securitizations, secondary market sales (including sales of servicing rights) or similar transactions related to a transaction of a consumer, as long as the institutions do not sell or transfer personal information to an nonaffiliated third party.

Financial product or service means a product or service that a financial holding company could offer by engaging in an activity that is financial in nature or incidental to such a financial activity under Section 4(k) of Bank Holding Company Act 1956 (12 U.S.C. § 1843(k)). Financial service includes a financial institution's evaluation or brokerage of information that the financial institution collects in connection with a request or an application from a consumer for a financial product or service.

Financial service includes a licensee's evaluation or brokerage of information that the licensee collects in connection with a request or an application from a consumer for a financial product or service.

Health information means any information or data except age or gender, whether oral or recorded in any form or medium, created by or derived from a health care provider or the consumer that relates to:

(a) The past, present or future physical, mental or behavioral health or condition of an individual;

(b) The provision of health care to an individual; or

(c) The payment of the provision of health care to an individual.

Licensee means all licensed insurers, producers, and other persons licensed or required to be licensed pursuant to the insurance laws and regulations of the District of Columbia.

(a) A licensee is not subject to the notice and opt out requirements for nonpublic personal information set in this regulation if the licensee is an employee, agent or

(b) other representative of another licensee ("the principal") and:

(1) The principal otherwise complies with, and provides the notices required by, the provisions of this regulation; and

(2) The licensee does not disclose any nonpublic personal information to any person other than the principal or its affiliates in a manner permitted by this regulation.

Nonaffiliated third party means any person except:

(a) The licensee's affiliate; or

(b) A person employed jointly by the licensee and any company that is not the licensee's affiliate, but nonaffiliated third party includes the other company that jointly employs the person.

(c) Nonaffiliated third party includes any company that is an affiliate solely by virtue of the direct or indirect ownership or control of the company by the licensee or its affiliate in conducting merchant banking or investment banking activities of the type described in section 4(k)(4)(H) or insurance company investment activities of the type described in section 4(k)(4)(I) of the Bank Holding Company Act (12 U.S.C. 1843(k)(4)(H) and (I)).

Nonpublic personal health information means health information:

(a) That identifies an individual who is the subject of the information; or

(b) With respect to which there is a reasonable basis to believe that the information could be used to identify an individual.

Nonpublic personal information means personally identifiable financial information and any list, description or other grouping of consumers (and publicly available information pertaining to them) that is derived using any personally identifiable financial information other than publicly available information. Nonpublic personal information does not include:

(a) Publicly available information, except as provided in this paragraph.

(b) Any list, description, or other grouping of consumers (and publicly available information pertaining to them) that is derived without using any personally identifiable financial information, other than publicly available information.

(c) Health information.

Nonpublic personal information includes:

(a) Any list of individuals 'names and street addresses that is derived using personally identifiable financial information, other than publicly available information, such as account numbers.

(b) Nonpublic personal information does not include any list of individual's names and addresses that contains only publicly available information, is not derived using personally identifiable financial information, other than publicly available information, either in whole or in part, and is not disclosed in a manner that indicates that any of the individuals on the list is a consumer of a financial institution.

Personally identifiable financial information means any information:

(a) Provided by a consumer to a licensee to obtain an insurance product or service from the licensee;

(b) About a consumer resulting from any transaction involving a financial products or service between a licensee and a consumer; or

(c) A licensee otherwise obtains about a consumer in connection with providing a financial product or service to that consumer.

(d) Personally identifiable financial information includes:

(1) Information a consumer provides to a license on an application to obtain and insurance or other financial product or service;

(2) Account balance information, payment history, and other payment information;

(3) The fact that an individual is or has been one or a licensee's customers or has obtained an insurance or other financial service from a licensee, unless that fact is derived using only publicly available information;

(4) Other information about the licensee's consumer if it is disclosed in a manner that indicates the individual is or has been the licensee's consumer;

(5) Any information provided by a consumer or otherwise obtained by the licensee in connection with collecting on an insurance policy or servicing a policy; and

(6) Information from a consumer report.

(e) Personally identifiable financial information does not include:

(1) A list of names and addresses of customers of an entity that is not financial institution;

(2) Information that does not identify a consumer, such as aggregate information or blind data that does not contain personal identifiers such as account numbers, names, or addresses; and

(3) Health information

Producer means the particular broker or agent dealing directly with the party seeking insurance.

Publicly available information means any information that a licensee has a reasonable basis to believe is lawfully made available to the general public from:

(a) Federal, State, District of Columbia or local government records;

(b) Widely distributed media;

(c) Disclosures to the general public that are required to be made by Federal, State, District of Columbia or local law;

(d) Publicly available information contained in government records includes information contained in government real estate records and security interest filings; or

(e) Publicly available information from widely distributed media includes information from a telephone book, a television or radio program, a newspaper or an internet site that is available to the general public without requiring a password or similar restriction. An Internet site is not restricted merely because an Internet service provider or a site operator requires a fee or a password, so long as access is available to the general public.

Service provider means a person that maintains, processes or otherwise is permitted access to customer information through its provision of services directly to the licensee.

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9052(November 10, 2000) [EXPIRED]; Emergency Rulemaking published at 48 DCR 2356(March 16, 2001) [EXPIRED]; as Emergency Rulemaking published at 48 DCR 6119(July 1, 2001) [EXPIRED]; as Final Rulemaking published at 48 DCR 8005 (August 24, 2001); as Final Rulemaking published at 50 DCR 1517(February 14, 2003).

26-A37 CAPTIVE INSURANCE COMPANIES

26-A DCMR § 3700 APPLICABILITY

3700.1 This regulation shall apply to all captive insurance companies formed or licensed under the provisions of the Captive Insurance Company Act of 2000, effective October 21, 2000 (D.C. Law 13-192; 47 DCR 7320), and the Captive Insurance Company Act of 2004, effective March 17, 2005 (D.C. Law 15-262; 52 DCR 1205), and the amendments thereto.

History

• SOURCE: Final Rulemaking published at 48 DCR 8034 (August 24, 2001); as amended by Final Rulemaking published at 59 DCR 13088 (November 16, 2012).

26-A DCMR § 3701 ANNUAL REPORTING REQUIREMENTS

All captive insurance companies licensed to do business in the District shall annually submit to the Commissioner a report of its financial condition, verified by oath of two of its executive officers.

History

• SOURCE: Final Rulemaking published at 48 DCR 8034(August 24, 2001).

26-A DCMR § 3702 ANNUAL AUDIT

3702.1 All captive insurance companies shall have an annual audit by an independent certified public accountant, authorized by the Commissioner and shall file such audited financial report with the Commissioner. A captive insurer not licensed as domestic risk retention group shall file its annual audited financial report on or before June 30 for the year ending December 31 immediately preceding. A captive insurer licensed as domestic risk retention groups shall file its annual audited financial report on or before June 1 for the year ending December 31 immediately preceding.

3702.2 The annual audit report shall be considered part of the captive insurance company's annual report of financial condition except with respect to the date by which it must be filed with the Commissioner.

3702.3 The annual audit shall consist of the following:

(a) Financial statements furnished pursuant to this section shall be examined by independent certified public accountants in accordance with generally accepted auditing standards as determined by the American Institute of Certified Public Accountants.

(b) The opinion of the independent certified public accountant shall cover all years presented.

(c) The opinion shall be addressed to the captive insurance company on stationery of the accountant showing the address of issuance, shall bear original manual signatures, and shall be dated.

3702.4 The annual audit report shall include an evaluation of the internal controls of the captive insurance company relating to the methods and procedures used in the securing of assets and the reliability of the financial records, including but not limited to such controls as the system of authorization and approval and the separation of duties.

3702.5 The annual audit shall be conducted in accordance with generally accepted auditing standards.

3702.6 The accountant shall furnish the company, for inclusion in the filing of the audited annual report, a letter stating:

(a) That it is independent with respect to the captive insurance company and conforms to the standards of the profession, as contained in the Code of Professional Ethics and pronouncements of the American Institute of Certified Public Accountants and pronouncements of the Financial Accounting Standards Board.

(b) The general background and experience of the staff engaged in audit including the experience in auditing captives or other insurance companies.

(c) That the accountant understands that the audited annual report and his opinions thereon will be filed in compliance with this regulation with the Department of Insurance and Securities Regulation.

(d) That the accountant consents to the requirements of § 3705 of this regulation and that the accountant consents and agrees to make available for review by the Commissioner, his designee or his appointed agent, the work papers as defined in § 3705.

(e) That the accountant is property licensed by an appropriate District or state licensing authority and that he is a member in good standing in the American Institute of Certified Public Accountants.

3702.7 The annual audit shall include the following financial statements:

(a) Balance sheet;

(b) Statement of operations;

(c) Statement of changes in financial position;

(d) Statement of changes in capital paid up, gross paid in and contributed surplus and unassigned funds (surplus); and

(e) Notes to financial statements, which shall include those that are required by generally accepted accounting principles, including:

1. A reconciliation of differences, if any, between the audited financial report and the statement or form filed with the Commissioner;

2. A summary of ownership and relationship of the company and all affiliated corporations or companies insured by the captive; and

3. A narrative explanation of all material transactions and balances with the company.

3702.8 The annual audit shall include an opinion as to the adequacy of the captive insurance company's loss reserves and loss expense reserves. The audit of the adequacy of the captive insurance company's life, health, disability and annuity loss reserves and loss expense reserves for a captive insurance company insuring employee benefit risks shall be performed by a life actuary. The individual who certifies as to the adequacy of reserves shall be approved by the Commissioner and shall be a Fellow of the Casualty Actuarial Society, a member in good standing of the American Academy of Actuaries, or an individual who has demonstrated his competence in loss reserve evaluation to the Commissioner.

3702.9 The certification in Subsection 3702.8 shall be in such form as the Commissioner deems appropriate.

History

• SOURCE: Final Rulemaking published at 48 DCR 8034(August 24, 2001); as amended by Final Rulemaking published at 59 DCR 13088 (November 16, 2012).

26-A DCMR § 3703 DESIGNATION OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT

Captive insurance companies, after becoming subject to this regulation, shall within ninety days report to the Commissioner in writing, the name and address of the independent certified public accountant retained to conduct the annual audit set forth in this regulation.

History

• SOURCE: Final Rulemaking published at 48 DCR 8034(August 24, 2001).

26-A DCMR § 3704 NOTIFICATION OF ADVERSE FINANCIAL CONDITION

A captive insurance company shall require the certified public accountant to immediately notify in writing the chief executive officer and all members of the Board of Directors of the company of any determination by the independent certified public accountant that the company has materially misstated its financial condition in its report to the Commissioner. The company shall furnish such notification to the Commissioner within five working days of receipt thereof.

History

• SOURCE: Final Rulemaking published at 48 DCR 8034(August 24, 2001).

26-A DCMR § 3705 AVAILABILITY AND MAINTENANCE OF WORKING PAPERS OF THE INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT

3705.1 Each captive insurance company shall require the independent certified public accountant to make available for review by the Commissioner the work papers prepared in the conduct of the audit of the company. The company shall require that the accountant retain the audit work papers for a period of not less than five years after the period reported upon.

3705.2 The review by the Commissioner referenced in § 3705.1 shall be considered investigations and all working papers obtained during the course of such investigations shall be confidential. The captive insurance company shall require that the independent certified public accountant provide photocopies of any of the working papers which the Commissioner considers relevant. The Commissioner may retain the work papers.

3705.3 "Work Papers" as referred to in this section include, but are not necessarily limited to, schedules, analyses, reconciliations, abstracts, memoranda, narratives, flow charts, copies of company records or other documents prepared or obtained by the accountant and his employees in the conduct of their examination of the company.

History

• SOURCE: Final Rulemaking published at 48 DCR 8034(August 24, 2001).

26-A DCMR § 3706 DEPOSIT REQUIREMENT

3706.1 Whenever the Commissioner deems that the financial condition of the captive insurance company warrants additional security, he or she may require a company to deposit in the Commissioner's custodial account cash or securities approved by the Commissioner or, alternatively, to furnish the Commissioner with a clean irrevocable letter of credit issued by a bank that has a branch located in the District of Columbia, and approved by the Commissioner.

3706.2 The captive insurance company may receive interest or dividends from said deposit or exchange the deposits for others of equal value after receiving prior written approval from the Commissioner.

3706.3 If such captive insurance company discontinues business, the Commissioner shall return such deposit only after being satisfied that all obligations of the company have been discharged.

History

• SOURCE: Final Rulemaking published at 48 DCR 8034(August 24, 2001).

26-A DCMR § 3707 CAPITAL AND SURPLUS REQUIREMENTS

3707.1 A captive insurer using a letter of credit as evidence of capital permitted by Section 7(d) of the Act shall not enter into any agreement with the issuer of the letter of credit granting the issuer any of the following:

(a) a right of reimbursement;

(b) a right of set-off against any funds or other assets owned by the captive insurer;

(c) a lien or other interest in any assets owned by the captive insurer; or

(d) a right to draw down on the letter or credit, in whole or in part.

History

• SOURCE: Final Rulemaking published at 48 DCR 8034 (August 24, 2001); as amended by Final Rulemaking published at 59 DCR 13088 (November 16, 2012).

26-A DCMR § 3708 REVIEW OF CAPTIVE APPLICATION

3708.1 The Commissioner may retain, at the applicant’s expense, any attorneys, actuaries, accountants, consultants, or other experts as may be reasonably necessary to assist the Commissioner in reviewing a captive application.

History

• SOURCE: Final Rulemaking published at 48 DCR 8034 (August 24, 2001); as amended by Final Rulemaking published at 59 DCR 13088 (November 16, 2012).

26-A DCMR § 3709 BOARD MEETINGS

3709.1 The board of directors of a captive insurer shall meet at least annually in the District of Columbia (District). The board of directors may permit any or all directors to participate in any regular or special meeting by the use of any means of communication which allows all directors participating to simultaneously hear each other during the meeting. A director participating in a meeting by such means of communication shall be deemed present in person at the meeting.

3709.2 A meeting of the Board of Directors shall be deemed to have taken place in the District if notice of the meeting delineates a location physically located in the District at which at least one Director, Officer, Assistant Officer, official of an approved Captive Manager, or approved captive attorney is physically present.

History

• SOURCE: Final Rulemaking published at 48 DCR 8034 (August 24, 2001); as amended by Final Rulemaking published at 59 DCR 13088 (November 16, 2012); as amended by Final Rulemaking published at 60 DCR 13175 (September 20, 2013).

26-A DCMR § 3710 CAPTIVE MANAGERS AND INTERMEDIARIES

3710.1 No person shall, in or from within the District, act as a captive manager, broker, agent, salesman, or reinsurance intermediary for captive business without the authorization of the Commissioner.

History

• SOURCE: Final Rulemaking published at 48 DCR 8034 (August 24, 2001); as amended by Final Rulemaking published at 59 DCR 13088 (November 16, 2012).

26-A DCMR § 3711 DIRECTORS

3711.1 Every company shall report to the Commissioner within thirty (30) days after any change in its executive officers or directors, including in its report a statement of the business and professional affiliations of any new executive officer or director.

3711.2 No director, officer, or employee of a company shall, except on behalf of the company, accept, or be the beneficiary of, any fee, brokerage, gift, or other emolument because of any investment, loan, deposit, purchase, sale, payment or exchange made by or for the company, but such person may receive reasonable compensation for necessary services rendered to the company in his or her usual private, professional or business capacity.

3711.3 Any profit or gain received by or on behalf of any person in violation of this section shall inure to and be recoverable by the company.

History

• SOURCE: Final Rulemaking published at 48 DCR 8034(August 24, 2001).

26-A DCMR § 3712 CONFLICT OF INTEREST

3712.1 Each captive insurer licensed in the District shall adopt a code of ethics. Each officer, director and key employee of the captive insurer shall be subject to the code of ethics, which shall include, at a minimum, the following requirements:

(a) Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

(b) Full, fair, accurate, timely and understandable disclosure in the periodic reports required to be filed by the insurer with the Department;

(c) Compliance with all applicable District laws, regulations and orders of the Commissioner;

(d) The prompt internal reporting of violations to an appropriate person or persons identified in the code of ethics; and

(e) Accountability for adherence to the code of ethics.

3712.2 Each director, officer and key employee shall certify in writing annually that he or she is in compliance with the captive insurer’s code of ethics. A record of such certification shall be maintained by the captive insurer and made available to the Department upon request.

History

• SOURCE: Final Rulemaking published at 48 DCR 8034 (August 24, 2001); as amended by Final Rulemaking published at 60 DCR 13175 (September 20, 2013).

26-A DCMR § 3713 SUSPENSION OR REVOCATION OF CAPTIVE LICENSE

3713.1 The Commissioner may, subject to the provisions of this section, by order suspend or revoke the license of the company:

(a) if the company has not commenced business according to its plan of operation within two years of being licensed; or

(b) if the company ceases to carry on insurance business in or from within the District;

(c) at the request of the company; or

(d) for any reason provided in Section 16 of the Act.

3713.2 Before the Commissioner suspends or revokes the license of a company pursuant to section § 3713.1, the Commissioner shall give the company notice in writing of the grounds on which he proposes to suspend or revoke the license, and shall afford the company an opportunity for a hearing within the period of thirty days after receipt of notice.

History

• SOURCE: Final Rulemaking published at 48 DCR 8034 (August 24, 2001); as amended by Final Rulemaking published at 59 DCR 13088 (November 16, 2012).

26-A DCMR § 3714 ACQUISITION OF CONTROL OR MERGER WITH DOMESTIC CAPTIVE

3714.1 No person other than the issuer shall make a tender offer of or a request or invitation for tenders of, or enter into any agreement to exchange securities for, seek to acquire, or acquire in the open market or otherwise, any voting security of a domestic captive if, after the consummation thereof, such person would, directly or indirectly (or by conversion or by exercise of any right to acquire) be in control of such company; and no person shall enter into an agreement to merge with or otherwise to acquire control of a domestic captive without the prior written approval of the Commissioner. In considering any application for acquisition of control or merger with a domestic captive, the Commissioner shall consider all of the facts and circumstances surrounding the application as well as the criteria for establishment of a company set out in this chapter.

History

• SOURCE: Final Rulemaking published at 48 DCR 8034 (August 24, 2001); as amended by Final Rulemaking published at 59 DCR 13088 (November 16, 2012).

26-A DCMR § 3715 CHANGE OF BUSINESS

3715.1 Any change in the nature of the captive business from that stated in the company's plan of operation filed with the Commissioner upon application requires prior written approval from the Commissioner.

3715.2 Any change in any other information filed with the application must be filed with the Commissioner, but does not require prior written approval.

History

• SOURCE: Final Rulemaking published at 48 DCR 8034(August 24, 2001).

26-A DCMR § 3716 CAPTIVE INSURANCE COMPANIES ISSUING ANNUITIES

3716.1 This regulation establishes reserve requirements, separate accounts and the form of the annual statement required of any captive insurance company that issues annuity contracts, which may have life or other benefits that constitute a subsidiary or incidental part of the entire contract.

3716.2 A captive insurance company that issues annuity contracts shall submit its annual report in the form of the annual statement approved by the National Association of Insurance Commissioners for life insurers, as modified or supplemented by the Commissioner.

3716.3 Any captive insurance company that issues contracts that provide variable benefits shall establish separate accounts.

3716.4 A captive insurance company that issues annuity contracts shall maintain reserves that are actuarially sufficient to support the liabilities provided by the contracts.

3716.5 If any provision of this regulation or the application thereof to any person or circumstance is for any reason held to be invalid, the remainder of the regulation and the application of such provisions to other persons or circumstances shall not be affected thereby.

History

• SOURCE: Final Rulemaking published at 48 DCR 8034 (August 24, 2001); as amended by Final Rulemaking published at 59 DCR 13088 (November 16, 2012).

26-A DCMR § 3750 REGULATIONS APPLICABLE TO RISK RETENTION GROUPS

3750.1 Sections 3750 through 3774 shall apply only to captive insurers licensed as risk retention groups.

History

• SOURCE: Final Rulemaking published at 59 DCR 13088 (November 16, 2012).

26-A DCMR § 3751 FORMS - GENERAL REQUIREMENTS

3751.1 Forms A, B, C, and D, set forth in the appendices 1 through 4 to chapter 37, are intended to identify the information to be included in the statements required by sections 3, 4, and 5 of the Holding Company System Act of 1993, effective October 21, 1993 (D.C. Law 10-44; D.C. Official Code § 31-701 et seq. (Holding Company Act). They are not intended to be blank forms which are to be completed but rather line-item instructions describing the information being sought by the Department and the format of the filed statement. The statements, when filed, must contain references to the corresponding numbers and captions for all items listed on the forms. All instructions, whether appearing under the items of the form or elsewhere therein, are to be omitted. Unless expressly provided otherwise, if any item is inapplicable or the answer thereto is in the negative, an appropriate statement to that effect shall be made.

3751.2 Two (2) complete copies of each statement, including exhibits and all other papers and documents filed as a part thereof, shall be filed with the Commissioner by personal delivery or mail addressed to: Department of Insurance, Securities and Banking, 810 First Street, N.E., Suite 701, Washington, D.C. 20002. A copy of Form C shall be filed in each jurisdiction in which an insurer is registered within thirty (30) days of filing such form with the Commissioner. At least one of the copies shall be manually signed in a manner prescribed on the form. Unsigned copies shall be confirmed. If the signature of any person is affixed pursuant to a power of attorney or other similar authority, a copy of such power of attorney or other authority shall also be filed with the statement.

3751.3 Statements should be prepared on letter- or legal-sized paper and preferably bound at the top or the top left-hand corner. Exhibits and financial statements, unless specifically prepared for the filing, may be submitted in their original size. All copies of any statement, financial statements, or exhibits shall be clear, easily readable, and suitable for photocopying. Debits in credit categories and credits in debit categories shall be designated so as to be clearly distinguishable as such on photocopies. Statements shall be in the English language and monetary values shall be stated in U.S. currency. If any exhibit or other paper or document filed with the statement is in a foreign language, it shall be accompanied by a translation into the English language and any monetary value shown in a foreign currency normally shall be converted into United States currency.

History

• SOURCE: Final Rulemaking published at 59 DCR 13088 (November 16, 2012).

26-A DCMR § 3752 FORMS - INCORPORATION BY REFERENCE, SUMMARIES AND OMISSION

3752.1 Information required by any item of Forms A, B, or D may be incorporated by reference in answer or partial answer to any other item. Information contained in any financial statement, annual report, proxy statement filed with a governmental authority, or any other document may be incorporated by reference in answer or partial answer to any item of Forms A, B, or D provided such document or paper is filed as an exhibit to the statement. Excerpts of documents may be filed as exhibits if the documents are extensive. Documents currently on file with the Commissioner which were filed within the three (3) years immediately preceding need not be attached as exhibits. References to information contained in exhibits or in documents already on file shall clearly identify the material and shall specifically indicate that such material is to be incorporated by reference in answer to the item. Matter shall not be incorporated by reference in any case where such incorporation would render the statement incomplete, unclear, or confusing.

3752.2 Where an item requires a summary or outline of the provisions of any document, only a brief statement shall be made as to the pertinent provisions of the document. In addition to such statement, the summary or outline may incorporate by reference particular parts of any exhibit or document currently on file with the Commissioner which was filed within the three (3) years immediately preceding and may be qualified in its entirety by such reference. In any case where two (2) or more documents required to be filed as exhibits are substantially identical in all material respects except as to the parties thereto, the dates of execution, or other details, a copy of only one (1) of such documents need be filed with a schedule identifying the omitted documents and setting forth the material details in which such documents differ from the documents a copy of which is filed.

History

• SOURCE: Final Rulemaking published at 59 DCR 13088 (November 16, 2012).

26-A DCMR § 3753 FORMS - INFORMATION UNKNOWN OR UNAVAILABLE AND EXTENSION OF TIME TO FURNISH

3753.1 Required information should be given only insofar as it is known or reasonably available to the person filing the statement. If any required information is unknown and not reasonably available to the person filing, either because obtaining the information would involve unreasonable effort or expense, or because it rests peculiarly within the knowledge of another person not affiliated with the person filing, the information may be omitted, subject to the following conditions:

(a) The person filing shall give such information on the subject as it possesses or can acquire without unreasonable effort or expense, together with the sources thereof; and

(b) The person filing shall include a statement either showing that unreasonable effort or expense would be involved or indicating the absence of any affiliation with the person within whose knowledge the information rests and stating the result of a request made to such person for the information.

3753.2 If it is impractical to furnish any required information, document, or report at the time it is required to be filed, information may be filed with the Commissioner that:

(a) Identifies the information, document, or report in question;

(b) States why the filing thereof at the time required is impractical; and

(c) Requests an extension of time for filing the information, document or report to specified date. The request for extension shall be deemed granted unless the Commissioner enters an order denying the request within sixty (60) days after receipt thereof.

History

• SOURCE: Final Rulemaking published at 59 DCR 13088 (November 16, 2012).

26-A DCMR § 3754 FORMS - ADDITIONAL INFORMATION AND EXHIBITS

3754.1 In addition to the information expressly required to be included in Forms A, B, C, and D, there shall be added such further material information, if any, as may be necessary to make the information contained therein not misleading. The person filing may also file such exhibits as it may desire in addition to those expressly required by the statement. Such exhibits shall be so marked as to indicate clearly the subject matters to which they refer. Changes to Forms A, B, C, and D shall include on the top of the cover page the phrase: "Changes No. (insert number) to" and shall indicate the date of the change and not the date of the original filing.

History

• SOURCE: Final Rulemaking published at 59 DCR 13088 (November 16, 2012).

26-A DCMR § 3755 SUBSIDIARIES OF DOMESTIC INSURERS

3755.1 The authority to invest in subsidiaries under Section 3 of the Holding Company Act is in addition to any authority to invest in subsidiaries which may be contained in any other provision of the Insurance Code.

History

• SOURCE: Final Rulemaking published at 59 DCR 13088 (November 16, 2012).

26-A DCMR § 3756 ACQUISITION OF CONTROL - STATEMENT FILING

3756.1 A person required to file a statement pursuant to Section 4 of the Holding Company Act shall furnish the required information on Form A, hereby made a part of this regulation.

History

• SOURCE: Final Rulemaking published at 59 DCR 13088 (November 16, 2012).

26-A DCMR § 3757 AMENDMENTS TO FORM A

3757.1 The applicant shall promptly advise the Commissioner of any changes in the information furnished on Form A arising subsequent to the date upon which such information was furnished but prior to the Commissioner's disposition of the application.

History

• SOURCE: Final Rulemaking published at 59 DCR 13088 (November 16, 2012).

26-A DCMR § 3758 ACQUISITION OF SECTION 4(b) INSURERS

3758.1 If the person being acquired is deemed to be a "domestic insurer" solely because of the provisions of Subsection 4(b) of the Holding Company Act, the name of the domestic insurer on the cover page should be indicated as follows:

"ABC Insurance Company, a subsidiary of XYZ Holding Company".

3758.2 Where a Subsection 4(b) insurer is being acquired, references to the "the insurer" contained in Form A shall refer to both the domestic subsidiary insurer and the person being acquired.

History

• SOURCE: Final Rulemaking published at 59 DCR 13088 (November 16, 2012).

26-A DCMR § 3759 ANNUAL REGISTRATION OF INSURERS - STATEMENT FILING

3759.1 An insurer required to file an annual registration statement pursuant to Section 6 of the Holding Company Act shall furnish the required information on Form B, hereby made a part of these regulations.

History

• SOURCE: Final Rulemaking published at 59 DCR 13088 (November 16, 2012).

26-A DCMR § 3760 SUMMARY OF REGISTRATION - STATEMENT FILING

3760.1 An insurer required to file an annual registration statement pursuant to Section 6 of the Holding Company Act shall also furnish the required information on Form C, hereby made a part of these regulations. An insurer shall file a copy of Form C in each jurisdiction in which the insurer is authorized to do business within thirty (30) days of filing such form with the Commissioner, if requested by the Commissioner of that jurisdiction, or if required to do so pursuant to the federal Liability Risk Retention Act.

History

• SOURCE: Final Rulemaking published at 59 DCR 13088 (November 16, 2012); as amended by Final Rulemaking published at 60 DCR 13175 (September 20, 2013).

26-A DCMR § 3761 AMENDMENTS TO FORM B [RESERVED]

History

• SOURCE: Final Rulemaking published at 59 DCR 13088 (November 16, 2012).

26-A DCMR § 3762 ALTERNATIVE AND CONSOLIDATED REGISTRATIONS

3762.1 Any authorized insurer may file a registration statement on behalf of any affiliated insurer or insurers which are required to register under section 6 of the Holding Company Act. A registration statement may include information not required by the Holding Company Act regarding any insurer in the insurance holding company system even if such insurer is not authorized to do business in this jurisdiction. In lieu of filing a registration statement on Form B, the authorized insurer may file a copy of the registration statement or similar report which it is required to file in its jurisdiction of domicile provided:

(a) The statement or report contains substantially similar information required to be furnished on Form B; and

(b) The filing insurer is the principal insurance company in the insurance holding company system.

3762.2 The question of whether the filing insurer is the principal insurance company in the insurance holding company system is a question of fact and an insurer filing a registration statement or report in lieu of Form B on behalf of an affiliated insurer, shall set forth a brief statement of facts which will substantiate the filing insurer's claim that it, in fact, is the principal insurer in the insurance holding company system.

3762.3 With the prior approval of the Commissioner, an unauthorized insurer may follow any of the procedures which could be done by an authorized insurer under subsection 3753.1 above.

3762.4 Any insurer may take advantage of the provisions of subsection 6(h) or 6(i) of the Holding Company Act without obtaining the prior approval of the Commissioner. The Commissioner, however, reserves the right to require individual filings if he or she deems such filings necessary in the interest of clarity, ease of administration, or the public good.

History

• SOURCE: Final Rulemaking published at 59 DCR 13088 (November 16, 2012).

26-A DCMR § 3763 DISCLAIMERS AND TERMINATION OF REGISTRATION

3763.1 A disclaimer of affiliation or a request for termination of registration claiming that a person does not, or will not upon the taking of some proposed action, control another person (hereinafter referred to as the "Subject" for the purposes of this section) shall contain the following information:

(a) The number of authorized, issued, and outstanding voting securities of the Subject;

(b) With respect to the person whose control is denied and all affiliates of such person, the number and percentage of shares of the Subject's voting securities which are held of record or known to be beneficially owned, and the number of such shares concerning which there is a right to acquire, directly or indirectly;

(c) All material relationships and bases for affiliation between the Subject and the person whose control is denied and all affiliates of such person; and

(d) A statement explaining why such person should not be considered to control the Subject.

3763.2 A request for termination of registration shall be deemed to have been granted unless the Commissioner, within thirty (30) days after he receives the request, notifies the registrant otherwise.

History

• SOURCE: Final Rulemaking published at 59 DCR 13088 (November 16, 2012).

26-A DCMR § 3764 TRANSACTIONS SUBJECT TO PRIOR NOTICE - NOTICE FILING

3764.1 An insurer required to give notice of a proposed transaction pursuant to Section 7 of the Holding Company Act shall furnish the required information on Form D, hereby made a part of these regulations.

History

• SOURCE: Final Rulemaking published at 59 DCR 13088 (November 16, 2012).

26-A DCMR § 3765 EXTRAORDINARY DIVIDENDS AND OTHER DISTRIBUTIONS

3765.1 Requests for approval of extraordinary dividends or any other extraordinary distribution to shareholders shall include the following:

(a) The amount of the proposed dividend;

(b) The date established for payment of the dividend;

(c) A statement as to whether the dividend is to be in cash or other property and, if in property, a description thereof, its cost, and its fair market value together with an explanation of the basis for valuation;

(d) A copy of the calculations determining that the proposed dividend is extraordinary. The work paper shall include the following information:

(1) The amounts, dates and form of payment of all dividends or distributions (including regular dividends but excluding distributions of the insurers own securities) paid within the period of twelve (12) consecutive months ending on the date fixed for payment of the proposed dividend for which approval is sought and commencing on the day after the same day of the same month in the last preceding year.

(2) Surplus as regards policyholders (total capital and surplus) as of the thirty-first (31st) day of December next preceding;

(3) If the insurer is a life insurer, the net gain from operations for the twelve (12) month period ending the thirty-first (31st) day of December next preceding;

(4) If the insurer is not a life insurer, the net income less realized capital gains for the twelve (12)-month period ending the thirty-first (31st) day of December next preceding and the two (2) preceding twelve (12) month periods; and

(5) If the insurer is not a life insurer, the dividend paid to stockholders excluding distributions of the insurer's own securities in the preceding (2) two calendar years.

(e) A balance sheet and statement of income for the period intervening from the last annual statement filed with the Commissioner and the end of the month preceding the month in which the request for dividend approval in submitted; and

(f) A brief statement as to the effect of the proposed dividend upon the insurer's surplus and the reasonableness of surplus in relation to insurer's outstanding liabilities and the adequacy of surplus relative to the insurer's financial needs.

3765.2 Subject to Subsection 7(b) of the Holding Company Act, each registered insurer shall report to the Commissioner all dividends and other distributions to shareholders within fifteen (15) business days following the declaration thereof, including the same information required by subparagraphs 3765.1(d)(1)-(5).

3765.3 Nothing in this section shall relieve an insurer from its obligation to obtain prior written approval from the Commissioner before making any material or substantive change to its business plan pursuant to Subsection 10(f) of the Captive Insurance Company Act of 2004.

History

• SOURCE: Final Rulemaking published at 59 DCR 13088 (November 16, 2012).

26-A DCMR § 3766 ADEQUACY OF SURPLUS

3766.1 The factors set forth in Subsection 7(d) of the Holding Company Act are not intended to be an exhaustive list. In determining the adequacy and reasonableness of an insurer's surplus no single factor is necessarily controlling. The Commissioner, instead, will consider the net effect of all of these factors plus other factors bearing on the financial condition of the insurer. In comparing the surplus maintained by other insurers, the Commissioner will consider the extent to which each of these factors varies from company to company and in determining the quality and liquidity of investments in subsidiaries, the Commissioner will consider the individual subsidiary and may discount or disallow its valuation to the extent that the individual investments so warrant.

History

• SOURCE: Final Rulemaking published at 59 DCR 13088 (November 16, 2012).

26-A DCMR § 3768 VALUATION OF BONDS

3768.1 All bonds or other evidences of debt having a fixed term and rate of interest held by an insurer may, if amply secured and not in default as to principal or interest, be valued based on Generally Accepted Accounting Principles (GAAP), or at the discretion of the Commissioner, modified GAAP, or Statutory Accounting Principles, as follows:

(a) If purchased at par, at the value; or

(b) If purchased above or below par, on the basis of the purchase price adjusted so as to bring the value to par at maturity and so as to yield in the meantime the effective rate of interest at which the purchase was made.

3768.2 The purchase price shall in no case be taken at a higher figure than the actual market value at the time of purchase, plus actual brokerage, transfer, postage, or express charges paid in the acquisition of such securities.

3768.3 The Commissioner shall have full discretion in determining the method of calculating values according to the rules set forth in this section, but no such method or valuation shall be inconsistent with any applicable valuation or method used by insurers in general, or any such method then currently formulated, or approved or permitted by the National Association of Insurance Commissioners or its successor organization.

History

• SOURCE: Final Rulemaking published at 59 DCR 13088 (November 16, 2012).

26-A DCMR § 3769 VALUATION OF OTHER SECURITIES

3769.1 Securities, other than those referred to in Section 3768, held by an insurer shall be valued, in the discretion of the Commissioner, at their market value, or at their appraised value, or at prices determined by it as representing their fair market value.

3769.2 Preferred or guaranteed stocks or shares while paying full dividends may be carried at a fixed value in lieu of market value, at the discretion of the Commissioner and in accordance with such method of valuation as it may approve.

3769.3 Stock of a subsidiary corporation of an insurer shall not be valued at an amount in excess of the net value thereof as based upon those assets only of the subsidiary which would be eligible under for investment of the funds of the insurer directly.

3769.4 No valuations under this section shall be inconsistent with any applicable valuation or method then currently formulated or approved by the National Association of Insurance Commissioners or its successor organization.

History

• SOURCE: Final Rulemaking published at 59 DCR 13088 (November 16, 2012).

26-A DCMR § 3770 OTHER INVESTED ASSETS

3770.1 A captive’s other invested assets shall be valued in accordance with procedures promulgated by the National Association of Insurance Commissioners’ Accounting Practices and Procedures Manual, or as prescribed by the Commissioner. A prescribed valuation methodology approved by the Commissioner shall be made available to the public.

History

• SOURCE: Final Rulemaking published at 59 DCR 13088 (November 16, 2012).

26-A DCMR § 3771 GAAP TO SAP RECONCILIATION

3771.1 All captives using Generally Accepted Accounting Principles (GAAP) or modified GAAP shall include a reconciliation from GAAP or modified GAAP to Statutory Accounting Principles (SAP) in the notes to its financial statements.

History

• SOURCE: Final Rulemaking published at 59 DCR 13088 (November 16, 2012).

26-A DCMR § 3772 ANNUAL STATEMENT FILING REQUIREMENTS

3772.1 Insurers required to file annual and quarterly statements pursuant to Section 3(a)(2) of the Risk Retention Act of 1993, effective October 23, 1993 (D.C. Law 10-46; D.C. Official Code § 31-4101(a)(2)), shall use the annual and quarterly statement instructions of the National Association of Insurance Commissioners.

3772.2 All financial statements shall be filed electronically with the National Association of Insurance Commissioners.

History

• SOURCE: Final Rulemaking published at 59 DCR 13088 (November 16, 2012).

26-A DCMR § 3773 CREDIT FOR REINSURANCE

3773.1 If any provision of this section, or its application to any person or circumstance, is held invalid, such determination shall not affect other provisions or applications of this regulation which can be given effect without the invalid provision or application, and to that end the provisions of this regulation are separable.

3773.2 A risk retention group shall not receive statement credit if all of its policies are ceded through one hundred percent (100%) reinsurance arrangements, or another lesser percentage as required, in the discretion of the Commissioner.

3773.3 Credit for reinsurance will be permitted if the reinsurer complies with D.C. Official Code § 31-501 et seq. A reinsurer that satisfies the requirements in D.C. Official Code § 31-501 et seq. shall also comply with the reinsurance regulations in Chapter 28 of Title 26 A of the District of Columba Municipal Regulations.

3773.4 Credit for reinsurance may be permitted if the reinsurer maintains an A- or higher A.M. Best rating, or other comparable rating from a nationally recognized rating organization, and the reinsurer maintains a minimum policyholder surplus in an amount acceptable to the Commissioner based upon a review of the reinsurer’s most recent audited financial statements; and the reinsurer is licensed and domiciled in a jurisdiction acceptable to the Commissioner.

3773.5 Credit for reinsurance may be permitted if the reinsurer satisfies all of the following requirements and any other requirements deemed necessary by the Commissioner:

The captive manager or risk retention group licensed as a captive insurer shall file annually, on or before June 30, the reinsurer’s audited financial statements, which shall be analyzed by the Commissioner to assess the appropriateness of the reserve credit or the initial and continued financial condition of the reinsurer;

The reinsurer shall demonstrate to the satisfaction of the Commissioner that it maintains a ratio of net written premium, wherever written, to surplus and capital of not more than three (3) to one (1);

The affiliated reinsurer shall not write third-party business without obtaining prior written approval from the Commissioner;

The reinsurer shall not use cell arrangements without obtaining prior written approval from the Commissioner;

The reinsurer shall be licensed and domiciled in a jurisdiction acceptable to the Commissioner; and

The reinsurer shall submit to the examination authority of the Commissioner.

3773.6 The Commissioner shall either require a reinsurer not domiciled in the US to include language in the reinsurance agreement that states that in the event of the reinsurer’s failure to perform its obligations under the terms of its reinsurance agreement, it shall submit to the jurisdiction of any court of competent jurisdiction in the US or shall require compliance with Subsection 3773.7.

3773.7 For credit for reinsurance and solvency regulatory purposes, the Commissioner may require an approved funds-held agreement; letter of credit; trust or other acceptable collateral based on unearned premium, loss, and LAE reserves; or IBNR.

3773.8 Upon application, the Commissioner may waive either of the reinsurance requirements in Subsection 3773.5(b) or 3773.5(f) in circumstances where the risk retention group licensed as a captive insurer or reinsurer can demonstrate to the satisfaction of the Commissioner that the reinsurer is sufficiently capitalized based upon an annual review of the reinsurer’s most recent audited financial statements, the reinsurer is licensed and domiciled in a jurisdiction satisfactory to the Commissioner, and the proposed reinsurance agreement adequately protects the risk retention group licensed as a captive insurer and its policyholders. Any such waiver should be included in the plan of operation, or any subsequent revision or amendment of the plan, pursuant to Section 3902(d)(1) of the Federal Liability Risk Retention Act of 1986, and the plan must be submitted by the risk retention group licensed as a captive to the Commissioner of its state of domicile and each state in which the risk retention group licensed as a captive intends to do business or is currently registered. Any such waiver of a Section 3773.5 requirement constitutes a change in the risk retention group’s plan of operation in each of those states.

3773.9 Upon application, the Commissioner may waive the requirement in Section 3773.6 that a reinsurance arrangement must satisfy either Section 3773.6 or 3773.7 in circumstances where the risk retention group licensed as a captive insurer or reinsurer can demonstrate to the satisfaction of the Commissioner that the reinsurer is sufficiently capitalized based upon an annual review of the reinsurer’s most recent audited financial statements, the reinsurer is licensed and domiciled in a jurisdiction satisfactory to the Commissioner, and the proposed reinsurance agreement adequately protects the risk retention group licensed as a captive insurer and its policyholders. Any such waiver should be disclosed in Note 1 of the risk retention group’s annual statutory financial statement.

3773.10 Each approved captive manager or risk retention group licensed as a captive insurer shall assess the reinsurance programs of the risk retention groups licensed as captives under their management, and within sixty (60) days of the effective date of this rulemaking, submit a written report to the Commissioner indicating whether such risk retention groups licensed as captives are in compliance with these guidelines. All risk retention groups licensed as captive insurers that fail to submit the report in a timely manner shall be examined, at the risk retention group’s expense, to determine compliance with this rulemaking.

3773.11 This section shall be effective after one hundred twenty (120) days from the effective date of these rules. Risk retention groups licensed as captive insurers who require additional time to comply with these guidelines shall be permitted to take credit for reinsurance for risks ceded to reinsurers not in compliance with these guidelines for a period not to exceed twelve (12) months from the effective date of these guidelines upon satisfactory demonstration to the Commissioner that such delay of implementation will not cause a hazardous financial condition or potential harm to its member policyholders.

3773.12 The requirements of this section shall not apply to reinsurance agreements that were effective on or before January 1, 2011, and received prior approval pursuant to D.C. Official Code § 31-3931.08.

History

• SOURCE: Final Rulemaking published at 59 DCR 13088 (November 16, 2012); as amended by Final Rulemaking published at 60 DCR 13175 (September 20, 2013).

26-A DCMR § 3774 RISK LIMITATION

3774.1 A risk retention group organized as a stock insurer shall not expose itself to any loss on any one risk or hazard, whether located in the District or outside the District, to an amount exceeding ten percent (10%) of the sum of its capital stock and surplus. A risk retention group organized as a mutual or reciprocal insurer shall not expose itself to any loss on any one risk or hazard, whether located in the District or outside the District, to an amount exceeding ten percent (10%) of its surplus.

3774.2 No portion of any such risk or hazard which shall have been reinsured in a reinsurer authorized to reinsure a risk retention group shall be included in determining limitation of risk.

3774.3 The Commissioner may waive the ten percent (10%) limitation in Section 3774.1 upon application by the risk retention group for good cause shown. Under no circumstances, however, shall the Commissioner allow a risk retention group’s risk limitation to exceed twenty percent (20%) of the sum of the company’s capital and surplus if the risk retention group is organized as a stock insurer or twenty percent (20%) of the company’s surplus if the risk retention group is organized as a reciprocal or mutual insurer.

History

• SOURCE: Final Rulemaking published at 59 DCR 13088 (November 16, 2012).

26-A DCMR § 3775 GOVERNANCE STANDARDS FOR RISK RETENTION GROUPS

These Governance Standards for Risk Retention Groups are effective January 1, 2018 for risk retention groups licensed prior to January 1, 2017 and are effective at the time of licensure for risk retention groups licensed on or after January 1, 2017.

3775.1 The board of directors shall adopt and make available governance standards, which shall include:

A process by which the directors are elected by the owner/insureds;

Director qualification standards;

Director responsibilities;

Director access to management and, as necessary and appropriate, independent advisors;

Director compensation;

Director orientation and continuing education;

The policies and procedures that are followed for management succession;

The policies and procedures that are followed for annual performance evaluation of the board; and

The policies and practices that must be followed by any audit committee required by this section, including compliance with Subsections 3775.7 and 3775.8 of this section or, if no audit committee is required, the policies and practices to be followed by the board of directors to satisfy the requirements of Subsection 3775.9 of this section.

3775.2 The board of directors shall adopt and make available a code of business conduct and ethics for directors, officers and employees, and promptly disclose to the board of directors any waivers of the code granted to a director or officer, which should include the following topics:

Conflicts of interest;

Matters covered under the corporate opportunities doctrine in the District of Columbia;

Confidentiality;

Fair dealing;

Protection and proper use of risk retention group assets;

Compliance with applicable laws, rules and regulations; and

The mandatory reporting of any illegal or unethical behavior that affects the operation of the risk retention group.

The risk retention group shall require in one or more of its organizational documents that the board of directors shall have a majority of independent directors. The board shall determine at least annually whether a director is independent and the risk retention group shall maintain a record of such determinations and report such determinations to the Commissioner promptly upon request. No director qualifies as “independent” unless the board of directors affirmatively determines that the director has no “material relationship” with the risk retention group. If the risk retention group is a reciprocal, then the attorney-in-fact shall adhere to the same standards regarding independence of operation and governance as imposed on the risk retention group’s board of directors; and, to the extent permissible under District law, service providers of a reciprocal risk retention group should contract with the risk retention group and not the attorney-in-fact.

The board of directors shall adopt a written policy in the plan of operation as approved by the board that requires the board to:

Assure that all owners/insureds/subscribers of the risk retention group receive evidence of ownership interest;

Develop a set of governance standards applicable to the risk retention group;

Oversee the evaluation of the risk retention group’s management including but not limited to the performance of the captive manager, managing general underwriter or other party or parties responsible for underwriting, determination of rates, collection of premium, adjusting or settling claims or the preparation of financial statements;

Review and approve the amount to be paid for all material service providers, and ensure that material service provider contracts comply with this rule; and

Review and approve, at least annually:

Risk retention group’s goals and objectives relevant to the compensation of officers and service providers;

The officers’ and service providers’ performance in light of those goals the and objectives; and

The continued engagement of the officers and material service providers.

The term of any material service provider contract with the risk retention group shall not exceed five (5) years. Any such contract, or its renewal, shall require the approval of the majority of the independent directors. The board of directors shall have the right to terminate any service provider, audit or actuarial contracts at any time for cause after providing notice as defined in the contract.

A material service provider contract, which is deemed by this rule to be a material transaction, shall not be entered into until after notice has been provided to the Commissioner in writing by the risk retention group of its intention to enter into such transaction at least thirty (30) days prior to the effective date and the contract has not been disapproved within thirty (30) days after such notice.

The risk retention group shall have an audit committee composed of at least three independent board members. If invited by the members of the audit committee, a non-independent board member may participate in the activities of the audit committee but may not serve as a member of the audit committee.

Alternatively, in lieu of the audit committee provisions in this section, the risk retention group shall have an audit committee similar to that required in Section 4D of the NAIC Annual Financial Reporting Model Regulation (#205).

(a) An audit committee established under this rule shall have a written charter that defines the committee’s purpose, which, at a minimum, must include to:

Assist board oversight of the integrity of the financial statements, the compliance with legal and regulatory requirements, and the qualifications, independence and performance of the independent auditor and actuary;

Discuss the annual audited financial statements and quarterly financial statements with management;

Discuss the annual audited financial statements with its independent auditor and, if advisable, discuss its quarterly financial statements with its independent auditor;

Discuss policies with respect to risk assessment and risk management;

Meet separately and periodically, either directly or through a designated representative of the committee, with management and independent auditors;

Review with the independent auditor any audit problems or difficulties and management’s response;

Set clear hiring policies of the risk retention group as to the hiring of employees or former employees of the independent auditor;

Require the external auditor to rotate the lead (or coordinating) audit partner having primary responsibility for the risk retention group’s audit as well as the audit partner responsible for reviewing that audit so that neither individual performs audit services for more than five (5) consecutive fiscal years or alternatively, require the external auditor to adhere to the partner rotation requirements similar to Section 7D of the NAIC Annual Financial Reporting Model Regulation (#205); and

Report regularly to the board of directors.

(b) Alternatively, in lieu of the audit committee requirements in this section, the risk retention group shall adhere to the audit committee requirements similar to those required in Section 14 of the NAIC Annual Financial Reporting Model Regulation (#205).

3775.9 The Commissioner may waive the requirement to establish an audit committee composed of independent board members if the risk retention group is able to demonstrate that it is impracticable to do so and the board of directors is otherwise able to accomplish the purposes of the audit committee.

3775.10 The captive manager, president or chief executive officer of the risk retention group shall promptly notify the Commissioner in writing if any becomes aware of any material non-compliance with a governance standard mandated in this section.

3775.99 As used in this section:

Board of directors means the governing body of the risk retention group elected by the shareholders or members to establish policy, elect or appoint officers and committees, and make other governing decisions.

Director means a natural person designated in the articles of the risk retention group, or designated, elected or appointed by any other manner, name or title to act as a director.

Independent director means a director who does not have a material relationship with the risk retention group. Any person that is a direct or indirect owner of or subscriber in a risk retention group (or is an officer, director and/or employee of such an owner and insured, unless such other position of such officer, director and/or employee constitutes a material relationship), that is a risk retention group described in 15 USC § 3901(a)(4)(E)(ii), is considered to be “independent”.

Material relationship means a relationship between a director and the risk retention group if the director, a member of his or her immediate family, or any business with which such director is affiliated:

In any twelve (12)-month period, receives compensation or payment of any other item of value from the risk retention group or a consultant or service provider to the risk retention group in an amount greater than or equal to five percent (5%) of the risk retention group’s gross written premium for such 12-month period or two percent (2%) of its surplus, whichever is greater, as measured at the end of any fiscal quarter falling in such a 12- month period. Such person or immediate family member of such person is not independent until one (1) year after his/her compensation from the risk retention group falls below the threshold established in this section, as applicable;

Is affiliated with or employed in a professional capacity by a present or former internal or external auditor of the risk retention group. Such material relationship shall continue for one year after the end of the affiliation, employment or auditing relationship ends; or

Is employed as an executive officer of another company where any of the risk retention group’s present executives serve on that other company’s board of directors. Such material relationship shall continue for one year after such employment or service ends.

Make available means making such information available through electronic (e.g., posting such information on the risk retention group's website) or other means, and providing such information to members/insureds upon request.

Material service provider contract means a service provider contract, for which the amount to be paid for such contract is greater than or equal to five percent (5%) of the risk retention group’s annual gross written premium or two percent (2%) of its surplus, whichever is greater. A service provider may include captive managers, auditors, accountants, actuaries, investment advisors, lawyers, managing general underwriters or other party responsible for underwriting, determination of rates, collection of premium, adjusting and settling claims and/or the preparation of financial statements. Lawyers acting as defense counsel retained by the risk retention group to defend claims shall be excluded from the definition of service provider unless the amount of the fees paid are material, as defined in this rule.

Organizational documents mean documents setting forth the establishment, structure, and standards for governing and operating a risk retention group, including governance standards, a code of business conduct and ethics, and plan of operations for a risk retention group.

History

• SOURCE: Final Rulemaking published at 64 DCR 9885 (October 6, 2017). District of Columbia Municipal Regulations Insurance, Securities, and Banking 26-A DCMR § 3775

26-A DCMR § 3798 APPENDICES

3798.1 FORM A

STATEMENT REGARDING THE ACQUISITION OF CONTROL OF OR MERGER WITH A DOMESTIC INSURER

---

Name of Domestic Insurer

BY

---

Name of Acquiring Person (Applicant)

Filed with the Insurance Department of

___ (jurisdiction of Domicile of insurer being acquired)

Date: ___, 19 ___

Name, Title, address and telephone number of Individual to Whom Notices and Correspondence Concerning this Statement Should be Addressed: ___

ITEM 1. INSURER AND METHOD OF ACQUISITION

State the name and address of the domestic insurer to which this application relates and a brief description of how control is to be acquired.

ITEM 2. IDENTITY AND BACKGROUND OF THE APPLICANT

(a) State the name and address of the applicant seeking to acquire control over the insurer.

(b) If the applicant is not an individual, state the nature of its business operations for the past five years or for such lesser period as such person and any predecessors thereof shall have been in existence. Briefly describe the business intended to be done by the applicant and the applicant's subsidiaries.

(c) Furnish a chart or listing clearly presenting the identities of the inter-relationships among the applicant and all affiliates of the applicant. No affiliate need be identified if its total assets are equal to less than 1/2 of 1% of the total assets of the ultimate controlling person affiliated with the applicant. Indicate in such chart or listing the percentage of voting securities of each such person is maintained other than by the ownership or control voting securities, indicate the basis of such control. As to each person specified in such chart or listing indicate the type of organization (e.g. corporation, trust, partnership) and the state or other jurisdiction of domicile. If court proceedings involving a reorganization or liquidation are pending with respect to any such person, indicate which person, set forth the title of the court, nature of proceedings and the date when commenced.

ITEM 3. IDENTITY AND BACKGROUND OF INDIVIDUALS ASSOCIATED WITH THE APPLICANT

State the following with respect to (1) the applicant if (s)he is an individual or (2) all persons who are directors, executive officers or owners of 10% or more of the voting securities of the applicant if the applicant is not an individual.

(a) Name and business address;

(b) Present principal business activity, occupation or employment including position and office held and the name, principal business and address of any corporation or other organization in which such employment is carried on;

(c) Material occupations, positions, offices or employment during the last five years, giving the starting and ending dates of each and the name, principal business and address of any business corporation or other organization in which each such occupation, position, office or employment was carried on; if any such occupation, position, office or employment required by licensing or registration with any federal, state or municipal governmental agency, indicate such fact, the current status of such licensing or registration, and an explanation of any surrender, revocation, suspension or disciplinary proceedings in connection therewith.

(d) Whether or not such person has ever been convicted in a criminal proceeding (excluding minor traffic violations) during the last ten years and, if so, give the date, nature of conviction, name and location of court, and penalty imposed or other disposition of the case.

ITEM 4. NATURE, SOURCE AND AMOUNT OF CONSIDERATION

(a) Describe the nature, source and amount of funds or other considerations used or to be used in effecting the merger or other acquisition of control. If any part of the same is represented or is to be represented by funds or other consideration borrowed or otherwise obtained for the purpose of acquiring, holding or trading securities, furnish a description of the transaction, the names of the parties thereto, the relationship, if any, between the borrower and the lender, the amounts borrowed or to be borrowed, and copies of all agreements, promissory notes and security arrangements relating thereto.

(b) Explain the criteria used in determining the nature and amount of such consideration.

(c) If the source of the consideration is a loan made in the lender's ordinary course of business and if the applicant wishes the identity of the lender to remain confidential, he must specifically request that the identity be kept confidential.

ITEM 5. FUTURE PLANS OF INSURER

Describe any plans or proposals which the applicant may have to declare an extraordinary dividend, to liquidate such insurer, to sell its assets to or merged it with any person or persons or to make any other material change in its business operations, corporate structure or management.

ITEM 6. VOTING SECURITIES TO BE ACQUIRED

State the number of shares of the insurer's voting securities which the applicant, its affiliates and any person listed in Item 3 plan to acquire, and the terms of the offer, request, invitation, agreement or acquisition, and a statement as to the method by which the fairness of the proposal was arrived at.

ITEM 7. OWNERSHIP OF VOTING SECURITIES

State the amount of each class of any voting security of the insurer which is beneficially owned or concerning which there is a right to acquire beneficial ownership by the applicant, its affiliates or any person listed in Item 3.

ITEM 8. CONTRACTS, ARRANGEMENTS, OR UNDERSTANDINGS WITH RESPECT TO VOTING SECURITIES OF THE INSURER

Give a full description of any contracts, arrangement or understandings with respect to any voting security of the insurer in which the applicant, its affiliates or any person listed in Item 3 is involved, including but not limited to transfer of any of the securities, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss or guarantees of profits division of losses or profits, or the giving or withholding of Proxies. Such description shall identify the persons with who such contracts, arrangements or understanding have been entered into.

ITEM 9. RECENT PURCHASE OF VOTING SECURITIES

Describe any purchase of any voting securities of the insurer by the applicant, its affiliates or any person listed in Item 3 during the 12 calendar months preceding the filing of this Statement. Include in such description the dates of purchase, the names of the purchasers, and the consideration paid or agreed to be paid therefor. State whether any such shares so purchased are hypothecated.

ITEM 10. RECENT RECOMMENDATIONS TO PURCHASE

Describe any recommendations to purchase any voting security of the insurer made by the applicant, its affiliates or any person listed in Item 3, or by anyone based upon interviews or at the suggestion of the applicant, its affiliates or any person listed in Item 3 during the 12 calendar months preceding the filing of this statement.

ITEM 11. AGREEMENTS WITH BROKER-DEALERS

Describe the terms of any agreement, contract or understanding made with any broker-dealer as to solicitation of voting securities of the insurer for tender and the amount of any fees, commissions or other compensation to be paid to broker-dealers with regard thereto.

ITEM 12. FINANCIAL STATEMENTS AND EXHIBITS

(a) Financial statements and exhibits shall be attached to this statement as an appendix, but list under this item the financial statements and exhibits so attached.

(b) The financial statements shall include the annual financial statements of the persons identified in Item 2(c) for the preceding five fiscal years (or for such lesser period as such applicant and its affiliates and any predecessors thereof shall have been in existence), and similar information covering the period from the end of such person's last fiscal year, if such information is available. Such statements may be prepared on either an individual basis, or, unless the Commissioner otherwise requires, on a consolidated basis if such consolidated statements are prepared in the usual course of business.

The annual financial statements of the applicant shall be accompanied by the certificate of an independent public accountant to the effect that such statements present fairly the financial position of the applicant and the results of its operations for the year the ended, in conformity with generally accepted accounting principles or with requirements of insurance or other accounting principles prescribed or permitted under law. If the applicant is an insurer which is actively engaged in the business of insurance, the financial statements need not be certified, provided they are based on the Annual Statement of such person filed with the insurance department of the person's domiciliary jurisdiction and are in accordance with the requirements of insurance or other accounting principles prescribed or permitted under the law and regulations of such jurisdiction.

(c) File as exhibits copies of all tender offers for, requests or invitations for, tenders of, exchange offers for, the agreements to acquire or change any voting securities of the insurer and (if distributed) of additional soliciting material relating thereto, any proposed employment, consultation, advisory or management contracts concerning the insurer, annual reports to the stockholders of the insurer and the applicant for the last two fiscal years, and any additional documents or papers required by Form A or District Regulations.

ITEM 13. SIGNATURE AND CERTIFICATION

Signature and certification required as follows:

SIGNATURE

Pursuant to the requirements of Section 4 of the Act ___ has caused this applicant to be duly signed on behalf in the City of ___ ___ on the ___ day of ___. 20 ___.

(SEAL) ___

Name of Applicant

BY ___

(Name) (Title)

Attest:

---

(Signature of Officer)

---

(Title)

CERTIFICATION

The undersigned deposes and says that (s)he duly executed the attached application dated ___, 20 ___, for and on behalf of ___ (Name of Applicant); that (s)he is the ___ (Title of Officer) of such company and that (s)he is authorized to executed and file such instrument. Deponent further says that (s)he is familiar with such instrument and the contents thereof, and that the facts therein set forth are true to the best of his/her knowledge, information and belief.

(Signature) ___

(Type or print name Beneath) ___

3798.2 FORM B

INSURANCE HOLDING COMPANY SYSTEM ANNUAL REGISTRATION STATEMENT

Filed with the Insurance Department of the ___

By

---

Name of Registrant

On behalf of Following Insurance Companies

Name Address

---

Date: ___, 20 ___

Name, Title, Address and telephone number of Individual to Whom Notices and Correspondence Concerning This Statement Should Be Addressed: ___

ITEM 1. IDENTITY AND CONTROL OR REGISTRANT

Furnish the exact name of each insurer registering or being registered (hereinafter called "the Registrant"), the home office address and principal executive offices of each: the date on which each Registrant became part of the insurance holding company system and the method(s) by which control of each Registrant was acquired and is maintained.

ITEM 2. ORGANIZATIONAL CHART

Furnish a chart or listing clearly presenting the identities of any interrelationships among all affiliated persons within the insurance holding company system. No affiliate need be shown if its total assets are equal to less than 1/2 of 1% of the total assets of the ultimate controlling person within insurance holding company system unless it has assets of valued at or exceeding (insert amount). The chart or listing should show the percentage of each class of voting securities of each affiliate which is owned, directly or indirectly, by another affiliate. If control of any person within the system is maintained other than by the ownership or control of voting securities, indicate the basis of such control. As to each person specified in such chart or listing indicate the type of organization (e.g., - corporation, trust, partnership) and the state or other jurisdiction of domicile.

ITEM 3. THE ULTIMATE CONTROLLING PERSON

As to the ultimate controlling person in the insurance holding company system furnish the following information:

(a) Name.

(b) Home office address.

(c) Principal executive office address.

(d) The organizational structure of the person, i.e., corporation, partnership, individual, trust, etc.

(e) The principal business of the person.

(f) The name and address of any person who holds or owns 10% or more of any class of voting security, the class of such security, the number of shares held of record or known to be beneficially owned, and the percentage of class so held or owned.

(g) If court proceedings involving a reorganization or liquidation are pending, indicate the title and location of the court, the nature of proceedings and the date when commenced.

ITEM 4. BIOGRAPHICAL INFORMATION

Furnish the following information for the directors and executive officers of the ultimate controlling person: the individual's name, address, his or her principal occupation and all offices and positions held during the past five years, and any conviction of crimes other than minor traffic violations during the past ten years.

ITEM 5 TRANSACTIONS AND AGREEMENTS

Briefly describe the following agreements in force, and transactions currently outstanding or which have occurred during the last calendar year between the Registrant and its affiliates:

(1) loans, other investments, or purchases, sales or exchanges of securities of the affiliates by the Registrant or of the Registrant by its affiliates:

(2) purchases, sales or exchanges of assets;

(3) transactions not in the ordinary course of business;

(4) guarantees or undertakings for the benefit of an affiliate which result in an actual contingent exposure of the Registrant's assets to liability, other than insurance contracts entered into in the ordinary course of the Registrant's business;

(5) all management agreements, service contracts and all cost-sharing arrangements;

(6) reinsurance agreements;

(7) dividends and other distributions to shareholders;

(8) consolidated tax allocation agreements; and

(9) any pledge of the Registrant's stock and/or of the stock of any subsidiary or controlling affiliate, for a loan made to any member of the insurance holding company system.

No information need be disclosed if such information is not material for purposes of Section 6 of the Holding Company Act.

Sales, purchases, exchanges, loan or extensions of credit, investments or guarantees involving one-half of 1% or less of the Registrant's admitted assets as of the 31st day of December next preceding shall not be deemed material. (Note: Commissioner may rule, regulation or order provide otherwise).

The description shall be in a manner as to permit the proper evaluation thereof by the Commissioner, and shall include at least the following: the nature purpose of the transaction, the nature and amounts of any payments or transfer of assets between the parties, the identity of all parties to such transaction, and relationship of the affiliated parties to the Registrant.

ITEM 6. LITIGATION OR ADMINISTRATIVE PROCEEDINGS

A brief description of any litigation or administrative proceedings of the following types, either then pending or concluded within the preceding fiscal year, to which the ultimate controlling person or any of its directors or executive officers was a party or of which the property of any such person is or was the subject; give the names of the parties and the court or agency in which such litigation or proceeding is or was pending:

(a) Criminal prosecutions or administrative proceedings by any government agency or authority which may be relevant to the trustworthiness of any party thereto; and

(b) Proceedings which may have a material effect upon the solvency or capital structure of the ultimate holding company including, but not necessarily limited to bankruptcy, receivership or other corporate reorganizations.

ITEM 7. STATEMENT REGARDING PLAN OR SERIES OF TRANSACTIONS

The insurer shall furnish a statement that transactions entered into since the filing of the prior year's annual registration statement are not part of a plan or series of like transactions, the purpose of which is to avoid statutory threshold amounts and the review that might otherwise occur.

ITEM 8. FINANCIAL STATEMENTS AND EXHIBITS

(a) Financial statements and exhibits should be attached to this statement as an appendix, but list under this item the financial statements and exhibits so attached.

(b) The financial statements shall include the annual financial statements of the ultimate controlling person in the insurance holding company system as of the end of the person's latest fiscal year.

If at the time of the initial registration, the annual financial statements for the latest fiscal year are not available, annual statements for the previous fiscal year may be filed and similar financial information shall be filed for any subsequent period to the extent such information is available. Such financial statements may be prepared on either an individual basis, or unless the Commissioner otherwise requires, on a consolidated basis, or unless the Commissioner otherwise requires, on a consolidated basis if such consolidated statements are prepared in the usual course of business.

Unless the Commissioner otherwise permits, the annual financial statements shall be accompanied by the certificate of an independent public accountant to the effect that such statements present fairly the financial position of the ultimate controlling person and the results of its or with requirements of insurance or other accounting principles prescribed or permitted under law. If the ultimate controlling person is an insurer which is actively engaged in the business of insurance, the annual financial statements need not be certified, provided they are based on the Annual Statement of such insurer filed with requirements of insurance or other accounting principles prescribed or permitted under the law and regulation of such jurisdiction.

(c) Exhibits shall include copies of the latest annual reports to shareholders of the ultimate controlling person and proxy material used by the ultimate controlling person; and any additional documents or papers required by Form B or District Regulations.

ITEM 9. FORM C REQUIRED

A FORM C, Summary of Registration Statement, must be prepared and filed with this Form B.

ITEM 10. SIGNATURE AND CERTIFICATION

Signature and certification required as follows:

SIGNATURE

Pursuant to the requirements of Section 6 of the Holding Company Act, the Registrant has caused this annual registrant statement to be duly signed on its behalf in the City of ___ ___ on the ___ day of ___, 20 ___.

(SEAL) ___

Name of Registrant

BY ___

(Name) (Title)

Attest: ___

(Signature of Officer)

---

(Title)

CERTIFICATION

The undersigned deposes and says that (s)he has duly executed the attached annual registration statement dated ___, 20 ___, for and on behalf of ___ (Name of Company); that (s)he is the ___ (Title of Officer) of such company and that (s)he is authorized to execute and file such instrument. Deponent further says that (s)he is familiar with such instrument and the contents thereof, and that the facts therein set forth are true to the best of his/her knowledge, information and belief.

(Signature) ___

(Type or print name Beneath) ___

3798.3 FORM C

SUMMARY OF REGISTRATION STATEMENT

Filed with the Insurance Department of the District of ___

By

---

Name of Registrant

On Behalf of Following Insurance Companies

Name Address

---

Date: ___, 20 ___

Name, Title, Address and telephone number of Individual to Whom Notices and Correspondence Concerning This Statement Should Be Addressed: ___

Furnish a brief description of all items in the current annual registration statement which represent changes from the prior year's annual registration statement. The description shall be in a manner as to permit the proper evaluation thereof by the Commissioner, and shall include specific references to Item numbers in the annual registration statement and to the terms contained therein.

Changes occurring under Item 2 of Form B insofar as changes in the percentage of each class of voting securities held by each affiliate is concerned, need only be included where such changes are ones which result in ownership or holdings of 10 percent or more of voting securities, loss or transfer of control, or acquisition or loss of partnership interest.

Changes occurring under Item 4 of Form B need only be included where: an individual is, for the first time, made a director or executive officer of the ultimate controlling person; a director or executive officer terminates his or her responsibilities with the ultimate controlling person; or in the event an individual is named president of the ultimate controlling person.

If a transaction disclosed on the prior year's annual registration statement has been changed, the nature of such change shall be included. If a transaction disclosed on the prior year's annual registration statement has been effectuated, furnish the mode of completion and any flow of funds between affiliates resulting from the transaction.

The insurer shall furnish a statement that transactions entered into since the filing of the prior year's annual registration statement are not part of a plan or series of like transactions whose purpose it is to avoid statutory threshold amounts and the review that might otherwise occur.

SIGNATURE AND CERTIFICATION

Signature and certification required as follows:

SIGNATURE

Pursuant to the requirements of Section 6 of the Act, the Registrant has caused this summary of registration statement to be duly signed on its behalf in the City of ___ on the ___ day of ___, 20 ___.

(SEAL) ___

Name of Registrant

By ___

(Name) (Title)

Attest:

---

(Signature of Officer)

---

(Title)

CERTIFICATION

The undersigned deposes and says that (s)he has duly executed the attached summary of registration statement dated ___, 20 ___, for and on behalf of ___ (Name of Company); that (s)he is the ___ (Title of Officer) of such company and that (s)he is authorized to execute and file such instrument. Deponent further says that (s)he is familiar with such instrument and the contents thereof, and that the facts therein set forth are true to the best of his/her knowledge, information and belief.

(Signature) ___

(Type or print name beneath) ___

3798.4 FORM D

PRIOR NOTICE OF A TRANSACTION

Filed with the Insurance Department of ___

By

---

Name of Registrant

On Behalf of Following Insurance Companies

Name Address

---

Date: ___, 20 ___

Name, Title, Address and telephone number of Individual to Whom Notices and Correspondence Concerning This Statement Should Be Addressed: ___

ITEM 1. IDENTITY OF PARTIES TO TRANSACTION

Furnish the following information for each of the parties to the transaction:

(a) Name.

(b) Home office address.

(c) Principal executive office address.

(d) The organizational structure, i.e. corporation, partnership, individual, trust, etc.

(e) A description of the nature of the parties' business operations.

(f) Relationship, if any, of other parties to the transaction to the insurer filing the notice, including any ownership or debtor/creditor interest by any other parties to the transaction in the insurer seeking approval, or by the insurer filing the notice in the affiliated parties.

(g) Where the transaction is with a non-affiliate, the name(s) of the affiliate(s) which will receive, in whole or in substantial part, the proceeds of the transaction.

ITEM 2. DESCRIPTION OF THE TRANSACTION

Furnish the following information for each transaction for which notice is being given:

(a) A statement as to whether notice is being given under Section 7(a)(2)(A), (B), (C), (D), or (E) of the Holding Company Act.

(b) A statement of the nature of the transaction.

(c) The proposed effective date of the transaction.

ITEM 3. SALES, PURCHASES, EXCHANGES, LOANS, EXTENSIONS OF CREDIT, GUARANTEES OR INVESTMENTS

Furnish a brief description of the amount and source of funds, securities, property or other consideration for the sale, purchase, exchange, loan, extension of credit, guarantee, or investment, whether any provision exists for purchase by the insurer filing notice, by any party to the transaction, or by any affiliate of the insurer filing notice, by any party to the securities being received, if any, and a description of any other agreements relating to the transaction involves other than cash, furnish a description of the consideration, its cost and its fair market value, together with an explanation of the basis for evaluation.

If the transaction involves a loan, extension of credit or a guarantee, furnish a description of the maximum amount which the insurer will be obligated to make available under such loan, extension of credit or guarantee, the date on which the credit or guarantee will terminate, and any provisions for the accrual of or deferral of interest.

If the transaction involves an investment, guarantee or other arrangement, state the time period during which the investment, guarantee or other arrangement will remain in effect, together with any provisions for extensions or renewals such investments, guarantees or arrangements. Furnish a brief statement as to the effect of the transaction upon the insurer's surplus.

No notice need be given if the maximum amount which can at any time be outstanding or for which the insurer can be legally obligated under the loan, extension of credit or guarantee is less than, (a) in the case of non-life insurer's, the lesser of 3% of the insurer's admitted assets or 25% of surplus as regards policyholders or, (b) in case of life insurers, 3% of the insurer's admitted assets, each as of the 31st day of December next preceding.

ITEM 4. LOANS OR EXTENSIONS OF CREDIT TO A NON-AFFILIATE

If the transaction involves a loan or extension of credit any person who is not an affiliate, furnish a brief description of the agreement or understanding whereby the proceeds of the proposed transaction, in whole or in substantial part, are to be used to make loan or extensions of credit to, to purchase the assets of, or to make investment in, any affiliate of the insurer making such loans or extensions of credit, and specify in what manner the proceeds are to be used to loan to, extend credit to, purchase assets of or make investments in any affiliate. Describe the amount and source of funds, securities, property or other consideration for the loan or extension of credit and, if the transaction is one involving consideration other than cash, a description of its cost and its fair market value together with an explanation of the basis for evaluation. Furnish a brief statement as to the effect of the transaction upon the insurer's surplus.

No notice need be given if the loan or extension of credit is one which equals less than, in the case of non-life insurer's, the lesser of 3% of the insurer's admitted assets or 25% of surplus as regards policyholders or, with respect to life insurers, 3% of the insurer's admitted assets, each as of the 31st day of December next preceding.

ITEM 5. REINSURANCE

If the transaction is a reinsurance agreement or modification thereto, as described by Section 7(a)(2)(C) of the Holding Company Act, furnish a description of the known and/or estimated amount of liability to be ceded and/or assumed in each calendar year, the period of time during which the agreement will be in effect, and a statement whether an agreement or understanding exists between the insurer and non-affiliate to the effect that any portion of the assets constituting the consideration for the agreement will be transferred to one or more of the insurer's affiliates. Furnish a brief description of the consideration involved in the transaction, and a brief statement as to the effect of the transaction upon the insurer's surplus.

No notice need be given for reinsurance agreements or modifications thereto if the reinsurance premium or a change in the insurer's liabilities in connection with the reinsurance agreement or modification thereto is less than 5% of the insurer's surplus as regards policyholders, as of the 31st day of December next preceding.

ITEM 6. MANAGEMENT AGREEMENTS, SERVICE AGREEMENTS COST-SHARING ARRANGEMENTS.

For management and service agreements, furnish:

(a) a brief description of the managerial responsibilities, or services to be performed.

(b) a brief description of the agreement, including a statement of its duration, together with brief descriptions of the basis for compensation and the terms under which payment or compensation is to be made.

For cost-sharing arrangements, furnish:

(a) a brief description of the purpose of the agreement.

(b) a description of the period of time during which the agreement is to be in effect.

(c) a brief description of each party's expenses or costs covered by the agreement.

(d) a brief description of the accounting basis to be used in calculating each party's costs under the agreement.

ITEM 7. SIGNATURE AND CERTIFICATION

Signature and certification required as follows:

SIGNATURE

Pursuant to the requirements of Section 7 of the Holding Company Act, ___ has caused this notice to be duly signed on its behalf in the City of ___ on the ___ day of ___, 20 ___.

(SEAL) ___

Name of Applicant

By ___

(Name) (Title)

Attest:

---

(Signature of Office)

---

(Title)

CERTIFICATION

The undersigned deposes and says that (s)he has duly executed the attached notice dated ___, 20 ___, for and on behalf of ___ (Name of Applicant); that (s)he is the ___ (Title of Officer) of such company and that (s)he is authorized to execute and file such instrument. Deponent further says that (s)he is familiar with such instrument and the contents thereof, and that the facts therein set forth are true to the best of his/her knowledge, information and belief.

(Signature) ___

(Type or print name beneath) ___

History

• SOURCE: Final Rulemaking published at 59 DCR 13088 (November 16, 2012).

26-A DCMR § 3799 DEFINITIONS

3799.1 The following words and phrases shall have the meaning ascribed in this section. Unless the context otherwise requires, other terms found in these regulations and in Section 2 of the Holding Company Act are used as defined in the said Section 2. Other nomenclature or terminology is according to Title 31 of D.C. Official Code or industry usage if not therein defined.

Commissioner means the Commissioner of the District of Columbia Department of Insurance, Securities, and Banking.

Executive officer means chief executive officer, chief operating officer, chief financial officer, treasurer, secretary, controller, and any other individual performing functions corresponding to those performed by the foregoing officers under whatever title.

Ultimate controlling person means that person which is not controlled by any other person.

History

• SOURCE: Final Rulemaking published at 59 DCR 13088 (November 16, 2012).

26-A38 RULES OF PRACTICE AND PROCEDURE FOR HEARINGS

26-A DCMR § 3800 APPLICABILITY

3800.1 This chapter contains procedures for administrative hearings involving a "contested case" as defined by the District of Columbia Administrative Procedure Act, effective October 21, 1968 (82 Stat. 1203, Pub. L. 90-614) before the Commissioner of the Department of Insurance and Securities Regulation ("Commissioner"), in matters other than those brought pursuant to the Securities Act of 2000 (D.C. Law 13-203; D.C. Official Code § 31-5601.01 et seq.).

3800.2 In any proceeding governed by this chapter the Commissioner or any hearing officer designated by the Commissioner may, on his or her own motion or on application of any person, waive, modify, or extend any provision of the chapter for good cause shown, to promote the interests of justice, or to prevent undue hardship; provided however that no provision may be waived, modified, or extended if its terms are required by any applicable statute. Whenever the Commissioner or any hearing officer waives, modifies, or extends any provision under the authority of this rule, he or she shall duly advise the parties of that fact.

History

• SOURCE: Final Rulemaking published at 50 DCR 6433(August 8, 2003).

26-A DCMR § 3801 DELEGATION OF HEARING AUTHORITY

3801.1 The Commissioner may, in his or her discretion, delegate authority to conduct a hearing to a hearing officer. The Commissioner shall serve a notice of delegation on all parties and on the hearing officer.

3801.2 The designated hearing officer shall issue a proposed decision and order that includes proposed findings of fact and conclusions of law.

3801.3 The Commissioner may, at his or her discretion, rescind all or part of the authority delegated to the hearing officer. If only part of the delegation is rescinded, the Commissioner shall specify in the order of rescission the portions of the matter for which the delegation has been rescinded. The rescission order shall be effective on the date it is signed by the Commissioner, unless a different effective date is specified in the order.

3801.4 The final decision issued by the Commissioner or proposed decision issued by the designated hearing officer shall reflect the rescission of delegation, and a copy of the rescission order shall be included as part of the record.

History

• SOURCE: Final Rulemaking published at 50 DCR 6433(August 8, 2003).

26-A DCMR § 3802 TIME, PLACE OF FILING, AND COMPUTATION OF TIMING

3802.1 Papers required or permitted to be filed under this chapter shall be filed by delivery of an original and two copies to the Department of Insurance and Securities Regulation, 810 First Street, NE, Suite 701, Washington, D.C. 20002, or such other places as the Commissioner may designate. Unless specifically authorized by the Commissioner or a designated hearing officer, no filings may be made by telefax or electronic mail.

3802.2 Unless otherwise specifically provided by law or these rules, computation of any time period prescribed by these rules or by an order of the Commissioner begins with the first day following the act or event that initiates the time period. If the last day of the time period so computed is a Saturday, Sunday, District of Columbia holiday, or any other day on which the Department is closed, in which event the period runs until the end of the next business day.

3802.3 If a notice or other filing is served by mail and the party served is entitled or required to take some action within a prescribed time period after service:

(a) The date of mailing is date of service; and

(b) Three (3) days are added to the prescribed time period.

3802.4 Except in the case of jurisdictional time periods prescribed by statute, when an act is required or allowed to be done at or within a specific time, the Commissioner on his or her own motion, for good shown, may order the period enlarged.

3802.5 Except in the case of jurisdictional time periods prescribed by statute, the Commissioner, at his or her discretion, may order an enlargement of time made pursuant to a motion before or after the expiration of the period proscribed, for good cause shown.

History

• SOURCE: Final Rulemaking published at 50 DCR 6433(August 8, 2003).

26-A DCMR § 3803 SUBPOENAS

3803.1 The Commissioner may issue subpoenas for the attendance of witnesses, or the production of books, papers, records, or other documents at any hearing. [a1]

3803.2 Subpoenas issued pursuant to this section shall be under seal of the Commissioner, and shall describe the document or name the person ordered to be produced, or required to attend the hearing. [a2]

3803.3 A subpoena may be served in the same manner and by any person authorized by the Rules of Civil Procedure of the Superior Court of the District of Columbia. A person serving a subpoena shall note the manner, place, and time of service in an affidavit, the original of which shall be made part of the official record.

History

• SOURCE: Final Rulemaking published at 50 DCR 6433(August 8, 2003).

26-A DCMR § 3804 SHOW CAUSE AND SUMMARY SUSPENSION HEARINGS

3804.1 All of the provisions of these rules, except those in § 3806, shall apply to show cause and summary suspension hearings.

3804.2 The Commissioner shall serve the summary suspension order or notice to show cause upon each respondent named in the order. Service may be made by personal service or by registered or certified mail by serving the respondent directly, or by serving the respondent's agent for service of process in the District.

3804.3 If the Commissioner is unable to serve an insurer with a summary suspension order or notice to show cause by the means specified in § 3804.2, proper service may be made by serving the Commissioner as the insurer's attorney for service of process in accordance with D.C. Official Code §§ 31-202 (2001 Ed.).

3804.4 If the Commissioner is unable to serve an insurance agent or broker with a summary suspension order or notice to show cause by the means specified in § 3804.2, proper service may be made by sending the notice to show cause or summary suspension order by registered or certified mail to the agent's or broker's principal place of business as indicated in the Department's records. [a3]

3804.5 In addition to any contents required by statute, a summary suspension order or notice to show cause shall advise the respondent of the:

(a) Respondent's right to a hearing;

(b) Time period within which the respondent must request a hearing;

(c) Respondent's obligation to file an answer; and

(d) Effect of a failure to file an answer and to request a hearing.

3804.6 The applicant shall have the burden of proof in a show cause hearing when the Commissioner has proposed to deny an application for licensure. [a4]

3804.7 The Department shall have the burden of proof in a show cause hearing or summary suspension order when the Commissioner has proposed to take disciplinary action against a licensee.

3804.8 A respondent shall file with the Commissioner a written answer to a notice to show cause or summary suspension order within ten (10) business days of service of the order and within five (5) business days of service of any amended order. The parties and the staff of the Department may by agreement extend the time for filing the answer up to 30 calendar days. Any additional extension of time may only be granted by order of the Commissioner.

3804.9 The answer shall admit or deny each factual allegation in the notice to show cause or summary suspension order and shall set forth affirmative defenses, if any. A respondent without knowledge or information sufficient to form a belief as to the truth of an allegation shall so state, and such a statement shall be treated as a denial of the allegation in question.

3804.10 The answer shall indicate whether the respondent requests a hearing concerning the notice to show cause or summary suspension order.

3804.11 If a respondent fails to file a timely answer, the Commissioner may issue a proposed or final decision adverse to that respondent.

History

• SOURCE: Final Rulemaking published at 50 DCR 6433(August 8, 2003).

26-A DCMR § 3805 RESERVED

History

• SOURCE: Final Rulemaking published at 50 DCR 6433(August 8, 2003).

26-A DCMR § 3806 PUBLIC HEARINGS - PURSUANT TO THE HOLDING COMPANY SYSTEM ACT

3806.1 The provisions of this section shall only apply to hearings held pursuant to D.C. Official Code §§ 31-703(g)(1), (2) and 31-704(e) (2001 Ed.), unless otherwise indicated. Other provisions of these rules, shall apply to hearings held pursuant to the Holding Company System Act of 1993, effective October 21, 1993 (D.C. Law 10-44, D.C. Official Code § 31-701 et seq). [a5]

3806.2 The Commissioner shall publish an official Notice of Public Hearing in the District of Columbia Register, not less than thirty (30) days prior to the commencement of the public hearing.

3806.3 A Notice of Public Hearing shall contain the following information:

(a) A statement summarizing the subject matter of the proceedings, including the issues involved and applicable statutes and rules; and

(b) That the Commissioner has scheduled a public hearing on the matter, setting forth the date, place and time of the public hearing.

3806.4 The Commissioner, in his or her discretion, may order the petitioner making a filing pursuant to D.C. Official Code §§ 31-703 or 31-704 (2001 Ed.) to place the Notice of Public Hearing in a newspaper of general circulation, not less than thirty (30) days prior to the commencement of the public hearing, at the petitioner's expense.

3806.5 If more than one day of hearings is held and there are less than thirty (30) days between the first and second hearing dates, the Commissioner shall not be required to publish more than one Notice of Public Hearing. The Commissioner shall either publish the date of any subsequent hearing to be held within thirty (30) days of the first hearing in the Notice of Public Hearing or notify the parties of the subsequent hearing date on the record during the first public hearing.

3806.6 A person filing the statement pursuant to D.C. Official Code §§ 31-703 or 31-704 shall be a "party" as defined in D.C. Official Code § 502(10), and shall have all of the rights afforded to such persons by the District of Columbia Administrative Procedure Act, effective October 21, 1968 (82 Stat. 1203, Pub. L. 90-614).

3806.7 A person desiring to participate in a hearing as permitted by D.C. Official Code § 31-703(g)(2) (2001 Ed.) shall file a motion to intervene with the Commissioner. The motion to intervene shall include: (1) the name and address of the person or organization; (2) an explanation of how the person or organization is or may be affected by the pending matter, and any relief sought; (3) a statement summarizing the issues, laws, and any other matters that will be pursued during discovery or covered at the hearing; and (4) a statement explaining why the person's or organization's interests would not be adequately represented by the parties that are already participating, including the Department. A copy of the motion to intervene shall be served on all parties.

3806.8 A party opposing a person's motion to intervene pursuant to § 3806.3 shall file a written objection, setting forth the grounds for its objection, no later than three (3) business days after service of the letter requesting the right to participate. [a6]

3806.9 The Commissioner or the designated hearing officer may issue a case management order prior to the hearing. The order may include deadlines for completing discovery, the consolidation of parties and issues, limitations or conditions on the scope of discovery, and any other reasonable provisions reasonably calculated to promote an orderly and efficient hearing process.

3806.10 The Commissioner or the designated hearing officer may permit any person that does not want to intervene as a party to offer an oral or written statement at the hearing, which shall be made part of the official record. The Commissioner or the designated hearing officer may reasonably restrict the length of any oral statement made at the hearing. If the Commissioner or designated hearing officer determines that an oral statement is irrelevant, immaterial or unduly repetitious, he or she may further restrict the time allowed to a speaker.

History

• SOURCE: Final Rulemaking published at 50 DCR 6433(August 8, 2003).

26-A DCMR § 3807 RESERVED

History

• SOURCE: Final Rulemaking published at 50 DCR 6433(August 8, 2003).

26-A DCMR § 3808 CONDUCT OF HEARINGS

3808.1 The Commissioner shall preside at all hearings unless the Commissioner has delegated his or her authority to conduct the hearing to a hearing officer in accordance with these rules.

3808.2 All hearings shall be open to the public. The Commissioner or designated hearing officer, for good cause shown, may grant a request by a party to keep confidential any proprietary or personal information introduced as evidence in a hearing.

3808.3 The proceedings shall be handled in the following manner:

(a) The Commissioner or designated hearing officer shall call the hearing to order;

(b) The Commissioner or designated hearing officer shall explain briefly the purpose and nature of the hearing and the issues involved;

(c) The Commissioner or designated hearing officer may allow the parties to present preliminary matters;

(d) The parties may make opening statements;

(e) The Commissioner or designated hearing officer shall state the order of the presentation of evidence;

(f) Witnesses shall be sworn or put under affirmation to tell the truth, and their direct testimony may be admitted in person or in writing, but cross examination shall be in person;

(g) The parties may present closing summations and arguments; and

(h) Shall exclude any irrelevant, immaterial, and unduly repetitious evidence.

3808.4 During the hearing, the Commissioner or designated hearing officer:

(a) Shall administer the oath or affirmation to each witness;

(b) Shall rule on the admissibility of evidence;

(c) Shall maintain order and take such action as necessary to avoid delay in the conduct of the hearing; and

(d) May question any witness at any time as to any matter that the Commissioner considers relevant and material to the proceeding.

3808.5 On a genuine issue of material fact necessary to the determination of a contested case, each party may:

(a) Call witnesses;

(b) Offer direct evidence;

(c) Cross-examine witnesses; and

(d) Make opening and closing statements.

3808.6 The Commissioner or designated hearing officer may take official notice of a fact which may be judicially noticed by the District of Columbia courts and may take official notice of general, technical or scientific facts within his or her specialized knowledge or experience. The Commissioner or designated hearing officer shall notify all parties person of the material so noticed and shall permit a party, upon timely request, to contest the facts noticed. The Commissioner or designated hearing officer may use his or her technical experience, technical competence, and specialized knowledge in the evaluation of the evidence presented.

3808.7 The Commissioner may impose sanctions on a party that does not comply with his or her orders, including entering orders for decision on one or more issues, limiting the introduction of evidence or a party's participation in the proceeding, and addressing other matters he or she deems appropriate. When a hearing is conducted by a designated hearing officer, the designated hearing officer may propose to the Commissioner that sanctions be imposed at any time during the proceeding, provided however that any such proposal must be in writing and must be served upon the party against whom the sanctions are proposed.

History

• SOURCE: Final Rulemaking published at 50 DCR 6433(August 8, 2003).

26-A DCMR § 3809 APPEARANCE AT PUBLIC HEARING

3809.1 All persons present at a hearing shall conduct themselves in a manner consistent with the standards of decorum commonly observed in the District of Columbia courts. The Commissioner or designated hearing officer may issue orders appropriate to maintain order, including the exclusion of a disorderly person from the hearing. If the person excluded is a party or its representative, the Commissioner may decide against the party with prejudice.

3809.2 In a proceeding before the Commissioner or designated hearing officer, an individual may appear in his or her own behalf; a receiver or trustee may appear in such capacity; a general partner of a partnership may represent the partnership; an officer or director of a corporation may represent the corporation; an officer or director of an association may be represent the association; and a duly authorized official of any District, Federal, or State governmental agency may represent such agency.

3809.3 A party has the right to waive the right to be present at the hearing, and may be represented by counsel who shall be licensed by the highest court of the District or any state.

History

• SOURCE: Final Rulemaking published at 50 DCR 6433(August 8, 2003).

26-A DCMR § 3810 FAILURE TO APPEAR

3810.1 If a party fails to appear at the hearing, either personally or through counsel, the Commissioner or designated hearing officer may proceed to hold the hearing in that party's or absence.

3810.2 The Commissioner or designated hearing officer may also hold the absent party in default and may issue a proposed or final decision and order against the defaulted party.

3810.3 A party defaulted as a result of a failure to appear at a hearing may file a written motion, within five calendar days of the entry of the order of default, requesting reconsideration by the Commissioner or designated hearing officer. The motion shall state the grounds for the request, and include a proposed order.

History

• SOURCE: Final Rulemaking published at 50 DCR 6433(August 8, 2003).

26-A DCMR § 3811 PREHEARING CONFERENCES

3811.1 The Commissioner or designated hearing officer may require parties to appear at a specified date, time, and place for a pre-hearing conference for the purpose of addressing the following matters:

(a) Simplification of issues;

(b) Admissions or stipulations of fact;

(c) Requests for official notice;

(d) Discovery disputes, where discovery is expressly allowed by statute;

(e) Preliminary motions;

(f) Admissibility of evidence;

(g) Order of presentation;

(h) Limitation of the number of witnesses;

(i) Exchange of prepared testimony and exhibits between the parties;

(j) Scheduling; and

(k) Other matters that will promote the orderly and prompt conduct of the hearing.

3811.2 The Commissioner or designated hearing officer shall make any action taken at a pre-hearing conference part of the record.

History

• SOURCE: Final Rulemaking published at 50 DCR 6433(August 8, 2003).

26-A DCMR § 3812 RECORD OF PROCEEDINGS

3812.1 The Department shall cause all oral proceedings, including testimony, to be recorded by a stenographer or by tape recorder or other device. The recording of the proceedings, which need not be transcribed, shall be maintained in the custody of the Department. If the Commissioner or designated hearing officer orders that the proceeding be transcribed by an official court reporter, the respondent shall bear the costs of such recording of the proceeding. If the proceeding is recorded by audio tape, any subsequent preparation of a transcript of the proceeding from the audio tape, for any reason, including an appeal by the respondent, shall be paid for by the respondent, and two complete copies of the transcribed proceedings shall be provided to the Commissioner at the respondent's expense.

3812.2 The record of a hearing shall include:

(a) All pleadings, motions, orders, and related papers filed with the Commissioner or designated hearing officer;

(b) All documentary and tangible evidence;

(c) A statement of matters officially noticed;

(d) Recordings and any transcripts of oral proceedings;

(e) The findings of fact and conclusions of law proposed by each party;

(f) Any exceptions filed by the parties and the rulings of the Commissioner or designated hearing officer on those exceptions;

(h) If a case has been delegated to a hearing officer for a proposed decision:

(1) The notice of delegation,

(2) Any order rescinding the delegation, whether in part or in whole,

(3) The proposed decision, including proposed findings of fact and proposed conclusions of law, of the hearing officer,

(4) Any exceptions filed by the parties with respect to the designated hearing officer's proposed decision,

(5) The Commissioner's rulings on any exceptions and the designated hearing officer's proposed findings of fact or conclusions of law, and

(6) Any additional information or documentation submitted to the Commissioner by the parties;

(g) The final findings of fact, conclusions of law, and final decision and order of the Commissioner; and

(j) Other documents or material placed in the record as required by law or at the discretion of the Commissioner or designated hearing officer.

3812.3 Upon compilation, the record shall be available for public inspection at the Department during normal business hours unless the contents are otherwise protected by law.

3812.4 The Department, upon request of any person, shall arrange for a copy of the record to be made, if the requesting person pays in advance to the Department the estimate of the reasonable cost of making the copy. The copy may be certified by the Commissioner upon request by any person.

History

• SOURCE: Final Rulemaking published at 50 DCR 6433(August 8, 2003).

26-A DCMR § 3813 MOTIONS AND OTHER PLEADINGS: COMMUNICATIONS WITH THE COMMISSIONER

3813.1 Except by leave of the Commissioner or designated hearing officer during a hearing, a party seeking an order or other relief or action regarding a pending matter that is the subject of public hearing, shall file a written motion, which shall become part of the public record.

3813.2 Responses to written motions shall be filed and served no later than ten (10) calendar days after the motion has been served.

3813.3 All motions and responses shall be accompanied by a memorandum setting forth:

(a) a statement of the facts;

(b) legal points and authorities in support thereof; and

(c) a proposed order.

3813.4 No rejoinders or replies to responses will be accepted without leave of the Commissioner or designated hearing officer.

3813.5 The Commissioner or designated hearing officer may, when deemed necessary, act upon a motion at any time without awaiting responses.

3813.6 Unless otherwise ordered by the Commissioner or designated hearing officer, no hearing shall be convened on motions.

3813.7 Any person seeking to inform the Commissioner of relevant information regarding a pending hearing without seeking any relief in the form of an order, shall so inform the Commissioner by filing such information in the form of a typewritten letter, which shall become part of the public record. The person filing such letter shall serve it on all parties to the proceeding.

3813.8 Any person filing a motion, pleading, letter, or other document shall sign and date the filing and include the address and telephone number of the filing party. The document shall contain a certification of service indicating that the filing has been served on all parties to the proceeding.

History

• SOURCE: Final Rulemaking published at 50 DCR 6433(August 8, 2003).

26-A DCMR § 3814 SERVICE OF PLEADINGS

3814.1 Written motions and all other pleadings shall be served on all parties.

3814.2 When filed, all pleadings shall be accompanied by proof of service upon all parties. Proof of service of any pleading shall be by certificate of service, affidavit or affirmation regarding delivery, or acknowledgement of receipt.

3814.3 Service of pleadings shall be made by one of the following methods:

(a) United States mail, with first-class postage prepaid;

(b) By personal delivery; or

(c) By leaving it at the party's place of business with a person in charge or an employee or, if the place of business is closed or the party has no place of business, by leaving it at the party's usual place of residence with a person of suitable age and discretion who is at least sixteen (16) years of age or older residing there.

3814.4 Service by mail is complete upon mailing.

3814.5 Service on a general partner shall be valid service on the partnership.

3814.6 Service on an officer or director or registered agent of a corporation or association shall be valid service on that corporation or association.

3814.7 When any party is represented in a specific proceeding by an attorney, service of all pleadings in that proceeding shall be made upon the attorney and that service shall be considered service upon that party or those parties.

History

• SOURCE: Final Rulemaking published at 50 DCR 6433(August 8, 2003).

26-A DCMR § 3815 EX PARTE COMMUNICATIONS

3815.1 From the start of the proceeding until the rendering of a final decision, no person may communicate ex parte with the Commissioner or designated hearing officer regarding the merits of the proceeding.

3815.2 The Commissioner shall not be prohibited from communicating with officials of the District government and members of the Department on policy and procedural matters during the course of a proceeding before the Commissioner.

3815.3 The Commissioner shall not be prohibited from communicating with any party that is a regulated entity or person of the Department on matters not related to the merits of a matter before the Commissioner. [a7]

3815.4 If the Commissioner determines that a person has violated the prohibition on ex parte communications, he or she may impose appropriate sanctions against that person, which may include excluding the person from the proceeding or deciding against it with prejudice. [a8]

3815.5 As used in this section, the term "ex parte" shall mean any oral or written communication related to the merits of a pending matter made to the Commissioner, not in the public hearing record, with respect to which reasonable prior notice to all parties to the proceeding is not given. An inquiry about the status of a proceeding is not considered an ex parte communication. [a9]

History

• SOURCE: Final Rulemaking published at 50 DCR 6433(August 8, 2003).

26-A DCMR § 3816 POST-HEARING PROCEDURES

3816.1 If the matter is heard before a hearing officer, the hearing officer shall serve proposed findings of fact, proposed conclusions of law, and a proposed order on all parties and the Commissioner within twenty (20) calendar days of the close of the hearing to the Commissioner for adoption, amendment, or rejection.

3816.2 A party served with proposed findings of fact, proposed conclusions of law, and a proposed order shall have the right to file exceptions to the proposed findings of fact, proposed conclusions of law, and proposed order. Such exceptions shall be filed and served within ten (10) calendar days of the date the proposed findings of fact, proposed conclusions of law, or proposed order in question were served. In addition, the party shall have the right to present argument to the Commissioner, who shall consider the exceptions and argument when rendering his or her final findings of fact, conclusions of law and order. [a10]

3816.3 If the matter is heard before the Commissioner, the Commissioner shall make a written final order within 60 days of the close of the hearing record. A final order will be in writing. A final order will include findings of fact, conclusions of law, and an order. A copy of a final order shall be served upon each party of record.

History

• SOURCE: Final Rulemaking published at 50 DCR 6433(August 8, 2003).

26-A DCMR § 3817 APPEAL RIGHTS

3817.1 Judicial review of an adverse decision of the Commissioner shall be by petition to the District of Columbia Court of Appeals. [a11]

History

• SOURCE: Final Rulemaking published at 50 DCR 6433(August 8, 2003).

26-A DCMR § 3818 SEVERABILITY

3818.1 If any section or portion of a section of these rules, or the applicability thereof to any person or circumstance is held invalid by any court of competent jurisdiction, the remainder of these rules, or the applicability thereof to other persons or circumstances, will not be affected thereby.

History

• SOURCE: Final Rulemaking published at 50 DCR 6433(August 8, 2003).

26-A DCMR § 3819 DEFINITIONS

"Commissioner" means the Commissioner of the Department of Insurance and Securities Regulation or designated hearing officer. [a12]

"District" means the District of Columbia.

"Party" means any person or agency named or admitted as a party, in any proceeding before the Commissioner, but nothing herein shall be construed to prevent the Commissioner from admitting any person or agency as a party for limited purposes. [a13]

"Person" means any natural or artificial person, including but not limited to, individuals, partnerships, associations, trusts, or corporations.

"Respondent" means a person against whom an adverse action is contemplated, proposed, or taken. [a14]

"Show Cause Order" means an order issued by the Commissioner that alleges facts that constitute a violation of, or a failure to comply with, the law by the respondent and that directs the respondent to explain why the Commissioner should not issue a final order against the respondent based upon the alleged facts, and shall include orders to show cause concerning:

(a) A cease and desist order, stop order; and

(b) A denial, suspension, or revocation order.

"Summary Suspension Order" means an order issued by the Commissioner that alleges facts that constitute a violation of, or failure to comply with, the law by the respondent and that directs the respondent immediately to take actions or refrain from certain actions. Summary suspension orders include:

(a) A summary cease and desist order;

(b) A stop order issued by the Commissioner;

(c) A summary postponement or suspension; and

(d) A summary denial or revocation.

History

• SOURCE: Final Rulemaking published at 50 DCR 6433(August 8, 2003).

26-A39 LICENSURE AS A PUBLIC INSURANCE ADJUSTER

26-A DCMR § 3900 GENERAL PROVISIONS

3900.1 No person shall act as or hold himself out as a public insurance adjuster unless the person has been issued a license in accordance with these rules.

3900.2 An applicant for licensure as a public insurance adjuster shall submit a properly completed application.

3900.3 An applicant who is licensed as a public insurance adjuster in another jurisdiction shall submit a properly completed application accompanied by a certificate of good standing from the insurance licensing authority of the applicant's home state that indicates that the applicant holds a valid public adjuster insurance license issued by that state.

3900.4 A natural person acting as a public insurance adjuster in the District through a business entity shall also obtain a public insurance adjuster license for the business entity. For purposes of this section, a "business entity" includes any corporation, partnership, limited partnership, joint venture, association, exchange, or limited liability company, limited liability partnership, or other enterprise. A business entity applying for a license as a public insurance adjuster shall submit proof that:

(a) The business entity is, or will become as soon as practicable, lawfully registered with the Department of Consumer and Regulatory Affairs to do business in the District; and

(b) Every officer, director, shareholder, general partner, or member of the limited liability company, or partnership, who personally engages in business of public insurance adjusting in the District, as defined in D.C. Official Code § 31-1631.01(5), is individually licensed as a public insurance adjuster pursuant to these rules.

3900.5 Every public insurance adjuster shall maintain a bond executed by the public insurance adjuster as principal and a surety company authorized to do business in the District, in the principal sum of $20,000, for the benefit of any person who suffers a loss as a result of fraud or dishonesty on the part of the public insurance adjuster.

3900.6 Notwithstanding the information requested in the application, as required in subsection 3900.2, an applicant shall also disclose the full name and residence address of each person who directly or indirectly owns, controls, holds with power to vote, or holds proxies representing, ten percent or more of the voting securities of the licensee.

3900.7 The Commissioner may, in addition to other grounds set forth in these rules, deny an application or suspend or revoke the license of a public insurance adjuster if any person who directly or indirectly owns, controls, holds with power to vote, or holds proxies representing ten percent or more of the voting securities of the public insurance adjuster, does not meet the qualifications for licensure set forth in these rules.

3900.8 Every applicant for an initial or renewal public insurance adjuster license shall file with such application a list of the full names of all employees who are authorized to negotiate claim settlements, and every licensee shall inform the Commissioner in writing within 30 days from the date of the occurrence of the name of any employee hired or terminated subsequent to the filing of the initial list.

3900.9 Any license issued pursuant to these rules shall at all times be the property of the government of the District and upon any suspension, revocation, nonrenewal, expiration or other termination shall no longer be in force and effect.

(a) Upon any suspension, revocation or other termination of a license, the licensee or any other person having custody of the license shall immediately deliver it to the Commissioner by personal delivery or by registered or certified mail.

(b) Where a license is lost, stolen or destroyed, the Commissioner may accept in lieu of the return of the license, an affidavit of the licensee or other person responsible for the license, setting forth the facts which prevent the return of the license.

(c) Failure to pay any requested fee for any reason including, but not limited to, a check being dishonored, shall render a license null and void.

(d) A license which was voluntarily cancelled by a licensee may be reinstated for the balance of the license term upon written request of the licensee and payment of the processing fee.

3900.10 The Commissioner may grant a temporary public insurance adjuster license before the applicant has passed the licensing examination required in § 3901.1, provided the applicant is otherwise qualified for licensure as a public insurance adjuster. The temporary license shall expire on September 30, 2003.

History

• SOURCE: Emergency Rulemaking published at 50 DCR 5970(July 25, 2003) [EXPIRED]; as Final Rulemaking published at 50 DCR 3191 (April 25, 2003).

26-A DCMR § 3901 LICENSING EXAMINATION

3901.1 Except as provided in § 3900.10, no person shall act as a public insurance adjuster in the District unless that person has taken and passed a licensing examination, which may be administered by the Department or by a vendor under contract to the Department.

3901.2 Examinations shall be administered at such times and places as may be designated by the Commissioner. If a contract vendor is utilized it shall provide the Commissioner with at least 60 days prior notice of the dates and times of the scheduled examinations.

3901.3 The Commissioner shall have the sole responsibility for establishing minimum qualification and passing requirements for candidates taking the licensing examination. The qualification and passing requirements shall be on file at the offices of the Department and shall be made available for public inspection.

History

• SOURCE: Emergency Rulemaking published at 50 DCR 5970(July 25, 2003) [EXPIRED]; as Final Rulemaking published at 50 DCR 3191 (April 25, 2003).

26-A DCMR § 3902 RENEWAL OF LICENSES

3902.1 A license issued pursuant to these rules shall expire on April 30th of each odd numbered year.

3902.2 At least thirty (30) days prior to the expiration of a license the Commissioner shall send an application for renewal by first class mail to the license holder at the address of the license holder on file with the Commissioner.

3902.3 The license holder shall notify the Commissioner in writing of any change of home or business address within thirty (30) days of the change of address.

3902.4 The failure of the license holder to receive the notice required under subsection 3902.2 does not relieve the license holder of the responsibility for renewing the license.

3902.5 A public insurance adjuster who fails to renew a license prior to the expiration date may renew the license within thirty (30) days after expiration upon paying the required late fee. Upon renewal, the public insurance adjuster shall be deemed to have possessed a valid license during the period between the expiration of the license and the renewal thereof.

3902.6 If a public insurance adjuster fails to renew a license within thirty (30) days after expiration of the license, the license shall be considered to have lapsed on the date of expiration, and the license holder shall be required to apply for reinstatement pursuant to section 3903.

History

• SOURCE: Emergency Rulemaking published at 50 DCR 5970(July 25, 2003) [EXPIRED]; as Final Rulemaking published at 50 DCR 3191 (April 25, 2003).

26-A DCMR § 3903 REINSTATEMENT OF AN EXPIRED LICENSE

3903.1 This section shall apply to an applicant for reinstatement of an expired license issued under these rules.

3903.2 An applicant for reinstatement under this section shall file an application with the Department on the prescribed form and shall pay the required reinstatement fee.

3903.3 An applicant for reinstatement under this section shall demonstrate fitness to resume practice by submitting evidence satisfactory to the Commissioner that the applicant has the competency and knowledge of District law necessary to resume transacting business as a public insurance adjuster and that such resumption will not be detrimental to the public interest or the integrity of the insurance adjusting profession.

3903.4 In making a determination pursuant to subsection 3903.3, the Commissioner shall consider the following:

(a) The length of time that the applicant has transacted insurance business as a public insurance adjuster in the District or in another state;

(b) The length of time after expiration of the applicant's license that the applicant was not transacting business as a public insurance adjuster, either in the District or in another state;

(c) The violation of any laws by the applicant;

(d) The applicant's present character; and

(e) The applicant's present qualifications and competency to transact insurance business.

3903.5 The Commissioner may require an applicant to complete certain educational or training requirements, or to pass the public insurance adjuster examination, prior to or after reinstatement, to ensure that the applicant is competent.

3903.6 The Commissioner shall not reinstate an expired license of a public insurance adjuster who fails to apply for reinstatement of the expired public insurance adjuster license within one (1) year from the date of the expiration of the license. A person who fails to apply for reinstatement within the one-year period may become licensed by meeting the requirements then in existence for obtaining an initial license.

History

• SOURCE: Emergency Rulemaking published at 50 DCR 5970(July 25, 2003) [EXPIRED]; as Final Rulemaking published at 50 DCR 3191 (April 25, 2003).

26-A DCMR § 3904 REINSTATEMENT AFTER SUSPENSION OR REVOCATION

3904.1 A person whose license to do business as a public insurance adjuster has been revoked shall be ineligible to apply for licensure as a public insurance adjuster for a period of three (3) years from the date of the revocation unless otherwise provided in the Commissioner's order of revocation.

3904.2 An applicant for the reinstatement of a suspended or revoked license shall file an application with the Department on the prescribed form and shall pay the required reinstatement fee.

3904.3 An applicant for the reinstatement of a suspended or revoked license shall demonstrate fitness to transact business as a public insurance adjuster by submitting evidence satisfactory to the Commissioner that the applicant is not dishonest, untrustworthy or incompetent, and will not be detrimental to the public interest or the integrity of the insurance adjusting profession.

3904.4 In making a determination pursuant to this section, the Commissioner may consider, among other factors, the following:

(a) The nature and circumstances of the conduct for which the applicant's license was suspended or revoked;

(b) The applicant's recognition of the seriousness of any misconduct;

(c) The applicant's conduct since the suspension or revocation, including steps taken by the applicant to remedy prior misconduct and prevent future misconduct;

(d) The applicant's present character;

(e) The applicant's present qualifications and competency to practice in the insurance adjusting profession; and

(f) Whether the applicant has paid all fines.

3904.5 The Commissioner may require an applicant to complete specific educational or training requirements, or to pass the public insurance adjuster examination, prior to or after reinstatement, to ensure that the applicant is competent.

History

• SOURCE: Emergency Rulemaking published at 50 DCR 5970(July 25, 2003) [EXPIRED]; as Final Rulemaking published at 50 DCR 3191 (April 25, 2003).

26-A DCMR § 3905 ESCROW OR TRUST ACCOUNTS

3905.1 Any public insurance adjuster who receives, accepts or holds any moneys, on behalf of an insured, towards the settlement of a claim for loss or damage, shall deposit such moneys in an interest bearing escrow or trust account in a financial institution in the District of Columbia which is insured by an agency of the Federal government.

3905.2 Any funds held in an escrow or trust account and interest accruing thereon shall be the property of the insured.

(a) Such moneys shall be held pursuant to a written agreement signed by the insured and by the public insurance adjuster which shall clearly specify:

(1) The services to be rendered; and

(2) The amount of any services to be paid from the escrowed funds.

(b) In the event of the insolvency and/or bankruptcy of a public insurance adjuster, the claim of an insured for any settlement moneys received, accepted or held by a public insurance adjuster shall constitute a statutory trust as provided at D.C. Official Code § 19-1102.

History

• SOURCE: Emergency Rulemaking published at 50 DCR 5970(July 25, 2003) [EXPIRED]; as Final Rulemaking published at 50 DCR 3191 (April 25, 2003).

26-A DCMR § 3906 MINIMUM RECORD KEEPING REQUIREMENTS

3906.1 Each licensee shall maintain accurate files, books and records reflecting all insurance-related transactions in which the licensee or his or her employees take part. These records shall be maintained by either separate books of record or by one or more consolidated books of record for a period of five years from the date of the closing of the claim.

(a) All books and records shall consist of sequentially numbered pages and shall be maintained in such a manner that they can be produced for examination at any time.

(b) Appropriate and required entries shall be made promptly.

3906.2 Each licensee shall maintain a register of all monies received, deposited, disbursed or withdrawn in connection with a transaction with an insured, including, but not limited to: fees, transfers and disbursements from a trust account; and all transactions concerning, including the balance of, all interest bearing accounts. The minimum information required to be maintained in the register includes the following:

(a) The name and location of the financial institution in which the funds are deposited;

(b) The account number of the trust or escrow account;

(c) The date monies are received, deposited, disbursed or withdrawn;

(d) The amount of money received, deposited, disbursed or withdrawn;

(e) An itemized record of the allocation of the funds;

(f) The name of the insured, insurance producer, insurer or other account to or from whom monies are disbursed or received;

(g) The claim number assigned by the insurer;

(h) The receipt number, when available; and

(i) The method of payment, such as, cash, check, money order or draft.

3906.3 For each disbursement, the number of the check shall be recorded in the register.

3906.4 All entries for receipts and disbursements shall be supported by evidential matter as provided in § 3906.2 (b) and (c). The evidential matter shall be referenced in the entry so that it may be traced for verification.

3906.5 Each licensee shall prepare and maintain a monthly reconciliation of the trust account.

3906.6 Each licensee shall maintain a file for each claimant with whom a contractual relationship has been established. The minimum items required to be maintained in the file include:

(a) Correspondence received or sent with respect to any insurance or insurance-related transaction;

(b) All of the client's contracts; and

(c) All other information related to the claim.

3906.7 The licensee shall also maintain the following records for a period of five years:

(a) Escrow or trust account statements;

(b) Names and addresses of all licensees;

(c) Copies of all new and renewal applications submitted to the Department by an individual and/or company;

(d) All fees received, if not deposited in a trust or escrow account; and

(e) All records of transactions with persons or entities owned by the licensee or by one or more of its officers or directors or an owner of 10 percent or more of the licensee that are construction firms, salvage firms or appraisal firms.

3906.8 Failure to keep, maintain or make available for inspection by the Commissioner, those records which the Commissioner shall require to be maintained in accordance with this section, or any other violations by a licensee, shall constitute a violation of D.C. Official Code § 31-1631.06.

History

• SOURCE: Emergency Rulemaking published at 50 DCR 5970(July 25, 2003) [EXPIRED]; as Final Rulemaking published at 50 DCR 3191 (April 25, 2003).

26-A DCMR § 3907 VIOLATIONS AND PENALTIES

3907.1 The Commissioner may deny, suspend, revoke, refuse to renew a public insurance adjuster's license, or impose a civil penalty based on any violation of the Act or these rules, or for the commission or omission of any act by a public insurance adjuster which demonstrates that the applicant or licensee is not competent or trustworthy to act as a public insurance adjuster, or where the person has:

(a) Violated any provision of the District's insurance laws, including any rules promulgated thereunder;

(b) Violated any provision of the Act, including any rules promulgated thereunder;

(c) Committed a fraudulent or dishonest act;

(d) Demonstrated the licensee's lack of integrity, incompetency, bad faith, dishonesty, financial irresponsibility or untrustworthiness to act as a public insurance adjuster;

(e) Aided, abetted or assisted another person in violating any insurance law of the District or any state;

(f) Withheld material information or made a material misstatement in the application for licensure;

(g) Failed to pay any fine or comply with an order of the Commissioner;

(h) Charged or collected from any client any fee other than that agreed to in the employment contract in a form required in section 3909;

(i) Misappropriated, converted or illegally withheld, money which was received in the conduct of business as a public insurance adjuster that belonged to insurers, clients or others;

(j) Failed to notify the Commissioner within 30 days of a conviction for any misdemeanor (except minor traffic offense) or felony conviction, the suspension or revocation of any insurance license or public insurance adjusters license, or failed to supply any documentation that the Commissioner may request in connection therewith;

(k) Failed to appear in response to any subpoena issued by the Commissioner or his authorized designee; failed to produce any documents or other material requested in a subpoena; or refused or failed to cooperate with an investigation by the Commissioner of the activities of the person or any other licensee;

(l) Induced the cancellation of a duly executed written memorandum between an insured and a public insurance adjuster;

(m) Made any misrepresentation of facts or advised any person on questions of law in conjunction with the business as a public insurance adjuster;

(n) Had any professional license suspended or revoked in the District or in any state;

(o) Engaged in the business of a public insurance adjuster in the District or other jurisdiction without a valid license; or

(p) Committed any other act, or omission which the Commissioner determines to be inappropriate conduct by a licensee of the District.

3907.2 Notwithstanding the bases for disciplinary action provided in subsection 3907.1, the Commissioner may also deny, suspend, revoke, refuse to renew, or impose a civil penalty on a public insurance adjuster's license for the following prohibited practices:

(a) No public insurance adjuster shall pay any money or give anything of value to any person in consideration of a direct or indirect referral of a client or potential client.

(b) No public insurance adjuster shall pay any money or give anything of value to any person as an inducement to refer business or clients.

(c) No public insurance adjuster shall charge, collect, or receive any money or other thing of value from any person providing services to the insured, either directly or on behalf of the public insurance adjuster, in connection with the business of adjusting insurance claims, without the prior written disclosure of the fee or benefit to the insured.

(d) No public insurance adjuster shall rebate to a client any part of a fee specified in any employment contract.

(e) No public insurance adjuster shall split his fee or pay any money to any person for services rendered to a client unless such other person is also licensed as a public insurance adjuster.

(f) No public insurance adjuster licensed in the District shall have any interest directly or indirectly in any home improvement, restoration, construction, salvage, or appraisal business that conducts business in the District.

(g) No public insurance adjuster shall, in connection with the transaction of his or her business as a public insurance adjuster, make any misrepresentation of facts or advise any person on any question of law.

(h) No public insurance adjuster shall make any false statements about any insurance company or its employees, agents or representatives.

(i) No public insurance adjuster shall solicit employment of a client in connection with any loss which is the subject of an employment contract with another public insurance adjuster.

(j) No public insurance adjuster shall represent both an insurer and insured simultaneously.

(k) No public insurance adjuster shall advance any monies to a client pending the settlement of a loss where such amount would be included in a final settlement.

History

• SOURCE: Emergency Rulemaking published at 50 DCR 5970(July 25, 2003) [EXPIRED]; as Final Rulemaking published at 50 DCR 3191 (April 25, 2003).

26-A DCMR § 3908 DISCLOSURES

3908.1 A public insurance adjuster shall disclose in writing to the client any interest the public insurance adjuster has in loss proceeds other than those acquired by his employment contract.

3908.2 A public insurance adjuster in soliciting a client for employment shall display his license and immediately inform such client that the adjuster does not represent any insurance company, or insurance company adjusting firm. The public insurance adjuster shall inform such client that his services are available for a fee to be paid by the client, and shall give such client a card identifying the public insurance adjuster and specifying on such card the amount of fee charged by the public insurance adjuster.

History

• SOURCE: Emergency Rulemaking published at 50 DCR 5970(July 25, 2003) [EXPIRED]; as Final Rulemaking published at 50 DCR 3191 (April 25, 2003).

26-A DCMR § 3909 FORM OF CONTRACT

No public insurance adjuster shall enter into an employment contract except in conformity with these rules. There shall be a true copy of the employment contract which shall be given to the client at the time the contract is signed. The contract and copy(ies) of the contract shall (1) be printed on white or cream paper in dark or black ink; (2) have section titles captioned in bold face type which otherwise stands out significantly from the text; (3) have statements on contract which read "read both sides before signing" and "I have read the information on both sides of this contract" printed in 18 point type; (4) use layout and spacing which separates the paragraphs from each other and from the border of the paper; (5) be on one piece of paper measuring 8 1/2" X 11" to be printed on both sides and which shall state:

(1) On side one:

INFORMATION ABOUT YOUR PUBLIC INSURANCE ADJUSTER EMPLOYMENT CONTRACT

YOUR LEGAL RIGHTS:

Cancellation: You may cancel this contract by notifying us at the address shown on the other side of this page, in writing, by certified mail, return receipt, postmarked not later than midnight three (3) business days following the day this contract is signed.

Settlement offer: We shall forward to you any written settlement offer from the insurance company.

Fee: Our services are available for a fee to be paid by you. We cannot charge or otherwise collect a fee that exceeds ten percent (10%) of the total recovery.

Copy of the contract: We must give you a true copy of this Public Insurance Adjuster Contract at the time you sign it.

LIMITATIONS OF PUBLIC INSURANCE ADJUSTERS:

We are not allowed:

--to solicit your employment if you have already hired or contracted with another public insurance adjuster.

--to have any interest whatsoever in any home improvement, restoration, construction, salvage, or appraisal business operating in the District.

--to represent both an insurer and an insured at the same time.

--to pay anything of value to any person as an inducement to refer business to us.

--to share our fee, except with another licensed Public Insurance Adjuster.

--to advise you on any question of law.

--to advance any monies to you before settlement of the loss, where such amount would be included in the final settlement.

--to make false statements about an insurance company or its representatives.

We must:

--sign this Contract.

--inform you that we do not represent any insurance company or any insurance company adjusting firm.

(2) On side two:

• NAME OF LICENSED PUBLIC INSURANCE ADJUSTER

• The name of the licensee must appear here. If you operate as a firm or on behalf of a firm, show name of firm licensee here and names of all individual licensees in designated area.

ADDRESS

TELEPHONE NUMBER

Names of individual public insurance

Adjuster licensee(s) to appear here

READ BOTH SIDES BEFORE SIGNING (18 point type)

PUBLIC INSURANCE ADJUSTER CONTRACT

To the Interested Insurance Companies and Others Whom it May Concern:

I/we retain (name of public insurance adjuster) to act as my/our public insurance adjuster(s) and to advise and assist in the adjustment and settlement of my/our (type) loss at (address) which occurred on or about (date). In consideration for these services, I/we hereby assign out of the monies due or to become due from said Insurance Companies on account of the said loss a sum equivalent to 10% percent of the total insurance recovery.

I HAVE READ THE INFORMATION ON BOTH SIDES OF THIS CONTRACT (18 point type)

(date)

Signed: (signature of insured)

(signature of insured)

(name)

(address)

(city & state)

Agreed to: (name of individual or firm licensee)

By: (signature of Public Insurance Adjuster)

This form is in compliance with Title 26, section 3909 (form of contract) of the DCMR. This form must be signed by the licensed Public Insurance Adjuster and the Insured.

History

• SOURCE: Emergency Rulemaking published at 50 DCR 5970(July 25, 2003) [EXPIRED]; as Final Rulemaking published at 50 DCR 3191 (April 25, 2003).

26-A DCMR § 3999 DEFINITIONS

3999.1 For the purposes of this chapter, the following words and phrases shall have meaning ascribed in this section:

"Act" - the Public Insurance Adjuster Licensure Act of 2002, effective March 27, 2003 (D.C. Law 14-256; D.C. Official Code § 31-1631.01 et seq.).

"Department" - the District of Columbia Department of Insurance and Securities Regulation.

"Person" - includes all natural persons, corporations, associations, limited liability companies, limited liability partnerships, joint ventures, exchanges, partnerships, limited partnerships, or other entities.

History

• SOURCE: Emergency Rulemaking published at 50 DCR 5970(July 25, 2003) [EXPIRED]; as Final Rulemaking published at 50 DCR 3191 (April 25, 2003).

26-A40 RECIPROCAL INSURANCE COMPANIES

26-A DCMR § 4001 AUTHORIZATION AND APPLICABILITY

4001.1 Any captive insurer may organize or reorganize and operate as a reciprocal insurer, subject to the act and these regulations. These regulations shall apply to all captive insurers organized as reciprocal insurers. It specifies the terms on which a reciprocal insurer may receive a certificate of authority and operate in the District of Columbia. These regulations provide for the licensing and regulation of reciprocal insurers, the conversion of a domestic stock or mutual insurance company into a domestic reciprocal insurer, the merger of a domestic reciprocal insurer with another reciprocal insurer, and the conversion of a domestic reciprocal insurer into a stock or mutual insurance company.

History

• Source: Notice of Emergency and Proposed Rulemaking published at 54 DCR 12099 (December 14, 2007)[EXPIRED]; as amended by Notice of Final Rulemaking published at 55 DCR 479 (January 18, 2008).

26-A DCMR § 4002 EXISTING RECIPROCALS

4002.1 Existing authorized reciprocal insurers shall, after January 1, 2009, comply with these regulations and shall make such amendments to their subscribers’ agreement, power of attorney, policies, and other documents and accounts and perform such other acts as may be required for such compliance.

History

• Source: Notice of Emergency and Proposed Rulemaking published at 54 DCR 12099 (December 14, 2007)[EXPIRED]; as amended by Notice of Final Rulemaking published at 55 DCR 479 (January 18, 2008).

26-A DCMR § 4003 INSURING POWERS OF RECIPROCALS

4003.1 A reciprocal insurer may, upon qualifying under the act, transact any kind or kinds of insurance defined by the act.

4003.2 A reciprocal insurer may purchase reinsurance upon the risk of any subscribers and may grant reinsurance as to any kind of insurance it is authorized to transact directly.

History

• Source: Notice of Emergency and Proposed Rulemaking published at 54 DCR 12099 (December 14, 2007)[EXPIRED]; as amended by Notice of Final Rulemaking published at 55 DCR 479, 480 (January 18, 2008).

26-A DCMR § 4004 NAME, SUITS, AND POWERS

4004.1 No reciprocal insurer shall be authorized to transact business in the District unless the name under which reciprocal contracts are to be exchanged shall include the word “reciprocal” or be supplemented by the following words immediately below the name under which such contracts are exchanged: “A reciprocal”.

4004.2 A reciprocal insurer may sue and be sued in its own name.

4004.3 A reciprocal insurer may own property in its own name.

4004.4 A reciprocal insurer shall have the power to borrow and lend money from or to any person.

4004.5 A reciprocal insurer shall have the power to the fullest extent permitted by law to indemnify its officers, employees, or agents and members of the subscriber’s advisory committee.

4004.6 A reciprocal insurer shall have and exercise all powers necessary or convenient to effect any and all of the purposes for which it is formed and which are authorized by the act.

History

• Source: Notice of Emergency and Proposed Rulemaking published at 54 DCR 12099 (December 14, 2007)[EXPIRED]; as amended by Notice of Final Rulemaking published at 55 DCR 479, 480 (January 18, 2008).

26-A DCMR § 4005 ATTORNEY, SUBSCRIBERS, AND RECIPROCAL INSURER A SINGLE ENTITY

4005.1 “Attorney”, as used in this chapter, means the attorney-in-fact of a reciprocal insurer. The attorney may be an individual, firm, or corporation.

4005.2 The attorney of a foreign reciprocal insurer, which insurer is duly authorized to transact insurance in the District, shall not, by virtue of discharge of its duties as such attorney with respect to the insurer’s transactions in the District, be thereby deemed to be doing business in the District within the meaning of any laws of the District applying to foreign persons, or corporations.

4005.3 The subscribers and the attorney-in-fact comprise a reciprocal insurer and are a single entity for:

(a) All fees, charges, and taxes imposed by the act; and

(b) Any operation conducted under the reciprocal insurer’s certificate of authority.

History

• Source: Notice of Emergency and Proposed Rulemaking published at 54 DCR 12099 (December 14, 2007)[EXPIRED]; as amended by Notice of Final Rulemaking published at 55 DCR 479, 480 (January 18, 2008).

26-A DCMR § 4006 ORGANIZATION OF RECIPROCAL INSURER

4006.1 Three or more persons may organize a domestic reciprocal insurer and make application to the Commissioner for a certificate of authority to transact insurance.

4006.2 The proposed attorney shall fulfill the requirements of and shall execute and file with the Commissioner when applying for a certificate of authority, a declaration verified by the oath of such attorney, or when such attorney is a corporation by the oath of an officer thereof, setting forth:

(a) The name of the insurer;

(b) The location of the insurer’s registered office, which shall be the same as the registered office of the attorney and shall be maintained within the District;

(c) The kinds of insurance proposed to be transacted;

(d) The names and addresses of the original subscribers;

(e) The designation and appointment of the proposed attorney and a copy of the power of attorney;

(f) The names and addresses of the officer and directors of the attorney, if a corporation, or of its members, if a firm;

(g) The powers of the subscribers’ advisory committee and the names and terms of office of the members thereof;

(h) That all moneys paid to the reciprocal shall, after deducting therefrom any sum payable to the attorney, be held in the name of the insurer and for the purposes specified in the subscribers’ agreement;

(i) A statement that each of the original subscribers has in good faith applied for insurance of a kind proposed to be transacted and that the insurer has received from each such subscriber the full premium or premium deposit required for the policy applied for, for a term of not less than three months at the rate provided therein; and

(j) A pro-forma statement of the financial condition of the insurer, a schedule of its assets and a statement that the surplus as required by the act is available.

4006.3 Any domestic stock or mutual insurance company may convert to a domestic reciprocal insurer in accordance with a plan filed with and approved by the Commissioner. Upon approval of a plan the Commissioner shall issue a new or amended certificate of authority which shall be the final act of conversion. The new domestic reciprocal insurer shall be the continuation of the converted stock of mutual company and be deemed organized on the date the converted stock or mutual company was organized.

4006.4 No declaration shall be required under this section for any reciprocal insurer organized in the District as a result of a conversion under subsection (3) of this section

History

• Source: Notice of Emergency and Proposed Rulemaking published at 54 DCR 12099 (December 14, 2007)[EXPIRED]; as amended by Notice of Final Rulemaking published at 55 DCR 479, 481 (January 18, 2008).

26-A DCMR § 4007 CERTIFICATE OF AUTHORITY

4007.1 The certificate of authority of a reciprocal insurer shall be issued to its attorney in the name of the insurer.

4007.2 The Commissioner may refuse to issue, suspend, or revoke the certificate of authority, in addition to any other applicable grounds, for failure of the attorney to comply with any applicable provision of the act or this chapter.

History

• Source: Notice of Emergency and Proposed Rulemaking published at 54 DCR 12099 (December 14, 2007)[EXPIRED]; as amended by Notice of Final Rulemaking published at 55 DCR 479, 482 (January 18, 2008).

26-A DCMR § 4008 POWER OF ATTORNEY

4008.1 The rights and powers of the attorney of a reciprocal insurer shall be as provided in the power of attorney given it by the subscribers.

4008.2 The power of attorney must be set forth:

(a) The powers of the attorney;

(b) The general services to be performed by the attorney;

(c) The maximum amount to be deducted from advance premiums or deposits to be paid to the attorney and the general items of expense in addition to losses to be paid by the insurer; and

(d) A provision for a contingent several liability of each subscriber who is issued an assessable policy in a specified amount, which amount shall not be less than one or more than ten times the premium or premium deposit stated in the policy.

4008.3 The power of attorney may:

(a) Provide for the right of substitution of the attorney and revocation of the power of attorney and rights thereunder.

(b) Impose such restrictions upon the exercise of the power as are agreed upon by the subscribers;

(c) Provide for the exercise of any right reserved to the subscribers directly or through their advisory committee;

(d) Provide that only non-assessable policies shall be issued; and

(e) Contain other lawful provisions deemed advisable.

4008.4 The terms of any power of attorney or agreement collateral thereto shall be reasonable and equitable, and no such power or agreement or modification thereof shall be used by a domestic reciprocal or be effective in the District until approved by the Commissioner.

History

• Source: Notice of Emergency and Proposed Rulemaking published at 54 DCR 12099 (December 14, 2007)[EXPIRED]; as amended by Notice of Final Rulemaking published at 55 DCR 479, 482 (January 18, 2008).

26-A DCMR § 4009 MODIFICATIONS

4009.1 Modifications of the terms of the subscribers’ agreement or of the power of attorney of a domestic reciprocal insurer shall be made jointly by the attorney and the subscribers’ advisory committee. Without additional notice, execution, or acceptance, every subscriber shall be bound by any modification of the subscriber agreement or power of attorney. However, no such modification shall be effective retroactively nor as to any insurance contract issued prior thereto unless agreed to by the affected subscriber.

History

• Source: Notice of Emergency and Proposed Rulemaking published at 54 DCR 12099 (December 14, 2007)[EXPIRED]; as amended by Notice of Final Rulemaking published at 55 DCR 479, 483 (January 18, 2008).

26-A DCMR § 4010 ATTORNEY’S BOND

4010.1 Concurrently with the filing of the declaration provided for in section 4006 of this chapter, the attorney of a domestic reciprocal insurer shall file with the Commissioner a bond in favor of the reciprocal for the benefit of all persons damaged as a result of breach by the attorney of the conditions of the attorney’s bond as set forth in subsection (2) of this section. The bond shall be executed by the attorney and by an authorized corporate surety and shall be subject to the Commissioner’s approval.

4010.2 The amount of the bond shall be $250,000, in aggregate form, and be conditioned so that the attorney will faithfully account for all moneys and other property of the insurer coming into the attorney’s hands, and that such attorney will not withdraw, or appropriate for his/her own use, the funds of the insurer or any moneys or property to which he/she is not entitled under the power of attorney.

4010.3 The bond shall provide that it is not subject to cancellation unless 30 days advance notice in writing of cancellation is given to both the attorney and the Commissioner.

History

• Source: Notice of Emergency and Proposed Rulemaking published at 54 DCR 12099 (December 14, 2007)[EXPIRED]; as amended by Notice of Final Rulemaking published at 55 DCR 479, 483 (January 18, 2008).

26-A DCMR § 4011 DEPOSIT IN LIEU OF BOND

In lieu of the bond required under section 4011 of this chapter, the attorney may maintain on deposit, through the office of the Commissioner, a like amount in cash or in value of securities qualified under section 8 of the act.

History

• Source: Notice of Emergency and Proposed Rulemaking published at 54 DCR 12099 (December 14, 2007)[EXPIRED]; as amended by Notice of Final Rulemaking published at 55 DCR 479, 484 (January 18, 2008).

26-A DCMR § 4012 ACTION ON BOND

Action on the attorney’s bond or to recover against any such deposit made in lieu thereof may be brought at any time by the subscriber’s advisory committee or by a receiver or liquidator of the insurer. Amounts recovered on the bond shall be deposited in and become part of the insurer’s funds. The total aggregate liability of the surety shall be limited to the amount of such bond.

History

• Source: Notice of Emergency and Proposed Rulemaking published at 54 DCR 12099 (December 14, 2007)[EXPIRED]; as amended by Notice of Final Rulemaking published at 55 DCR 479, 484 (January 18, 2008).

26-A DCMR § 4013 SERVICE OF PROCESS

Legal process shall be served upon a domestic reciprocal insurer by serving the insurer’s attorney at the attorney’s registered offices or by serving the Commissioner’s as the insurer’s process agent the “Insurers Service of Process Act of 1994,” effective March 21, 1995 (D.C. Law 10-233; D.C. Official Code § 31-202).

History

• Source: Notice of Emergency and Proposed Rulemaking published at 54 DCR 12099 (December 14, 2007)[EXPIRED]; as amended by Notice of Final Rulemaking published at 55 DCR 479, 484 (January 18, 2008).

26-A DCMR § 4014 CONTRIBUTIONS TO INSURER

The attorney or other parties may advance to a domestic reciprocal insurer upon reasonable terms such funds as it may require from time to time in its operations. Sums so advanced shall not be treated as a liability of the insurer and, except upon liquidation of the insurer, shall not be withdrawn or repaid except out of the insurer’s realized earned surplus in excess of its minimum required surplus. No such withdrawal or repayment shall be made without the advance approval of the Commissioner. This section does not apply to commercial loans or to other loans made upon security.

History

• Source: Notice of Emergency and Proposed Rulemaking published at 54 DCR 12099 (December 14, 2007)[EXPIRED]; as amended by Notice of Final Rulemaking published at 55 DCR 479, 484 (January 18, 2008).

26-A DCMR § 4015 METHOD OF DETERMINING FINANCIAL CONDITION

4015.1 In determining the financial condition of a reciprocal insurer, the Commissioner shall apply the following rules:

(a) The Commissioner shall charge as liabilities the same reserves as are required of incorporated insurers issuing nonassessable policies on a reserve basis.

(b) The surplus deposits of subscribers shall be allowed as assets, except that any premium deposits delinquent for 90 days shall first be charged against such surplus deposit.

(c) The surplus deposits of subscribers shall not be charged as a liability.

(d) The subscribers’ and other accounts as provided in subsection 4016.2 of this section shall not be charged as a liability unless and until the subscriber or other person entitled to the account has a right to withdraw the account.

(e) All premium deposits delinquent less than 90 days shall be allowed as assets.

(f) An assessment levied upon subscribers and not collected shall not be allowed as an asset.

(g) The contingent liability of subscribers shall not be allowed as an asset.

(h) The computation of reserves shall be based upon premium deposits other than membership fees and without any deduction for expenses and the compensation of the attorney.

(i) The Commissioner shall permit any reciprocal that is a captive insurer or risk retention group to use such accounting rules, principles, procedures and practices as are permitted for mutual captive insurers or risk retention groups.

4015.2 A reciprocal insurer may establish one or more categories or types of subscriber and other surplus accounts with such terms and conditions as may be provided in the subscriber’s agreement or power of attorney and allocate to such accounts amounts as may be determined by the subscribers advisory committee.

History

• Source: Notice of Emergency and Proposed Rulemaking published at 54 DCR 12099 (December 14, 2007)[EXPIRED]; as amended by Notice of Final Rulemaking published at 55 DCR 479, 484 (January 18, 2008).

26-A DCMR § 4016 SUBSCRIBERS

4016.1 Subscribers are persons, including any association, aggregate of individuals, purchasing group, business company, corporation, individual, joint stock company, Lloyds type organization, cooperative, partnership, receiver, reciprocal, interinsurance exchange, trustee or society or government or governmental agencies, state or political subdivisions thereof, boards, associations, estates, trustees or fiduciaries that exchange reciprocal interinsurance contracts with each other. Any officer, representative, trustee, receiver or legal representative of any such subscriber shall be recognized as acting for or on its behalf for the purpose of such contract but shall not be personally liable upon such contract by reason of acting in such representative capacity. The right to exchange such contracts is incidental to the purposes for which corporations are organized. No subscriber shall be found to be in the business of insurance as a result of exchanging reciprocal interinsurance contracts.

History

• Source: Notice of Emergency and Proposed Rulemaking published at 54 DCR 12099 (December 14, 2007)[EXPIRED]; as amended by Notice of Final Rulemaking published at 55 DCR 479, 485 (January 18, 2008).

26-A DCMR § 4017 SUBSCRIBERS’ ADVISORY COMMITTEE

4017.1 The advisory committee of a domestic reciprocal insurer exercising the subscribers’ rights shall be selected under such rules as the subscribers adopt. The advisory committee may be known as and referred to as a board of directors, board of trustees, or such other designation as the committee chooses.

4017.2 Not less than two thirds of such committee shall be subscribers other than the attorney or any person employed by, representing or having a financial interest in the attorney, unless the reciprocal insurer and the attorney are under common “control” as that word is defined pursuant to section 2(2) of the Holding Company System Act of 1993, effective October 21, 1993 (D.C. Law 10-44; D.C. Official Code § 31-701(2)).

4017.3 The committee shall:

(a) Supervise the finances of the insurer;

(b) Supervise the insurer’s operations to such extent as to assure conformity with the subscribers’ agreement and power of attorney;

(c) Procure the audit of the accounts and records of the insurer and of the attorney at the expense of the insurer; and

(d) Have such additional powers and functions as may be conferred by the subscribers’ agreement.

History

• Source: Notice of Emergency and Proposed Rulemaking published at 54 DCR 12099 (December 14, 2007)[EXPIRED]; as amended by Notice of Final Rulemaking published at 55 DCR 479, 486 (January 18, 2008).

26-A DCMR § 4018 SUBSCRIBERS’ LIABILITY GENERALLY

4018.1 Subscribers shall be nonassessable unless specifically provided otherwise in the written power of attorney or in the written subscribers’ agreement.

4018.2 The liability of each assessable subscriber under an assessable policy for the obligations of the reciprocal insurer shall be an individual, several, and proportionate liability, and not joint. Each subscriber under an assessable policy shall have a contingent assessment liability, in the amount provided for in the power of attorney or in the subscribers’ agreement, for payment of actual losses and expenses incurred while the subscriber’s policy was in force. Such contingent liability may be at the rate of not less than one nor more than ten times the premium or premium deposit stated in the policy, and the maximum aggregate thereof shall be computed in the manner set forth in section 4023 of this chapter.

4018.3 No policy issued by the insurer shall be assessable unless it contains a statement of the contingent liability set in type of the same prominence as the insuring clause.

History

• Source: Notice of Emergency and Proposed Rulemaking published at 54 DCR 12099 (December 14, 2007)[EXPIRED]; as amended by Notice of Final Rulemaking published at 55 DCR 479, 486 (January 18, 2008).

26-A DCMR § 4019 SUBSCRIBERS’ LIABILITY ON JUDGMENT

4019.1 No action shall lie against any subscriber upon any obligation claimed against the insurer.

History

• Source: Notice of Emergency and Proposed Rulemaking published at 54 DCR 12099 (December 14, 2007)[EXPIRED]; as amended by Notice of Final Rulemaking published at 55 DCR 479, 487 (January 18, 2008).

26-A DCMR § 4020 ASSESSMENTS

4020.1 Assessments may from time to time be levied upon subscribers of a domestic reciprocal insurer having contingent liability under the terms of their policies by the attorney upon approval in advance by the subscribers’ advisory committee and the Commissioner or by the Commissioner during rehabilitation or liquidation of the insurer.

4020.2 Each subscriber’s share of a deficiency for which an assessment is made shall not exceed the subscriber’s aggregate contingent liability as computed in accordance with section 4023 of this chapter, and shall be computed by applying to the premium earned on the subscriber’s policy or policies, during the period to be covered by the assessment, the ratio of the total deficiency to the total premiums earned from all policies subject to the assessment.

4020.3 In computing the earned premiums for the purposes of this section, the gross premium received by the insurer for the policy shall be sued as a base from which charges not recurring upon the renewal or extension of the policy shall be deducted.

4020.4 Retrospective, audit, or other premium adjustments provided for in any policy of insurance shall not be considered assessments.

4020.5 No subscriber shall have an offset against any assessment for which such subscriber is liable on account of any claim for unearned premium or losses payable.

History

• Source: Notice of Emergency and Proposed Rulemaking published at 54 DCR 12099 (December 14, 2007)[EXPIRED]; as amended by Notice of Final Rulemaking published at 55 DCR 479, 487 (January 18, 2008).

26-A DCMR § 4021 TIME LIMIT FOR ASSESSMENTS

4021 Every subscriber of a domestic reciprocal insurer having contingent liability shall be liable for and shall pay the subscriber’s share of any assessment, as computed and limited in accordance with this chapter if:

(a) While the subscriber’s policy is in force or within three years after its termination, the subscriber is notified by either the attorney or the Commissioner of his/her intention to levy such assessment; or

(b) An Order to Show Cause why a receiver, conservator, rehabilitator, or liquidator of the insurer should not be appointed is issued while the subscriber’s policy is in force or within three years after its termination.

History

• Source: Notice of Emergency and Proposed Rulemaking published at 54 DCR 12099 (December 14, 2007)[EXPIRED]; as amended by Notice of Final Rulemaking published at 55 DCR 479, 487 (January 18, 2008).

26-A DCMR § 4022 AGGREGATE OR CONTINGENT LIABILITY

4022.1 No one policy or subscriber as to such policy shall be assessed or charged with an aggregate or contingent liability as to the obligations incurred by a domestic reciprocal insurer in any one calendar year in excess of the amount provided for in the power of attorney or in the subscribers’ agreement, computed solely upon premium earned on such policy during that year.

History

• Source: Notice of Emergency and Proposed Rulemaking published at 54 DCR 12099 (December 14, 2007)[EXPIRED]; as amended by Notice of Final Rulemaking published at 55 DCR 479, 488 (January 18, 2008).

26-A DCMR § 4023 NONASSESSABLE POLICIES

4023.1 Any domestic reciprocal insurer may issue nonassessable policies.

4023.2 If a reciprocal insurer has a surplus of assets over all liabilities at least equal to the minimum capital stock and surplus required to be maintained by a domestic stock insurer authorized to transact like kinds of insurance, upon application of the attorney and as approved by the subscribers’ advisory committee, the Commissioner shall issue a certificate authorizing the insurer to extinguish the contingent liability of subscribers under all its policies previously issued.

4023.3 If required by the laws of another state in which the reciprocal insurer is transacting insurance as an authorized insurer, the reciprocal insurer may issue polices providing for the contingent liability of such of its subscribers as may acquire such policies in such state and need not extinguish the contingent liability applicable to policies theretofore in force in such state.

4023.4 Retrospective, audit or other premium adjustments provided for in any policy of insurance shall not be considered assessments. Any policy of insurance issued by a reciprocal may provide for a minimum and maximum premium.

History

• Source: Notice of Emergency and Proposed Rulemaking published at 54 DCR 12099 (December 14, 2007)[EXPIRED]; as amended by Notice of Final Rulemaking published at 55 DCR 479, 488 (January 18, 2008).

26-A DCMR § 4024 SUBSCRIBERS’ SHARE IN ASSETS

4024.1 Upon the liquidation of a domestic reciprocal insurer, its remaining assets shall be distributed according to such reasonable plan as the Commissioner may approve.

4024.2 No subscriber shall receive any distribution from a liquidated domestic reciprocal insurer until:

(a) All indebtedness and policy obligations are discharged;

(b) Any contributions of the attorney or other persons to the surplus of the reciprocal insurer have been returned; and

(c) Any unused premium, savings, or credits held by the reciprocal insurer are returned.

History

• Source: Notice of Emergency and Proposed Rulemaking published at 54 DCR 12099 (December 14, 2007)[EXPIRED]; as amended by Notice of Final Rulemaking published at 55 DCR 479, 488 (January 18, 2008).

26-A DCMR § 4025 MERGER, CONVERSION, REORGANIZATION

4025.1 A domestic reciprocal insurer may merge with another reciprocal insurer or be converted to a stock or mutual insurer upon affirmative vote of not less than two thirds of its subscribers who are authorized to vote on such a merger or conversion, provided that timely notice of the proposed action is provided to the Commissioner and that the Commissioner approves in advance of all of the terms of the proposed merger or conversion.

4025.2 Such a stock or mutual insurer shall be subject to the same capital or surplus requirements and shall have the same rights as a like domestic insurer transacting like kinds of insurance.

4025.3 The Commissioner shall not approve any plan for such merger or conversion which inequitable to subscribers, or which, if for conversion to a stock insurer, does not give each subscriber preferential right to acquire stock of the proposed insurer proportionate to each subscriber’s interest in the reciprocal insurer as determined in accordance with section 4025 of this chapter and a reasonable length of time within which to exercise such right.

4025.4 A domestic reciprocal may enter into any reorganization transaction with one or more other insurers where the reciprocal is the surviving or disappearing entity.

History

• Source: Notice of Emergency and Proposed Rulemaking published at 54 DCR 12099 (December 14, 2007)[EXPIRED]; as amended by Notice of Final Rulemaking published at 55 DCR 479, 489 (January 18, 2008).

26-A DCMR § 4026 IMPAIRED RECIPROCALS

4026.1 Whenever the assets of a domestic reciprocal insurer are insufficient to discharge its liabilities (other than any liability on account of funds contributed by the attorney or others) and to maintain the required surplus, its attorney shall forthwith make up the deficiency or levy an assessment upon the subscribers that have been issued assessable policies. Such assessment shall not be in excess of any limitation set forth in the power of attorney or the insurance policy issued to the subscriber by the reciprocal.

4026.2 If the attorney fails to make up such deficiency or to make the assessment within 30 days after the Commissioner orders such attorney to do so or if the deficiency is not fully made up within 60 days after the date the assessment was made, the insurer shall be deemed insolvent and shall be proceeded against as authorized by Insurers Rehabilitation and Liquidation Act of 1993, effective October 15, 1993 (D.C. Law 10-35; D.C. Official Code § 31-1301 et seq.).

4026.3 If liquidation of such an insurer is ordered, an assessment shall be levied upon the subscribers that have been issued assessable policies for such an amount, subject to limits as provided by this act, as the Commissioner determines to be necessary to discharge all liabilities of the insurer, exclusive of any funds contributed by the attorney or other persons but including the reasonable cost of the liquidation.

History

• Source: Notice of Emergency and Proposed Rulemaking published at 54 DCR 12099 (December 14, 2007)[EXPIRED]; as amended by Notice of Final Rulemaking published at 55 DCR 479, 489 (January 18, 2008).

26-A DCMR § 4099 DEFINITIONS

Where applicable, the words and phrases used in this chapter shall have the same meaning as is found in the Captive Insurance Company Act of 2004, effective March 17, 2005 (D.C. Law 15-262; D.C. Official Code § 31-3131.01 et seq.). Additionally, for purpose of this chapter, the term:

“Act” means the Captive Insurance Company Act of 2004, effective March 17, 2005 (D.C. Law 15-262; D.C. Official Code § 31-3131.01 et seq.).

“Assessable policy” means an insurance policy that permits an insurer to require its policyholders to contribute additional monies to the insurer in the event that the insurer has insufficient funds to cover losses it is obligated to pay.

“Reciprocal insurers” or “reciprocals” mean an unincorporated insurance company, under a common name, in which subscribers exchange insurance policies through an Attorney in Fact, having the authority to obligate each subscriber both as insured and insurer, for the purpose of transferring and distributing insurance risks among its subscribers.

“Reciprocal interinsurance contract” means an insurance policy that is used to transfer and distribute insurance risks in a reciprocal insurance company.

“Risk retention group” has the same meaning as the term is defined in section 2(12) of the Risk Retention Act of 1993, effective October 21, 1993 (D.C. Official § 31-4101(12)).

“Subscriber” means one or more persons who obtain insurance through the exchange of agreements of indemnity in a reciprocal insurer and who are obligated under a reciprocal insurance agreement.

History

• Source: Notice of Emergency and Proposed Rulemaking published at 54 DCR 12099 (December 14, 2007)[EXPIRED]; as amended by Notice of Final Rulemaking published at 55 DCR 479, 489 (January 18, 2008).

26-A41 TITLE INSURANCE RATE MAKING

26-A DCMR § 4101 SCOPE OF CHAPTER

4101.1 This chapter applies to all kinds and classes of insurance that insure or guarantee:

(a) Titles to real or leasehold property or an estate in real or leasehold property;

(b) Against loss by reason of defects, encumbrances, liens, or charges on real or leasehold property or an estate in real or leasehold property;

(c) The validity, priority, and status of liens on real or leasehold property or an estate in real or leasehold property; or

(d) The correctness and sufficiency of searches for instruments, liens, charges, or other matters affecting the title to real or leasehold property or an estate in real or leasehold property.

4101.2 This chapter applies to a person that makes guarantees or issues insurance described in subsection 4101.1(a) of this section.

Scope: Notice of Emergency and Proposed Rulemaking published at 57 DCR 12276 (December 24, 2010)[EXPIRED]; as amended by Notice of Final Rulemaking published at 58 DCR 2487 (March 18, 2011).

26-A DCMR § 4102 INTERIM USE OF RATES

4102.1 Notwithstanding any other provision of this chapter, title insurers may use the premium rate schedules in effect prior to the applicability date of the Fiscal Year 2011 Budget Support Act of 2010, effective September 24, 2010 (D.C. Law 18-223; 57 DCR 6242) (“Title Insurance Insurer Act of 2010”) on an interim basis until March 31, 2011.

Scope: Notice of Emergency and Proposed Rulemaking published at 57 DCR 12276 (December 24, 2010)[EXPIRED]; as amended by Notice of Final Rulemaking published at 58 DCR 2487, 2488 (March 18, 2011).

26-A DCMR § 4103 RATE MAKING STANDARDS

4103.1 All title insurance rates shall be made in accordance with this section.

4103.2 Rates shall be reasonable and adequate for the class of risks to which they apply.

4103.3 Rates may not discriminate unfairly between risks that involve essentially the same hazards and expense elements.

4103.4 Due consideration shall be given to:

(a) Past and prospective loss experience within and outside the District;

(b) A reasonable margin for profit and contingencies;

(c) The cost of participating insurance;

(d) The percentage to be allocated to reserve;

(e) Past and prospective operating expenses; and

(f) All other relevant factors fairly attributable to the business of title insurance within and outside of the District.

4103.5 Guarantees may be grouped by classifications for the establishment of rates and

minimum premiums.

4103.6 A special or unusual guarantee that is more hazardous to the title insurer than

ordinary title guarantees because of an alleged irregularity or a difference in

interpretation or application of law that might affect marketability of title, may be

classified individually and separately according to the circumstances peculiar to

each case.

Scope: Notice of Emergency and Proposed Rulemaking published at 57 DCR 12276 (December 24, 2010)[EXPIRED]; as amended by Notice of Final Rulemaking published at 58 DCR 2487, 2488 (March 18, 2011).

26-A DCMR § 4104 RATE FILINGS

4104.1 Except as otherwise provided in this subsection, each title insurer shall file with

the Commissioner all rates or premiums, and supplementary rate information that

it proposes to use.

4104.2 A filing is not required for rates or premiums for a special or unusual guarantee as

described in subsection 4103.6.

4104.3 Each filing shall indicate the character or extent of coverage contemplated under the rates and premiums for which it is made.

4104.4 A title insurer may not make a change in rates or premiums or in the forms of contracts, policies, or guarantees of insurance unless a report that indicates the change has been filed with and approved by the Commissioner.

Scope: Notice of Emergency and Proposed Rulemaking published at 57 DCR 12276 (December 24, 2010)[EXPIRED]; as amended by Notice of Final Rulemaking published at 58 DCR 2487, 2489 (March 18, 2011).

26-A DCMR § 4105 APPROVAL OR DISAPPROVAL OF FILINGS

4105.1 Unless the Commissioner finds that a filing does not meet the requirements of this

chapter, or is otherwise contrary to other applicable law, the Commissioner shall

approve the filing.

4105.2 If the Commissioner approves a filing prior to the waiting period in subsection

4105.4, or disapproves a filing, such action must be made in writing.

4105.3 If the Commissioner disapproves a filing, the Commissioner shall specify how the

filing fails to meet the requirements of this chapter or is otherwise contrary to

other applicable law.

4105.4 If a filing is not disapproved by the Commissioner within thirty (30) days after the date of filing, or within forty-five (45) days after the date of filing if the Commissioner extends the waiting period in writing during the initial thirty (30) day period, the filing is deemed approved and the effective date of the filing is the end of the thirty (30) day or forty-five (45) day waiting period.

4105.5 The Commissioner shall have the authority to investigate and hold a hearing to

review rate filings on the same basis as, and in accordance with, the provisions

found in § 4 of An Act To provide regulation of certain insurance rates in the

District of Columbia, and for other purposes, approved May 20, 1948 (D.C.

Official Code § 31-2704; 62 Stat. 243).

4105.6 In determining the necessity for an adjustment of title insurance rates, the

Commissioner shall be bound by the provisions of this chapter or other applicable

law.

Scope: Notice of Emergency and Proposed Rulemaking published at 57 DCR 12276 (December 24, 2010)[EXPIRED]; as amended by Notice of Final Rulemaking published at 58 DCR 2487, 2489 (March 18, 2011).

26-A DCMR § 4106 FINANCIAL DATA AND OTHER INFORMATION

4106.1 Each title insurer subject to this chapter shall provide to the Commissioner on a uniform basis financial data and any other information that the Commissioner requires in the regulation of rates.

4106.2 The financial data to be provided shall include:

(a) Rates, taxes, general expenses, allocated and unallocated loss adjustment expenses, licenses, and fees; and

(b) All other expenses that relate to the procurement of business not specifically listed as commissions, including dividends, retainers, stock, office space, and any other valuable consideration.

4106.3 The information to be provided under this section shall be supplied on forms provided or approved by the Commissioner.

Scope: Notice of Emergency and Proposed Rulemaking published at 57 DCR 12276 (December 24, 2010)[EXPIRED]; as amended by Notice of Final Rulemaking published at 58 DCR 2487, 2490 (March 18, 2011).

26-A DCMR § 4107 EXCHANGE OF INFORMATION AND EXPERIENCE DATA

4107.1 To further more equitable establishment and adjustment of rates and premiums and forms of contracts, policies, or guarantees of insurance, the Commissioner and each title insurer may:

(a) Exchange information and experience data with each other, with insurance regulatory officials and insurers in other states, and with national organizations and associations, including the National Association of Insurance Commissioners; and

(b) Consult and cooperate with each other about rate and premium making and forms of contracts, policies, and guarantees of insurance.

Scope: Notice of Emergency and Proposed Rulemaking published at 57 DCR 12276 (December 24, 2010)[EXPIRED]; as amended by Notice of Final Rulemaking published at 58 DCR 2487, 2490 (March 18, 2011).

26-A DCMR § 4108 PROHIBITED CONTRACTS, POLICIES, AND GUARANTEES OF INSURANCE; COMMISSIONS AUTHORIZED

4108.1 A title insurer may not make or issue a contract, policy, or guarantee of insurance except in accordance with filings approved as provided in this chapter.

4108.2 Each title insurer shall use the rates or premiums as approved by the Commissioner and may not deviate from the rates or premiums or allow to or for the account of an insured a rebate or discount on the rates or premiums payable.

4108.3 A title insurer may pay or allow a commission to a licensed insurance producer of the title insurer as compensation for procuring business.

Scope: Notice of Emergency and Proposed Rulemaking published at 57 DCR 12276 (December 24, 2010)[EXPIRED]; as amended by Notice of Final Rulemaking published at 58 DCR 2487, 2490 (March 18, 2011).

26-A DCMR § 4109 FALSE OR MISLEADING INFORMATION

4109.1 A person may not knowingly give false or misleading information to the Commissioner, an insurer, or another person if the information will affect the proper determination of rates or premiums or the proper issuance of a contract, policy, or guarantee of insurance.

Scope: Notice of Emergency and Proposed Rulemaking published at 57 DCR 12276 (December 24, 2010)[EXPIRED]; as amended by Notice of Final Rulemaking published at 58 DCR 2487, 2491 (March 18, 2011).

26-A DCMR § 4110 PENALTIES

4110.1 The Commissioner may impose any administrative penalty authorized under, and in accordance with, the Title Insurance Insurer Act of 2010.

Scope: Notice of Emergency and Proposed Rulemaking published at 57 DCR 12276 (December 24, 2010)[EXPIRED]; as amended by Notice of Final Rulemaking published at 58 DCR 2487, 2491 (March 18, 2011).

26-A42 UNIFORM CREDENTIALING AND RE-CREDENTIALING FORM

26-A DCMR § 4200 APPLICABILITY

4200.1 Each health insurer or its credentialing intermediary, and § 44-501(a) entities listed in the Health-Care and Community Residence Facility, Hospice and Home Care Licensure Act of 1983, effective February 24, 1984 (D.C. Law 5-48, D.C. Official Code § 44-501) must comply with these rules one hundred twenty (120) days after the promulgation of the final regulations.

History

• Source: Notice of Final Rulemaking published at 53 DCR 6531 (August 11, 2006).

26-A DCMR § 4201 APPLICATION FOR BECOMING CREDENTIALED OR RE-CREDENTIALED

4201.1 Each health insurer or its credentialing intermediary, and § 44-501(a) entities shall accept the current credentialing/re-credentialing form attached to this chapter as Appendix 39-1 as the sole application for credentialing and re-credentialing of a healthcare provider for participation on a provider panel.

4201.2 A copy of the “Provider Application” may be obtained from the department.

4201.3 The “Provider Application” form is available in hard copy and on-line at the department’s website at www.disr.dc.gov

History

• Source: Notice of Final Rulemaking published at 53 DCR 6531 (August 11, 2006).

26-A DCMR § 4202 PENALTIES

4202.1 The commissioner may impose a penalty not to exceed $500.00 against any health insurer or § 44-501(a) entity for each violation of the Act, by the health insurer, the § 44-501(a) entity, or authorized credentialing intermediary.

4202.2 Any health insurer or § 44-5019(a) entity found by the Commissioner to be in violation of the Act shall be notified in writing by the Commissioner of the basis of the violation and the amount of the penalty.

4202.3 The health insurer or § 44-501(a) entity shall pay the penalty in the notice or respond in writing to the Commissioner with an explanation of its conduct within thirty (3) days.

History

• Source: Notice of Final Rulemaking published at 53 DCR 6531, 6532 (August 11, 2006).

26-A DCMR § 4299 DEFINITIONS

4299.1 When used in this chapter, the following terms and phrases shall have the meanings ascribed:

“Act” means the Health Insurers and Credentialing Intermediaries Uniform Credentialing Form Act of 2002 (D.C. Law 14-96; D.C. Official Code § 31-3251 et seq.(Supp. 2002).

“Commissioner” means Commissioner of the District of Columbia Department of Insurance, Securities, and Banking.

“Credentialing Intermediary” means a person to whom a health insurer has delegated credentialing or re-credentialing authority and responsibility.

“Health insurer” means any person that provides one or more health benefit plans or insurance in the District of Columbia, including an insurer, a hospital and medical services corporation, a fraternal benefit society, or any other person providing a plan of health insurance subject to the authority of the Commissioner.

“Provider application” means the uniform credentialing form that the Commissioner of this department adopted to comply with the Health Insurers and Credentialing Intermediaries Uniform Credentialing Form statute.

“Provider panel” means providers that contract with a health insurer to provide health care services to the enrollees under a health benefit plan of the health insurer.

“Uniform credentialing form” means the form designed by the Commissioner through regulation for use by a health insurer or its credentialing intermediary for credentialing and re-credentialing of a health care provider for participation on a provider panel.

“§44-501 entity” means an agency, organization, facility, or distinct part of any of them, licensed under D.C. Official Code § 44-501 et seq. (2001).

History

• Source: Notice of Final Rulemaking published at 53 DCR 6531, 6532 (August 11, 2006).

26-A43 UNIFORM CONSULTATION REFERRAL FORM

26-A DCMR § 4300 APPLICABILITY

4300.1 Each health insurer that requires an enrollee or subscriber to have a written referral in order to receive services shall use the uniform consultation referral form adopted by the Commissioner.

4300.2 Each health insurer must comply with these rules beginning with referrals issued 120 days after the promulgation of the final regulation.

History

• Source: Notice of Final Rulemaking published at 54 DCR 5295 (May 25, 2007); as corrected by Errata Notice published at 58 DCR 2410 (March 18, 2011).

26-A DCMR § 4301 CONSULTATION REFERRAL FORM

4301.1 The health insurer may not impose as a condition of coverage a requirement to modify the uniform consultation referral form or to require the submission of additional consultation referral forms.

4301.2 The health insurer may provide a separate set of instructions for use by the health care provider regarding the health insurer’s specific managed care requirements7, and the instructions may be preprinted on the back of the uniform consultation referral form, if the instructions do not result in any modifications in the format, of, or information categories directed to be supplied on the front of the uniform consultation referral form.

4301.3 The health insurer may provide stamps or preprinted stickers to include additional information to be inserted in the health insurer information block.

4301.4 The health insurer may preprint the designated health insurer information in the health insurer information field on the uniform consultation referral form.

4301.5 The health care provider shall use the uniform consultation referral form and complete it properly.

4301.6 The consultant or facility provider shall accept a properly completed uniform consultation referral form.

History

• Source: Notice of Final Rulemaking published at 54 DCR 5295 (May 25, 2007).

26-A DCMR § 4302 ELECTRONIC TRANSFER

4302.1 The uniform consultation referral form may be transmitted by facsimile, so long as, the format and the data on the uniform consultation referral form remain unchanged.

History

• Source: Notice of Final Rulemaking published at 54 DCR 5295, 5296 (May 25, 2007).

26-A DCMR § 4399 DEFINITIONS

4399.1 “Health benefits plan” mans any accident and health insurance policy or certificate, hospital and medical services corporation contract, health maintenance organization subscriber contract, plan provided by a multiple employer welfare arrangement, or plan provided by another benefit arrangement. The term “health benefit plan” does not mean accident only, credit, or disability insurance; coverage of Medicare services or federal employee health plans, pursuant to contracts with the United States government; Medicare supplemental or long-term insurance; dental only or vision only insurance; specified disease insurance; hospital confinement indemnity coverage; limited benefit health coverage; coverage issued as a supplement to liability insurance, insurance arising out of workers’ compensation or similar law; automobile medical payment insurance; medical expense and loss of income benefits; or insurance under which benefits are payable with or without regard to fault and that is statutorily required to be contained in any liability insurance policy or equivalent self-insurance.

“Health insurer” means any person that provides one or more health benefit plans or insurance in the District of Columbia, including an insurer, a hospital and medical services corporation, a fraternal benefit society, a health maintenance organization, a multiple employer welfare arrangement, or any other person providing a plan of health insurance subject to the authority of the Commissioner.

“Commissioner” means the Commissioner of the Department of Insurance, Securities and Banking.

History

• Source: Notice of Final Rulemaking published at 54 DCR 5295, 5296 (May 25, 2007).

26-A44 CHILD-ONLY POLICIES

26-A DCMR § 4401 SCOPE OF CHAPTER

4401.1 This chapter is applicable to child-only policies issued on or after September 23, 2010.

History

• Source: Notice of Emergency and Proposed Rulemaking published at 57 DCR 12281 (December 24, 2010)[EXPIRED]; as amended by Notice of Final Rulemaking published at 58 DCR 2492 (March 18, 2011).

26-A DCMR § 4402 CHILD-ONLY POLICY

4402.1 Carriers shall issue or deliver a child-only policy in the District in accordance with the requirements of this chapter.

History

• Source: Notice of Emergency and Proposed Rulemaking published at 57 DCR 12281 (December 24, 2010)[EXPIRED]; as amended by Notice of Final Rulemaking published at 58 DCR 2492 (March 18, 2011).

26-A DCMR § 4403 OPEN ENROLLMENT PERIODS

4403.1 A carrier issuing or delivering child-only policies in the District shall accept applications for coverage during the open enrollment periods outlined in this chapter.

4403.2 Each carrier issuing child-only policies shall hold open enrollment periods twice a year from:

(a) January 1 thru January 31 of each year; and

(b) July 1 thru July 31 of each year.

4403.3 During the open enrollment periods, any applicant for a child-only policy shall be offered coverage on a guaranteed issue basis, without any limitations or riders based on medical condition or health status.

4403.4 Notice of the open enrollment period and instructions on how to apply during the open enrollment period shall be displayed prominently on the carrier’s website for the duration of the open enrollment period.

4403.5 During open enrollment, a carrier may request from an applicant information to determine whether the proposed insured has substantially similar coverage available and may obtain an attestation from an applicant that the proposed insured does not have substantially similar coverage available.

4403.6 Applications for coverage during the open enrollment period under paragraph 4403.2(a) of this section that are received:

(a) On or before January 15 shall become effective on the first day of February of the same year; and

(b) After January 15 shall become effective no later than February 16 of the same year.

4403.7 Applications for coverage during the open enrollment period under paragraph 4403.2(b) of this section that are received:

(a) On or before July 15 shall become effective on the first day of August of the same year; and

(b) After July 15 shall become effective no later than August 16 of the same year.

4403.8 Notwithstanding the provisions of subsection 4403.1 of this section, a carrier may reject an application during the open enrollment period if the child has other substantially similar coverage available.

History

• Source: Notice of Emergency and Proposed Rulemaking published at 57 DCR 12281 (December 24, 2010)[EXPIRED]; as amended by Notice of Final Rulemaking published at 58 DCR 2492 (March 18, 2011)

26-A DCMR § 4404 APPLICATIONS RECEIVED OUTSIDE OPEN ENROLLMENT PERIOD

4404.1 If a carrier receives an application for a child-only policy outside the open enrollment periods, the carrier shall accept the application if the applicant meets the criteria set forth in section 4405 of this chapter.

4404.2 Except as provided in subsection 4404.1 of this section, if a carrier receives an application for a child-only policy outside the open enrollment period, the carrier may deny the application and notify the applicant of the next open enrollment period and how to apply for coverage during the open enrollment period.

4404.3 If a carrier accepts an application outside the open enrollment period, the carrier shall offer coverage on a guaranteed issue basis, without any limitations or riders based on medical condition or health status.

History

• Source: Notice of Emergency and Proposed Rulemaking published at 57 DCR 12281 (December 24, 2010)[EXPIRED]; as amended by Notice of Final Rulemaking published at 58 DCR 2492, 2494 (March 18, 2011).

26-A DCMR § 4405 COURT ORDERED COVERAGE

4405.1 Carriers issuing child-only policies shall accept an application for a child-only policy outside of the open enrollment periods described in section 4403 of this chapter if a court has ordered health benefits be provided to the child.

4405.2 A carrier may request a copy of a valid court order mandating health benefits for the child.

History

• Source: Notice of Emergency and Proposed Rulemaking published at 57 DCR 12281 (December 24, 2010)[EXPIRED]; as amended by Notice of Final Rulemaking published at 58 DCR 2492, 2494 (March 18, 2011)

26-A DCMR § 4406 UNDERWRITING

4406.1 A carrier may not deny issuance of a child-only policy due to medical underwriting.

4406.2 A carrier may conduct medical underwriting to determine the appropriate premium rate for a child-only policy.

History

• Source: Notice of Emergency and Proposed Rulemaking published at 57 DCR 12281 (December 24, 2010)[EXPIRED]; as amended by Notice of Final Rulemaking published at 58 DCR 2492, 2494 (March 18, 2011)

26-A DCMR § 4499 DEFINITIONS

4499.1 For the purpose of this chapter, the term:

Applicant means a child or an individual on behalf of a child who submits an application for a child-only policy.

Carrier means an insurer, nonprofit health service plan, group hospital and medical service corporation, or a health maintenance organization.

Commissioner means the Commissioner of the Department of Insurance, Securities and Banking.

Child means an individual under the age of nineteen (19).

Child-only policy means an individual health benefit plan issued or delivered to a child in the District of Columbia.

Health benefit plan means a health insurance contract issued by a carrier that includes benefits for medical care. “Health benefit plan" does not include:

(a) Any of the following:

Coverage only for accident or disability income insurance;

Coverage issued as a supplement to liability insurance;

Liability insurance, including general liability insurance and automobile liability insurance;

Workers’ compensation or similar insurance;

Automobile medical payment insurance;

Credit-only insurance;

Coverage for on-site medical clinics; and

Other similar insurance coverage, specified in federal regulations issued pursuant to the Health Insurance Portability and Accountability Act of 1996, approved August 21, 1996 (Pub. L. No. 104-191; 110 Stat. 1936).

(b) The following benefits if they are provided under a separate contract of insurance:

Limited-scope dental or vision benefits;

Benefits for long-term care, nursing home care, home health care, community-based care, or any combination of these benefits; and

Similar, limited benefits as are specified in federal regulations issued pursuant to the Health Insurance Portability and Accountability Act of 1996, approved August 21, 1996 (Pub. L. No. 104-191; 110 Stat. 1936).

(c) The following benefits if offered as independent, non-coordinated benefits:

(1) Coverage only for a specified disease or illness; and

(2) Hospital indemnity or other fixed indemnity insurance.

(d) The following benefits if offered as a separate insurance policy:

(1) Medicare supplemental health insurance, as defined under § 1882(g)(1) of the Social Security Act;

(2) Coverage supplemental to the coverage provided under chapter 55 of title 10, United States Code; and

(3) Similar supplemental coverage provided to coverage under an employer sponsored plan.

“Individual health benefit plan” means a health benefit plan issued or delivered to an individual, including:

(a) A certificate issued or delivered to an individual in the District that evidences coverage under a policy or contract issued to a trust or association or other similar group of individuals, regardless of the situs of the delivery of the policy or contract, if the individual pays the premium and is not being covered under the policy or contract under either federal or State continuation of benefits provisions; and

(b) Short-term limited duration insurance.

“Substantially similar coverage” means coverage under any group health benefit plan or employer-sponsored plan that provides health benefits to the employees of the employer. “Substantially similar coverage” does not mean a policy or contract issued to a trust or association or other similar group of individuals that is an individual health benefit plan.

History

• Source: Notice of Emergency and Proposed Rulemaking published at 57 DCR 12281 (December 24, 2010)[EXPIRED]; as amended by Notice of Final Rulemaking published at 58 DCR 2492, 2494 (March 18, 2011).

26-A45 OVERSIGHT ROLE AND FIDUCIARY OBLIGATIONS OF MEMBERS OF THE BOARD OF DIRECTORS OF A HOSPITAL AND MEDICAL SERVICES CORPORATION

26-A DCMR § 4500 APPLICABILITY

4500.1 These rules shall apply to domestic corporations issued a certificate of authority pursuant to § 6 of the Hospital and Medical Services Corporation Regulatory Act of 1996, effective April 9, 1997 (D.C. Law 11-245; D.C. Official Code § 31-3505 (2001)).

4500.2 A corporation shall comply with the requirements of these rules within 30 days after they become effective.

History

• Source: Notice of Final Rulemaking published at 51 DCR 9011 (September 17, 2004).

26-A DCMR § 4501 REQUIRED CODE OF CONDUCT FOR DIRECTORS, OFFICERS, AND EMPLOYEES OF THE CORPORATION

4501.1 The board of directors of the corporation shall adopt a code of conduct that governs the conduct of the corporation’s directors, officers, and employees.

4501.2 The code of conduct shall be submitted to the Commissioner for approval prior to its adoption by the board of directors. The Commissioner will advise the corporation, in writing, within twenty (20) days after receipt, whether the code of conduct is approved. If the Commissioner disapproves the code of conduct, he or she will specify, in writing, which elements of the code of conduct are inadequate. Any subsequent revisions to the code of conduct shall be submitted to the Commissioner for approval.

4501.3 The corporation’s bylaws shall be amended to require the corporation’s board of directors to adopt policies consistent with the provisions of the code of conduct and any compliance program rules adopted by the Commissioner.

4501.4 The corporation shall file with the Commissioner annually, on or before June 1, a copy of its bylaws, which shall require the corporation’s board of directors to adopt policies consistent with the provisions of the code of conduct and the rules of this chapter.

History

• Source: Notice of Final Rulemaking published at 51 DCR 9011, 9012 (September 17, 2004).

26-A DCMR § 4502 MINIMUM REQUIREMENTS FOR CODE OF CONDUCT

4502.1 The code of conduct adopted by the corporation pursuant to this chapter shall include all fiduciary obligations applicable to directors as set forth in this chapter. In addition, the code of conduct as applicable to directors, officers, and employees shall include provisions that:

(a) Specify prohibited outside activities;

(b) Specify prohibited uses of corporation funds;

(c) Require proper accounting and audit procedures;

(d) Protect the corporation’s handling of confidential medical and financial information;

(e) Require ethical subcontracting;

(f) Prohibit the giving or receive of gifts or gratuities under specific guidelines;

(g) Regulate the purposes and expenses of business travel;

(h) Regulate the business relationships between officers and employees and agents, sales representatives, providers and consultants;

(i) Prohibit payments to government employees;

(j) Require cooperation with the investigation of any violation of the code of conduct, whether undertaken by the corporation or the Commissioner;

(k) Regulate the retention of records;

(l) Prohibit unsafe or unhealthy work place activities;

(m) Prohibit unlawful work place discrimination or harassment;

(n) Prohibit the use or possession of unlawful drugs on corporate property;

(o) Require the reporting of any knowledge of a suspected violation of the code of conduct to the compliance officer; and

(p) Specify the penalties for violations of the code of conduct.

4502.2 The code of conduct may include other provisions consistent with the effective management of the corporation.

History

• Source: Notice of Final Rulemaking published at 51 DCR 9011, 9012 (September 17, 2004).

26-A DCMR § 4503 CODE OF CONDUCT COMPLIANCE PROGRAM

4503.1 The corporation’s board of directors shall appoint a code of conduct compliance officer who shall have the responsibility to investigate all reports of violations of the code of conduct.

4503.2 Suspected violations of the code of conduct shall be reported to the compliance officer who shall then promptly investigate the report and prepare a written report of his findings to the board of directors. The board of directors shall ensure that the compliance officer has the authority and funding to retain independent experts as deemed necessary by compliance officer to assist him or her in any investigations authorized under this section.

4503.3 The board of directors of the corporation shall make a written report to the Commissioner of all cases where the board has determined that there has been a violation of the code of conduct. The report shall set forth the facts upon which any violation of the code of conduct is predicated. The report shall also set forth any remedial action taken by the corporation in response to the finding that a violation has occurred.

4503.4 The corporation shall cooperate with any investigation of a violation of these rules conducted by the Commissioner or other District of Columbia official.

History

• Source: Notice of Final Rulemaking published at 51 DCR 9011, 9013 (September 17, 2004).

26-A DCMR § 4504 FIDUCIARY OBLIGATIONS OF BOARD MEMBERS

4504.1 Directors shall carry out the corporation’s purposes as set forth in its charter. In fulfilling this obligation, directors shall:

(a) Annually review the corporation’s charter, by-laws and District of Columbia and federal law governing the corporation’s operations;

(b) Review the activities of the corporation’s officers, employees, and agents to ensure that they comply with the provisions of the corporation’s charter, by-laws and District of Columbia and federal law governing the corporation’s operations;

(c) Promptly investigate any case where a director learns of a suspected violation of the corporation’s charter, by-laws or state or federal laws governing the corporation’s operations by an officer or employee of the corporation;

(d) Review the use of the corporation’s funds; and

(e) Use professional legal and financial advisors to monitor changes in the law and to ensure the corporation’s compliance with all legal requirements.

4504.2 Directors shall act in good faith, in a reasonably prudent manner, and in a manner reasonably believed to further the best interests of the corporation as a charitable and benevolent institution. In fulfilling this obligation, Directors shall:

(a) Exhibit fairness, openness, and honesty in all corporation business;

(b) Apply sound practical judgment when making decisions for the corporation;

(c) Be attentive to the operations of the corporation and alert to potential problems;

(d) Manage the financial affairs of the corporation carefully and responsibly;

(e) Comply with all regulatory requirements affecting the corporation;

(f) Secure independent professional advice regarding any proposals that may result in a financial benefit for officers of the corporation; and

(g) Secure independent professional advice for any matter beyond the expertise of the board or the board committee considering the issue.

4504.3 Directors shall give their complete and undivided loyalty to the corporation’s mission as set forth in ITS charter. In fulfilling this obligation; Directors shall:

(a) Further the goals of the corporation and not their own interests;

(b) Ensure that any prerequisites of their position are customary for directors of similar corporations;

(c) Ensure that they do not use their position or any information they receive in their official capacity to gain any personal advantage;

(d) Not receive excessive compensation or benefits;

(e) Not receive loans from the corporation; and

(f) Not use their positions to benefit third persons.

4504.4 Directors shall be entitled to rely upon information provided to them by officers and employees, but only to the extent that a reasonable person would believe such information to be reliable and competent. Directors have an affirmative duty to investigate any information provided to them by officers and employees that does not reasonably appear to be reliable and competent.

4504.5 Directors shall be entitled to rely upon the advice of lawyers and accountants regarding a director’s compliance with these rules, but only to the extent that a reasonable person would believe such advice to be reliable and competent. Directors shall obtain a second opinion whenever advice provided to them by lawyers and accountants does not reasonably appear to be reliable competent.

History

• Source: Notice of Final Rulemaking published at 51 DCR 9011, 9014 (September 17, 2004).

26-A DCMR § 4599 DEFINITIONS

4599.1 For the purposes of this chapter, the following terms shall have the meanings ascribed;

Commissioner – the Commissioner of the District of Columbia Department of Insurance, Securities, and Banking.

Compliance officer – the person appointed pursuant to this chapter by the corporation’s board of directors to investigate and report on reports of violations of the corporation’s code of conduct for directors, officers, and employees.

Director – a member of the corporation’s board of directors or board of trustees.

Domestic corporation – a corporation organized under the laws of the District, or formed or organized under an act of Congress.

History

• Source: Notice of Final Rulemaking published at 51 DCR 9011, 9016 (September 17, 2004).

26-A46 PROCEDURES FOR THE DETERMINATION OF EXCESS SURPLUS

26-A DCMR § 4600 APPLICABILITY

4600.1 These rules apply to any domestic hospital and medical services corporations issued a certificate of authority pursuant to section 6 of the Act.

History

• SOURCE: Notice of Final Rulemaking published at 56 DCR 8841 (November 13, 2009).

26-A DCMR § 4601 FILING REQUIREMENTS AND PUBLIC NOTIFICATION

4601.1 All domestic companies licensed under this chapter shall file a financial report with the Commissioner which details the company’s surplus and examines whether the company’s surplus is considered excessive under the Act. The financial report shall detail the appropriate level of surplus necessary for the company to meet the National Association of Insurance Commissioners’ Risk Based Capital Requirements for health insurers pursuant to the Health Organizations RBC Amendment Act of 2002, effective June 18, 2003 (D.C. Law 14-312; D.C. Official Code § 31-3851.01 et seq. (2008 Supp.)); and the Blue Cross/Blue Shield Association capital requirements.

4601.2 The report required by section 4601.1 shall be filed with the Commissioner for his review by June 1st of each year, except that the report with the Commissioner by July 24, 2009.

4601.3 All filings are required to be submitted electronically in a format prescribed by the Commissioner.

4601.4 In determining whether the surplus is excessive, the Commissioner shall consider the National Association of Insurance Commissioners’ Risk Based Capital Requirements for health insurers pursuant to the Health Organizations RBC Amendment Act of 2002, effective June 18, 2003 (D.C. Law 14-312; D.C. Official Code §§ 31-3851.01 et seq. (2008 Supp.)); and the Blue Cross/Blue Shield Association capital requirements.

4601.5 If the preliminary analysis of the Commissioner determines that the company’s surplus is excessive, a public hearing shall be scheduled in accordance with section 4602 to determine whether the company’s surplus is excessive and unreasonably large, and the company shall provide a report to the Commissioner, at least fifteen (15) days prior to the date of the public hearing, a report with the following information:

(a) The company’s actuarially determined risk exposures; and

(b) The company’s expected and unanticipated contingencies.

4601.6 The Commissioner shall post on the Department’s website, all public documentation used in determining whether a company’s surplus is excessive and unreasonably large, and whether surplus is adequate to cover the anticipated and unanticipated losses of the company.

4601.7 The Commissioner shall provide a determination of the amount of surplus attributable to the District of Columbia.

4601.8 In determining whether a company’s surplus attributable to the District is unreasonably large, the Commissioner may include provisions for actuarially determined risk exposures as well as the expected and unanticipated contingencies of the company. The anticipated cost of the corporation’s contribution to the open enrollment program required by section 15 of the Act should be included in the surplus determination.

History

• SOURCE: Notice of Final Rulemaking published at 56 DCR 8841 (November 13, 2009).

26-A DCMR § 4602 PUBLIC HEARINGS

4602.1 The Commissioner shall publish a public notice of hearing in the D.C. Register setting forth the hearing date for the surplus determination, including applicable briefing schedule as determined by the Commissioner. The public notice shall be published no later than forty-five (45) days prior to the hearing. A copy of the public notice shall be served on any corporation subject to the public hearing by U.S. mail no less than forty-five (45) days prior to the hearing.

4602.2 The corporation and members of the public may submit a written report for consideration by the Commissioner no later than fifteen (15) days prior to the hearing date. The corporation’s report shall not exceed 50 pages in length and interested persons’ reports should not exceed fifteen (15) pages. The Commissioner shall publish any report submitted pursuant to this section on the Department’s website no later than two (2) days after receipt of a report.

4602.3 The hearing shall be conducted in accordance with the following requirements:

The hearing shall be transcribed at the cost of the corporation;

The corporation may make an oral presentation.

At the discretion of the Commissioner, interested members of the public may make oral presentations.

The Commissioner may directly, or through independent experts, question witnesses presented by the corporation or any interested person making a presentation.

The corporation should be allowed to make a final statement prior to the conclusion of the hearing. The final statement should not exceed thirty (30) minutes.

4602.4 The record in the hearing shall remain open for seven (7) days to allow the corporation or interested persons to file rebuttal statements, not to exceed eight (8) pages, clarifying any issue or responding to questions raised at the hearing.

4602.5 Following the hearing, the Commissioner shall make a final determination regarding the corporation’s surplus after review of all relevant submissions and with the assistance of experts, if necessary. The cost of any experts used by the Commissioner shall be borne by the corporation.

4602.6 The final determination shall be issued in writing and shall be accompanied by findings of fact and conclusions of law.

4602.7 The transcript of a Public Hearing shall be posted for public inspection on the Department’s website as soon as practicable.

History

• SOURCE: Notice of Final Rulemaking published at 56 DCR 8841 (November 13, 2009).

26-A DCMR § 4603 DETERMINATION OF EXCESSIVE AND UNREASONABLY LARGE SURPLUS

4603.1 If the Commissioner make a final determination that a corporation’s surplus which is attributable to the District is excessive and unreasonably large, the Commissioner shall order the corporation to submit a plan for dedication of the excess to community health reinvestment for approval.

4603.2 The Commissioner shall approve the plan if it is fair and equitable as determined by the Commissioner.

4603.3 Should the corporation fail to submit a plan as ordered or fails to execute within a reasonable time period a plan approved by the Commissioner, the Commissioner shall deny all premium rate increases for subscriber policies written in the District until the company complies with the order or the Commissioner may issue any other order as necessary to enforce the purposes of the Act.

4603.4 The Commissioner shall verify compliance with its approved plan with the use of experts and other professionals, the cost of which shall be borne by the corporation.

History

• SOURCE: Notice of Final Rulemaking published at 56 DCR 8841 (November 13, 2009).

26-A DCMR § 4699 DEFINITIONS

4699.1 “Act” – shall mean the Hospital and Medical Services Corporation Regulatory Act of 1996, effective April 9, 1997 (D.C. Law11-245; D.C. Official Code § 31-3501 et seq. (2001)).

4699.2 “Attributable to the District”- shall mean the process used by the Commissioner to allocate the portion of the surplus of a hospital and medical services corporation that is derived from the company’s operations in the District of Columbia based on the following factors:

(a) The number of policies by geographic area;

(b) The number of health care providers under contract with the company by geographic area; and

(c) Any other factor that the Commissioner deems to be relevant based on the record of a public hearing held pursuant to section 4602.

4699.3 “Department” – District of Columbia Department of Insurance, Securities and Banking.

4699.4 “Unreasonably large surplus” – shall mean a surplus of a corporation that is greater than the sum of the following:

(a) The appropriate NAIC risk-based capital level requirements determined by the Commissioner and the Blue Cross/Blue Shield Association capital requirements based on the company’s surplus from the immediately preceding year; and

(b) The amount of surplus needed by the corporation to meet its expected and unanticipated contingencies.

History

• SOURCE: Notice of Final Rulemaking published at 56 DCR 8841 (November 13, 2009).

26-A47 HEALTH BENEFIT PLAN NETWORK ACCESS AND ADEQUACY

26-A DCMR § 4700 PURPOSE

PURPOSE

4700.1 The purpose and intent of these rules are to:

Establish standards for the creation and maintenance of networks by health carriers; and

Ensure the adequacy, accessibility, transparency, and quality of health care services offered under a network plan by:

Establishing requirements for written agreements between health carriers offering network plans and participating providers regarding the standards, terms, and provisions under which the participating provider will provide covered services to covered persons; and

Requiring health carriers to maintain and follow Access Plans that consist of policies and procedures for ensuring the ongoing sufficiency of provider networks, including any requirements related to their availability to the public.

History

• SOURCE: Final Rulemaking published at 70 DCR 002231 (February 17, 2023). District of Columbia Municipal Regulations Insurance 26-A DCMR § 4700

26-A DCMR § 4701 APPLICABILITY AND SCOPE

4701.1 Except as provided in § 4701.2, this chapter applies to all health carriers that offer network plans, including Medicaid.

4701.2 These rules shall not apply to health carriers that offer network plans that consist solely of limited scope dental plans or limited scope vision plans.

History

• SOURCE: Final Rulemaking published at 70 DCR 002231 (February 17, 2023). District of Columbia Municipal Regulations Insurance 26-A DCMR § 4701

26-A DCMR § 4702 NETWORK ADEQUACY

4702.1 A health carrier providing a network plan shall maintain a network that is sufficient in numbers and facilitates access to appropriate types of providers, including those that are (1) racially, ethnically, and gender diverse; (2) culturally aware of and sensitive to the needs of the diverse communities and gender identities in the District; and (3) serve predominantly low-income, medically underserved individuals, to ensure that all covered services to covered persons, including children and adults, will be accessible without unreasonable travel or delay.

4702.2 Carriers shall submit to the Commissioner a Network Adequacy Report demonstrating compliance with this section, no later than September 1 of each year, for health plans being sold, issued, or renewed on or after January 1 of the subsequent year. If a carrier is unable to demonstrate compliance with any of the provisions set forth under this chapter, the carrier may submit a Request for Waiver Form for approval by the Commissioner. A health carrier may request that the Commissioner deem portions of its filed Network Adequacy Report or Request for Waiver Form confidential. The Commissioner may request additional information to evaluate efforts to achieve a sufficient network when reviewing a waiver request, including but not limited to:

(a) A list of providers or physicians that the carrier attempted to contract with,

identified by name, practice location, and specialty or facility type;

(b) A description of when and how many times the carrier last contacted each provider or physician;

(c) A description of any reason(s) each provider or physician gave for refusing to contract with the carrier;

(d) A description of any modifications to the contract or contracting process offered to providers or facilities described in paragraph (c);

(e) Steps the carrier will take to attempt to improve its network to meet the requirements of this section;

(f) Carriers that provide a majority of their covered professional services through physicians employed by the carrier, or through a single medical group in contract with the carrier, shall include, in a waiver request, a description of how the carrier otherwise meets the access needs of its enrollees, and a description of expansion plans, if applicable;

(g) If this additional information is required because an issuer is not in compliance with any provision of this chapter or requested a waiver, the Commissioner may publish a report for consumers to understand efforts the issuer is taking to come into compliance or why any provision of this chapter does not apply.

4702.3 The Commissioner shall determine the sufficiency of a network in accordance with the requirements of this section.

4702.4 For any provider-to-covered person ratio referenced in this section, the ratio shall be formulated by dividing the number of providers in each network, as listed in the carrier’s submitted Centers for Medicare and Medicaid Services (CMS) Qualified Health Plan (QHP) network template, by the number of covered persons with access to that same network. If a carrier submits more than one Network ID, then separate ratios shall be formulated for each Network ID. For plans that do not use QHP templates, separate ratios shall be formulated for each established network and identified in a manner substantially similar to the Network ID.

4702.5 For plans sold, issued, or renewed on or after January 1, 2024, carriers that provide a majority of covered professional services through physicians employed by the carrier, or through a single medical group in contract with the carrier, shall provide services consistent with the following requirements:

(a) Provider-to-covered person ratios by specialty using the following standards:

Neurology 1:7,500

Cardiology 1:7,500

Hematology/Oncology 1:7,500

Dermatology 1:7,500

Rheumatology 1:7,500

Orthopedics 1:7,500

Nephrology 1:7,500

Plastic Surgery 1:7,500

(b) Provider--to-covered person ratios using the following standards:

Primary Care 1:3,000

(Medical Doctor, Nurse Provider)

Pediatrics 1:3,000

(Board Certified Pediatrician or Family Medicine)

OB/GYN 1:3,000

(Board Certified OB/GYN, Nurse Provider, or Midwife)

Behavioral Health & Substance Use 1:3,000

(Board Certified Neurology or Psychiatry; PsyD, PhD, Masters level clinician in the areas of Social Work, Family Therapy, Licensed Professional Counselors)

Habilitative Services 1:3,000

(Speech, Language and Occupational and Physical Therapists, Applied Behavior Analysis providers)

(c) Physician Accessibility:

(1) On or before March 1 of each year, the Commissioner shall make available to the carriers a list of physicians with a fully privileged, active license to practice medicine in the District of Columbia, and other qualified providers if applicable, their primary practice address in the District of Columbia, and identify the physicians with an office located within half (1/2) of a mile of a Metrorail stop. The Commissioner, in consultation with carriers, shall include additional data elements in the listing as necessary to allow for comparison with carrier data. In the event no update is made available, the carriers shall use the prior year’s list.

(2) The Commissioner shall provide a mechanism for a carrier to report providers who are improperly excluded from the list; included on the list; or improperly identified as having or not having an office within half (1/2) of a mile of a Metrorail stop.

(3) Carriers shall have in their network at least fifteen percent (15%) of providers with a primary practice address within the District of Columbia identified as having an office within half (1/2) of a mile of a Metrorail stop on the list of providers.

(d) Appointment Wait Times:

(1) Carriers shall establish the standards listed below for appointment

wait times for services within the network. The standard shall not be defined in terms of an appointment with a specific provider, but rather any qualified provider employed by the carrier or single contracted medical group who is available within a reasonable time frame to see a covered person.

SERVICE TYPE

TIME FRAME

First appointment with a new or replacement Primary Care physician

within 7 business days

First appointment with a new or replacement provider for Behavioral Health treatment, including Substance Use Treatment

within 7 business days

First appointment with a new or replacement provider for Prenatal Care treatment

within 15 business days

First appointment with a new or replacement provider for Specialty Care treatment

within 15 business days

(2) Carriers shall communicate the appointment wait time standards to all covered persons in their welcome packet, and post or link the standards in online provider directory pages. The language used shall be substantially similar to the following:

Requirements for Timely Medical Appointments

Some customers of [Company Name] have a right to an appointment with an in-network health care provider within a certain number of days. You have this right if:

You buy your health insurance directly or receive it through your employer in the District of Columbia, and

The appointment is for your first visit with a provider. A first visit includes when you:

Schedule your first primary care visit with a provider;

Have changed primary care providers and need to schedule your first visit with a new primary care provider; or

Schedule your first visit with a provider other than your primary care provider, your behavioral health / substance use provider, or your prenatal care provider for specialty treatment.

How quickly can you expect to be seen? The District of Columbia has set the standards below for appointments with an in-network provider.

SERVICE TYPE

TIME FRAME

First appointment with a new or replacement Primary Care physician

within 7 business days

First appointment with a new or replacement provider for Behavioral Health treatment, including Substance Use Treatment

within 7 business days

First appointment with a new or replacement provider for Prenatal Care treatment

within 15 business days

First appointment with a new or replacement provider for Specialty Care treatment

within 15 business days

If you have trouble scheduling an appointment within the timeframes listed, please call [Phone Number] to speak to a [Company Name] representative. That person will help you schedule an appointment within the timeframes listed.

(3) Carriers shall maintain and publicize a toll-free number to a call center through which covered persons can promptly speak to an individual who shall assist them with identifying providers who have appointments available within the timeframes required based on the date of the initial call to the call center.

(4) Carriers shall include information in its Network Adequacy Report summarizing the activities of the call center, including statistics on the number of calls received, the issues addressed, and resolution of the calls.

(e) Essential Community Providers:

(1) Carriers are required to have a sufficient number and geographic distribution of providers employed by the carrier, or single medical group in contract with the carrier, to ensure reasonable and timely access, consistent with the provisions set forth in this subsection, to a broad range of services for low-income or medically underserved individuals in their service areas.

(2) Carriers shall demonstrate that at least twenty percent (20%) of the providers employed by the carrier, or the single medical group in contract with the carrier, are located within Health Professional Shortage Areas (HPSAs), or five-digit ZIP codes designated as Medically Underserved Areas/Populations (MUA/P), as determined by DC Health.

4702.6 For plans sold, issued, or renewed on or after January 1, 2024, carriers that do not provide a majority of covered professional services through physicians employed by the carrier, or through a single medical group in contract with the carrier, shall provide services consistent with the following requirements:

(a) Provider-to-covered person ratios by specialty using the following standards:

Neurology 1:5,000

Cardiology 1:5,000

Hematology/Oncology 1:5,000

Dermatology 1:5,000

Rheumatology 1:5,000

Orthopedics 1:5,000

Nephrology 1:5,000

Plastic Surgery 1:5,000

(b) Provider-to-covered person ratios using the following standards:

Primary Care 1:2,000

(Medical Doctor, Nurse Provider)

Pediatrics 1:2,000

(Board Certified Pediatrician or Family Medicine)

OB/GYN 1:2,000

(Board Certified OB/GYN, Nurse Provider, or Midwife)

Behavioral Health & Substance Use 1:2,000

(Board Certified Neurology or Psychiatry; PsyD, PhD, Masters level clinician in the areas of Social Work, Family Therapy, Licensed Professional Counselors)

Habilitative Services 1:2,000

(Speech, Language and Occupational and Physical Therapists, Applied Behavior Analysis providers)

(c) Physician Accessibility:

(1) On or before March 1 of each year, the Commissioner shall make available to the carriers a list of physicians with a fully privileged, active license to practice medicine in the District of Columbia, and other qualified providers if applicable, among the specialties listed in (3), with their primary practice address in the District of Columbia. The list will identify among those on the list the physicians with an office located within half (1/2) of a mile of a Metrorail stop. The Commissioner, in consultation with carriers, shall include additional data elements in the listing as necessary to allow for comparison with carrier data. In the event no update is made available, the carriers shall use the prior year’s list.

(2) The Commissioner shall provide a mechanism for a carrier to report providers who are improperly excluded from the list; improperly included on the list; or improperly identified as having or not having an office within half (1/2) of a mile of a Metrorail stop.

(3) Carriers shall contract with a minimum of thirty percent (30%) of the providers on the list provided by the Commissioner for each of the specialties listed below:

Primary Care

Pediatrics

OB/GYN

Behavioral Health & Substance Use

Neurology

Cardiology

Hematology / Oncology

Dermatology

Rheumatology

Orthopedics

Nephrology

(4) Carriers shall have in their network at least thirty percent (30%) of

all providers (not just those on the specialty list) with a primary practice address within the District of Columbia identified as having an office within half (1/2) of a mile of a Metrorail stop on the list of providers.

(d) Appointment Wait Times:

Carriers shall establish the standards listed below for appointment wait times for services within the network. The standard shall not be defined in terms of an appointment with a specific provider, but rather any qualified in-network provider.

SERVICE TYPE

TIME FRAME

First appointment with a new or replacement Primary Care physician

within 7 business days

First appointment with a new or replacement provider for Behavioral Health treatment, including Substance Use Treatment

within 7 business days

First appointment with a new or replacement provider for Prenatal Care treatment

within 15 business days

First appointment with a new or replacement provider for Specialty Care treatment

within 15 business days

(2) Carriers shall communicate the appointment wait time standards to

all covered persons in their welcome packet, and post or link the standards in online provider directory pages. The language used shall be substantially similar to the following:

Requirements for Timely Medical Appointments

Some customers of [Company Name] have a right to an appointment with an in-network health care provider within a certain number of days. You have this right if:

You buy your health insurance directly or receive it through your employer in the District of Columbia. and

The appointment is for your first visit with a provider. A first visit includes when you:

Schedule your first primary care visit with a provider;

Have changed primary care providers and need to schedule your first visit with a new primary care provider; or

Schedule your first visit with a provider other than your primary care provider, your behavioral health / substance use provider, or your prenatal care provider for specialty treatment.

How quickly can you expect to be seen? The District of Columbia has set the standards below for appointments with in-network providers.

SERVICE TYPE

TIME FRAME

First appointment with a new or replacement Primary Care physician

within 7 business days

First appointment with a new or replacement provider for Behavioral Health treatment, including Substance Use Treatment

within 7 business days

First appointment with a new or replacement provider for Prenatal Care treatment

within 15 business days

First appointment with a new or replacement provider for Specialty Care treatment

within 15 business days

If you have trouble scheduling an appointment within the timeframes listed, please call [Phone Number] to speak to a [Company Name] representative. That person will help you schedule an appointment within the timeframes listed.

Please note:

1. The [Company Name] representative will likely give you the provider’s contact information and you may need to schedule the appointment yourself.

2. The [Company Name] representative can’t force the specific provider you want to see to give you an appointment within the timeframe, as the provider may have already scheduled appointments with other patients or is otherwise unavailable. Instead, the representative will give you contact information for a qualified, in-network provider who is available to see you within the above timeframe.

3. The [Company Name] representative can’t otherwise guarantee an appointment with a provider you’ve seen before.

(3) Carriers shall maintain and publicize a toll-free number to a call center through which covered persons can speak to an individual who shall assist them with identifying providers who have appointments available within the timeframes required based on the date of the initial call to the call center.

(4) Carrier shall include information in its Network Adequacy Report

summarizing the activities of the call center including statistics on the calls received and resolution of the calls.

(e) Essential Community Providers:

(1) Carriers are required to have a sufficient number and geographic distribution of essential community providers (“ECPs”), where available. An essential community provider is a provider that serves predominantly low-income, medically underserved individuals, including: a health care provider as defined in Section 340(B)(a)(4) of the Public Health Service Act (PHSA) (42 USC § 256b), or as described in Section 1927(c)(1)(D)(i)(IV) of the Social Security Act (42 USC § 1396r-8); or a State-owned family planning service site, or governmental family planning service site that does not receive Federal funding under special programs, including under Title X of the PHSA (42 USC §§ 300 to 300a-6), unless any of the above providers has lost its status under either of these sections, Section 340(B) of the PHSA, or Section 1902 of the Social Security Act (42 USC § 1396a) as a result of violating Federal law.

(2) Carriers shall demonstrate in their Network Adequacy Report that at least twenty percent (20%) of available ECPs in each plan’s service area participate in the plan’s network.

4702.7 A health carrier shall have procedures to ensure that a covered person may obtain covered benefits from non-participating providers at in-network benefit levels, including for cost-sharing, or shall make other arrangements acceptable to the Commissioner when the health carrier has met the requirements of this chapter, but does not have participating providers available to provide medically necessary covered benefits which meet any one of the three standards below:

The service or benefit will, or is reasonably expected to, prevent the onset of an illness condition, or disability;

The service or benefit will, or is reasonably expected to, reduce, or ameliorate the physical, mental, or developmental effects of an illness, condition, or disability;

The service or benefit will assist the individual to achieve or maintain maximum functional capacity in performing daily activities that take into account both the functional capacity of the individual and those functional capacities that are appropriate for individuals of the same age.

4702.8 (a) A health carrier shall provide instructions to covered persons explaining

how to make a written request for access to covered benefits from non-participating providers under circumstances provided in § 4702.7.

(b) The carrier shall treat the health care services received by a covered person from a non-participating provider pursuant to §§ 4702.7 and 4702.8(a)-(b) as if the services were provided by a participating provider, including crediting the cost-sharing for such services toward the applicable maximum out-of-pocket limit for services obtained from participating providers under the health benefit plan.

(c) The procedures described in § 4702.8(d) shall ensure that requests to obtain covered benefits from non-participating providers are addressed in a timely fashion relative to the covered person’s condition.

(d) The carrier shall document and retain copies of all requests for covered benefits from non-participating providers, for as long as the enrollee maintains coverage plus a minimum of one (1) year after an enrollee terminates coverage and shall make the information available to the Commissioner upon request.

(1) The procedures established in this subsection are not intended to be used as a substitute for establishing and maintaining a sufficient provider network or to circumvent the use of covered benefits available through a health carrier’s network.

(2) Nothing in this section prevents a covered person from exercising any right and remedy available under applicable District or federal law relating to internal and external claims grievance and appeals procedures.

History

• SOURCE: Final Rulemaking published at 70 DCR 002231 (February 17, 2023). District of Columbia Municipal Regulations Insurance 26-A DCMR § 4702

26-A DCMR § 4703 ACCESS PLAN

4703.1 A health carrier shall file an Access Plan prior to or at the time it files a new or amended network plan, in a manner and form set by the Commissioner, separate and apart from the Network Adequacy Report, meeting the requirements of this chapter with the Commissioner by September 1 of each year.

4703.2 A health carrier shall notify the Commissioner of any material change to any existing network plan, as noted in the filed Access Plan, including but not limited to:

(a) A ten percent (10%) or greater change in the carrier’s total number of network of providers;

(b) A twenty percent (20%) or greater reduction in the number of primary care providers in the carrier’s network;

(c) A twenty percent (20%) or greater reduction in the number of specialty providers available in the carrier’s network;

(d) A reduction in a specific type of provider, such that the provider type or a specific covered service is no longer available;

(e) A twenty percent (20%) change to a tiered, multi-tiered, layered, or multi-level network plan structure, including a reduction or greater in the number of providers in any tier, layer, or level; or

(f) An increase or decrease of twenty percent (20%) or more covered persons since the previous filing.

4703.3 A health carrier’s Access Plan shall describe or contain the following:

(a) The provider network, including the extent it supports the use of telemedicine or other technology to enhance network access;

(b) The procedures for making and authorizing referrals within and outside the network, if applicable;

(c) The process for monitoring and assuring the sufficiency of the network to meet the health care needs of populations that use the network;

(d) The factors used by the health carrier to build its provider network, including a description of the network and the criteria used to select or tier providers;

(e) The efforts to address the needs of covered persons, including children and adults, persons with limited English proficiency or literacy, persons with diverse cultural and ethnic backgrounds, and persons with physical or mental disabilities or other serious, chronic, or complex medical conditions. This includes a health carrier’s efforts, when appropriate, to include various types of essential community providers, as described in § 4702.6(e)(2), in its network;

(f) The methods for assessing the health care needs of covered persons and their satisfaction with the services provided;

(g) The method of informing covered persons of covered services and features, including but not limited to:

(1) The grievance and appeals procedures;

(2) The process for selecting and changing providers;

(3) The process for updating provider directories for each network plan;

(4) A statement of health care services offered, including services offered through the preventive care benefit, if applicable; and

(5) The procedures for covering and approving emergency, urgent, and specialty care, if applicable;

(h) The process for ensuring the coordination and continuity of care:

(1) For covered persons referred to specialty providers; and

(2) For covered persons using ancillary services, including social services and other community resources, and for appropriate discharge planning;

(i) The process for covered persons to change primary care professionals, if applicable;

(j) A plan for providing continuity of care in the event of contract termination between the health carrier and any of its participating providers, or in the event of the health carrier’s insolvency or other inability to continue operations. The plan shall explain how covered persons will be notified and transitioned to other providers, in a timely manner, due to termination of a provider contract, the health carrier’s insolvency, or other cessation of operations; and

(k) Any other information required by the Commissioner to determine compliance with this chapter.

4703.4 The Commissioner shall publish the filed Access Plan online, and a health carrier may file a written request that the Commissioner deem portions of its filed Access Plan confidential and redact the confidential portions from published version. A written request shall:

Identify the particular information that the carrier requests be deemed confidential; and

Cite the legal basis for the request.

4703.5 The Commissioner shall have the authority to deem the following as confidential:

Proprietary methodology used to annually assess the carrier’s performance in meeting the standards established under this rule;

Proprietary methodology used to annually measure timely access to health care services;

Factors used by the carrier to build its network; and

Any other subject-matter recognized as confidential, proprietary, or otherwise prohibited from disclosure under District law.

History

• SOURCE: Final Rulemaking published at 70 DCR 002231 (February 17, 2023). District of Columbia Municipal Regulations Insurance 26-A DCMR § 4703

26-A DCMR § 4704 REQUIREMENTS FOR HEALTH CARRIERS AND PARTICIPATING PROVIDERS

4704.1 A health carrier offering a network plan shall satisfy all the requirements contained in this section.

4704.2 A health carrier shall notify the participating providers which of the covered health care services the provider will be responsible for, including any limitations or conditions on those services.

4704.3 Every contract between a health carrier and a participating provider shall include a hold harmless provision. The requirement may be satisfied by including the following language, or other language approved by the Commissioner:

“[Physician/Hospital] hereby agrees that in no event, including, but not limited to, non-payment by Corporation or entity with access to this Agreement by virtue of a contract with Corporation for any reason, including a determination that the services furnished were not Medically Necessary, Corporation’s insolvency, [Physician/Hospital]’s failure to submit claims within the time period specified or breach of this Agreement, will [Physician/Hospital] bill, charge, collect a deposit from, seek compensation, remuneration or reimbursement from, or have any recourse against Members or persons other than Corporation for Covered Services furnished pursuant to this Agreement. This provision will not prohibit collection of applicable copayments, coinsurance or deductibles billed in accordance with the terms of Corporation’s agreements with Members.

[Physician/Hospital] further agrees that this provision will survive the termination of this Agreement regardless of the cause giving rise to such termination and will be construed to be for the benefit of Members. Finally, this provision supersedes any oral or written agreement to the contrary now existing or hereafter entered into between [Physician/Hospital] and Members or persons acting on their behalf.

Any modifications, additions, or deletions to the provisions of this hold harmless clause will become effective on a date no earlier than thirty (30) days after the Commissioner has received written notice of such proposed changes.”

4704.4 Carriers shall file with the Commissioner the language used for hold harmless provisions as described under § 4704.3 no later than thirty (30) days after the effective date of these rules.

4704.5 Every contract between a health carrier and a participating provider shall set forth that, in the event of a health carrier or intermediary insolvency or other cessation of operations, the provider’s obligation to deliver covered services to covered persons without balance billing will continue until the earlier of:

(a) The termination of the covered person’s coverage under the network plan, including any extension of coverage provided under the contract terms, or applicable District or federal law for covered persons who are in an active course of treatment or totally disabled; or

(b) The date the contract between the carrier and the provider would have terminated if the carrier or intermediary had remained in operation, including any required extension for covered persons in an active course of treatment.

4704.6 The contract provisions that satisfy the requirements of §§ 4704.2 and 4704.3 shall be construed in favor of the covered person, and shall survive the termination of the contract regardless of the reason for termination, including the insolvency of the health carrier, and shall supersede any oral or written contrary agreement between a provider and a covered person or the representative of a covered person if the contrary agreement is inconsistent with the hold harmless and continuation of covered services provisions required by §§ 4704.2 and 4704.3 of this section.

4704.7 In no event shall a participating provider collect or attempt to collect from a covered person any money owed to the provider by the health carrier.

4704.8 Health carrier selection standards for selecting and tiering (if applicable) participating providers shall be developed for providers and each health care professional specialty, if applicable. The standards shall be used in determining the selection and tiering of participating providers by the health carrier and its intermediaries.

4704.9 Health carrier selection standards shall meet the requirements of the District’s health care credentialing rules at 26-A DCMR §§ 4200 et seq.

4704.10 The health carrier selection standards may not:

(a) Allow a health carrier to discriminate against high-risk populations by excluding and/or tiering providers negatively because they are located in geographic areas that contain populations or providers presenting a risk of higher-than-average claims, losses, or health care services utilization;

(b) Exclude or negatively tier providers because they treat or specialize in treating populations presenting a risk of higher-than-average claims, losses, or health care services utilization; or

(c) Discriminate against a provider with respect to participation under the health benefit plan for acting within the scope of the provider’s license or certification under applicable District law or regulations.

4704.11 Section 4704.10 may not be construed to require a health carrier to contract with any provider willing to abide by the terms and conditions for participation established by the carrier and shall not be construed to prohibit a carrier from declining to select a provider who fails to meet legitimate criteria in the health carrier selection standards developed in compliance with this section.

4704.12 A health carrier shall notify participating providers of the provider’s responsibilities with respect to the health carrier’s administrative policies and programs regarding, among others: payment terms; provider directory updates; utilization review; quality assessment and improvement programs; credentialing; grievance and appeals procedures; data reporting requirements; reporting requirements for timely notice of changes in practice, such as discontinuance of accepting new patients; confidentiality requirements; and any applicable District or federal programs.

4704.13 A health carrier is prohibited from offering anything of value as an inducement to a provider to withhold medically necessary services, equipment, prescriptions and referrals.

4704.14 A health carrier shall not prohibit a participating provider from discussing any treatment options with covered persons, irrespective of the health carrier’s position on the treatment options; or from advocating on behalf of covered persons for medically necessary treatments during the utilization review, or grievance or appeals processes, or on behalf of other persons who have contracted with the carrier while enforcing any right or remedy available under applicable District or federal law.

4704.15 A health carrier shall provide at least sixty (60) days written notice to a participating provider before the provider is removed from the network without cause.

4704.16 The health carrier shall make a good faith effort to provide written notice of a provider’s removal or withdrawal from the network, within thirty (30) days of receipt or delivery of the notice, to all covered persons who have that provider as their assigned provider.

4704.17 The provisions of this chapter do not require a health carrier, its intermediaries, or the provider networks that it contracts with, to employ specific providers acting within the scope of their license or certification under District law that may meet their selection criteria; or to contract with or retain more providers acting within the scope of their license or certification under District law than are necessary to maintain a sufficient provider network under § 4702 of this chapter.

4704.18 A provider contract shall not contain provisions that conflict with the provisions contained in the network plan, or the requirements of this chapter.

4704.19 A health carrier shall inform a provider in a timely manner of the provider’s network participation status on any health benefit plan in which the provider participates.

4704.20 Where a provider is terminated without cause, a carrier shall allow a covered person receiving an active course of treatment to continue treatment with that provider until the treatment is complete, or until ninety (90) days after the discontinuation’s effective date, whichever is shorter, at in-network cost-sharing rates.

4704.21 If applicable, for non-emergency services, a provider contract with a facility shall include a provision regarding the written disclosure or notice to be provided to a covered person, and who shall provide such notice, at the time of authorization for services, or within ten (10) days of an appointment for in-patient or outpatient services at the facility, or at the time of a non-emergency admission at the facility, acknowledging that the facility is a participating provider of the covered person’s network plan and disclosing that certain providers at the facility may not be participating providers, such as an anesthesiologist, pathologist or radiologist, but may be performing services for the covered person. The disclosure or notice shall state that the covered person may be subject to higher cost-sharing pursuant to the plan summary of benefits and coverage, including balance billing, if the covered services are performed by an out-of-network provider at a participating facility, and that information regarding how much the health plan will pay for covered services performed by out-of-network providers is available upon request. The disclosure or notice also shall inform a covered person, or their authorized representative, of the participating providers available to provide the covered services.

History

• SOURCE: Final Rulemaking published at 70 DCR 002231 (February 17, 2023). District of Columbia Municipal Regulations Insurance 26-A DCMR § 4704

26-A DCMR § 4705 PROVIDER DIRECTORIES

4705.1 A health carrier shall post electronically a current and accurate provider directory for each of its network plans. The directory should include at least the following information:

(a) The following identifiers for health care professionals:

(1) Name;

(2) Gender;

(3) Participating office location(s), ADA accessibility and contact information;

(4) Specialty;

(5) Facility affiliations;

(6) Languages spoken other than English; and

(7) Whether accepting new patients;

(b) The following identifiers for hospitals:

(1) Hospital name;

(2) Hospital type (i.e., acute, rehabilitation, children’s, cancer); and

(3) Participating hospital location, and contact information; and

(c) The following identifiers for facilities, other than hospitals, organized by type:

(1) Facility name;

(2) Facility type; and

(3) Participating facility location(s), ADA accessibility and contact information.

4705.2 The directory for individual and small group plans shall be made available to the District of Columbia Health Benefit Exchange Authority (“Exchange”), provided at regular intervals, and in a format approved by the Commissioner for use to populate the Exchange’s single provider directory search tool.

4705.3 The directory available electronically for a plan on a carrier’s own website shall allow the general public to view all of the current providers, except for those providers which a carrier may need to suppress, through a clearly identifiable link or tab without creating or accessing an account or entering a policy or contract number.

4705.4 Carriers shall make the directory available by mail, to covered persons or potential covered persons in hard copy upon request. The hard copy may be a print-out of all or part of the online directory sufficient to meet the needs of the requester and not a pre-printed book.

4705.5 To ensure online directory accuracy, the health carrier shall do the following:

(a) Include in its directories a customer service email address or electronic link, and telephone number, that covered persons and the general public may use to notify the carrier of inaccurate information;

(b) Maintain a log, looking back at least two years of provider directory inaccuracies reported to the carrier, and make the log available to the Commissioner upon request;

(c) Validate reports that online directories are inaccurate or incomplete, and correct flawed provider information within thirty (30) days;

(d) On a quarterly basis, for providers who have not filed a claim with a carrier in two years or more, verify, audit, and update (if necessary).

(e) Conduct, at a minimum, an annual audit of at least fifteen percent (15%) of providers in each specialty included in § 4702.5 and § 4702.6 in each of its networks, to determine whether their network status and contact information in the carrier’s directory are accurate or require updates. Necessary updates shall be completed within one month of the completion of an audit; and

(f) Make it clear which products its provider directory applies to.

4705.6 A carrier who uses Council for Affordable Quality Healthcare’s DirectAssure, or other similar resource approved by the Commissioner, will be deemed compliant with § 4705.5 upon submission of supporting documentation from the health carrier.

4705.7 Where a covered person receives covered services from a non-participating provider, where the online directory indicates that the provider is a participating provider at the time the services are rendered, the carrier shall reimburse the provider for the full amount of services billed, less the amount of cost-sharing as if the services were obtained from a participating provider, and the cost-sharing shall apply to the in-network deductible and out-of-pocket maximum.

4705.8 Covered persons who believe they are entitled to in-network benefits due to material error in an online directory may appeal a denial of such benefits through internal and external appeals processes.

4705.9 Both electronic and print provider directories shall include in plain language that authorization or referral may be required to access some providers and the process to obtain that authorization or referral.

4705.10 Both electronic and print provider directories shall accommodate the communication needs of individuals with disabilities and include a link to or information regarding assistance for persons with limited English proficiency.

4705.11 A printed directory shall include a disclosure that the information provided is only accurate as of the date printed, and that a more current provider directory after that date may be available and obtained at a specific electronic link, or a customer service telephone number.

4705.12 When a covered individual requests information regarding a provider directory:

A carrier shall respond as soon as practicable and in no case later than 1 business day after the request for information is received; and

A carrier shall retain such communication in such individual’s file for at least two (2) years following such response.

History

• SOURCE: Final Rulemaking published at 70 DCR 002231 (February 17, 2023). District of Columbia Municipal Regulations Insurance 26-A DCMR § 4705

26-A DCMR § 4706 INTERMEDIARIES

4706.1 This section is only applicable to the extent that a health carrier, provider, or medical group uses an intermediary.

4706.2 A contract between a health carrier and an intermediary shall satisfy all the requirements contained in this section.

4706.3 Intermediaries and participating providers with whom they contract shall comply with all the applicable requirements of § 4705 of this chapter.

4706.4 A health carrier shall have the right to disapprove the participation status of a subcontracted provider in its own or a contracted network for the purpose of delivering covered benefits.

4706.5 A health carrier shall maintain copies of all intermediary health care subcontracts at its principal place of business in the District of Columbia or ensure that it has access to all intermediary subcontracts, including the right to make copies to facilitate regulatory review, and provide copies of those subcontracts to the Commissioner within twenty (20) days of receiving a request to furnish them.

4706.6 If applicable, an intermediary shall transmit utilization documentation and claims paid documentation to the health carrier. A carrier shall monitor the timeliness and appropriateness of payments made to providers and health care services received by covered persons.

4706.7 If applicable, an intermediary shall maintain the books, records, financial information, and documentation of services provided to covered persons at its principal place of business in the District of Columbia and preserve them for seven (7) years.

4706.8 An intermediary shall allow the Commissioner access to the intermediary’s books, records, financial information, and any documentation of services provided to covered persons as necessary to determine compliance with this chapter.

4706.9 In the event of the intermediary’s insolvency, a health carrier shall have the right to require that the provisions of the provider contract addressing the provider’s obligation to furnish covered services be assigned to the health carrier, and the health carrier shall then be obligated to pay the provider for furnishing covered services under the same terms and conditions as the intermediary prior to the insolvency.

4706.10 Notwithstanding any other provision of this section, to the extent the health carrier delegates its responsibilities to the intermediary, the carrier shall retain full responsibility for the intermediary’s compliance with the requirements of this chapter.

History

• SOURCE: Final Rulemaking published at 70 DCR 002231 (February 17, 2023). District of Columbia Municipal Regulations Insurance 26-A DCMR § 4706

26-A DCMR § 4707 FILING REQUIREMENTS FOR CARRIER – PROVIDER AND INTERMEDIARY CONTRACTS

4707.1 At the time a health carrier files its initial Access Plan or subsequently, the health carrier shall file as part of the Access Plan, with the Commissioner:

(a) Sample (template) contract forms proposed for use with its participating providers and intermediaries, excluding downstream vendor contracts.

(b) At least thirty (30) days prior to use, a health carrier shall submit any material changes to a contract that would affect a provision required under this chapter to the Commissioner through the System for Electronic Rate and Form Filing (“SERFF”).

(c) A health carrier shall provide copies of provider and intermediary contracts to the Commissioner for regulatory review within twenty (20) days of receiving written notice and maintain the provider and intermediary contracts at its principal place of business, or otherwise having access to all of those contracts.

4707.2 The execution of a contract by a health carrier shall not relieve the health carrier of its liability to any person with whom it has contracted for the provision of services or of its responsibility for compliance with District of Columbia law or this chapter.

4707.3 All contracts between carriers and providers or facilities shall be in writing and subject to review by the Commissioner upon request.

History

• SOURCE: Final Rulemaking published at 70 DCR 002231 (February 17, 2023). District of Columbia Municipal Regulations Insurance 26-A DCMR § 4707

26-A DCMR § 4708 ENFORCEMENT

4708.1 The Commissioner may require a modification to the Access Plan, order an appropriate corrective action plan that shall be followed by the health carrier, or use any other enforcement powers permitted under District of Columbia law or regulation to obtain the health carrier’s compliance with this chapter, if the Commissioner determines that one or more of the following has occurred:

The health carrier has not contracted with a sufficient number of participating providers to ensure that covered persons will have reasonably accessible health care services in a geographic area;

The health carrier’s Access Plan does not ensure reasonable access to covered benefits;

The health carrier’s appeals process regarding coverage and billing is inaccessible or if its decisions are not in conformity with applicable law and regulations; or

The health carrier has not complied with a provision of this chapter.

4708.2 The Commissioner will not arbitrate, mediate, or settle disputes regarding a decision not to include a provider in a network plan or provider network, or regarding any other dispute between a health carrier, its intermediaries, or providers, arising under or by reason of a provider contract or the contract’s termination.

History

• SOURCE: Final Rulemaking published at 70 DCR 002231 (February 17, 2023). District of Columbia Municipal Regulations Insurance 26-A DCMR § 4708

26-A DCMR § 4709 APPLICABILITY

4709.1 All health carriers offering or renewing network plans in the individual and small group markets in the District of Columbia shall file an Access Plan, and a Network Adequacy Report (including a Request for Waiver form, if necessary) that complies with this chapter, beginning with the 2024 plan year.

4709.2 All health carriers shall comply with the provisions in this chapter concerning notices and disclosures to consumers, including but not limited to, the requirements for timely medical appointments under §§ 4702.5(d) and 4702.6(d), and the circumstances to request covered benefits from non-participating providers under § 4702.8, for all plans sold, issued, or renewed on or after January 1, 2024.

4709.3 All provider and intermediary contracts shall comply with this chapter for all plans sold, issued, or renewed on or after January 1, 2024.

History

• SOURCE: Final Rulemaking published at 70 DCR 002231 (February 17, 2023). District of Columbia Municipal Regulations Insurance 26-A DCMR § 4709

26-A DCMR § 4799 DEFINITIONS

4799.1 For purposes of this chapter, the following terms and phrases shall have the meanings ascribed:

“Access Plan” – a document consisting of policies and procedures for assuring the ongoing sufficiency of provider networks, developed in accordance with § 4702 of this chapter.

“Active course of treatment” –

(a) An ongoing course of treatment for a life-threatening condition, defined as a disease or condition for which likelihood of death is probable unless the course of the disease or condition is interrupted;

(b) An ongoing course of treatment for a serious acute condition, defined as a disease or condition requiring complex ongoing care which the covered person is currently receiving, such as chemotherapy, radiation therapy, or post-operative visits;

(c) The second or third trimester of pregnancy, through the postpartum period; or

(d) An ongoing course of treatment for a health condition for which a treating physician or health care provider attests that discontinuing care by that physician or health care provider would worsen the condition or interfere with anticipated outcomes.

“Authorized representative” –

(a) A person to whom a covered person has given express written consent to represent the interests of the covered person;

(b) A person authorized by law to provide substituted consent for a covered person; or

(c) The covered person’s treating health care professional, but only when the covered person or a family member of the covered person is unable to provide consent.

“Balance billing” – the practice of a provider billing the covered person for the difference between the provider’s charge and the health carrier’s allowed reimbursement rate.

“Commissioner” – the Commissioner of the Department of Insurance, Securities and Banking.

“Covered benefit” or “benefit” – the health care services to which a covered person is entitled under the terms of a health benefit plan.

“Covered person” – a policyholder or other person participating in a health benefit plan.

“Emergency medical condition” – a physical, mental, or behavioral health condition that manifests itself by acute symptoms of sufficient severity, including severe pain, that would lead a prudent layperson, possessing an average knowledge of medicine and health, to reasonably expect, in the absence of immediate medical attention, would result in:

(a) Serious jeopardy to the individual’s physical, mental, or behavioral health or, with respect to a pregnant woman, her unborn child’s health;

(b) Serious impairment to a bodily function;

(c) Serious impairment of any bodily organ or part; or

(d) With respect to a pregnant woman who is having contractions:

(1) That there is inadequate time to affect a safe transfer to another hospital before delivery; or

(2) That transfer to another hospital may pose a threat to the health or safety of the woman or unborn child.

“Emergency services” – a medical or mental health screening examination that is within the capability of the emergency department of a hospital, including ancillary services routinely available to the emergency department to evaluate the emergency medical condition; and shall include any further medical or mental health examination and treatment to the extent they are within the capabilities of the staff and facilities available at the hospital to stabilize the patient.

“Facility” – an institution licensed pursuant to D.C. Official Code §§ 44-501 et seq.

“Health benefit plan” -- the same meaning as provided in D.C. Official Code § 31-3301.01(20).

“Health care professional” – a physician or other health care provider who is licensed, accredited, or certified to perform specified physical, mental, or behavioral health care services consistent with their scope of practice pursuant to D.C. Official Code §§ 3-1201 et seq.

“Health care provider” or “provider” – a “provider” as defined by D.C. Official Code § 31-3131(7).

“Health care services” – services for the diagnosis, prevention, treatment, cure, or relief of a physical, mental, or behavioral health condition, illness, injury, or disease, including mental health and substance use disorders.

“Health carrier” or “carrier” – a “health insurer,” as defined by D.C. Official Code § 31-3131(5).

“Intermediary” – a person not employed by a carrier or by a provider but who is otherwise authorized to negotiate and execute provider contracts with health carriers on behalf of health care providers or on behalf of a network.

“Limited scope dental plan” – a plan that is provided under a separate policy, certificate, or contract of insurance, or is otherwise not an integral part of a health benefit plan, which provides coverage generally limited to treatment of the mouth, including any organ or structure within the mouth.

“Limited scope vision plan” – a plan that is provided under a separate policy, certificate, or contract of insurance, or is otherwise not an integral part of a health benefit plan, which provides coverage generally limited to treatment of the eye.

“Network” – the group or groups of participating providers and facilities rendering services under a network plan.

“Network plan” – a health benefit plan that requires, or creates incentives for, a covered person to use health care providers that are under contract with, or managed, owned, or employed by the health carrier.

“Participating provider” – a provider who has contractually agreed to provide health care services to covered persons with an expectation of receiving payment, other than coinsurance, copayments, or deductibles, directly or indirectly from the health carrier.

“Person” – an individual, a corporation, a partnership, an association, a joint venture, a joint stock company, a trust, an unincorporated organization, any similar entity, or any combination of the foregoing.

“Primary care” – health care services for a range of common physical, mental, or behavioral health conditions provided by a physician or non-physician primary care professional.

“Primary care professional” – a participating health care professional designated by the health carrier to supervise, coordinate or provide initial or continuing care to a covered person, and who may also be required by the health carrier to initiate a referral for specialty care and maintain overall supervision of the health care services rendered to the covered person.

“Specialist” – a physician or non-physician health care professional who:

(a) Focuses on a specific area of physical, mental, or behavioral health or a group of patients;

(b) Has successfully completed required training and is recognized by the state in which he or she practices as providing specialty care; and

(c) Includes a subspecialist who has additional training and recognition above and beyond his or her specialty training.

“Specialty care” – advanced medically necessary care and treatment of specific physical, mental, or behavioral health conditions, or health conditions which may manifest in particular ages or subpopulations, that are provided by a specialist, preferably in coordination with a primary care professional or other health care professional.

“Telemedicine” – health care services provided through telecommunications technology by a health care professional who is at a location other than where the covered person is located, in accordance with the definition of telehealth as provided in D.C. Official Code §§ 31–3861 et seq.

“Tiered network” – a network that allows for different provider reimbursement, covered person cost-sharing, or provider access requirements, or any combination thereof, for the same services, as a result of grouping some or all types of providers and facilities.

“To stabilize” – with respect to an emergency medical condition, to provide medical treatment of the condition as may be necessary to ensure, within a reasonable medical probability, that no material deterioration of the condition is likely to result from or occur during the transfer of the individual to or from a facility, or with respect to an emergency birth without complications that would result in a continued emergency, to deliver the child and the placenta.

“Transfer” – the movement, including the discharge, of an individual from a hospital’s facilities at the direction of any person directly or indirectly employed by, or affiliated or associated with, the hospital, but does not include the movement of an individual who:

(a) Has been declared dead; or

(b) Leaves the facility without the permission of any such person.

History

• SOURCE: Final Rulemaking published at 70 DCR 002231 (February 17, 2023). District of Columbia Municipal Regulations Insurance 26-A DCMR § 4799

26-A50 UNFAIR TRADE PRACTICES

26-A DCMR § 5000 PERMISSIBLE REASONS FOR NON- RENEWAL/CANCELLATION AND USE OF CLAIMS HISTORY INFORMATION

5000.1 An insurer shall not refuse to renew a policy of homeowners’ insurance solely due to claim or loss frequency unless there have been two (2) or more claims during the preceding three (3) year period. For the purposes of this subsection, an insurer shall not consider:

(a) The first claim for a loss caused by weather, unless the insurer can provide evidence that the insured unreasonably failed to maintain the property and such failure to maintain contributed to the loss;

(b) Any claim that was reported to the insured’s agent or insurer as an inquiry for which no payment was made by the insurer;

(c) A loss for which there was no investigation or other claim activity; or

(d) Any losses caused by a catastrophic event. For the purposes of this paragraph, the term “catastrophic event” means a manmade or natural event that causes twenty-five million dollars ($25,000,000) or more in insured property losses and affects multiple property and casualty policyholders or insurers.

5000.2 An insurer shall not refuse to renew a policy of homeowners’ insurance solely because of damages requiring repairs that are discovered during a renewal or loss inspection, unless the insurer has allowed the insured a reasonable timeframe in which to repair the damages.

5000.3 An insurer shall comply with the rate making standards of section 3 of An Act to provide for regulation of certain insurance rates in the District of Columbia, and for other purposes, approved May 20, 1948 (62 Stat. 243; D.C. Official Code § 31-2703 (2001)) with respect to any increase in the premium on a policy of homeowners’ insurance that is due to claim or loss frequency, including any policy surcharge, movement between classes or tiers, or the removal or reduction of a discount. All such increases in premium shall be consistent with the insurer’s filed rate plan.

5000.4 An insurer shall provide a notice to its homeowners’ insurance policyholders that the insurer considers claims history in determining whether to renew the policy. Such notice may be on the declarations page or on a separate notice that accompanies the policy so long as the notice is conspicuous and includes the following statement: “Your insurer may consider your claims and loss history when determining whether to renew your policy.”

5000.5 Anytime an insurer attempts to cancel or non-renew a policy of homeowner’s insurance based on an insured’s claims or loss history, the insurer shall specify the reasons for such action and such reasons shall include the date of the claim or loss, the amount of the claim or loss, the type of insurance applicable to the claim or loss, the name of the insurer of the claim or loss, and brief statement of circumstances that caused the claim or loss. Such specification of reasons shall include enough information so that the insured can have an adequate basis of refuting the accuracy of any claim or loss history specified as reasons for the cancellation or non-renewal decision of the insurer.

5000.6 An insurer may refuse to renew a policy of homeowners’ insurance due to claim or loss frequency based upon standards more restrictive than those set forth in this section if, at the time of policy issuance or renewal, the insurer provided the insured with a conspicuous, written copy of the more restrictive underwriting standards upon which the insurer proposes to base its non-renewal decisions, and an explanation of how the more restrictive underwriting standards differ from those established by any District law or regulation.

History

• Source: Notice of Emergency and Proposed Rulemaking published at 50 DCR 9269 (October 31, 2003)[EXPIRED]; as amended by Notice of Emergency and Proposed Rulemaking published at 51 DCR 987 (January 23, 2004)[EXPIRED]; as amended by Notice of Final Rulemaking published at 51 DCR 3880 (April 16, 2004); as amended by Notice of Final Rulemaking published at 54 DCR 9680 (October 12, 2007).

26-A DCMR § 5001 USE OF CLAIMS HISTORY – NEW BUSINESS

5001.1 In determining whether to issue a homeowners’ insurance policy on a property not previously owned by the applicant, an insurer shall not base an adverse underwriting decision solely on the loss history of a previous owner of the property to be insured.

History

• Source: Notice of Emergency and Proposed Rulemaking published at 50 DCR 9269 (October 31, 2003)[EXPIRED]; as amended by Notice of Emergency and Proposed Rulemaking published at 51 DCR 987 (January 23, 2004)[EXPIRED]; as amended by Notice of Final Rulemaking published at 51 DCR 3880, 3881 (April 16, 2004).

26-A51 STANDARD NONFORFEITURE LAW FOR INDIVDUAL DEFERRED ANNUITIES

26-A DCMR § 5100 CALCULATING MINIMUM VALUES

5100.1 The minimum values, as specified in section 5c(c)(1) of Chapter V of the Life Insurance Act, effective October 13, 1978 (D.C. Law 2-120; D.C. Official Code § 31-4705.03 (2001), of any paid-up annuity, cash surrender or death benefits available under an annuity contract shall be based upon minimum nonforfeiture amounts as defined in sections 5100.2 and 5100.3.

5100.2 The minimum nonforfeiture amount at any time at or prior to the commencement of any annuity payments shall be equal to an accumulation up to such time at rates of interest as indicated in section 5100.3 of the net considerations (as hereinafter defined) paid prior to such time, decreased by the sum of subsections (a) through (d) below:

Any prior withdrawals from or partial surrender of the contract accumulated at rates of interest as indicated in section 5100.3;

An annual contract charge of $50, accumulated at rates of interest as indicated in section 5100.3;

Any premium tax paid by the company for the contract, accumulated at rates of interest as indicated in section 5100.3; and

The amount of any indebtedness to the company on the contract, including interest due and accrued.

5100.3 The net considerations for a given contract year used to define the minimum nonforfeiture amount shall be an amount equal to the eighty-seven and one-half percent (87.5%) of the gross considerations credited to the contract during that contract year.

5100.4 The interest rate used in determining minimum nonforfeiture amounts shall be an annual rate of interest determined as the lesser of three percent (3%) per annum and the following, which shall be specified in the contract if the interest rate will be reset:

The five-year Constant Maturity Treasury Rate reported by the Federal Reserve as of a date, or average over a period, rounded to the nearest 1/20th of one percent, specified in the contract no longer than fifteen (15) months prior to the contract issue date or redetermination date under subsection 5100.4(d);

Reduced by 125 basis points;

Where the resulting interest rate is not less than 15 basis points (0.15%); and

The interest rate shall apply for an initial period and may be redetermined for additional periods. The redetermination date, basis and period, if any, shall be stated in the contract. The basis is the date or average over a specified period that produces the value of the five-year Constant Maturity Treasury Rate to be used at each redetermination date.

5100.5 During the period or term that a contract provides substantive participation in an equity indexed benefit, it may increase the reduction described in subsection 5100.4(b) above by up to an additional 100 basis points to reflect the value of the equity index benefit. The present value at the contract issue date, and at each redetermination date thereafter, of the additional reduction shall not exceed the market value of the benefit. The Commissioner may require a demonstration that the present value of the additional reduction does not exceed the market value of the benefit. Lacking such a demonstration that is acceptable to the Commissioner, the Commissioner may disallow or limit the additional reduction, which shall be conducted pursuant to the District of Columbia Administrative Procedure Act, approved October 21, 1968 (82 Stat. 1209; D.C. Official Code § 2-501 et seq. (2001)).

History

• Source: Notice of Final Rulemaking published at 51 DCR 5600 (May 28, 2006); as amended by Final Rulemaking published at 70 DCR 007108 (May 19, 2023). District of Columbia Municipal Regulations Insurance 26-A DCMR § 5100

26-A52 MILITARY SALES PRACTICES

26-A DCMR § 5200 Purpose

5200.1 The purpose of this regulation is to set forth standards to protect active duty service members of the United States Armed Forces from dishonest and predatory insurance sales practices by declaring certain identified practices to be false, misleading, deceptive or unfair.

5200.2 Nothing herein shall be construed to create or imply a private cause of action for a violation of this regulation.

History

• Source: Notice of Final Rulemaking published at 54 DCR 11702, 11703 (December 7, 2007).

26-A DCMR § 5201 Scope

5201.1 This regulation shall apply only to the solicitation or sale of any life insurance or annuity product by an insurer or insurance producer to an active duty service member of the United States Armed Forces.

History

• Source: Notice of Final Rulemaking published at 54 DCR 11702, 11703 (December 7, 2007).

26-A DCMR § 5202 Authority

5202.1 This regulation is issued under the authority of the Insurance Trade and Economic Development Amendment Act of 2000, effective April 3, 2001, (D.C. Law 13-265, D.C. Official Code § 31-2231 et. seq. (2001).

History

• Source: Notice of Final Rulemaking published at 54 DCR 11702, 11703 (December 7, 2007).

26-A DCMR § 5203 EXEMPTIONS

5203.1 This regulation shall not apply to solicitations or sales involving:

(a) Credit insurance;

(b) Group life insurance or group annuities where there is no in-person, face- to-face solicitation of individuals by an insurance producer or where the contract or certificate does not include a side fund;

(c) An application to the existing insurer that issued the existing policy or contract when a contractual change or a conversion privilege is being exercised; or, when the existing policy or contract is being replaced by the same insurer pursuant to a program filed with and approved by the commissioner; or, when a term conversion privilege is exercised among corporate affiliates;

(d) Individual stand-along health policies, including disability income policies;

(e) Contracts offered by Service members’ Group Life Insurance (SGLI) or Veterans’ Group Life Insurance (VGLI), as authorized by 38 U.S.C. §§ 1965 et seq.;

(f) Life insurance contracts offered through or by a non-profit military association, qualifying under Section 501(c)(23) of the Internal Revenue Code (IRC), and which are not underwritten by an insurer: or

(g) Contracts used to fund:

(i) An employee pension or welfare benefit plan that is covered by the Employee Retirement and Income Security Act (ERISA);

(ii) A plan described by Sections 401(a), 401(k), 403(b), 408(k) or 408(p) of the IRC, as amended, if established or maintained by an employer;

(iii) A government or church plan defined in Section 414 of the IRC, a government or church welfare benefit plan, or a deferred compensation plan of a state or local government or tax exempt organization under Section 457 of the IRC;

(iv) A nonqualified deferred compensation arrangement established or maintained by an employer or plan sponsor;

(v) Settlements of or assumptions of liabilities associated with personal injury litigation or any dispute or claim resolution process; or

(vi) Prearranged funeral contracts.

5203.2 Nothing herein shall be construed to abrogate the ability of nonprofit organizations (and/or other organizations) to educate members of the United States Armed Forces in accordance with Department of Defense DoD Instruction 1344.07 – PERSONAL COMMERCIAL SOLICITATION ON DoD INSTALLATION or successor directive.

5203.3 For purposes of this regulation, general advertisements, direct mail and internet marketing shall not constitute “solicitation.” Telephone marketing shall not constitute “solicitation” provided the caller explicitly and conspicuously discloses that the product concerned is life insurance and makes no statements that avoid a clear and unequivocal statement that life insurance is the subject matter of the solicitation. Provided however, nothing in this subsection shall be construed to exempt an insurer or insurance producer from this regulation in any in-person, face-to-face meeting established as a result of the “solicitation” exemption identified in this subsection

History

• Source: Notice of Final Rulemaking published at 54 DCR 11702, 11703 (December 7, 2007).

26-A DCMR § 5204 PRACTICES DECLARED FALSE, MISLEADING, DECEPTIVE, OR UNFAIR ON A MILITARY INSTALLATION

5204.1 The following acts or practices when committed on a military installation by an insurer or insurance producer with respect to the in-person, face-to-face solicitation of life insurance are declared to be false, misleading, deceptive or unfair:

(a) Knowingly soliciting the purchase of any life insurance product “door to door” without first establishing a specific appointment for each meeting with the prospective purchaser.

(b) Soliciting service members in a group or “mass” audience or in a “captive” audience where attendance is not voluntary.

(c) Knowingly making appointments with or soliciting service members during their normally scheduled duty hours.

(d) Making appointments with or soliciting service members in barracks, day rooms, unit areas, or transient personnel housing or other areas where the installation commander has prohibited solicitation.

(e) Soliciting the sale of life insurance without first obtaining permission from the installation commander or the commander’s designee.

(f) Posting unauthorized bulletins, notices or advertisements.

(g) Failing to present DD Form 2885, Personal Commercial Solicitation Evaluation, to service members solicited or encouraging service members solicited not to complete or submit a DD Form 2885.

(h) Knowingly accepting an application for life insurance or issuing a policy of life insurance on the life of an enlisted member of the United States Armed Forces without first obtaining for the insurer’s files a completed copy of any required form which confirms that the applicant has received counseling or fulfilled any other similar requirement for the sale of life insurance established by regulations, directives or rules of the DoD or any branch of the Armed Forces.

5204.2 The following acts or practices when committed on a military installation by an insurer or insurance producer constitute corrupt practices, improper influences or inducements and are declared to be false, misleading, deceptive or unfair:

(a) Using DoD personnel, directly or indirectly, as a representative or agent in any official or business capacity with or without compensation with respect to the solicitation or sale of life insurance to service members.

(b) Using an insurance producer to participate in any United States Armed Forces sponsored education or orientation program.

History

• Source: Notice of Final Rulemaking published at 54 DCR 11702, 11705 (December 7, 2007).

26-A DCMR § 5205 PRACTICES DECLARED FALSE, MISLEADING, DECEPTIVE OR UNFAIR REGARDLESS OF LOCATION

5205.1 The following acts or practices by an insurer or insurance producer constitute corrupt practices, improper influences or inducements and are declared to be false, misleading, deceptive or unfair:

(a) Submitting, processing or assisting in the submission or processing of any allotment form or similar device used by the United States Armed Forces to direct a service member’s pay to a third party for the purchase of life insurance. The foregoing includes, but is not limited to, using or assisting in using a service members’ “My Pay” account or other similar internet or electronic medium for such purposes. This subsection does not prohibit assisting a service member by providing insurer or premium information necessary to complete any allotment form.

(b) Knowingly receiving funds from a service member for the payment of premium from a depository institution with which the service member has no formal banking relationship. For purposes of this section, a formal banking relationship is established when the depository institution:

(1) provides the service member a deposit agreement and periodic statements and makes the disclosures required by the Truth in Savings Act, 12 U.S.C. §§ 4301 et seq. and the regulations promulgated thereunder; and

(2) permits the service member to make deposits and withdrawals unrelated to the payment or processing of insurance premiums.

(c) Employing any device or method or entering into any agreement whereby funds received from a service member by allotment for the payment of insurance premiums are identified on the service member’s Leave and Earnings Statement or equivalent or successor form as “Savings” or “Checking” and where the service member has no formal banking relationship as defined in subsection 7(A)(2).

(d) Entering into any agreement with a depository institution for the purpose of receiving funds from a service member whereby the depository institution, with or without compensation, agrees to accept direct deposits from a service member with whom it has no formal banking relationship.

(e) Using DoD personnel, directly or indirectly, as a representative or agent in any official or unofficial capacity with or without compensation with respect to the solicitation or sale of life insurance to service members who are junior in rank or grade, or to the family members of such personnel.

(f) Offering or giving anything of value, directly or indirectly, to DoD personnel to procure their assistance in encouraging, assisting or facilitating the solicitation or sale of life insurance to another service member.

(g) Knowingly offering or giving anything of value to a service member with a pay grade of E-4 or below for his or her attendance to any event where an application for life insurance is solicited.

(h) Advising a service member with a pay grade of E-4 or below to change his or her income tax withholding or State of legal residence for the sole purpose of increasing disposable income to purchase life insurance.

5205.2 The following acts or practices by an insurer or insurance producer lead to confusion regarding source, sponsorship, approval or affiliation and are declared to be false, misleading, deceptive or unfair:

(a) Making any representation, or using any device, title, descriptive name or identifier that has the tendency or capacity to confuse or mislead a service member into believing that the insurer, insurance producer or product offered is affiliated, connected or associated with, endorsed, sponsored, sanctioned or recommended by the U.S. Government, the United States Armed Forces, or any state or federal agency or government entity. Examples of prohibited insurance producer titles include, but are not limited to, “Battalion Insurance Counselor,” “Unit Insurance Advisor,” “Servicemen’s Group Life Insurance Conversion Consultant” or “Veteran’s Benefits Counselor.”

Nothing herein shall be construed to prohibit a person from using a professional designation awarded after the successful completion of a course of instruction in the business of insurance by an accredited institution of high learning. Such designations include, but are not limited to, Chartered Life Underwritter (CLU), Chartered Financial Consultant (ChFC), Certified Financial Planner (CFP), Master of Science In Financial Services (MSFS), or Masters of Science Financial Planning (MS).

(b) Soliciting the purchase of any life insurance product through the use of or in conjunction with any third party organization that promotes the welfare of or assists members of the United States Armed Forces in a manner that has the tendency or capacity to confuse or mislead a service member into believing that either the insurer, insurance producer or insurance product is affiliated, connected or associated with, endorsed, sponsored, sanctioned or recommended by the U.S. Government, or the United States Armed Forces.

5205.3 The following acts or practices by an insurer or insurance producer lead to confusion regarding premiums, costs or investment returns and are declared to be false, misleading, deceptive or unfair:

(a) Using or describing the credited interest rate on a life insurance policy in a manner that implies that the credited interest rate is a net return on premium paid.

(b) Excluding individually issued annuities, misrepresenting the mortality costs of a life insurance product, including stating or implying that the product “costs nothing” or is “free.”

5205.4 The following acts or practices by an insurer or insurance producer regarding SGLI or VGLI are declared to be false, misleading, deceptive or unfair:

(a) Making any representation regarding the availability, suitability, amount, cost, exclusions or limitations to coverage provided to a service member or dependents by SGLI or VGLI, which is false, misleading or deceptive.

(b) Making any representation regarding conversion requirements, including the costs of coverage, or exclusions or limitations to coverage of SGLI or VGLI to private insurers which is false, misleading or deceptive.

(c) Suggesting, recommending or encouraging a service member to cancel or terminate his or her SGLI policy or issuing a life insurance policy which replaces an existing SGLI policy unless the replacement shall take effect upon or after the service member’s separation from the United States Armed Forces.

5205.5 The following acts or practices by an insurer and or insurance producer regarding disclosure are declared to be false, misleading, deceptive or unfair:

(a) Deploying, using or contracting for any lead generating materials designed exclusively for use with service members that do not clearly and conspicuously disclose that the recipient will be contacted by an insurance producer, if that is the case, for the purpose of soliciting the purchase of life insurance.

(b) Failing to disclose that a solicitation for the sale of life insurance will be made when establishing a specific appointment for an in-person, face-to-face meeting with a prospective purchaser.

(c) Excluding individually issued annuities, failing to clearly and conspicuously disclose the fact that the product being sold is life insurance.

(d) Failing to make, at the time of sale or offer to an individual known to be a service member, the written disclosures required by Section 10 of the “Military Personnel Financial Services Protection Act,” Pub. L. No. 109-290, p. 16.

(e) Excluding individually issued annuities, when the sale is conducted in-person face-to-face with an individual known to be a service member, failing to provide the applicant at the time the application is taken:

(1) an explanation of any free look period with instructions on how to cancel if a policy is issued; and

(2) either a copy of the application or a written disclosure. The copy of the application or the written disclosure shall clearly and concisely set out the type of life insurance, the death benefit applied for and its expected first year cost. A basic illustration that meets the requirements of [insert reference to state’s illustration or disclosure regulation] shall be deemed sufficient to meet this requirement for a written disclosure.

5205.6 The following acts or practices by an insurer or insurance producer with respect to the sale of certain life insurance products are declared to be false, misleading, deceptive or unfair:

(a) Excluding individually issued annuities, recommending the purchase of any life insurance product which includes a side fund to a service member in pay grades E-4 and below unless the insurer has reasonable grounds for believing that the life insurance death benefit, standing alone, is suitable.

(b) Offering for sale or selling a life insurance product which includes a side fund to a service member in pay grades E-4 and below who is currently enrolled in SGLI, is presumed unsuitable unless, after the completion of a needs assessment, the insurer demonstrates that the applicant’s SGLI death benefit, together with any other military survivor benefits, savings and investments, survivor income, and other life insurance are insufficient to meet the applicant’s insurable needs for life insurance.

(1) “Insurable needs” are the risks associated with premature death taking into consideration the financial obligations and immediate and future cash needs of the applicant’s estate and/or survivors or dependents.

(2) “Other military survivor benefits” include, but are not limited to: the Death Gratuity, Funeral Reimbursement, Transition Assistance, Survivor and Dependents’ Education Assistance, Dependency and Indemnity Compensation, TRICARE Healthcare benefits, Survivor Housing Benefits and Allowances, Federal Income Tax Forgiveness, and Social Security Survivor Benefits.

(c) Excluding individually issued annuities, offering for sale or selling any life insurance contract which includes a side fund:

(1) unless interest credited accrues from the date of deposit to the date of withdrawal and permits withdrawals without limit or penalty;

(2) unless the applicant has been provided with a schedule of effective rates of return based upon cash flows of the combined product. For this disclosure, the effective rate of return will consider all premiums and cash contributions made by the policyholder and all cash accumulations and cash surrender values available to the policyholder in addition to life insurance coverage. This schedule will be provided for at least each policy year from one (1) to ten (10) and for every fifth policy year thereafter ending at age 100, policy maturity or final expiration; and

(3) which by default diverts or transfers funds accumulated in the side fund to pay, reduce or offset any premiums due.

(d) Excluding individually issued annuities, offering for sale or selling any life insurance contract which after considering all policy benefits, including but not limited to endowment, return of premium or persistency, does not comply with standard nonforfeiture law or life insurance.

(e) Selling any life insurance product to an individual known to be a service member that excludes coverage if the insured’s death is related to war, declared or undeclared, or any act related to military service except for an accidental death coverage, e.g., double indemnity, which may be excluded.

History

• Source: Notice of Final Rulemaking published at 54 DCR 11702, 11706 (December 7, 2007).

26-A DCMR § 5206 SEVERABILITY

5206.1 If any provision of these sections or the application thereof to any person or circumstance is held invalid for any reason, the invalidity shall not affect the other provisions or any other application of these sections which can be given effect without the invalid provisions or application. To this end all provisions of these sections are declared to be severable.

History

• Source: Notice of Final Rulemaking published at 54 DCR 11702, 11711 (December 7, 2007).

26-A DCMR § 5207 EFFECTIVE DATE

5207.1 This regulation shall become effective January 1, 2008, and shall apply to acts or practices committed on or after the effective date.

History

• Source: Notice of Final Rulemaking published at 54 DCR 11702, 11711 (December 7, 2007).

26-A DCMR § 5299 DEFINITIONS

5299.1 When used in this chapter, the following words and phrases shall have the meaning ascribed:

“Active Duty” – full-time duty in the active military service of the United States and includes members of the reserve component (National Guard and Reserve) while serving under published orders for active duty or full-time training. The term does not include members of the reserve component who are performing active duty or active duty for training under military calls or orders specifying periods of less than 31 calendar days.

“Department of Defense (DoD) Personnel” – all active duty service members and all civilian employees, including nonappropriated fund employees and special government employees, of the Department of Defense.

“Door to Door” – a solicitation or sales method whereby an insurance producer proceeds randomly or selectively from household to household without prior specific appointment.

“General Advertisement” – an advertisement having as its sole purpose the promotion of the reader’s or viewer’s interest in the concept of insurance, or the promotion of the insurer or the insurance producer.

“Insurer” – an insurance company required to be licensed under the laws of this state to provide life insurance products, including annuities.

“Insurance producer” – a person required to be licensed under the laws of this state to sell, solicit or negotiate life insurance, including annuities.

“Known” or “Knowingly” – depending on its use herein, the insurance producer or insurer had actual awareness, or in the exercise of ordinary care should have known, at the time of the act or practice complained of, that the person solicited:

is a service member; or

is a service member with a pay grade of E-4 or below

“Life Insurance” – insurance coverage on human lives including benefits of endowment and annuities, and may include benefits in the event of death or dismemberment by accident and benefits for disability income and unless otherwise specifically excluded, includes individually issued annuities.

“Military Installation” – any federally owned, leased, or operated base, reservation, post, camp, building, or other facility to which service members are assigned for duty, including barracks, transient housing, and family quarters.

“My Pay” – a Defense Finance and Accounting Service (DFAS) web-based system that enables service members to process certain discretionary pay transactions or provide updates to personal information data elements without using paper forms.

“Service Member” – any active duty officer (commissioned and warrant) or enlisted member of the United States Armed Forces.

“Side Fund” – a fund or reserve that is part of or otherwise attached to a life insurance policy (excluding individually issued annuities) by rider, endorsement or other mechanism which accumulates premium or deposits with interest or by other means. The term does not include;

accumulated value or cash value or secondary guarantees provided by a universal life policy;

cash values provided by a whole life policy which are subject to standard nonforfeiture law for life insurance; or

a premium deposit fund which:

contains only premiums paid in advance which accumulate at interest;

impose no penalty for withdrawal;

does not permit funding beyond future required premiums;

is not marketed or intended as an investment; and

does not carry a commission, either paid or calculated.

“Specific Appointment” – a prearranged appointment agreed upon by both parties and definite as to place and time.

“United States Armed Forces” – all components of the Army, Navy, Air Force, Marine Corps, Coast Guard

History

• Source: Notice of Final Rulemaking published at 54 DCR 11702, 11711 (December 7, 2007).

26-A53 MEDICAL MALPRACTICE LIABILITY HEARING RULES AND RATE FILING REQUIREMENTS

26-A DCMR § 5301 PURPOSE

5301.1 The purpose of these rules is to implement the provisions of An Act To provide for regulation of certain insurance rates in the District of Columbia, and for other purposes, approved May 20, 1948 (62 Sta. 242; D.C. Official Code § 31-2701, et seq.), as amended by the “Medical Malpractice Amendment Act of 2006,” effective March 14, 2007 (D.C. Law 16-263; 54 DCR 807)(hereinafter the “Act”), and to safeguard the public interest by allowing reasonable inspection and analysis of medical malpractice liability company rate plans and premium rates.

History

• Source: Notice of Final Rulemaking published at 55 DCR 12490 (December 12, 2008).

26-A DCMR § 5302 FILING REQUIREMENTS AND PUBLIC NOTIFICATION

5302.1 All companies licensed to write medical malpractice liability insurance in the District of Columbia are subject to the provisions of this chapter. Every company shall file with the Commissioner of the Department of Insurance, Securities, and Banking (“Department”), either directly or through a licensed rating organization of which it is a member or subscriber, all rates and rating plans, rules, and classifications which it uses or proposes to use in the District (“rate filings”).

5302.2 All rate filings are required to be submitted on-line via the National Association of Insurance Commissioner’s System for Electronic Rate and Form Filing (“SERFF”). All such information requested as a part of a SERFF filing must be submitted in order for the Department to deem the rate filing complete and filed.

5302.3 Rate filings must be submitted at least annually. If no change is anticipated, the company should indicate that the existing approved rate filing will continue in effect.

5302.4 Once a rate filing is deem3ed filed, the Commissioner shall provide the public notice of the rate filing by either posting the rate filing on the Department’s website or by using any other means reasonably designed to provide meaningful and timely notice. The published rate filings will be identified and marked as being filed with the Department.

5302.5 Filed rate filings shall be deemed approved 60 days after the Commissioner has provided public notice of the filings, as provided in subsection 5302.4, unless the proposed rate change increase exceeds ten percent (10%). If the proposed rate increase exceeds ten percent (10%), then the Commissioner shall conduct a hearing on the proposed change and shall issue an order approving, denying or modifying the proposed rate change within 90 days after public notice of the proposed change.

History

• Source: Notice of Final Rulemaking published at 55 DCR 12490 (December 12, 2008).

26-A DCMR § 5303 ADJUSTMENTS OF RATES

5303.1 Whenever it shall be made to appear to the Commissioner, either from his own information or from a complaint of any party alleging to be aggrieved thereby, that there are reasonable grounds to believe that the rates on any or on all risks or classes of risk or kinds of insurance within the scope of the act, are excessive, inadequate or unfairly discriminatory, it shall be the Commissioner’s duty, and he or shall have the full power and authority, to investigate the necessity for an adjustment of any or all such rates.

5303.2 After an investigation of the rates, the Commissioner shall, before order an adjustment, hold a hearing upon not less than 10 days written notice specifying the matters to be considered at the hearing, to every company and rating organization which filed the rates, provided, the Commissioner shall not be required to hold the hearing if he or she is advised in writing by every such company and rating organization admitted to write medical malpractice insurance in the District that they do not wish to contest the adjustment and thereby are waiving any right they may have to a hearing. The hearing shall be conducted in accordance with the hearing regulations provided at Chapter 38 of Title 26 of the District of Columbia Municipal Regulations (“DCMR”), and the cost shall be borne by the insurance company requesting the rate increase.

5303.3 If, after the hearing, the Commissioner determines that any or all of the rates are excessive, inadequate or unfairly discriminatory, he or she shall order an adjustment.

5303.4 An order of adjustment shall not affect any contract or policy made or issued prior to the effective date of the order unless:

(1) The adjustment is substantial and exceeds the cost to the companies of making the adjustment; and

(2) The order is made after the prescribed investigation and hearing and within 30 days after the filing of the rates affected.

5303.5 In determining the necessity for an adjustment of rates, the Commissioner shall be bound by the provisions of section 3 of the Act (D.C. Official Code § 31-2703).

History

• Source: Notice of Final Rulemaking published at 55 DCR 12490, 12491 (December 12, 2008).

26-A DCMR § 5304 MANDATORY HEARINGS

5304.1 All hearings commenced as a result of a rate change increase exceeding ten percent (10%) shall be conducted in accordance with the Department’s rules of practice and procedures for hearings found at 26 DCMR § 3800 et seq.

5304.2 In a hearing held by the Commissioner pursuant to this chapter, any person shall have the right to testify. However, the right to testify in a hearing under this chapter does not by itself confer upon such person the status of “party,” as defined at 26 DCMR §3819.

5304.3 A person who wishes to apply for status as a party for a hearing shall file with the Commissioner a statement, in not less than five (5) days prior to the date set for the hearing, that includes the prospective party’s name and address, the name and address of any legal counsel, whether the prospective party is a proponent or opponent of the rate filing, a list of witnesses who will be called to testify, the manner in which the prospective party may be affected or aggrieved by the action, and the extent to which the prospective party satisfies one or more of the following qualifications:

(1) Expertise in the insurance laws of the District of Columbia;

(2) An understanding of the actuarial principles employed in establishing rates and rating systems;

(3) Sufficient access to a qualified actuary and sufficient expertise to conduct a technical examination of a rate filing;

(4) Sufficient resources to participate in the hearing process; or

(5) A demonstrated commitment to represent the interest of consumers and accept a duty of fidelity to do so.

5304.4 The Commissioner shall make the final determination for status as a party.

History

• Source: Notice of Final Rulemaking published at 55 DCR 12490, 12492 (December 12, 2008).

26-A DCMR § 5305 USE OF EXPERIENCE OUTSIDE OF THE DISTRICT

5305.1 If a company is filing a new or “introductory rate filing,” then the company will permitted to use countrywide experience in support of the new product. If a company is filing to revise or adjust an existing rate but lacks actuarially credible experience for the District, then the company may use countrywide experience to supplement any of their District experience.

5305.2 Regardless of whether a filing is a new or introductory rate filing, or a revision to an existing rate, all companies must adequately explain why their experience for the District is not actuarially credible and how the experience they are using in place or as a supplement to their District experience is an appropriate substitute to support the rate filing.

5305.3 For the purposes of this section, and “introductory rate filing” shall mean an initial rate filing by a company that has not written medical malpractice liability insurance in the District, either directly or through an affiliate, within the past five-years (5) of the filing at issue. All other rate filings will be considered revisions or adjustments unless the Commissioner, upon request, expressly deems a filing to be an “introductory rate filing.”

History

• Source: Notice of Final Rulemaking published at 55 DCR 12490, 12493 (December 12, 2008).

26-A56 CERTIFIED CAPITAL COMPANIES

26-A DCMR § 5600 APPLICABILITY

5600.1 This chapter shall apply to all certified capital companies formed, certified, or authorized under the Act.

5600.2 This chapter shall apply to any investment in a certified capital company for which a premium tax credit is allocated to a certified investor for making the investment in the certified capital company.

5600.3 This chapter shall apply to the allocation of premium tax credits authorized under the Act.

History

• SOURCE: Final Rulemaking published at 51 DCR 7555 (July 30, 2004)

26-A DCMR § 5601 FILING APPLICATION FOR CERTIFICATION

5601.1 An applicant seeking certification as a certified capital company shall file an Application for Certification with the Commissioner on or after the application date.

5601.2 An Application for Certification filed prior to the application date shall be treated as having been filed on the application date.

5601.3 An applicant, within five (5) business days after the applicant has or should have knowledge that any material information that the applicant supplied in its Application for Certification filed pursuant to § 5601.1 is found to be inaccurate or obsolete, shall file an amended Application for Certification correcting or updating the information provided in the Application for Certification.

5601.4 The submission of new or corrected material information under § 5601.3 shall not cause a change in the date on which the application was deemed originally received by the Department.

5601.5 The Commissioner shall make a copy of the Application for Certification form available directly from the Commissioner in paper copy format, by electronic mail with an attached Word file, or by accessing the Commissioner's website at: www.disb.dc.gov.

History

• SOURCE: Final Rulemaking published at 51 DCR 7555 (July 30, 2004)

26-A DCMR § 5602 REQUIREMENTS OF AN APPLICATION FOR CERTIFICATION

5602.1 The Application for Certification shall contain the following:

(a) A completed Application for Certification;

(b) A nonrefundable application fee in the amount of fifteen thousand dollars ($ 15,000) in the form of a cashier's check, certified check, or company check made payable to the D.C. Treasurer;

(c) An audited balance sheet, with an unqualified opinion from an independent certified public accountant, as of a date not more than thirty-five (35) days prior to the date that the Application for Certification is filed with the Commissioner;

(d) Evidence (which may be the audited balance sheet described in § 5602.1(c)) of an equity capitalization of at least five hundred thousand dollars ($ 500,000) in the form of unencumbered cash, marketable securities or other liquid assets;

(e) An affidavit from the applicant affirming that the applicant, if certified under the Act, will maintain an equity capitalization of at least five hundred thousand dollars ($ 500,000), except for reductions due to qualified distributions, until the allocation date;

(f) An affidavit from the applicant affirming that the applicant, within sixty (60) days of receiving certification, will maintain its principal office within the District and will maintain a set of its books, records, files, and any other information required by the Commissioner as a condition of certification or as required by this chapter;

(g) An affidavit from the applicant affirming that at least two (2) of the principals of the applicant or persons employed or engaged to manage the funds of the applicant have:

(1) At least three (3) years of experience in the venture capital business, which may include investments made in connection with a state or federally sponsored venture capital program; and

(2) Not violated any federal or state insurance, securities or banking law or been convicted of any crime involving fraud;

(h) A detailed description, and supporting documentation, that demonstrates how each of the persons providing affidavits pursuant to § 5602.1(g) qualify as having at least three (3) years of experience in the venture capital business, which shall include, but not be limited to:

(1) A detailed resume with a listing of references including reference telephone numbers; and

(2) A listing of all applicable licenses that each individual holds (or has held within the last ten (10) years). Such listing shall indicate whether the license is active and in good standing, the date on which it will expire or did expire, whether any license has been revoked, the date of revocation and an explanation surrounding the revocation, whether any disciplinary action has ever been imposed with regard to the license, the date of the disciplinary action and a description surrounding the disciplinary action;

(i) A list, if any, of any fines, penalties, or other sanctions or actions by any state, federal, or local regulatory entity relating to violations of any type;

(j) The applicant's overall investment strategy and the applicant's three (3) year business plan including an organizational chart;

(k) The name, address, and phone number for each principal, manager, officer, or director, and each person owning fifteen percent (15%) or more of the voting equity interest or other voting ownership interest of the applicant;

(l) A copy of any offering materials involving the sale of securities of the applicant or the proposed certified capital company;

(m) A copy of the applicant's organizational documents and a description of the applicant's business history, if any; and

(n) Any other information requested by the Commissioner or required by the Act.

5602.2 For purposes of section 3(d) of the Act, the term "principal office" shall mean the location in the District that is the primary place where the investment functions of a certified capital company are performed and the principal location for books and records of the certified capital company.

History

• SOURCE: Final Rulemaking published at 51 DCR 7555, 7556 (July 30, 2004).

26-A DCMR § 5603 REVIEW OF APPLICATION FOR CERTIFICATION

5603.1 The Commissioner shall review an Application for Certification and all required documents to determine whether the applicant satisfies the requirements for certification as a certified capital company set forth in section 3 of the Act and § 5602.

5603.2 Except as provided in § 5603.6 or § 5603.7, the Commissioner shall approve or disapprove the certification of an applicant as a certified capital company within thirty (30) days of the date of receipt of a complete Application for Certification filed by the Applicant.

5603.3 If the Commissioner determines that an Application for Certification is incomplete or the Commissioner requests supplemental information, the Commissioner, within ten (10) days of the date of receipt of an Application for Certification, shall notify the applicant, in writing, that the Application is incomplete or that the Commissioner requires the applicant to submit additional information to supplement the Application for Certification.

5603.4 The notice required pursuant to § 5603.3 shall provide a list of the documentation or information required to complete or supplement the Application for Certification.

5603.5 In the event an Application for Certification filed with the Department is incomplete or if the Commissioner requests additional information in connection with a filed Application for Certification, the Application for Certification shall be deemed received on the date it was originally submitted only if the applicant submits the additional information within fifteen (15) days after the date of the Commissioner's written request.

5603.6 Upon receiving all missing or requested information set forth in a notice provided pursuant to § 5603.3, the Commissioner shall have fifteen (15) days from the day that the missing or requested information is submitted, to approve or reject the Application for Certification.

5603.7 Upon receiving an amended Application for Certification correcting or updating the information provided in the Application for Certification pursuant to § 5601.3, the Commissioner shall have fifteen (15) days from the day that the missing or requested information is submitted, in addition to the thirty (30) day period provided in § 5603.2, to approve or reject the Application for Certification.

5603.8 An Application for Certification shall be deemed withdrawn, and the Commissioner shall have no obligation to provide additional notices to the applicant or take further action on the Application for Certification if the applicant fails to provide to the Department missing or requested information for an Application for Certification within fifteen (15) days after the notice provided pursuant to § 5603.3.

5603.9 Upon the Commissioner's disapproval of an Application for Certification, the Commissioner shall provide written notice to the applicant of the disapproval and the requirements of section 3 of the Act or § 5603 that the applicant failed to satisfy.

5603.10 An applicant that receives a notice of disapproval pursuant to § 5603.9 may file an amended Application for Certification within fifteen (15) days of receipt of a notice of disapproval issued by the Commissioner pursuant to § 5603.9.

5603.11 Within fifteen (15) days of receipt of an amended Application for Certification filed pursuant to § 5603.10, the Commissioner shall review the Application for Certification and certify, or refuse to certify, the applicant as a certified capital company.

History

• SOURCE: Final Rulemaking published at 51 DCR 7555, 7558 (July 30, 2004)

26-A DCMR § 5604 ALLOCATION OF PREMIUM TAX CREDITS

5604.1 A Premium Tax Credit Allocation Request shall be made pursuant to a Premium Tax Credit Allocation Request Form delivered to the Commissioner.

5604.2 The Premium Tax Credit Allocation Request Form shall include the following two affidavits of each prospective certified investor:

(a) An affidavit of the certified investor attesting that it is legally bound and irrevocably committed to make an investment of certified capital in a certified capital company in the amount of allocated premium tax credits, even if the amount of allocated premium tax credits is less than the amount of the request, subject only to the receipt of an allocation pursuant to Section 5 of the Act; and

(b) An second affidavit of the certified investor attesting that it complies with its requirements under Sections 3(h) and 5(b) of the Act.

5604.3 The Commissioner shall accept Premium Tax Credit Allocation Requests filed pursuant to § 5604.1 on or before the premium tax credit allocation request filing date.

5604.4 Not later than six (6) business days after receiving notice from the Commissioner allocating premium tax credits to its certified investors, a certified capital company shall file a report with the Department that provides, for each certified investor that was allocated premium tax credits that failed to provide its required certified capital within five (5) business days after the certified capital company received notice from the Commissioner allocating premium tax credits to its certified investors, the name of the certified investor and the amount of certified capital the certified investor failed to invest in the certified capital company pursuant to its obligation as established by its affidavit filed pursuant to § 5604.2(a).

History

• SOURCE: Final Rulemaking published at 51 DCR 7555, 7559 (July 30, 2004)

26-A DCMR § 5605 QUALIFIED INVESTMENTS

5605.1 Prior to making a proposed investment in a business, a certified capital company shall request from the Commissioner a written determination of whether the business is considered a “qualified business,” as defined in the Act.

5605.2 A certified capital company shall provide the Commissioner with the following information in support of its request for a determination of whether a business is eligible to receive an initial or follow-on investment:

A complete Qualified Business Application signed by an executive officer of the applicant;

A term sheet or other detailed description of the proposed equity investment or loan to be made by the certified capital company;

The applicant’s business plan;

The applicant’s current financial statements, including an income statement, balance sheet and cash flow statement;

(e) An affidavit that is signed by the president or chief executive officer of the applicant that includes the following statements:

(1) The applicant agrees to use one hundred percent (100%) of the funds received from the certified capital company solely for the purpose of supporting the applicant’s business operations in the District, except for advertising, promotions and sales purposes;

(2) The applicant is current on all District tax obligations;

(3) The applicant has obtained all required business licenses and permits, and the business is currently in good standing in the District at the time of the filing of the Qualified Business Application; and

(4) The applicant currently satisfies all of the criteria to be a qualified business, as defined by the Act, unless a waiver is obtained, and will continue to meet such criteria for six (6) consecutive months immediately following the receipt of an initial or follow-on investment from the CAPCO.

A copy of the applicant’s articles of incorporation or organization, as filed with the District or other state of incorporation or organization;

A copy of a letter from a bank or other commercial lender denying the applicant’s request for conventional financing. The letter shall include the amount of financing requested by the applicant and shall not be dated more than one hundred twenty (120) days prior to the date the Qualified Business Application is filed with the Commissioner;

A copy of the applicant’s lease, sublease or property deed establishing the location of its business operations in the District;

A current list of all of the applicant’s full and part-time employees. An owner of the applicant who also manages the activities of the applicant or provides any type of services to the applicant on a regular basis, regardless of whether he or she is compensated by the applicant, shall be deemed an employee;

The following information for a sufficient number of employees to determine that at least twenty-five percent (25%) of the employees listed in paragraph (i) of this subsection are residents of the District:

A copy of the employee’s IRS form W-4;

A current payroll report showing the wages or salaries paid, and the taxes withheld for each employee;

A copy of each employee’s driver’s license or non-driver identification card issued by the District’s Department of Motor Vehicles; and

A copy of a telephone, cable or utility bill, residential lease or voter registration card that shows each employee’s home address.

(k) Each document filed pursuant to paragraph (j) of this subsection to establish an employee’s residency in the District shall have identical addresses. Documents with different addresses will be unacceptable.

5605.3 The Commissioner shall consider the following factors in determining if a person is an employee or an independent contractor:

Whether the person performing services is engaged in an occupation or business distinct from that of the alleged employer;

Whether or not the work is a part of the regular business of the alleged employee or alleged employer;

Whether the alleged employer or the worker supplies the instrumentalities, tools, and the place of business for the person doing the work;

The alleged employee’s investment in the equipment or materials required by his or her task, or the cost of any labor needed to perform the task;

Whether the service rendered requires a special skill;

The kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the alleged employer or by a specialist without supervision;

The alleged employee’s opportunity for profit or loss depending on his or her managerial skill;

The length of time for which the services are to be performed;

The degree of permanence of the working relationship;

The method of payment, whether by time or by the job; and

Whether the parties believe they are creating an employer-employee relationship.

5605.4 A certified capital company that applies to make a certified investment in a business that is unable to provide all of the information required in subsection 5604.2(k)(3) and (4) shall file a detailed written explanation describing the circumstances of the employee’s residency status, and request a waiver of the requirement to provide one (1) or more documents for that employee. Acceptable reasons for being unable to provide one (1) or more of the required documents include the fact that an employee is homeless; does not have a fixed address in the District; or has a temporary living arrangement in the District and does not have any utilities in his or her name at that address. The Commissioner may, at his or her discretion, waive one (1) or more of the documents required to be filed to establish an employee’s residency status in the District.

5605.5 If the Commissioner fails to notify the certified capital company of its determination within the twenty (20) day period required by section 6(e) of the Act, D.C. Official Code § 31-5235(e), the business shall be deemed to be a qualified business.

5605.6 (a) A business that satisfies the requirements of a qualified business at the time of the initial or follow-on investment shall continue to satisfy the requirements for six (6) consecutive months following the initial or follow-on investment; provided, however, that any employee that has resigned their employment with the qualified business, is no longer a resident of District, or has been terminated by the qualified business for cause, shall continue to be considered an employee for purposes of the requirement set forth in sections 2(12)(A)(i) and (ii) of the Act, D.C. Official Code § 31-5231(2)(12)(A)(i) and (ii).

(b) The certified capital company shall obtain a monthly payroll report from each qualified business within ten (10) days after the end of each calendar month, for six (6) consecutive months following an initial or follow-on investment. The certified capital company shall make the payroll reports available to the Commissioner during the annual review process.

5605.7 If at any time during the six (6) month period following an initial or follow-on investment in a qualified business the business does not satisfy the requirements of a qualified business, the business shall have thirty (30) days from the date of non-compliance to cure the deficiency. The business shall provide the certified capital company with proof that it has cured the deficiency, and the certified capital company shall make that information available to the Commissioner during the annual review of the certified capital company.

5605.8 For purposes of section 2(12)(A)(v) of the Act, D.C. Official Code § 31-5231(2)(12)(A)(v), a business that has previously obtained conventional financing from a bank or commercial lender and requires additional capital, shall certify that it is unable to obtain the additional capital in the form of conventional financing from a bank or commercial lender. The business shall provide the proof set forth in section 5605.2(g) of this chapter.

5605.9 A certified capital company may make an approved qualified investment to a qualified business in installments or tranches over a period not to exceed six (6) months from the date of the approval of the initial or follow-on investment. Any amount of the qualified investment that is not provided to a qualified business within the six (6) month period shall not be considered a qualified investment for purposes of the Act without a new approval of such investment by the Commissioner pursuant to this section.

5605.10 Any amount of an initial or follow-on investment that is repaid by a qualified business to a certified capital company within twenty-four (24) months of the date of the certified investment shall not be considered a certified investment for purposes of the Act; provided, however, that this provision shall not apply to any interest, dividend, principal payments made based on an amortization of at least twenty-four (24) months or other profit distribution payments made. For purposes of this section, there shall be a rebuttable presumption that any amount of the certified investment that is returned to a certified capital company within the twenty four (24) month period was not used by the qualified business for the purposes described in the Qualified Business Application. A certified capital company shall be permitted to receive credit for one hundred percent (100%) of its investment in a qualified business even though the funds were returned within the aforementioned period, if the certified capital company can provide proof to the Commissioner that the qualified business chose to repay the certified investment from its profits or from some other source such as a private equity investor, lender or debt capital provider. Nothing in this subsection shall prevent a certified capital company from exercising any of its rights as a creditor, including the acceleration of debt owed upon a default by the qualified business under the terms of the debt instrument or upon the acquisition, merger or sale of all or substantially all of the assets of the qualified business.

History

• SOURCE: Final Rulemaking published at 51 DCR7555, 7560 (July 30, 2004); as amended by the Notice of Final Rulemaking published at 58 DCR 2229 (March 11, 2011).

26-A DCMR § 5606 WAIVER OF QUALIFIED BUSINESS REQUIREMENTS

5606.1 A certified capital company that applies to make an initial certified investment in a business that does not satisfy all of the requirements to be a qualified business shall file a written request for a waiver of one (1) or more of the requirements.

5606.2 A letter requesting the Commissioner to waive one (1) or more of the requirements for qualification of a qualified business shall contain the following information:

(a) The name of the certified capital company requesting the waiver;

(b) The name of the business for which the certified capital company is requesting the waiver;

(c) The amount of capital that the certified capital company proposes to invest in the business for which the certified capital company is requesting the waiver; and

(d) A statement that demonstrates how the proposed investment by certified capital company in the business for which the certified capital company is requesting the waiver will further economic development in the District.

5606.3 In determining if a waiver will further economic development in the District pursuant to § 5606.2(d), the Commissioner shall consider whether the business intends to use the certified investment to save existing jobs or create new jobs for District residents, expand its operations in the District, create new or additional tax revenue for the District Government, or engage in economic activity that will benefit other businesses located in the District.

5606.4 A certified capital company that obtains a waiver for one (1) or more of the eligibility criteria pursuant to this subsection shall, no later than two hundred and ten (210) days after making the initial investment, establish to the satisfaction of the Commissioner that the business is a qualified business as defined in the Act. For purposes of investments made in installments, the two hundred and ten (210) day period shall commence from the date of the first installment.

5606.5 A certified capital company shall file an affidavit with the Commissioner signed by an executive officer of the qualified business confirming that the business satisfies the requirements of a qualified business as defined in the Act. In support of the affidavit required by this subsection, the certified capital company shall submit sufficient documentary proof. For example, if the business received a waiver of the District’s residency requirement, the certified capital company shall obtain a complete list of employees, payroll reports, and at least one (1) current form of proof of residency from each employee claiming to reside in the District, and make those documents available to the Commissioner during the annual review of the certified capital company.

History

• SOURCE: Final Rulemaking published at 51 DCR 7555, 7560 (July 30, 2004); as amended by Notice of Final Rulemaking published at 58 DCR 2229, 2233 (March 11, 2011).

26-A DCMR § 5607 FEES

5607.1 In addition to the ten thousand dollar ($ 10,000) annual, non-refundable certification fee due on or before January 31 required by section 6(g)(4) of the Act, a certified capital company shall pay to the Commissioner a late fee in the amount of five thousand dollars ($ 5,000) if the certified capital company submits its certification fee required by section 6(g)(4) of the Act after January 31.

5607.2 If a certified capital company fails to file a report required by section 6(g) of the Act on a timely basis, the certified capital company shall pay to the Department a daily late fee in the amount of fifty dollars ($ 50) per day for each report filed after the due date established by section 6(g) of the Act, unless the late fee is waived by the Commissioner.

5607.3 In connection with the annual review conducted by the Commissioner of a certified capital company pursuant to section 8(a) of the Act, the certified capital company shall pay the cost of the annual review in an amount not to exceed ten thousand dollars ($10,000).

History

• SOURCE: Final Rulemaking published at 51 DCR 7555, 7561 (July 30, 2004); as amended by Final Rulemaking published at 57 DCR 6722 (July 30, 2010).

26-A DCMR § 5608 WAIVER OF RECAPTURE OR FORFEITURE UPON DECERTIFICATION

5608.1 A certified capital company may request the Commissioner to waive the recapture or forfeiture of premium tax credits upon the decertification of the certified capital company pursuant to section 8(c) of the Act by filing a Request for Waiver of Recapture or Forfeiture Form within ten (10) business days of receiving notice from the Commissioner of the decertification of the certified capital company.

5608.2 A request for a waiver filed pursuant to § 5608.1 shall provide all the facts, circumstances, and other information that demonstrate that the waiver of the recapture or forfeiture of premium tax credits will further economic development in the District.

5608.3 The Commissioner shall review a request for a waiver filed pursuant to § 5608.1 and, in his or her sole discretion, may approve or disapprove the request for a waiver within thirty (30) days of receipt of the request.

5608.4 The Commissioner shall notify the decertified certified capital company of the Commissioner's determination made pursuant to § 5608.3.

5608.5 The following violations of section 6 of the Act, unless waived by the Commissioner, are material and shall be grounds for decertification of a certified capital company:

(a) A violation of section 6(a), (c), (d), (f), (g)(1), or (g)(4) of the Act; and

(b) More than two (2) violations of the requirements established by section 6(g)(2) and (3) of the Act.

History

• SOURCE: Final Rulemaking published at 51 DCR 7555, 7561 (July 30, 2004)

26-A DCMR § 5609 DISTRIBUTIONS

5609.1 Any proposed distribution by a certified capital company pursuant to section 7(b) of the Act shall be audited by a nationally recognized certified public accounting firm acceptable to the Commissioner, if the Commissioner directs that an audit be conducted.

5609.2 An audit conducted pursuant to § 5609.1 shall be conducted at the expense of the certified capital company.

History

• SOURCE: Final Rulemaking published at 51 DCR 7555, 7562 (July 30, 2004)

26-A DCMR § 5610 TRANSFER OF PREMIUM TAX CREDITS

5610.1 Within fifteen (15) days after the transfer or sale of premium tax credits, the transferring certified investor shall notify the Commissioner in writing of the:

(a) Name of the new holder of the transferred premium tax credits;

(b) Amount of premium tax credits transferred;

(c) Date the transfer occurred;

(d) NAIC Number of the transferring certified investor;

(e) NAIC Number of the new holder of the transferred premium tax credits; and

(f) Remaining balance of premium tax credits held by the transferring certified investor.

5610.2 A certified investor that transfers or sells premium tax credits and fails to file the notice required by § 5610.1 within fifteen (15) days after the transfer or sale of the premium tax credits, shall be subject to a fine in the amount of five hundred dollars ($ 500).

History

• SOURCE: Final Rulemaking published at 51 DCR 7555, 7562 (July 30, 2004)

26-A DCMR § 5611 FILINGS, NOTICES AND WRITTEN COMMUNICATIONS

5611.1 All filings, notices and other communications required or permitted under the Act or this chapter shall be in writing and shall delivered by hand, courier, or registered or certified U.S. Mail, postage prepaid, addressed to:

(a) If to the Commissioner of the Department of Insurance, Securities and Banking, at 810 First Street, NE, Suite 701, Washington, DC 20002;

(b) If to a certified investor, at the certified investor's address set forth on the certified investor's last premium tax filing; or

(c) If to an applicant or certified capital company, at the applicant's or certified capital company's address set forth on the applicant's or certified capital company's Application for Certification, as may be updated by written notice to the Commissioner.

5611.2 For all purposes of the Act and this chapter, each notice provided pursuant to § 5611.1 shall be treated as effective or having been given when delivered by hand or by courier, or, if mailed, at the earlier of its receipt or seventy-two (72) hours after the notice has been deposited in a regularly maintained receptacle for the deposit of the United States mail.

History

• SOURCE: Final Rulemaking published at 51 DCR 7555, 7563 (July 30, 2004)

26-A DCMR § 5612 FULL INVESTMENT

5612.1 Except as provided in § 5612.2, a certified capital company that has invested an amount cumulatively equal to one hundred percent (100%) of its certified capital in qualified investments shall not be subject to the regulation of the Commissioner provided that the certified capital company provides the Commissioner with audited financial statements, or an agreed upon procedures letter, that demonstrate that the certified capital company has invested an amount cumulatively equal to one hundred percent (100%) of its certified capital in qualified investments, and the Commissioner certifies that the certified capital company has invested an amount cumulatively equal to one hundred percent (100%) of its certified capital in qualified investments.

5612.2 Notwithstanding § 5612.1, the requirements to apportion distributions to the District under subsection 7(b)(2) of the Act shall continue after a certified capital company has invested an amount cumulatively equal to one hundred percent (100%) of its certified capital.

History

• SOURCE: Final Rulemaking published at 51 DCR 7555, 7563 (July 30, 2004)

26-A DCMR § 5613 FORMS

5613.1 The forms set forth below, as well as any instructions accompanying them, are hereby adopted and incorporated by reference into these rules:

(a) Form CAP-1, Application for Certification;

(b) Form CAP-2, Premium Tax Credit Allocation Request Form; and

(c) Form CAP-3, Request for Waiver of Recapture or Forfeiture Form.

History

• SOURCE: Final Rulemaking published at 51 DCR 7555, 7564 (July 30, 2004)

26-A DCMR § 5614 ECONOMIC IMPACT STUDY AND ANNUAL REVIEW

5614.1 The Commissioner shall conduct an annual economic impact study of the certified capital companies to determine their economic impact on the District’s economy beginning with the year ending December 31, 2009 through December 31, 2014.

5614.2 The Commissioner shall conduct an annual review of each certified capital company to determine if the certified capital company is in compliance with the requirements for initial and continuing certification, and to determine the eligibility status of its initial and follow-on investments. The Commissioner need not re-examine a certified capital company or any of its qualified investments to determine compliance with the Act, if the Commissioner has determined during a prior annual review that the initial certification of the certified investment company, or any of its certified investments, were made in compliance with the Act.

5614.3 The Commissioner may retain consultants, lawyers, economists or other experts to perform the economic studies and annual reviews. The costs of these experts shall be borne by the certified capital companies.

5614.4 The Commissioner may, at his or her discretion, select a single qualified firm to conduct one (1) or more of the annual economic impact studies and the annual reviews.

5614.5 A certified capital company shall provide the Commissioner with the following information for each of its qualified investments within thirty (30) days of his or her request:

The name, job title, home and work addresses, and dates of employment for each employee that worked for the qualified business during the period covered by the economic study;

Payroll records showing salaries or wages paid, and taxes withheld for each employee of the qualified business during the period covered by the economic study;

Copies of all District tax returns filed by the qualified business during the period covered by the economic study;

Financial statements for the year being studied by the Commissioner, and the year immediately preceding; and

Evidence of payments made by each qualified business to significant suppliers, vendors, contractors, landlords, and professional service firms, which may include accounting, legal, financial, information technology, architectural and engineering services, among others.

5614.6 The Commissioner may request any additional information from a certified capital company that will assist the Commissioner in his or her efforts to determine the economic impact of the District’s certified capital company program.

5614.7 A certified capital company shall provide the Commissioner with the following information for each loan or investment as part of the annual review process:

A list of loans or investments, and the names and addresses of the businesses that received funding during the period under review;

A complete set of transaction documents, including but not limited to, the term sheet, note, shareholders agreement, purchase agreement, and proof of transfer of funds;

The qualified business application and all attachments thereto, business plan, payroll report, W-4s, government-issued identification cards, proofs of District residency, and a list of names and addresses of each employee employed by the business at the time of funding, articles of incorporation or organization, lease or other evidence showing the business’ principal place of business in the District, an affidavit certifying the business’ inability to obtain conventional financing, and a letter from a commercial lender denying the business’ application for conventional financing;

All documents demonstrating that any waivers granted by the Commissioner have been satisfied;

All documents demonstrating that a business determined to be a qualified business continued to satisfy that requirement for the six (6)-month period following the qualified investment;

All information related to the initial certification and funding of the certified capital company;

The certified capital company’s audited financial statements and agreed-upon procedures report prepared by the certified capital company’s independent auditor;

Proof of payment of the annual certification fee; and

Premium tax credit transfer affidavits and certified investors’ annual notice of tax credit transfers.

5614.8 A certified capital company shall require each qualified business that it funded to provide it with copies of all records required in this section at the time of the certified capital company’s initial or follow-on investment, and such other documents as requested by Commissioner. A certified capital company shall retain copies of the records set forth in this section until the certified capital company has made cumulatively equal to one hundred percent (100%) of its certified capital.

5614.9 A certified capital company shall inform each business applying for certified capital of the business’ obligation to provide information and cooperate with the annual economic impact studies and annual reviews at the time of the certified capital company’s initial and follow-on investments. The certified capital company shall also make each business’s cooperation with the annual economic studies and annual reviews a term and condition of receiving certified capital, including a provision that a failure to cooperate with the economic studies or annual reviews shall constitute a breach of the agreement. A certified capital company shall cooperate with the Commissioner during the annual economic study, and shall make every reasonable effort to obtain information from its qualified businesses.

5614.10 The Commissioner shall analyze the data received from the certified capital companies and determine the annual economic impact that each certified capital company has made on the District’s economy, including an annual assessment of the economic impact of activities of the certified capital companies on an aggregate basis. The Commissioner may also consider general economic data, including reasonable and reliable extrapolations and assumptions, to evaluate the economic impact of the certified capital company program on the District’s economy. The Commissioner shall document his or her findings in a written report to be made available to the public; provided however, that any proprietary or confidential information of a qualified business or certified capital company shall be exempted from such written report.

History

• Source: Notice of Final Rulemaking published at 58 DCR 2229, 2235 (March 11, 2011).

26-A DCMR § 5699 DEFINITIONS

As used in this chapter, the following terms shall have the meanings indicated:

Act – the Certified Capital Companies Act of 2003, effective March 10, 2004 (D.C. Law 15-87; D.C. Official Code §§ 31-5231, et seq.).

Applicant -- a person who files an Application for Certification to be certified as a certified capital company under the Act.

Application date -- August 9, 2004.

Application for Certification -- the application form adopted by the Commissioner pursuant to which an applicant can apply for certification as a certified capital company, including, but not limited to, any additional information required by the Department.

Department -- the Department of Insurance, Securities and Banking.

NAIC Number -- the identification number assigned to an insurance company by the National Association of Insurance Commissioners.

Rules -- these rules promulgated pursuant to the Act.

Premium tax credit allocation request filing date -- November 1, 2004.

Premium Tax Credit Allocation Request Form -- the form adopted by the Commissioner pursuant to which a certified capital company on behalf of its respective certified investors makes a request for allocation of premium tax credits.

History

• SOURCE: Final Rulemaking published at 51 DCR 7555, 7564 (July 30, 2004); as amended by Notice of Final rulemaking published at 58 DCR 2229, 2237 (March 11, 2011).

26-A58 SENIOR-SPECIFIC CERTIFICATIONS, DESIGNATIONS AND CREDENTIALS

26-A DCMR § 5800 APPLICABILITY

5800.1 This chapter shall apply to any solicitation, sale, or purchase of, or advice made in connection with, a life insurance or annuity product by an insurance producer.

History

• SOURCE: Final Rulemaking published at 57 DCR 6723 (July 30, 2010).

26-A DCMR § 5801 PROHIBITED USE OF SENIOR-SPECIFIC CERTIFICATIONS AND PROFESSIONAL DESIGNATIONS

5801.1 The use, directly or indirectly, through publications or writings, or by issuing or promulgating analyses or reports, of a senior-specific certification or professional designation by any person in connection with the solicitation, sale, or purchase of life insurance or annuity products; or in providing advice as to the value or advisability of purchasing or selling life insurance or annuity products that indicates or implies that the insurance producer has special certification or training in advising or servicing seniors or retirees, in such a way as to mislead, constitutes an unfair and deceptive act or practice in the business of insurance within the meaning of the Insurance Trade and Economic Development Amendment Act of 2000, effective April 3, 2001 (D.C. Law 13-265; D.C. Official Code § 31-2231.01 (2001)).

5801.2 The uses prohibited by subsection 5801.1 include, but are not limited to, the following:

(a) Use of a certification or professional designation by an insurance producer who has not actually earned the certification or professional designation or is otherwise ineligible to use the certification or designation;

(b) Use of a nonexistent or self-conferred certification or professional designation;

(c) Use of a certification or professional designation that indicates or implies a level of occupational qualifications obtained through education, training, or experience that the insurance producer using the certification or designation does not have; and

(d) Use of a certification or professional designation that was obtained from a certifying or designating organization that:

(1) Is primarily engaged in the business of instruction in sales or marketing;

(2) Does not have reasonable standards or procedures for assuring the competency of its certificants or designees;

(3) Does not have reasonable standards or procedures for monitoring and disciplining its certificants or designees for improper or unethical conduct; or

(4) Does not have reasonable continuing education requirements for its certificants or designees in order to maintain the certificate or designation.

5801.3 There is a rebuttable presumption that a certifying or designating organization is not disqualified solely based on subsection 5801.2(d) when the certification or designation issued by the organization:

(a) Does not primarily apply to sales or marketing; and

(b) When the organization or the certification or designation in question has been accredited by:

(1) The American National Standards Institute;

(2) The National Commission for Certifying Agencies;

(3) Any organization that is on the U.S. Department of Education’s list entitled “Accrediting Agencies Recognized for Title IV Purposes;” or

(4) Any other nationally-recognized accreditation organization designated by the Commissioner.

5801.4 In determining whether a combination of words or an acronym standing for a combination of words constitutes a certification or professional designation indicating or implying that a person has special certification or training in advising or servicing seniors or retirees, factors to be considered shall include:

(a) Use of one or more words such as “senior,” “retirement,” “elder,” or like words combined with one or more words such as “certified,” “registered,” “chartered,” “advisor,” “specialist,” “consultant,” “planner,” or like words, in the name of the certification or professional designation; and

(b) The manner in which those words are combined.

5801.5 For the purposes of this chapter, a certification or professional designation does not include a job title within an organization that is licensed or registered by a State or federal financial services regulatory agency, unless it is used in a manner that would confuse or mislead a reasonable consumer, if the job title:

(a) Indicates seniority or standing within the organization; or

(b) Specifies an individual’s area of specialization within the organization.

History

• SOURCE: Final Rulemaking published at 57 DCR 6723 (July 30, 2010).

26-A DCMR § 5899 DEFINITIONS

5899.1 For the purposes of this chapter, the following terms shall have the means ascribed:

Financial services regulatory agency - includes, but is not limited to, an agency that regulates insurers, insurance producers, broker-dealers, investment advisers, or investment companies as defined under the Investment Company Act of 1940.

Insurance producer - a person required to be licensed under the laws of the District of Columbia to sell, solicit, or negotiate insurance, including annuities.

History

• SOURCE: Final Rulemaking published at 57 DCR 6723, 6725 (July 30, 2010).

26-A82 CONTINUING CARE REQUIREMENT COMMUNITIES

26-A DCMR § 8200 LICENSURE PROCEDURES

8200.1 An individual or business entity seeking to development, construct, operate, purchase, or expand a continuing care facility (“applicant”) shall apply for a license in accordance with the procedures contained in this section. All forms referred to in this section and following sections may be found on the Department of Insurance, Securities, and Banking website at disb.dc.gov.

8200.2 For new or development stage facilities, the applicant shall submit the following items to the Commissioner for review:

(a) The applicant’s name, address, and telephone number;

(b) A copy of a non-binding reservation agreement form (a nonbinding agreement between a continuing care facility and future resident (or his or her representative) to reserve a unit in the continuing care facility);

(c) An escrow agreement to establish an escrow account in compliance with the requirements of section 109 of the Act;

(d) A narrative describing the facility, its mode of operation, and its location; and

(e) Any advertising materials to be used.

8200.3 After submitting all of the items described in subsection 8200.2, the applicant for a new or development stage facility may:

(a) Disseminate materials describing the intent to develop a continuing care facility; and

(b) Enter into fully refundable non-binding reservation agreements for up to one thousand dollars ($1,000). All funds received shall be escrowed with a bank, trust company, or other independent person or entity agreed upon by the provider and the resident.

8200.4 To obtain a Start-Up Certificate, an applicant for a new or development stage facility or provider shall have submitted the items described in section 8200.2 and shall submit the following to the Commissioner for review:

(a) An application for licensure, accompanied by a five hundred dollar ($500) filing fee;

(b) A disclosure statement as required by section 105 of the Act;

(c) A copy of a binding reservation agreement form or resident agreement form; and

(d) A market feasibility study.

8200.5 Upon issuance of a Start-Up Certificate, the applicant or provider may:

(a) Enter into binding reservation agreements or resident agreements;

(b) Accept entrance fees and entrance fee deposits over one thousand dollars ($1,000). Any funds received shall be escrowed and shall be released only with the approval of the Commissioner;

(c) Begin site preparation work; and

(d) Construct model units for marketing.

8200.6 To obtain a Preliminary Certificate, an applicant or provider must hold a valid Start-Up Certificate and shall submit the following to the Commissioner for review:

(a) An explanation of any material differences between actual costs and projected costs contained in the Start-Up Certificate submission, except that an explanation is not required for existing continuing care facilities that are seeking to expand;

(b) An updated disclosure statement;

(c) Current interim financial statements; and

(d) Confirmation of signed reservation agreements for at least 50 percent (50%) of any new units and confirmation that those units were reserved through a deposit equal to at least 10 percent (10%) of the entrance fee or by a non-refundable deposit equal to the periodic fee for at least two (2) months for continuing care facilities that have no entrance fee.

8200.7 Upon issuance of a Preliminary Certificate, an applicant or provider may:

(a) Purchase or construct a continuing care facility;

(b) Renovate or develop structure(s) not already licensed as a continuing care facility; or

(c) Expand an existing continuing care facility in excess of ten percent (10%) of the current number of available independent living units or available health related units/beds.

8200.8 To obtain a Permanent License, an applicant or provider must hold a valid Preliminary Certificate and shall submit the following to the Commissioner for review at least sixty (60) days before the opening of the continuing care facility:

(a) An updated application for licensure;

(b) An updated disclosure statement;

(c) Confirmation of signed reservation agreements for new units required by the continuing care facility to break even and confirmation that those units were reserved by a deposit equal to at least ten percent (10%) of the entrance fee or by a non-refundable deposit equal to the periodic fee for at least two (2) months for continuing care facilities that have no entrance fee;

(d) All reports as required by an approved accrediting organization for the continuing care facility to maintain its accreditation; and

(e) A summary of the report of an actuary estimating the capacity of the applicant or provider to meet its contractual obligation to the residents.

8200.9 Upon issuance of a Permanent License and satisfaction of all other legal requirements, the applicant or provider may:

(a) Open the continuing care facility; and

(b) Provide continuing care services.

8200.10 If all other licensing requirements are met, the Commissioner may, in lieu of denying the issuance of a Permanent License, issue a Restricted or Conditional License to an applicant if one (1) or more of the following conditions exist:

(a) A hazardous financial condition; or

(b) Occupancy at the facility, or the number of executed agreements for new units at the facility, is below the level at which the facility would break even.

8200.11 Upon issuance of a Restricted or Conditional License, a provider may operate the facility under the conditions or restricts established by the Commissioner until such time as the Commissioner alters the conditions or restrictions or issues a Permanent License.

8200.12 Upon issuance of a Restricted or Conditional License, a provider shall file with the Commissioner each quarter a financial statement and an occupancy report, both due no later than forty-five (45) days following the end of each fiscal quarter.

8200.13 All continuing care facilities operating in the District of Columbia on the effective date of these regulations shall submit an application for a Permanent License with a filing fee of five hundred dollars ($500) attached within one hundred twenty (120) days after the effective date of these regulations. An existing continuing care facility may apply for a Permanent License without first obtaining a Start-Up Certificate or Preliminary Certificate. An application for a Permanent License under this subsection shall be accompanied by the following:

(1) Disclosure statement;

(2) Financial statements;

(3) Escrow agreement;

(4) Narrative describing the facility, its mode of operation, and the location;

(5) Advertising materials that are used or to be used; and

(6) Confirmation of signed agreements for units in the continuing care facility to break even and confirmation that those units were reserved by a deposit equal to at least ten percent (10%) of the entrance fee or by a non-refundable deposit equal to the periodic fee for at least two (2) months for continuing care facilities that have no entrance fee.

8200.14 A continuing care facility that has applied for a Permanent License pursuant to subsection 8200.13 may continue to operate until the Commissioner acts upon the application for a Permanent License. If the application is denied, the applicant shall thereafter be treated as a continuing care facility whose license or certificate of authority has been revoked.

History

• Source: Notice of Final Rulemaking published at 53 DCR 1399 (February 24, 2006); as amended by Corrected Notice of Final Rulemaking published at 53 DCR 8475 (October 20, 2006).

26-A DCMR § 8201 REVOCATION, SUSPENSION OR DENIAL OF LICENSE; ADMINISTRATIVE PENALTIES

8201.1 The suspension, revocation, denial, and administrative penalty processes provided in this section shall apply to a Start-Up Certificate, Preliminary Certificate, Permanent License, and Restricted or Conditional License.

8201.2 The suspension or revocation of a license or certificate of authority, the denial of an application for a license or certificate of authority, or the imposition of an administrative penalty shall be by written order and shall be sent to the continuing care facility, provider, or applicant by certified or registered mail. The written order shall state the grounds, charges, or conduct on which suspension, revocation, denial, or imposition of administrative penalty is based. A continuing care facility, provider, or applicant may in writing request a hearing within thirty (30) days from the date of the mailing of the order. If no written request is made, the order shall be final upon expiration of the thirty (30) day period.

8201.3 If a continuing care facility, provider, or applicant requests a hearing, the Commissioner shall issue a written notice of hearing and send it to the continuing care facility, provider, or applicant by certified or registered mail. The notice shall include a specific date, time, and place for the hearing.

8201.4 If a hearing is requested, the Commissioner or his or her designee shall be in attendance and shall conduct the proceedings. The provisions of the District of Columbia Administrative Procedure Act, approved October 21, 1968, (82 Stat. 1204; D.C. Official Code § 1-1501 et seq.) shall apply to proceedings under this subsection.

8201.5 After a hearing, or upon failure of the continuing care facility, provider, or applicant to appear at a hearing, the Commissioner shall issue a decision and order that includes findings of fact and conclusions of law. The Commissioner’s decision and order shall be sent to the continuing care facility, provider, or applicant by certified mail. The Commissioner’s decision and order shall be subject to appeal to the District of Columbia Court of Appeals.

8201.6 If the license or certificate of authority of a continuing care facility, provider, or applicant is revoked, such entity shall proceed, immediately following the effective date of the order of revocation, to wind up its affairs in the District and shall conduct no further business in the District except as may be essential to the orderly conclusion of its affairs in the District. The continuing care facility, provider, or applicant shall engage in no further advertising or solicitation in the District. The rehabilitation and liquidation provisions of section 111 of the Act shall be implemented unless the Commissioner, by written order, permits further operation of the continuing care facility as the Commissioner may find to be in the best interest of residents of a continuing care facility, to the end that residents will be afforded the greatest practical opportunity to obtain continuing care services.

History

• Source: Notice of Final Rulemaking published at 53 DCR 1399 (February 24, 2006); as amended by Corrected Notice of Final Rulemaking published at 53 DCR 8475, 8479 (October 20, 2006).

26-A DCMR § 8202 SALE OR TRANSFER OF OWNERSHIP

The sale or transfer of ownership process in section 104 of the Act shall apply to the holder of a Start-Up Certificate, Preliminary Certificate, Permanent License, and Restricted or Conditional License.

History

• Source: Notice of Final Rulemaking published at 53 DCR 1399 (February 24, 2006); as amended by Corrected Notice of Final Rulemaking published at 53 DCR 8475, 8480 (October 20, 2006).

26-A DCMR § 8203 STANDARDIZED DISCLOSURE STATEMENT FORMAT

All disclosure statements shall be prepared following a standardized format issued by the Commissioner, which the Commissioner may update as necessary.

History

• Source: Notice of Final Rulemaking published at 53 DCR 1399 (February 24, 2006); as amended by Corrected Notice of Final Rulemaking published at 53 DCR 8475, 8480 (October 20, 2006).

26-A DCMR § 8204 HEALTH AND FINANCIAL CONDITIONS FOR ACCEPTANCE

The health and financial conditions for acceptance as a resident shall appear within the disclosure statement. The disclosure statement shall also include any conditions related to the acceptance conditions required by the provider or continuing care facility, such as age, ability to move or communicate, minimum assistance levels necessary to perform daily activities, prepared wills, and ability to pay under specified conditions.

History

• Source: Notice of Final Rulemaking published at 53 DCR 1399 (February 24, 2006); as amended by Corrected Notice of Final Rulemaking published at 53 DCR 8475, 8480(October 20, 2006).

26-A DCMR § 8205 FINANCIAL STATEMENTS AND COMPILED FIVE-YEAR FORECASTS

8205.1 Certified financial statements, as required by section 105(a)(10) of the Act, and compiled five (5) year forecasts, as required by section 105(a)(12) of the Act, shall be prepared by an independent certified public accountant and shall be of the provider’s corporation or other legal entity that owns the continuing care facility. The Commissioner may require the provider to supply supplementary financial data or other appropriate disclosure on individual continuing care facilities if a corporation or other legal entity owns various continuing care facilities or is engaged in various enterprises.

8205.2 The Commissioner may accept all or part of the report and supporting documentation of an approved accrediting organization acceptable to the Commissioner to satisfy the review requirements under the Act; provided, that such acceptance shall not preclude the Commissioner from performing the examination function.

History

• Source: Notice of Final Rulemaking published at 53 DCR 1399 (February 24, 2006); as amended by Corrected Notice of Final Rulemaking published at 53 DCR 8475, 8480 (October 20, 2006).

26-A DCMR § 8206 COMPILED FIVE-YEAR FORECAST

8206.1 The compiled five (5) year forecast shall consist of the following:

(a) A balance sheet including, at a minimum, individual categories or line items that sum into the following subtotals:

(1) Current assets;

(2) Restricted assets, including a line item for operating reserve assets;

(3) Fixed assets, including property, plant, and equipment;

(4) Total assets;

(5) Current liabilities;

(6) Long-term debt;

(7) Total liabilities;

(8) Overdue revenue – refundable;

(9) Deferred revenue – nonrefundable;

(10) Equity or fund balance – unrestricted; and

(11) Equity or fund balance – restricted;

(b) A statement of operations including, at a minimum, the following categories or line items:

(1) Monthly fee revenues;

(2) Amortization of entrance fees;

(3) Health care revenues;

(4) Investment/interest income;

(5) Contributions/gifts;

(6) Health care expenses;

(7) Operation expenses, consisting of at least maintenance, laundry, and housekeeping;

(8) Dietary expenses;

(9) Administrative expenses;

(10) Interest expenses; and

(11) Depreciation;

(c) A statement of cash flow; and

(d) A narrative detailing all significant assumptions.

History

• Source: Notice of Final Rulemaking published at 53 DCR 1399 (February 24, 2006); as amended by Corrected Notice of Final Rulemaking published at 53 DCR 8475, 8481 (October 20, 2006).

26-A DCMR § 8207 INFORMATION REQUIRED OF PROPOSED OR DEVELOPMENT STAGE FACILITIES APPLICABLE TO FACILITIES SEEKING TO EXPAND

The Commissioner may require all or part of the information listed in section 105(a)(14) of the Act be provided by existing continuing care facilities that apply to expand their facilities.

History

• Source: Notice of Final Rulemaking published at 53 DCR 1399 (February 24, 2006); as amended by Corrected Notice of Final Rulemaking published at 53 DCR 8475, 8482 (October 20, 2006).

26-A DCMR § 8208 INSOLVENCY OR HAZARDOUS FINANCIAL CONDITION

8208.1 The Commissioner may deem a provider or continuing care facility that has a negative fund balance to be insolvent or in imminent danger of becoming insolvent if any of the following hazardous financial condition standards or factors are applicable or present:

(a) There are findings or conditions reported in the provider’s or continuing care facility’s financial statements that the Commissioner determines to be adverse to the financial stability of the provider or continuing care facility;

(b) The current or projected ratios of total assets, including required reserve levels, to total liabilities indicate an impairment or deterioration of the provider’s or continuing care facility’s operations or equity or demonstrate a trend that could lead to an impairment or a deterioration of the provider’s or continuing care facility’s operations, working capital, or equity;

(c) The current or projected ratios of current assets to current liabilities indicate an impairment or deterioration of the provider’s or continuing care facility’s operations, working capital, or equity or demonstrate a trend that could lead to an impairment or a deterioration of the provider’s or continuing care facility’s operations, working capital, or equity;

(d) The provider or continuing care facility is unable to perform normal daily activities and meet its obligations as they become due, considering the provider’s or continuing care facility’s current or projected cash flow and liquidity position;

(e) The provider’s or continuing care facility’s operating losses for the past year or projected operating losses are of such magnitude as to jeopardize normal daily activities or continued operations of the provider or continuing care facility;

(f) The insolvency of an affiliated provider or continuing care facility or other affiliated person results in legal liability of the provider or continuing care facility for payments and expenses of such magnitude as to jeopardize the provider’s or continuing care facility’s ability to meet its obligations as they become due, without the substantial disposition of assets outside the ordinary course of business, restructuring of debt, or externally forced revisions of its operations;

(g) The provider or continuing care facility has receivables that are more than ninety (90) days old;

(h) The insolvency is not temporary and the provider or continuing care facility cannot demonstrate that the insolvency will be materially reduced or eliminated;

(i) There is an adverse effect on the provider or continuing care facility of reporting entrance fees as deferred revenues, with consideration given to all reporting requirements required under generally accepted accounting principles and the ultimate net income component of those revenues; and

(j) A start-up provider or continuing care facility or any operational provider or continuing care facility undergoing plant expansion or refinancing of its debt has a financial condition as a result of such action that could seriously jeopardize its present or future operations.

8208.2 The provider or continuing care facility shall prepare a plan to address and correct and condition that has led to a determination of insolvency or imminent danger of insolvency by the Commissioner. The plan must be presented to the Commissioner within ninety (90) days after the date of the determination of insolvency or imminent danger of insolvency. If the plan is disapproved by the Commissioner, the plan does not correct the condition leading to the Commissioner’s determination of insolvency, or the provider’s or continuing care facility’s hazardous condition is such that it cannot be significantly corrected or eliminated, the Commissioner may take action pursuant to sections 103 and 111 of the Act.

History

• Source: Notice of Final Rulemaking published at 53 DCR 1399 (February 24, 2006); as amended by Corrected Notice of Final Rulemaking published at 53 DCR 8475, 8482 (October 20, 2006); as corrected by Errata Notice published at 58 DCR 2421, 2422 (March 18, 2011).

26-A DCMR § 8209 BOOKS AND RECORDS

8209.1 Each provider shall maintain its books and records in the District of Columbia and shall not remove from the District of Columbia its books and records without the permission of the Commissioner.

8209.2 Each provider shall maintain its books and records for three (3) years.

History

• Source: Notice of Final Rulemaking published at 53 DCR 1399 (February 24, 2006); as amended by Corrected Notice of Final Rulemaking published at 53 DCR 8475, 8484 (October 20, 2006).

26-A DCMR § 8299 DEFINITIONS

For the purposes of this chapter, the following words and phrases shall have the meanings ascribed:

Act – the Continuing Care Retirement Communities Act of 2004, effective April 6, 2005 (D.C. Law 15-270; D.C. Official Code § 44-151.01 et seq.)(2005 Supp.)

Break even – to have sufficient executed resident agreements to assure the financial stability of a continuing care facility and to have projected revenues that are at least equal to projected expenses.

Commissioner – the Commissioner of the Department of Insurance, Securities, and Banking.

Continuing care facility – a building, or complex of buildings under common management at one (1) or more sites where continuing care services are provided.

Continuing care services – the continuum of care, ranging from independent living to assisted living to nursing home care, provided pursuant to a contract for the life of the individual purchasing the services or for a period of not less than one (1) year.

Development stage facilities – the beginning of the legal commitment to develop a continuing care facility up to the point when residents are admitted to reside in the facility.

Disclosure statement – a document containing all the information required by section 105 of the Act.

Entrance fee – a payment that assures a resident a place in a continuing care facility for a term of at least one (1) year or life.

Health related services – domiciliary (rest home) care or care provided at homes for the aged, skilled or intermediate nursing, nursing home or rest home admission, or priority admission into a facility, unit, or bed providing any of the above-named services.

Health units/beds – beds in the health center (also known as the nursing home) component of the continuing care facility that are occupied by a resident having been referred to that level of care by a hospital (as on discharge) or by a physician.

Independent living units – a room, apartment, cottage, or other area within a continuing care facility set aside for the exclusive use or control of one (1) or more identified residents who do not need specialized health care services beyond general preventative health care.

Negative fund balance – a financial position of a provider or continuing care facility in which the assets of a provider or continuing care facility do not exceed its liabilities, under generally accepted accounting principles.

Provider – the promoter, developer, or owner, whether a natural person, partnership or other unincorporated association, however organized, trust, or corporation, whether or not operated for profit, or any other person, that solicits or undertakes to provide continuing care services.

History

• Source: Notice of Final Rulemaking published at 53 DCR 1399 (February 24, 2006); as amended by Corrected Notice of Final Rulemaking published at 53 DCR 8475, 8484 (October 20, 2006).

26-A84 SUITABILITY IN ANNUITY TRANSACTIONS

26-A DCMR § 8400 PURPOSE

8400.1 The purpose of this chapter is to require insurers to establish a system to supervise recommendations and to set forth standards and procedures for recommendations to consumers that result in transactions involving annuity products so that the insurance needs and financial objectives of consumers at the time of the transaction are appropriately addressed.

8400.2 Nothing herein shall be construed to create or imply a private cause of action for a violation of this chapter.

History

• Source: Notice of Final Rulemaking published at 57 DCR 12209 (December 24, 2010).

26-A DCMR § 8401 SCOPE

8401.1 This chapter shall apply to any recommendation to purchase, exchange or replace an annuity made to a consumer by an insurance producer, or an insurer where no producer is involved, that results in the recommended purchase, exchange or replacement transaction being executed.

History

• Source: Notice of Final Rulemaking published at 57 DCR 12209 (December 24, 2010).

26-A DCMR § 8402 EXEMPTIONS

8402.1 Unless otherwise specifically included, this chapter shall not apply to transactions involving:

(a) Direct response solicitations where there is no recommendation based on information collected from the consumer pursuant to this chapter; or

(b) Contracts used to fund:

(1) An employee pension or welfare benefit plan that is covered by the Employee Retirement and Income Security Act (ERISA);

(2) A plan described by sections 401(a), 401(k), 403(b), 408(k) or 408(p) of the Internal Revenue Code (IRC), as amended, if established or maintained by an employer;

(3) A government or church plan defined in section 414 of the IRC, a government or church welfare benefit plan, or a deferred compensation plan of a state or local government or tax exempt organization under section 457 of the IRC;

(4) A nonqualified deferred compensation arrangement established or maintained by an employer or plan sponsor;

(5) Settlements of or assumptions of liabilities associated with personal injury litigation or any dispute or claim resolution process; or

(6) Formal prepaid funeral contracts.

History

• Source: Notice of Final Rulemaking published at 57 DCR 12209 (December 24, 2010).

26-A DCMR § 8403 DUTIES OF INSURERS AND INSURANCE PRODUCERS

8403.1 In recommending the purchase or exchange of an annuity to a consumer that results in an insurance transaction or series of insurance transactions, the insurance producer, or the insurer where no producer is involved, shall have reasonable grounds for believing that the recommendation is suitable for the consumer on the basis of the facts disclosed by the consumer relative to his or her investments and other insurance products, and financial situation and needs, including the consumer’s suitability information, and that there is a reasonable basis to believe all of the following:

(a) The consumer has been reasonably informed of the various features of the annuity, such as the potential surrender period and surrender charge, potential tax penalty if the consumer sells, exchanges, surrenders or annuitizes the annuity, mortality and expense fees, investment advisory fees, potential charges for and features of riders, limitations on interest returns, insurance and investment components and market risk;

(b) The consumer would benefit from certain features of the annuity, such as tax-deferred growth, annuitization or death or living benefit;

(c) The particular annuity as a whole, the underlying subaccounts to which funds are allocated at the time of purchase or exchange of the annuity, and riders and similar product enhancements, if any, are suitable (and in the case of an exchange or replacement, the transaction as a whole is suitable) for the particular consumer based on his or her suitability information; and

(d) In the case of an exchange or replacement of an annuity, the exchange or replacement is suitable including taking into consideration whether:

(1) The consumer will incur a surrender charge, be subject to the commencement of a new surrender period, lose existing benefits (such as death, living or other contractual benefits), or be subject to increased fees, investment advisory fees or charges for riders and similar product enhancements;

(2) The consumer would benefit from product enhancements and improvements; and

(3) The consumer has had another annuity exchange or replacement within the preceding thirty-six (36) months.

8403.2 Prior to the execution of a purchase, exchange or replacement of an annuity resulting from a recommendation, an insurance producer, or an insurer where no producer is involved, shall make reasonable efforts to obtain the consumer’s suitability information.

8403.3 Except as permitted under subsections 8403.4 and 8403.5, an insurer shall not issue an annuity recommendation to a consumer unless there is a reasonable basis to believe the annuity is suitable based on the consumer’s suitability information.

8403.4 Except as provided under subsection 8403.5 of this section, neither an insurance producer, nor an insurer, shall have any obligation to a consumer under section 8403.1 or 8403.3 related to any annuity transaction if:

(a) No recommendation is made;

(b) A recommendation was made and was later found to have been prepared based on inaccurate material information provided by the consumer;

(c) A consumer refuses to provide relevant suitability information and the annuity transaction is not recommended; or

(d) A consumer decides to enter into an annuity transaction that is not based on a recommendation of the insurer or the insurance producer.

8403.5 An insurer’s issuance of an annuity subject to subsection 8403.4 shall be reasonable under all the circumstances actually known to the insurer at the time the annuity is issued.

8403.6 An insurance producer, or where no insurance producer is involved, the insurer or its responsible representative, shall at the time of sale:

(a) Make a record of any recommendation subject to subsection 8403.1;

(b) Obtain a customer signed statement documenting a customer’s refusal to provide suitability information, if any; and

(c) Obtain a customer signed statement acknowledging that an annuity transaction is not recommended if a customer decides to enter into an annuity transaction that is not based on the insurance producer’s or insurer’s recommendation.

8403.7 An insurer shall establish a system of supervision that is reasonably designed to comply with an insurer and its producer’s obligations under this chapter, including, but not limited to, the following:

The insurer shall maintain reasonable procedures to inform its insurance producers of the requirements of this chapter and shall incorporate the requirements of this chapter into the relevant insurer producer policies and training manuals;

The insurer shall establish standards for insurance producer product training and shall maintain reasonable procedures to require its insurance producers to comply with the requirements of section 8404 of this chapter;

The insurer shall provide product-specific training and training materials which explain to its insurance producers all material features of its annuity products;

The insurer shall maintain procedures for review of each recommendation of an annuity that are designed to ensure that there are reasonable bases to determine that a recommendation is suitable. Such review procedures may include a screening system for the purpose of identifying selected transactions for additional review, and may be accomplished electronically or through other means, including, but not limited to, physical review. Such an electronic or other system may be designed to require additional review of those transactions deemed to have met certain selection criteria;

The insurer shall maintain reasonable procedure to detect recommendations that are not suitable. This may include, but is not limited to, confirmation of consumer suitability information, systematic customer surveys, interviews, confirmation letters and programs of internal monitoring. Nothing in this paragraph prevents an insurer from complying with this subsection by applying sampling procedures or by confirming suitability information after the issuance or delivery of the annuity; and

The insurer shall annually provide a report to senior management, including the senior manager responsible for audit functions, which details a review, with appropriate testing reasonably designed to determine the effectiveness of the supervision system, the exceptions found, and corrective action taken or recommended, if any.

8403.8 Nothing in this section shall restrict an insurer from contracting with third-parties to perform a function (including maintenance of procedures) required under subsection 8403.7. An insurer is responsible for taking appropriate corrective action and may be subject to the sanctions and penalties in section 8306 of this chapter regardless of whether the insurer contracts for performance of a function or otherwise complies with paragraph (a) of this subsection.

An insurer’s system of supervision under subsection 8403.7 shall include the supervision of contractual performance under this section. This includes, but is not limited to, the following:

(1) Monitoring and, as appropriate, conducting audits to assure that the contracted function is properly performed; and

(2) Annually obtaining a certification from a senior manager who has responsibility for the contracted function stating that the manager has a reasonable basis to represent, and does represent, that the function is being properly performed.

(b) An insurer is not required to include in its system of supervision an insurance producer’s recommendations to consumers of products other than the annuities offered by the insurer.

8403.9 An insurance producer shall not dissuade, or attempt to dissuade, a consumer from:

(a) Truthfully responding to an insurer’s request for confirmation of suitability information;

(b) Filing a complaint; or

(c) Cooperating with the investigation of a complaint.

8403.10 Sales made in compliance with FINRA requirements pertaining to suitability and supervision of annuity transactions shall satisfy the requirements under this chapter. This subsection applies to FINRA broker-dealer sales of variable annuities and fixed annuities if the suitability and supervision procedures are similar to those applied to variable annuity sales. However, nothing in this subsection shall limit the Commissioner’s ability to enforce the provisions of this chapter.

8403.11 For subsection 8403.10 of this section to apply, an insurer shall:

(a) Monitor the FINRA member broker-dealer using information collected in the normal course of an insurer’s business; and

(b) Provide to the FINRA member broker-dealer information and reports that are reasonably appropriate to assist in maintaining the FINRA member’s broker-dealer system of supervision.

History

• Source: Notice of Final Rulemaking published at 57 DCR 12209, 12210 (December 24, 2010).

26-A DCMR § 8404 INSURANCE PRODUCER TRAINING

8404.1 An insurance producer shall not solicit the sale of an annuity product unless the insurance producer has adequate knowledge of the product to recommend the annuity and the insurance producer is in compliance with the insurer’s standards for product training. An insurance producer may rely on the insurer-to provide product-specific training standards and materials to comply with this section.

8404.2 An insurance producer who engages in the sale of annuity products shall complete a one-time four (4) credit training course approved by the Department.

8404.3 Insurance producers who hold a life insurance line of authority on the effective date of this chapter and who desire to sell annuities shall complete the requirements of this section within six (6) months after the effective date of this chapter. Individuals who obtain a life insurance line of authority on or after the effective date of this chapter may not engage in the sale of annuities until the annuity training course required under this subsection has been completed.

8404.4 The minimum length of the training required under this subsection shall be sufficient to qualify for at least four (4) CE credits, but may be longer.

8404.5 The training required under this section shall include information on the following topics:

(a) The types of annuities and various classifications of annuities;

(b) Identification of the parties to an annuity;

(c) How fixed, variable and indexed annuity contract provisions affect consumers;

(d) The application of income taxation of qualified and non-qualified annuities;

(e) The primary uses of annuities; and

(f) Appropriate sales practices, replacement and disclosure requirements.

8404.6 Providers of courses intended to comply with this section shall cover all topics listed in the prescribed outline and shall not present any marketing information or provide training on sales techniques or provide specific information about a particular insurer’s products. Additional topics may be offered in conjunction with, and in addition to, the required outline.

8404.7 A provider of an annuity training course intended to comply with this section shall register as a CE provider with the Department and comply with the applicable laws pertaining to insurance producer continuing education courses as set forth in 26 DCMR §§ 100, et seq.

8404.8 Annuity training courses may be conducted and completed by classroom or self-study methods in accordance with 26 DCMR §§ 100, et seq.

8404.9 Providers of annuity training shall comply with the reporting requirements and shall issue certificates of completion in accordance with 26 DCMR §§ 100, et seq.

8404.10 The satisfactory compliance of another States’ training requirements that are substantially similar to the provisions of this section shall be deemed to have satisfied the training requirements of this section.

8404.11 An insurer shall verify that an insurance producer has completed the annuity training course required under this section before allowing the producer to sell an annuity product for that insurer. An insurer may satisfy its responsibility under this section by obtaining certificates of completion of the training course or obtaining reports provided by database system sponsored and maintained by the Commissioner, or a vendor, or from any other reasonably reliable commercial database vendor that has a reporting arrangement with the approved insurance education providers.

History

• Source: Notice of Final Rulemaking published at 57 DCR 12209, 12214 (December 24, 2010).

26-A DCMR § 8405 COMPLIANCE MITIGATION; PENALTIES

8405.1 An insurer is responsible for compliance with this chapter. If a violation occurs, either because of the action or inaction of the insurer, or its insurance producer, the commissioner may order:

(a) An insurer to take reasonably appropriate corrective action for any consumer harmed by an insurer or insurance producer’s violation of this chapter;

(b) A general agency, independent agency or the insurance producer to take reasonably appropriate corrective action for any consumer harmed by the insurance producer’s violation of this chapter; and

(c) Any appropriate penalties and sanctions permitted under the Insurance Trade and Economic Development Amendment Act of 2009, effective April 3, 2001 (D.C. Law 1-265; D.C. Official Code §§ 31-2231.01, et seq. (2001)).

8405.2 Any applicable penalty for a violation of this chapter may be reduced or eliminated, if corrective action for the consumer was taken promptly after a violation was discovered or the violation was not part of a pattern or practice.

History

• Source: Notice of Final Rulemaking published at 57 DCR 12209, 12215 (December 24, 2010).

26-A DCMR § 8406 RECORDKEEPING

8406.1 Insurers, general agents, independent agencies and insurance producers shall maintain and make available to the Commissioner upon request records of the information collected from the consumer and other information used in making the recommendations that were the basis for insurance transactions for three (3) years after the insurance transaction is completed by the insurer. An insurer is permitted, but shall not be required, to maintain documentation on behalf of an insurance producer.

8406.2 Records required to be maintained by this chapter may be maintained in paper, photographic, microprocess, magnetic, mechanical or electronic media or by any process that accurately reproduces the actual document.

History

• Source: Notice of Final Rulemaking published at 57 DCR 12209, 12216 (December 24, 2010).

26-A DCMR § 8407 EFFECTIVE DATE

8407.1 This chapter shall take effect six (6) months after the date the rules become effective.

History

• Source: Notice of Final Rulemaking published at 57 DCR 12209, 12216 (December 24, 2010).

26-A DCMR § 8499 DEFINITIONS

8499 For the purposes of this chapter, the term:

Annuity means an annuity that is an insurance product under District of Columbia law and individually solicited, whether the product is classified as an individual or group annuity.

Commissioner means the Commissioner of the District of Columbia Department of Insurance, Securities and Banking.

Continuing education credit or CE credit means one continuing education credit as provided for in 26 DCMR §§ 100, et seq.

Continuing education provider or CE provider means an individual or entity that is approved to offer continuing education courses pursuant to 26 DCMR §§ 100, et seq.

Department means the District of Columbia Department of Insurance, Securities and Banking.

FINRA means the Financial Industry Regulatory Authority.

Insurer means a company required to be licensed under the laws of the District of Columbia to provide insurance products, including annuities.

Insurance producer means a person required to be licensed under the laws of the District of Columbia to sell, solicit or negotiate insurance, including annuities.

Recommendation means advice provided by an insurance producer, or an insurer where no producer is involved, to an individual consumer that results in a purchase, exchange or replacement of an annuity in accordance with that advice.

Replacement means a transaction in which a new policy or contract is to be purchased, and it is known or should be known to the proposing producer, or to the proposing insurer if there is no producer, that by reason of the transaction, an existing policy or contract has been or is to be:

(A) Lapsed, forfeited, surrendered or partially surrendered, assigned to the replacing insurer or otherwise terminated;

(B) Converted to reduced paid-up insurance, continued as extended term insurance, or otherwise reduced in value by the use of nonforfeiture benefits or other policy values;

(C) Amended so as to effect either a reduction in benefits or in the term for which coverage would otherwise remain in force or for which benefits would be paid;

(D) Reissued with any reduction in cash value; or

(E) Used in a financed purchase.

Suitability information means information that is reasonably appropriate to determine the suitability of a recommendation, including the following:

(A) Age;

(B) Annual income;

(C) Financial situation and needs, including the financial resources used for the funding of the annuity;

(D) Financial experience;

(E) Financial objectives;

(F) Intended use of the annuity;

(G) Financial time horizon;

(H) Existing assets, including investment and life insurance holdings;

(I) Liquidity needs;

(J) Liquid net worth;

(K) Risk tolerance; and

(L) Tax status

History

• Source: Notice of Final Rulemaking published at 57 DCR 12209, 12216 (December 24, 2010).

26-A88 HEALTH BENEFIT PLANS PROMPT PAYMENT

26-A DCMR § 8800 CLAIM FORM FOR MENTAL HEALTH SERVICES

8800.1 When a health insurer requests a treatment plan from a provider who provides mental health services, the health insurer shall require the provider to submit the information on the “Release of Mental Health Information for Outpatient Mental Health Treatment” form (See the Appendix).

History

• Source: Notice of Final Rulemaking published at 53 DCR 4822 (June 16, 2006).

26-A DCMR § 8899 DEFINITIONS

8899.1 “Health benefits plan” means any accident and health insurance policy or certificate, hospital and medical services corporation contract, health maintenance organization subscriber contract, plan provided by a multiple employer welfare arrangement, or plan provided by another benefit arrangement. The term “health benefit plan” does not mean accident only, credit, or disability insurance; coverage of Medicare services or federal employee health plans, pursuant to contracts with the United States government; Medicare supplemental or long-term care insurance; dental only or vision only insurance; specified disease insurance; hospital confinement indemnity coverage; limited benefit health coverage; coverage issued as a supplement to liability insurance, insurance arising out of a workers’ compensation or similar law; automobile medical payment insurance; medical expense and loss of income benefits; or insurance under which benefits are payable with or without regard to fault and that is statutorily required to be contained in any liability insurance policy or equivalent self-insurance.

8899.2 “Health insurer” means any person that provides one or more health benefit plans or insurance in the District of Columbia, including an insurer, a hospital and medical services corporation, a fraternal benefit society, a health maintenance organization, a multiple employer welfare arrangement, or any other person providing a plan of health insurance subject to the authority of the Commissioner.

8899.3 “Provider” means any hospital or health professional licensed, or authorized by reciprocity or endorsement, to practice a health occupation by the District pursuant to Chapter 12 of Title 3, or any state.

History

• Source: Notice of Final Rulemaking published at 53 DCR 4822 (June 16, 2006).

26-A89 INDIVIDUAL RESPONSIBILITY REQUIREMENT

26-A DCMR § 8900 GENERAL PROVISIONS

8900.1 The provisions of this chapter are adopted under authority of D.C. Official Code §§ 47-5101 et seq.

8900.2 The provisions of this chapter shall become effective with respect to taxable years commencing after December 31, 2018.

History

• SOURCE: Final Rulemaking published at 67 DCR 1234 (February 7, 2020). District of Columbia Municipal Regulations Insurance, Securities, and Banking 26-A DCMR § 8900

26-A DCMR § 8901 exempt individuals

8901.1 An individual is an exempt individual, and is not required to maintain the minimum essential coverage specified in D.C. Official Code § 47-5102(a), for a month that includes a day with respect to which the individual:

(a) Was a non-citizen of the United States, meaning the individual was not a U.S. citizen or U.S. national for any day during the month and was either:

(1) A nonresident alien (within the meaning of Section 26 USC § 7701(b)(1)(B)) for the taxable year that includes the month; or

(2) Not lawfully present (within the meaning of 45 CFR § 155.20) on any day in the month;

(b) Was a U.S. citizen or a resident alien who was physically present in a foreign country or countries for at least three hundred thirty (330) full days during any period of twelve (12) consecutive months that included the applicable tax year;

(c) Was incarcerated;

(d) Was a member of an Indian tribe;

(e) Was enrolled in the D.C. HealthCare Alliance;

(f) Was a member of a health care sharing ministry;

(g) Was a member of a religious sect or division that is recognized by the United States Social Security Administration as conscientiously opposed to accepting any insurance benefits, including Social Security and Medicare; or

(h) Had a short coverage gap.

8901.2 An individual is treated as having minimum essential coverage for an entire month in which an individual is exempt under § 8901.1.

8901.3 If a calendar year includes more than one short coverage gap, the exemption provided by § 8901.1(h) only applies to the earliest short coverage gap.

8901.4 For purposes of applying § 8901.3 to the first taxable year, the months in the second taxable year included in the continuous period are disregarded. For purposes of applying § 8901.3 to the second taxable year, the months in the first taxable year included in the continuous period are taken into account.

8901.5 An individual is exempt from the District shared responsibility payment for the entire tax year if that individual is:

(a) A taxpayer who is:

(1) Twenty-one (21) years of age or older as of the last date of the tax year and whose household income, as defined in 9 DCMR § 3999.1(k), for the taxable year is equal to or less than an amount equal to two hundred twenty-two percent (222%) (or a percentage determined by the Mayor pursuant to D.C. Official Code § 47-5102(b)(2)(C)) of the applicable federal poverty level as published annually by the Authority; or

(2) Twenty (20) years of age or younger as of the last date of the tax year and not claimed as a dependent by another taxpayer and whose household income, as defined in 9 DCMR § 3999.1(k), for the taxable year is equal to or less than an amount equal to three hundred twenty-four percent (324%) (or a percentage determined by the Mayor pursuant to D.C. Official Code § 47-5102(b)(2)(C)) of the applicable federal poverty level as published annually by the Authority; or

(b) A dependent who is:

(1) Twenty-one (21) years of age or older as of the last date of the tax year and who can be claimed by a dependent of a taxpayer whose household income, as defined in 9 DCMR § 3999.1(k), for the taxable year is equal to or less than an amount equal to two hundred twenty-two percent (222%) (or a percentage determined by the Mayor pursuant to D.C. Official Code § 47-5102(b)(2)(C)) of the applicable federal poverty level as published by the Authority; or

(2) Twenty (20) years of age or younger as of the last date of the tax year and who can be claimed by a dependent of a District taxpayer whose household income, as defined in 9 DCMR § 3999.1(k), for the taxable year is equal to or less than an amount equal to three hundred twenty-four percent (324%) (or a percentage determined by the Mayor pursuant to D.C. Official Code § 47-5102(b)(2)(C)) of the applicable federal poverty level as published by the Authority.

(c) For purposes of determining the applicable federal poverty level for this section, the number of persons in a family shall include:

(1) For taxpayers with the District income tax filing status of single, head-of-household, qualifying widow(er) or married filing separately, the taxpayer and all dependents claimed by the taxpayer; or

(2) For taxpayers with the District income tax filing status of married filing jointly, registered domestic partners filing jointly, married filing separately on the same return, and registered domestic partners filing separately on the same return, the taxpayer, the taxpayer’s spouse or registered domestic partner, and all dependents claimed by the taxpayer and his or her spouse or registered domestic partner.

History

• SOURCE: Final Rulemaking published at 67 DCR 1234 (February 7, 2020). District of Columbia Municipal Regulations Insurance, Securities, and Banking 26-A DCMR § 8901

26-A DCMR § 8902 MEC PLANS BY FEDERAL APPROVAL PRIOR TO 2018

8902.1 Sponsors that sought recognition for the specific plans listed as minimum essential coverage (“MEC”) from the U.S. Secretary of Health and Human Services and received recognition on or before December 15, 2017, shall have plans recognized as having the MEC, unless and until the plan sponsor makes a substantial change to the benefits provided (e.g., a reduction in benefits, increase in cost sharing, or the plan no longer complies with a requirement of Title I of the Affordable Care Act that applies to non-grandfathered, individual health insurance coverage as of December 15, 2017). The listing of approved plans can be accessed through the Centers for Medicare and Medicaid Services at the following web address:

https://www.cms.gov/CCIIO/Programs-and-Initiatives/Health-Insurance-Market-Reforms/minimum-essential-coverage.html.

History

• SOURCE: Final Rulemaking published at 67 DCR 1234 (February 7, 2020). District of Columbia Municipal Regulations Insurance, Securities, and Banking 26-A DCMR § 8902

26-A DCMR § 8999 DEFINITIONS

8999.1 For the purposes of this chapter, the following words, terms, and phrases shall have the following meanings, unless otherwise required by the context of this chapter:

D.C. HealthCare Alliance - the program established pursuant to Section 7 of the Health Care Privatization Amendment Act of 2001, effective July 12, 2001 (D.C. Law 14-18; D.C. Official Code § 7-1405).

Eligible employer-sponsored plan - With respect to any employee:

(1) Group health insurance coverage offered by, or on behalf of, an employer to the employee that is:

(A) A governmental plan (within the meaning of Section 2791(d)(8) of the Public Health Service Act (42 USC § 300gg-91(d)(8));

(B) Any other plan or coverage offered in the small or large group market within the District or a State; or

(C) A grandfathered health plan offered in a group market; or

(2) A self-insured group health plan under which coverage is offered by, or on behalf of, an employer to the employee.

Government-sponsored program - any of the following:

(1) The Medicare program under part A of Title XVIII of the Social Security Act (42 USC § 1395c and following sections);

(2) The Medicaid program under Title XIX of the Social Security Act (42 USC § 1396 and following sections);

(3) The Children's Health Insurance Program (CHIP) under Title XXI of the Social Security Act (42 USC § 1397aa and following sections);

(4) Medical coverage under Chapter 55 of Title 10 USC, including coverage under the TRICARE program;

(5) The following health care programs under Chapters 17 or 18 of Title 38 USC:

(A) The medical benefits package authorized for eligible veterans under 38 U.S.C. §§ 1705 and 1710;

(B) The Civilian Health and Medical Program of the Department of Veterans Affairs (CHAMPVA) authorized under 38 USC § 1781; and

(C) The comprehensive health care program authorized under 38 USC §§ 1803 and 1821 for certain children of Vietnam Veterans and Veterans of covered service in Korea who are suffering from spina bifida.

(6) A health plan under Section 2504(e) of Title 22 USC (relating to Peace Corps volunteers); and

(7) The Non-appropriated Fund Health Benefits Program of the Department of Defense, established under Section 349 of the National Defense Authorization Act for Fiscal Year 1995, approved October 5, 1994 (108 Stat. 2727; 10 USC § 1587, note).

(8) Government-sponsored program” does not mean any of the following:

(A) Optional coverage of family planning services under Section 1902(a)(10)(A)(ii)(XXI) of the Social Security Act (42 USC § 1396a(a)(10)(A)(ii)(XXI));

(B) Optional coverage of tuberculosis-related services under Section 1902(a)(10)(A)(ii)(XII) of the Social Security Act (42 USC § 1396a(a)(10)(A)(ii)(XII));

(C) Coverage of pregnancy-related services under Sections 1902(a)(10)(A)(i)(IV) and (a)(10)(A)(ii)(IX) of the Social Security Act (42 USC §§ 1396a(a)(10)(A)(i)(IV), (a)(10)(A)(ii)(IX));

(D) Coverage limited to treatment of emergency medical conditions in accordance with 8 USC § 1611(b)(1)(A), as authorized by Section 1903(v) of the Social Security Act (42 USC § 1396b(v));

(E) Coverage for medically needy individuals under Section 1902(a)(10)(C) of the Social Security Act (42 USC § 1396a(a)(10)(C)) and 42 CFR § 435.300 and following sections;

(F) Coverage authorized under Section 1115(a) of the Social Security Act (42 USC § 1315(a));

(G) Coverage under Sections 1079(a), 1086(c)(1), or 1086(d)(1) of Title 10 USC, that is solely limited to space available care in a facility of the uniformed services for individuals excluded from TRICARE coverage for care from private sector providers; or

(H) Coverage under Sections 1074a and 1074b of title 10 USC, for an injury, illness, or disease incurred or aggravated in the line of duty for individuals who are not on active duty.

(9) Except for the program identified in § 8999.1(c)(7), a government-sponsored program described in this section is not an eligible employer-sponsored plan.

Grandfathered health plan - any group health plan or group health insurance coverage to which section 1251 of the Affordable Care Act (42 USC § 18011) applies.

Health care sharing ministry - an organization that:

(1) Is described in § 501(c)(3) of the Internal Revenue Code and is exempt from tax under § 501(a) of the Internal Revenue Code;

(2) Has (or its predecessor has) been in existence at all times since December 31, 1999;

(3) Conducts an annual audit performed by an independent certified public accounting firm in accordance with generally accepted accounting principles and makes the annual audit report available to the public upon request; and

(4) Has members that:

(A) Share a common set of ethical or religious beliefs and share medical expenses among themselves in accordance with those beliefs and without regard to the District or state in which a member resides or is employed;

(B) Retain membership even after they develop a medical condition; and

(C) Have shared medical expenses continuously and without interruption since at least December 31, 1999.

Immigrant Children’s Program - the program established pursuant to Section 2202(b) of the Medical Assistance Expansion Program Act of 1999, effective October 20, 1999 (D.C. Law 13-38; D.C. Official Code § 1-307.03(b)).

Incarcerated - confined, after the disposition of charges, in a jail, prison, or similar penal institution or correctional facility.

Indian tribe - a group or community described in § 45A(c)(6) of the Internal Revenue Code.

Internal Revenue Code - has the same meaning as under D.C. Official Code § 47-1801.04(28).

Minimum essential coverage - coverage under the following plans or programs:

The following plans or programs:

(A) A government-sponsored program;

(B) An eligible employer-sponsored plan;

(C) A plan in the individual market; or

(D) A grandfathered health plan.

(2) The following plans or programs, as defined by 45 CFR § 156.602, as that section was in effect on December 15, 2017:

(A) Refugee Medical Assistance supported by the Administration for Children and Families;

(B) Medicare Advantage Plans, pursuant to Part C of Title XVIII of the Social Security Act; or

(C) State high risk pool coverage established on or before November 26, 2014 in the District or any State;

(3) Any plan or arrangement under § 8902.1.

(4) The Immigrant Children’s Program; or

(5) Any plan or arrangement recognized by the Mayor by rule as minimum essential coverage.

(6) “Minimum essential coverage” does not include:

(A) Any coverage that consists solely of excepted benefits described in Section 2791(c)(1), (c)(2), (c)(3), or (c)(4) of the Public Health Service Act (42 USC § 300gg-91(c)).

(B) Health coverage provided under multiple employer welfare arrangement if the multiple employer welfare arrangement did not provide coverage in the District on December 15, 2017, or it does not comply with federal law and regulations applicable to multiple employer welfare arrangements that were in place as of December 15, 2017.

Month - a calendar month.

Multiple employer welfare arrangement - has the same meaning as provided in Section 3(40) of the Employee Retirement Income Security Act of 1974, approved September 2, 1974 (88 Stat. 833; 29 USC § 1002(40)).

Plan in the individual market - health insurance coverage offered to individuals in the individual market within the District or a state, other than short-term limited duration insurance within the meaning of Section 2791(b)(5) of the Public Health Service Act (42 USC § 300gg-91(b)(5)). A qualified health plan offered by an Exchange is a plan in the individual market. If a territory of the United States elects to establish an Exchange under Section 1323(a)(1) and (b) of the Affordable Care Act (42 USC § 18043(a)(1), (b)), a qualified health plan offered by that Exchange is a plan in the individual market.

Short coverage gap - a continuous period of less than three (3) months in which the individual is not covered under minimum essential coverage. If the individual does not have minimum essential coverage for a continuous period of three (3) or more months, none of the months included in the continuous period are treated as included in a short coverage gap.

History

• SOURCE: Final Rulemaking published at 67 DCR 1234 (February 7, 2020). District of Columbia Municipal Regulations Insurance, Securities, and Banking 26-A DCMR § 8999

26-B SECURITIES

26-B1 BROKER-DEALERS, AGENTS, INVESTMENT ADVISERS, AND INVESTMENT ADVISER REPRESENTATIVES

26-B DCMR § 100 [RESERVED]

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 101 INTERNET COMMUNICATIONS

101.1 Broker-dealers and agents who use the Internet to distribute information on available products and services through communications made on the Internet directed generally to anyone having access to the Internet, and transmitted through Internet communications shall not be considered to be transacting business "in the District" for purposes of the Securities Act of 2000 (D.C. Law 13-203, 47 DCR 7387) ("the Act"), provided that:

(a) The Internet communication contains a legend in which it is clearly stated that:

(1) The broker-dealer or agent in question may only transact business in the District if licensed, excluded, or exempted from broker-dealer or agent licensing requirements; and,

(2) Follow-up, individualized responses to persons in the District by the broker-dealer or agent that involve either effecting or attempting to effect transactions in securities, or rendering of personalized investment advice for compensation, will not be made without compliance with broker-dealer or agent licensing requirements, or an applicable exemption or exclusion; and,

(b) The Internet communication contains a mechanism which includes, but is not limited to, technical "firewalls" or other implemented policies and procedures, designed reasonably to ensure that before any subsequent, direct communication with prospective customers or clients in the District, the broker-dealer and agent are first licensed in the District or qualify for an exemption or exclusion from the licensing requirement; and,

(c) The Internet communication is limited to the dissemination of general information on products and services and does not involve either effecting or attempting to effect transactions in securities, or rendering personalized investment advice for compensation in the District over the Internet; and,

(d) With respect to agent Internet communications:

(1) The broker-dealer affiliation of the agent is prominently disclosed within the Internet communication;

(2) The broker-dealer with whom the agent is associated retains responsibility for reviewing and approving the content of any Internet communication by an agent;

(3) The broker-dealer with whom the agent is associated first authorizes the distribution of information on the particular products and services through the Internet communication; and

(4) When disseminating information through the Internet communication, the agent acts within the scope of the authority granted by the broker-dealer.

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 102 BROKER-DEALER AND AGENT REGISTRATION AND LICENSING

102.1 Except as otherwise provided in § 102.3, an application for an initial or renewal license as a broker-dealer or agent, pursuant to Section 203(a) (D.C. Register at 47 DCR 7846) of the Act or a successor's license as a broker-dealer pursuant to Section 203(a)(5) (D.C. Register at 47 DCR 7846) of the Act, shall be filed with the Department of Insurance and Securities Regulation ("Department"), or any other entity designated by the Department, on application forms provided for that purpose in accordance with the instruction for preparation and execution of the forms.

1102.2 If the information contained in any application form for licensing or renewal or licensing as a broker-dealer or agent or in any amendment thereto is or becomes materially inaccurate or incomplete for any reason, the broker-dealer or agent shall promptly correct or complete the information by amending the application.

1102.3 Applications for licenses by broker-dealers and agents who are members of the Financial Industry Regulatory Authority (“FINRA”) shall be filed with the Central Registration Depository ("CRD") of the FINRA as developed under contract with the North American Securities Administrators Association ("NASAA"), on forms established for the CRD and, in addition thereto, the broker-dealer shall file with the Department completed Broker-Dealer Affidavit, Affidavit of No Sales, and such other information as the Director may require.

102.4 Applications for licenses and annual reports of broker-dealers and agents not members of the NASD shall be filed with the Department on Forms BD, U-4, Broker-Dealer Affidavit and Affidavit of No Sales, and such other information as the Director may require.

102.5 The broker-dealer who files an application for an initial license shall file as part of its application an original statement of financial condition in such detail as to disclose the nature and amount of assets, liabilities, and capital as of a date within thirty (30) days of the application filing date.

102.6 The applicant shall attach to the statement an oath or affirmation that the statement is true and correct to the best of his or her knowledge and belief.

102.7 The oath or affirmation shall be made before a person duly authorized to administer the oath or affirmation.

102.8 If the broker-dealer is a sole-proprietorship, the oath or affirmation shall be made by the proprietor; if a partnership, by a general partner; if a corporation, by a duly authorized officer.

102.9 The schedule of securities furnished as a part of the statement of financial condition shall be considered confidential if bound separately from the balance of the statement.

102.10 Except as provided for in § 102.9, the schedule of securities shall be available for official use by any official or employee of the United States or any state, by national securities exchanges and national securities associations of which the person filing the statement is a member, and by any other person to whom the Department authorizes disclosure of the information as being in the public interest.

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 103 EXAMINATIONS

103.1 Each person applying for a license as a sole proprietor broker-dealer or as an agent shall be required to take the appropriate examination for that category. Examinations designated as appropriate for a category by FINRA shall be deemed appropriate for the purposes of this section.

103.2 The examination referred to in § 103.1 is not required to be taken by any of the following applicants unless specifically required by the Department:

(a) An applicant who at the time of his or her application is filed is a registered representative, registered with the FINRA, the New York Stock Exchange or the American Stock Exchange;

(b) An applicant who has made the required score on an appropriate written qualification examination given by the FINRA; and

(c) An applicant who has lawfully and actively engaged in the securities business on a full-time basis for the five(5) years immediately preceding the date on which he or she filed his or her application;

103.3 The Department may, for good cause shown, waive the requirements of § 103.1.

103.4 Without otherwise restricting the discretionary authority granted to the Commissioner of the Department of Insurance, Securities and Banking ("Commissioner") by Section 208 (6) of the Act (D.C. Register at 47 DCR 7852), the Commissioner will consider the factors listed in this subsection in determining whether a waiver from the examination requirements. The following factors are set forth for illustrative purposes only and do not constitute the entire range of considerations that may form the basis for granting or denying a waiver request.

(a) Whether the applicant has disciplinary history;

(b) Whether the applicant has certified to Department staff persons that the applicant has reviewed the act and this title.

(c) Whether the applicant has substantial long-term and continuous experience as a principal, agent or employee, other than in a clerical capacity, of a broker-dealer or investment adviser. Staff persons also will consider whether the applicant has similar experience in a responsible position, other than in a clerical capacity, in the securities, banking, finance or other related business.

(d) Whether the applicant has some continuous experience in a responsible position, other than in a clerical capacity, in the securities, banking, finance or other related business and also possesses educational credentials or professional designations such as one of the following:

(1) An advanced degree obtained through graduation from a formal degree program of an accredited educational institution with a concentration in economics, finance, mathematics, business, business administration or similar subjects.

(2) A license in good standing with the relevant licensing authority as a certified public accountant.

(e) Whether the applicant is a member of the bar in good standing of any state.

(f) Whether the applicant previously has passed the examination and has remained continuously employed in the securities industry or possesses some employment experience in the securities industry and has not had a significant lapse of this employment as of the date of filing of the application for registration with the Department.

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 104 FILING AND TRANSFER PROCEDURES

104.1 All relevant time periods in the Act for processing of filings will begin running on the first business day after the date the document is received.

104.2 Any electronic method acceptable to the Director of the Securities Bureau ("Director") may be used to make any filings with the Department. The filing of documents and information using such an electronic method is equivalent to paper filing of documents and information with the Department.

104.3 Filings directed to the Department by means of facsimile will be accepted by the Commissioner as complying with the requirements of the Act and these regulations, provided the filer sends the original signed document to the Department postmarked not later than the next business day after the facsimile transmission.

104.4 A broker-dealer or an issuer may apply to the Commissioner to transfer its agent's license in order to transfer the business of the agent to other licensed broker-dealers or issuers. The agent may not conduct the activities of an agent on behalf of the other broker-dealer or issuer until the transferred license is effective.

104.5 A broker-dealer who is not a member of FINRA or an issuer shall transfer an agent's affiliation from another broker-dealer or issuer by filing with the Department a signed, complete FINRA Form U-4, or its successor, with "DC" checked, and the required fee pursuant to § 109.

104.6 A broker-dealer that is a registered with FINRA shall transfer an agent's affiliation from another FINRA broker-dealer by filing the appropriate application with the CRD, or any successor system, and shall comply with applicable FINRA rules regarding filing requirements, and dates.

104.7 An application filed under this subsection is processed as an initial application in accordance with § 102.

104.8 A licensed broker-dealer may register a successor by filing with the Department the following:

(a) a current, complete, and signed copy of SEC Form BD, or its successor, with "DC" checked; and

(b) a list of licensed agents associated or to be associated with the successor broker-dealer;

104.9 If the successor is a broker-dealer who is also licensed with NASDR, the application for transfer of agents must be filed and processed through the CRD system, or any successor system.

104.10 If a broker-dealer succeeds to and continues the business of another broker-dealer, the license of the predecessor broker-dealer is effective as the license of the successor broker-dealer for sixty (60) days after that succession or until the last day of the calendar year, whichever is sooner, but only if the successor broker-dealer has filed the SEC Form BD, or its successor, with the Department within thirty (30) days after the succession or before the last day of the calendar year, whichever occurs earlier.

104.11 If a broker-dealer partnership that is not licensed with the Commissioner succeeds to and continues the business of a predecessor partnership that was licensed as a broker-dealer and files an SEC Form BD, or its successor, with the Commissioner to reflect changes in the partnership the Commissioner will treat a SEC Form BD, or its successor, as an application for license. The Commissioner will take this action even though the form filed may be designated as an amendment to an existing license of the predecessor partnership.

104.12 A successor broker-dealer effecting a mass transfer of agents licenses pursuant to Section 205 of the Act (D.C. Register at 47 DCR 7848) shall be exempt from the fee requirement of § 109.

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 105 INCOMPLETE OR DEFICIENT APPLICATIONS

105.1 An application for license or a renewal as an agent or broker-dealer shall be deemed incomplete for purposes of Section 203 of the Act (D.C. Register at 47 DCR 7846) if it omits required documents or material facts.

105.2 If the Director finds that a registrant's application contains a misrepresentation or omits a document or material fact required, he or she shall notify the applicant of the deficiency by letter.

105.3 A deficiency letter shall require the applicant to perfect the application within twenty-one (21) days after issuance of the deficiency letter.

105.4 A deficiency letter shall postpone the effectiveness of the applicant's license application for thirty (30) days after the applicant perfects the application.

105.5 The Director may accelerate the effective date of a license once the Director determines that the application is complete and that all applicable requirements are satisfied.

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Final Rulemaking published at 47 DCR 1221 (February 25, 2000); Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 106 REAPPLICATION FOR AN AGENT OR BROKER-DEALER LICENSE

106.1 An agent or broker-dealer applicant whose application was denied under Section 207 of the Act (D.C.Official Code § 31-5602.07; D.C. Register at 47 DCR 7849) may not reapply for licensing until one (1) year after the initial application was acted upon, unless the Director in his discretion declares otherwise.

106.2 An individual who has not been licensed in any jurisdiction for a period of two (2) years shall be required to comply with the examination requirements of § 103.

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 107 TERMINATION AND WITHDRAWAL OF REGISTRATION AS AN AGENT OF A BROKER-DEALER

107.1 Every broker-dealer shall promptly file with the Department, through the CRD on From U-5, a notice of termination of employment of any person registered in the District as an agent with such broker-dealer in the District, and shall also furnish the reason or reasons for such termination.

107.2 When a licensed agent withdraws, cancels, or otherwise terminates its license, or when the association between the agent and broker-dealer is otherwise terminated for any reason, notice of such fact shall be filed promptly by the agent with the Department on the forms or in the manner prescribed below.

107.3 A broker-dealer which is a member of the NASDR shall file notice of any withdrawals, cancellations, or terminations of an agent's license with the Department through the CRD. A broker-dealer which is not a member of FINRA shall file any notice required by this section with the Department.

107.4 The Commissioner, in his or her discretion, may institute a disciplinary proceeding pursuant to Section 207 of the Act (D.C. Official Code § 31-5602.07; D.C. Register at 47 DCR 7849) after the effective date of a termination or withdrawal of a license, as provided in Section 209 of the Act (D.C.Official Code § 31-5602.09; D.C. Register at 47 DCR 7852).

107.5 A broker-dealer shall be responsible for the acts, practices, and conduct of licensed agents in connection with the purchase and sale of securities until such time as they have been properly terminated as provided in these regulations; and such broker-dealer may be subject to disciplinary action pursuant to Section 207 of the Act, for such agents as have been terminated but for whom the appropriate termination notices have not been filed at date of license renewal.

107.6 The forms to be utilized for providing notice to the Department required by § 107.1 are:

(a) Uniform Request for Broker Dealer Withdrawal (Form BDW) (Revised 8/99); or

(b) Uniform Termination Notice for Securities Industry Registration (Form U-5) (Revised 8/99).

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 108 [RESERVED]

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001); as amended by Final Rulemaking published at 60 DCR 16653 (December 6, 2013).

26-B DCMR § 109 [RESERVED]

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001); as amended by Final Rulemaking published at 60 DCR 16653 (December 6, 2013).

26-B DCMR § 110 RATIO OF AGGREGATE INDEBTEDNESS TO NET CAPITAL

110.1 No broker-dealer licensed or required to be licensed under the Act shall permit its aggregate indebtedness to all persons to exceed the ratio of its net capital as set forth in Rule 15c3-1, as amended, (§ 240.15c3-1 of 17 CFR 217) under the Securities Exchange Act of 1934.

110.2 The broker-dealer shall also comply with the provisions of Customer Protection-Reserves and Custody of Securities Rule 15c3-3, as amended, (§ 240.15c3-3 of 17 CFR 255) under the Securities Exchange Act of 1934.

110.3 The provisions of this section shall not apply to those persons who are exempt from Rule 15c3-1, as amended, (§ 240.15c3-1 of 17 CFR 217) under the Securities Exchange Act of 1934.

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 111 MINIMUM NET CAPITAL

111.1 Each broker-dealer licensed or required to be licensed under the Act shall have and maintain minimum net capital as required by Rule 15c3-1, as amended, (§ 240.15c3-1 of 17 CFR 217) under the Securities Exchange Act of 1934.

111.2 For the purposes of computing "Minimum Net Capital," net capital shall be computed as described in Rule 15c3-1, as amended, (§ 240.15c3-1 of 17 CFR 217) under the Securities Exchange Act of 1934.

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 112 SURETY BOND

112.1 Each agent of an issuer shall, as set forth in this section, post on the prescribed form, a surety bond issued by a corporate surety company licensed to do business in the District.

112.2 Each agent of an issuer licensed or applying for licensing under the Act shall post a surety bond in an amount of ten thousand dollars ($ 10,000).

112.3 The surety bond required by § 112 shall not apply for agents representing issuers having a net worth in excess of five hundred thousand dollars ($ 500,000).

112.4 Each issuer claiming exemption pursuant to § 112.3 shall file with and as a part of any agent application the following documents:

(a) A detailed original document of financial condition which discloses the nature and the amount of assets and liabilities; and

(b) The net worth of the issuer as of the date within thirty (30) days of the date on which the statement is filed.

112.5 The issuer shall attach to the statement an oath or affirmation that the statement is true and correct to the best of its knowledge and belief.

112.6 The oath or affirmation shall be made before a person duly authorized to administer the oath or affirmation.

112.7 If the issuer is a sole proprietorship, the oath or affirmation shall be made by the proprietor; if a partnership, by a general partner; if a corporation, by a duly authorized officer.

112.8 Upon a written request from the applicant or licensee, the Department may, when it is necessary or appropriate, in the public interest and consistent with the protection of investors, and for good cause shown, waive the bonding requirement.

112.9 The text of the surety bond form as required by § 112.1 shall read as follows:

SURETY BOND

That __ as Principal, __ a Corporation, incorporated under the laws of __ and licensed to do business in the District of Columbia are held and firmly bound to the Department of Insurance and Securities Regulation of the District of Columbia for the use and benefit of any persons damaged by any breach of this obligation in the sum of $ 10,000 for the payment of which sum we bind ourselves, or heirs, executors, administrators, successors and assigns, jointly and severally by these presents. The conditions of the bond are as follows:

(1) The above-mentioned principal has applied or will apply for a license as agent of an issuer, or is licensed as agent of an issuer under the provisions of Section 101 of the Act (D.C. Register at 47 DCR 7837);

(2) The above named principal is required to file a surety bond in accordance with the provisions of Section 203 (g)(1)(A) of the Act (D.C. Register at 47 DCR 7847), and § 110.1;

(3) This bond is a continuous obligation and shall cover the full period or periods of licensing of the principal, including initial and renewal licensing;

(4) The surety shall not be obligated to this bond unless the principal fails to account for all money and securities coming into its possession for the benefit of investors, or fails to discharge all obligations imposed on it by the Act and the rules adopted thereunder;

(5) The liability of the surety for any one or more claims by any one or more persons shall not be cumulative and shall not exceed in the aggregate the sum of this bond;

(6) Any person or persons, including the Department, who have cause of action arising under the Act, or any provision of this bond, may bring suit on this bond;

(7) In the event that either the principal or the surety, or both, are served with notice of any suit on this bond, the person served with the notice shall immediately give written notice of the filing of the action to the Department of Insurance and Securities Regulation of the District of Columbia; and

(8) No suit may be maintained to enforce any liability on the bond unless brought within two years after the sale or other act upon which the liability is based.

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 113 CONSENT TO SERVICE OF PROCESS

Pursuant to Section 706 of the Act (D.C. Official Code § 31-5607.06; D.C. Register at 47 DCR 7883), each broker-dealer and each agent shall file with its initial application for license an irrevocable consent to service of process on the form provided for that purpose, appointing the Commissioner or his or her successor in office to be the person's attorney to receive service of any lawful process in any non-criminal suit, action, or proceeding against the person or his or her successor, executor, or administrator which shall arise, after the consent has been filed, under the Act or any rule or order thereunder, with the same force and validity as if served personally on the person filing the consent.

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 114 FILING OF A FINANCIAL STATEMENT

114.1 Each licensed broker-dealer shall annually file with the Department, or, subject to the conditions set forth in § 114.2 of this section, with the Commissioner, on a calendar or fiscal year basis, a financial report (1) audited by an independent public accountant or independent certified public accountant meeting the qualifications of § 115, and (2) containing the information required by Securities and Exchange Commission Rule 17a-5(d), 17 C.F.R. § 240.17a-5(d). The report shall be filed not more than 90 days following the end of the calendar or fiscal year. If the date of the filing exceeds such 90-day requirement, an unaudited statement similar in all respects shall also be filed and shall not be dated more than 90 days prior to the filing.

114.2 A licensed broker-dealer shall be exempt from the annual financial report filing requirement described in § 114.1, and shall instead file its financial report with the NASDR, provided the broker-dealer is in compliance with the net capital requirements in §§ 110 and 111.

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 115 QUALIFICATIONS OF ACCOUNTANTS

115.1 The Commissioner shall not recognize any person as a certified public accountant who is not duly registered and in good standing under the laws of his or her place of residence or principal office.

115.2 The Commissioner shall not recognize any person as a public accountant who is not in good standing and entitled to practice under the laws of his or her place of residence of principal office.

115.3 The accountant's certificate shall contain the information specified in §§ 115.4 through 115.7.

115.4 The certificate shall be dated, signed, and shall identify without detailed enumeration the items of the report covered by the certificate.

115.5 The certificate shall have a reasonably comprehensive statement as to the scope of the audit made, including a statement as to the following items:

(a) Whether the accountant reviewed the procedures followed for safeguarding the securities of customers;

(b) Whether, with respect to significant items in the report covered by the certificate, any auditing procedures generally recognized as normal have been omitted, including a specific designation of the procedures and of the reasons for their omission;

(c) Whether the audit was made in accordance with generally acceptable auditing standards applicable in the circumstances; and

(d) Whether the audit omitted any procedure considered necessary by the accountant under the circumstances of the particular case.

115.6 Nothing in this section shall be construed to imply authority for the omission of any procedure which independent accountants would ordinarily employ in the course of an audit made for the purpose of expressing the opinions required under § 115.7.

115.7 The accountant's certificate shall state clearly the opinion of the accountant with respect to the financial statement covered by the certificate and the accounting principles and practices reflected therein.

115.8 Any matters to which the accountant takes exception shall be clearly identified; the exception shall be specifically and clearly stated; and, to the extent practicable, the effect of each exception on the related item of the report shall be given.

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 116 RESERVED

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 117 RESERVED

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 118 FINANCIAL AND DISCIPLINARY INFORMATION THAT BROKER-DEALERS MUST DISCLOSE TO CLIENTS

1818.1 A broker-dealer shall promptly disclose in writing the financial and disciplinary history of an agent employed or associated with the broker-dealer upon the request of a current or prospective client. Disclosure of financial and disciplinary history shall be consistent with the provisions of this section.

1818.2 It shall constitute a dishonest practice within the meaning of Section 207(a) of the Act (D.C. Official Code 31-5602.07(a); D.C. Register at 47 DCR 7849) for any broker-dealer to fail to disclose to any client or prospective client in the District all material facts pertaining to its agents that is required to be disclosed to NASDR or other SRO with respect to:

(a) A financial condition of the broker-dealer that is reasonably likely to impair the ability of the broker-dealer to meet contractual commitments to clients.

(b) A legal or disciplinary event that is material to an evaluation of the broker-dealer's or their representative's integrity or ability to meet contractual commitments to clients.

(c) A failure to comply with any arbitration award issued in connection with doing business as a broker-dealer or agent.

1818.3 It shall constitute a rebuttable presumption that the following legal or disciplinary allegations involving the broker-dealer, or agent (hereinafter referred to a "person"), that were not resolved in the person's favor or subsequently reversed, suspended, or vacated are material within the meaning of this section for a period of 10 years from the time of the event. No affirmative or negative presumption of materiality shall be created under this section for events not specifically set forth in this subsection.

(a) A criminal or civil action in a court of competent jurisdiction in which the person:

(1) Was convicted or pleaded guilty or nolo contendere ("no contest") to a felony or misdemeanor, or is the named subject of a pending criminal proceeding (any of the foregoing referred to hereafter as "action"), and such action involved: an investment related business; fraud, false statements, or omissions; wrongful taking of property; or bribery, forgery, counterfeiting, or extortion;

(2) Was found to have been involved in a violation of an investment-related statute or rule; or

(3) Was the subject of any order, judgment, or decree permanently or temporarily enjoining the person or otherwise limiting the person from engaging in any investment related activity.

(b) An administrative proceeding before the SEC, the Department, or any federal or state agency (any of the foregoing being referred to hereafter as "agency") in which the person:

(1) Was found to have caused an investment related business to lose its authorization to do business; or

(2) Was found to have been involved in a violation of an investment-related statute or rule, or was the subject of an order by the agency denying, suspending, or revoking the authorization to act in, or barring or suspending the person's association with, an investment-related business; or otherwise significantly limiting the person's investment-related activities.

(c) A Self Regulatory Organization ("SRO") proceeding in which the person:

(1) Was found to have caused an investment-related business to lose its authorization to do business; or

(2) Was found to have been in violation of the SRO's rules and was the subject of an order by the SRO barring or suspending the person from membership or from association with other members, or expelling the person from membership; fining the person more than $ 2,500; or otherwise significantly limiting the person's investment-related activities.

1818.4 For purposes of calculating the 10-year period during which events are presumed to be material under these regulations, the date of the reportable event shall be the date on which the final order, judgment, or decree was entered, or the date on which any rights of appeal from preliminary orders, judgments, or decrees expired.

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 119 PRACTICES DEEMED UNETHICAL OR DISHONEST FOR BROKER-DEALERS AND AGENTS

119.1 Pursuant to the authority of Section 207(a)(9) of the Act (D.C. Register at 47 DCR 7851), each broker-dealer and agent registered in the District is required to observe high standards of commercial honor and just and equitable principles of trade in the conduct of their business. The acts and practices described this section, among others, are considered contrary to such standards and may constitute grounds for denial, suspension or revocation of registration or such other action authorized by the Act.

119.2 For the purposes of Section 207(a)(9) of the Act (D.C. Official Code § 31-5602.07(a)(9); D.C. Register at 47 DCR 7851), dishonest or unethical practices by a broker-dealer shall include, but not be limited to, the following conduct:

(a) Engaging in an unreasonable and unjustifiable delay in the delivery of securities purchased by any of its customers or in the payment, upon request, of free credit balances reflecting completed transactions of any of its customers, or failing to notify customers of their right to receive possession of any certificate of ownership to which they are entitled;

(b) Inducing trading in a customer's account that is excessive in size or frequency in view of the customer's investment objective, level of sophistication in investments, and financial situation and needs;

(c) Recommending a transaction without reasonable grounds to believe that such transaction is suitable for the customer in light of the customer's investment objective, level of sophistication in investments, financial situation and needs, and any other information material to the investment;

(d) Executing a transaction on behalf of a customer without prior authorization to do so;

(e) Exercising any discretionary power in effecting a transaction for a customer's account without first obtaining written discretionary authority from the customer, unless the discretionary power relates solely to the time and/or price for the execution of orders;

(f) Executing any transaction in a margin account without securing from the customer a properly executed written margin agreement promptly after the initial transaction in the account;

(g) Failing to segregate and identify customer's free securities or securities held in safekeeping;

(h) Hypothecating a customer's securities without having a lien thereon unless the broker-dealer secures from the customer a properly executed written consent promptly after the initial transaction, except as permitted by SEC regulations;

(i) Entering into a transaction with or for a customer at a price not reasonably related to the current market price of the security or receiving an unreasonable commission or profit (commissions or profits equal to 10% or more of the price of a security are presumed to be unreasonable);

(j) Failing to furnish to a customer purchasing securities in an offering, no later than the date of confirmation of the transaction, either a final prospectus or a preliminary prospectus and an additional document, which, together with the preliminary prospectus, includes all information set forth in the final prospectus;

(k) Charging unreasonable and inequitable fees for services performed, including miscellaneous services such as collection of monies due for principal, dividends or interest, exchange or transfer of securities, appraisals, safekeeping, or custody of securities and other services related to its securities business;

(l) Charging any fee for which no notice is given to the customer, and consent obtained, prior to the event incurring the fee;

(m) Offering to buy from or sell to any person any security at a stated price, unless such broker-dealer is prepared to purchase or sell, as the case may be, at such price and under such conditions as are stated at the time of such offer to buy or sell;

(n) Representing that a security is being offered to a customer "at the market" or a price relevant to the market price, unless such broker-dealer knows or has reasonable grounds to believe that a market for such security exists other than that made, created or controlled by such broker-dealer, or by any person for whom he is acting or with whom he is associated in such distribution, or any person controlled by, controlling or under common control with such broker-dealer;

(o) Effecting any transaction in, or inducing the purchase or sale of, any security by means of any manipulative or deceptive device, practice, plan, program, design or contrivance, that may include but not be limited to:

(1) Effecting any transaction in a security that involves no change in the beneficial ownership thereof;

(2) Entering an order or orders for the purchase or sale of any security with the knowledge that an order or orders of substantially the same size, at substantially the same time and substantially the same price, for the sale of any such security, has been or will be entered by or for the same or different parties for the purpose of creating a false or misleading appearance of active trading in the security or false or misleading appearance with respect to the market for the security; provided, however, nothing in this subparagraph shall prohibit a broker-dealer from entering bona fide agency cross transactions for its customers; or

(3) Effecting, alone or with one or more other persons, a series of transactions in any security creating actual or apparent active trading in such security or raising or depressing the price of such security for the purpose of inducing the purchase or sale of such security by others;

(p) Guaranteeing a customer against loss in any securities account of such customer carried by the broker-dealer or in any securities transaction effected by the broker-dealer with or for such customer;

(q) Publishing or circulating or causing to be published or circulated, any notice, circular, advertisement, newspaper article, investment service, or communication of any kind that purports to report any transaction as a purchase or sale of any security, unless such broker-dealer believes that such transaction was a bona fide purchase or sale of such security; or that purports to quote the bid price or asked price for any security, unless such broker-dealer believes that such quotation represents a bona-fide bid for, or offer of, such security;

(r) Using any advertising or sales presentation in such a fashion as to be deceptive or misleading. An example of such practice would be a distribution of any nonfactual data, material, or presentation based on conjecture, unfounded or unrealistic claims or assertions in a brochure, flyer, or display by words, pictures, graphs or otherwise designed to supplement, detract from, supersede or defeat the purpose or effect of any prospectus or disclosure;

(s) Failing to disclose that the broker-dealer is controlled by, controlling, affiliated with or under common control with the issuer of any security before entering into any contract with or for a customer for the purchase or sale of such security, and, if such disclosure is not made in writing, it shall be supplemented by the giving or sending of written disclosure at or before the completion of the transaction;

(t) Failing to make a bona fide public offering of all the securities allotted to a broker-dealer for distribution, whether acquired as an underwriter or a selling group member, or from a member participating in the distribution as an underwriter or selling group member;

(u) Failing or refusing to furnish a customer, upon reasonable request, information to which he is entitled, including:

(1) with respect to a security recommended by the broker-dealer, material information that is reasonably available; and

(2) a written response to any written request or complaint;

(v) Making a recommendation that one customer buy a particular security and that another customer sell that security, where the broker-dealer acts as a principal and such recommendations are made within a reasonably contemporaneous time period, unless individual suitability considerations or preferences justify the different recommendations;

(w) Where the broker-dealer holds itself out as a market maker in a particular security, or publicly quotes bid prices in a particular security, failing to buy that security from a customer promptly upon the customer's request to sell;

(x) Recommending a security to its customers without conducting a reasonable inquiry into the risks of that investment or communicating those risks to its agents and its customers in a reasonably detailed manner and with such emphasis as is necessary to make the disclosure meaningful;

(y) Representing itself as a financial or investment planner, consultant, or adviser, when the representation does not fairly describe the nature of the services offered, the qualifications of the person offering the services, and the method of compensation for the services;

(z) Falsifying any record or document or failing to create or maintain any required record or documents;

(aa) A broker-dealer shall not enter into any contract with a customer if the contract contains any condition, stipulation or provision binding the customer to waive any rights under the Act, or any rule or order thereunder. Any such condition, stipulation or provision is void.

(bb) Violating any standard in the conduct rules promulgated by the FINRA; or

(cc) Aiding or abetting any of the conduct listed above.

119.3 For the purposes of Section 207(a)(9) of the Act (D.C. Official Code § 31-5602.07(a)(9); D.C. Register at 47 DCR 7851), unethical or dishonest practices by an agent or an issuer agent shall include, but not be limited to, the following conduct:

(a) Engaging in the practice of lending or borrowing money or securities from a customer, or acting as a custodian for money, securities or an executed stock power of a customer;

(b) Effecting securities transactions not recorded on the regular books or records of the broker-dealer that the agent represents, unless the transactions are authorized in writing by the broker-dealer prior to execution of the transaction;

(c) Establishing or maintaining an account containing fictitious information in order to execute transactions that would otherwise be prohibited;

(d) Sharing directly or indirectly in profits or losses in the account of any customer without the written authorization of the customer and the broker-dealer that the agent represents;

(e) Dividing or otherwise splitting the agent's commissions, profits or other compensation from the purchase or sale of securities with any person not also registered as an agent for the same broker-dealer or for a broker-dealer under direct or indirect common control;

(f) Where a recommendation is made that an unsophisticated customer purchase an over-the-counter security that:

(1) trades sporadically or in small volume; and

(2) is not traded on any United States securities exchange (excluding the Spokane Exchange) or on the NASDAQ National Market System, failing to inform the customer that he may not be able to find a buyer if the customer would subsequently want to sell the security;

(g) Where a recommendation is made to purchase an over-the-counter security in which the asked price is greater than the bid by 25 percent or more, failing to inform the customer of the bid and the asked prices and of the significance of the spread between them should the customer wish to resell the security;

(h) Using excessively aggressive or high pressure sales tactics, such as repeatedly telephoning and offering securities to individuals who have expressed disinterest and have requested that the calls cease, or using profane or abusive language, or calling prospective customers at home at an unreasonable hour at night or in the morning;

(i) Conducting or facilitating securities transactions outside the scope of the agent's relationship with his broker-dealer employer unless he has provided prompt written notice to his employer;

(j) Acting or registering as an agent of more than one broker-dealer without giving written notification to and receiving written permission from all such broker-dealers; or

(k) Holding himself out as an objective investment adviser or financial consultant without fully disclosing his financial interest in a recommended securities transaction at the time the recommendation is made;

(l) Engaging in any of the conduct specified in § 119.2; or

(m) Aiding or abetting any of the conduct listed in this subsection or § 119.2.

119.4 For purposes of Section 207 (a)(9) of the Act (D.C. Official Code § 31-5602.07(a)(9); D.C. Register at 47 DCR 7851) in connection with the sale of investment company shares, dishonest or unethical practices by a broker-dealer, agent or issuer agent shall include, but not be limited to, the following conduct:

(a) In connection with the offer or sale of investment company shares, failing to adequately disclose to a customer all sales charges, including asset based and contingent deferred sales charges, which may be imposed with respect to the purchase, retention or redemption of such shares;

(b) In connection with the offer or sale of investment company shares, stating or implying to a customer, either orally or in writing, that the shares are sold without a commission, are "no load" or have "no sales charge" if there is associated with the purchase of the shares a front-end loan, a contingent deferred sales load, a SEC Rule 12b-1 fee or a service fee which exceeds .25 percent of average net fund assets per year, or in the case of closed-end investment company shares, underwriting fees, commissions or other offering expenses;

(c) In connection with the offer or sale of investment company shares, failing to disclose to a customer any available sales charge discount on the purchase of shares in dollar amounts at or above a breakpoint or the availability of a letter of intent feature which will reduce the sales charges to the customer;

(d) In connection with the offer or sale of investment company shares, recommending to a customer the purchase of a specific class of investment company shares in connection with a multi-class sales charge or fee arrangement without reasonable grounds to believe that the sales charge or fee arrangement associated with such class of shares is suitable and appropriate based on the customer's investment objectives, financial situation and other securities holdings, and the associated transaction or other fees;

(e) In connection with the offer or sale of investment company shares, recommending to a customer the purchase of investment company shares which results in the customer simultaneously holding shares in different investment company portfolios having similar investment objectives and policies without reasonable grounds to believe that such recommendation is suitable and appropriate based on the customer's investment objectives, financial situation and other securities holdings, and any associated transaction charges or other fees;

(f) In connection with the offer or sale of investment company shares, recommending to a customer the liquidation or redemption of investment company shares for the purpose of purchasing shares in a different investment company portfolio having similar investment objectives and policies without reasonable grounds to believe that such recommendation is suitable and appropriate based on the customer's investment objectives, financial situation and other securities holdings and any associated transaction charges or other fees;

(g) In connection with the offer or sale of investment company shares, stating or implying to a customer, either orally or in writing, the fund's current yield or income without disclosing the fund's most recent average annual total return, calculated in a manner prescribed in SEC Form N-1A, for one, five and ten year periods and fully explaining the difference between current yield and total return; provided, however, that if the fund's registration statement under the Securities Act of 1933 has been in effect for less than one, five, or ten years, the time during which the registration statement was in effect shall be substituted for the periods otherwise prescribed;

(h) In connection with the offer or sale of investment company shares, stating or implying to a customer, either orally or in writing, that the investment performance of an investment company portfolio is comparable to that of a savings account, certificate of deposit or other bank deposit account without disclosing to the customer that the shares are not insured or otherwise guaranteed by the Federal Deposit Insurance Corporation or any other government agency and the relevant differences regarding risk, guarantees, fluctuation of principal and/or return, and any other factors which are necessary to ensure that such comparisons are fair, complete and not misleading;

(i) In connection with the offer or sale of investment company shares, stating or implying to a customer, either orally or in writing, the existence of insurance, credit quality, guarantees or similar features regarding securities held, or proposed to be held, in the investment company's portfolio without disclosing to the customer other kinds of relevant investment risks, including but not limited to, interest rate, market, political, liquidity, or currency exchange risks, which may adversely affect investment performance and result in loss and/or fluctuation of principal notwithstanding the creditworthiness of such portfolio securities;

(j) In connection with the offer or sale of investment company shares, stating or implying to a customer, either orally or in writing, (i) that the purchase of such shares shortly before an ex-dividend date is advantageous to such customer unless there are specific, clearly described tax or other advantages to the customer, or (ii) that a distribution of long-term capital gains by an investment company is part of the income yield from an investment in such shares;

(k) In connection with the offer or sale of investment company shares, making representations to a customer, either orally or in writing, that the broker-dealer or agent knows or has reason to know are based in whole or in part on information contained in dealer-use-only material which has not been approved for public distribution; or

(l) Aiding or abetting any of the conduct listed above.

119.5 In connection with the offer or sale of investment company shares, the delivery of a prospectus shall not be dispositive that the broker-dealer or agent has fulfilled the duties set forth in the § 119.4.

119.6 The conduct set forth in this section is not exclusive. Engaging in other conduct such as forgery, embezzlement, theft, exploitation, nondisclosure, incomplete disclosure or misstatement of material facts, manipulative or deceptive practices, or aiding or abetting any unethical practice, shall be deemed an unethical business practice and shall also be grounds for denial, suspension or revocation of the broker-dealer's or agent's license.

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 120 RECORDKEEPING REQUIREMENTS

120.1 Any broker-dealer maintaining books and records pursuant to SEC orFINRA rules shall be deemed to be in compliance with this section. Any broker-dealer not in compliance with SEC or NASDR books and records rules shall make and keep current books, records, and other documents relating to business conducted in the District as specified in this section.

120.2 The broker-dealer shall keep blotters (or other records or original entry) containing an itemized daily record of the following information:

(a) The purchases and sales of securities;

(b) The receipts and deliveries of securities (including certificate numbers);

(c) The disbursements of cash and all other debits and credits;

(d) The account for which each transaction was effected;

(e) The name and amount of securities;

(f) The unit and aggregate purchase of the sale price, if any; and

(g) The trade date, and the name or other designation of the person from whom purchased or received or to whom sold or delivered;

120.3 The broker-dealer shall keep ledgers (or other records) reflecting all assets and liabilities, income and expenses, and capital accounts.

120.4 The broker-dealer shall keep ledger accounts (or other records), itemizing separately each cash and margin account of every customer and of the broker-dealer and partners in the following manner:

(a) All purchases, sales, and receipts;

(b) All deliveries of securities and commodities for the account; and

(c) All other debits and credits to the account.

120.5 The broker-dealer shall keep ledgers (or other records) reflecting the following:

(a) Securities in transfer;

(b) Dividends and interest received;

(c) Securities borrowed and securities loaned;

(d) Monies borrowed and monies loaned (together with a record of the collateral and any substitutions in the collateral); and

(e) Securities failed to receive and failed to deliver.

120.6 The broker-dealer shall keep a securities record or ledger reflecting separately for each security, as of the clearance dates, all "long" or "short" positions (including securities in safekeeping) carried by the broker-dealer for his or her account or for the account of his or her customers or partners and showing the location of all securities long and the off-setting position to all securities short, and in all cases the name or designation of the account in which each position is carried.

120.7 The broker-dealer shall keep a memorandum of each brokerage order, and of any other instruction given or received for the purchase or sale of securities, whether executed or unexecuted.

120.8 The broker-dealer's memorandum shall show the following:

(a) The terms and conditions of the order or instructions;

(b) Any modification or cancellation;

(c) The account for which entered;

(d) The time of entry;

(e) The price at which executed; and

(f) To the extent feasible, the time of execution or cancellation.

120.9 Records of orders entered into the ledger pursuant to the exercise of discretionary power by the broker-dealer, or any employee, shall be so designated.

120.10 For the purposes of §§ 120.7 and 120.8, the term "instruction" shall be considered to include instructions between partners and employees of a broker-dealer.

120.11 The broker-dealer shall keep a memorandum of each purchase of securities for the account of the broker-dealer showing the price and, to the extent feasible, the time of execution.

120.12 The broker-dealer shall keep copies of all purchases and sales of securities and copies of notices of all other debits and credits for securities, cash, and other items for the account of customers and partners of the broker-dealers.

120.13 The broker-dealer shall keep with respect to each cash and margin account, the name and address of the beneficial owner of the account; and in the case of a margin account, the signature of the owner. Provided, that in the case of a joint account or the account of a corporation, the records are required only with respect to the person or persons authorized to transact business for the account.

120.14 The broker-dealer shall keep a record of all puts, calls, spreads, straddles, and other options in which the broker-dealer has any direct or indirect interest or which the broker-dealer has granted or guaranteed, containing at least an identification of the security and the number of units involved.

120.15 The broker-dealer shall keep a record of the proof of money balances of all ledger accounts in the form of trial balances.

120.16 The broker-dealer shall keep a record that shows, over a three (3) month period, the computations of the minimum net capital and ratio of aggregate indebtedness to net capital as of the trial balance date pursuant to § 110; Provided, that any member of an exchange whose members are exempted from § 110 by § 110.3 shall make a record of the computation of the ratio of aggregate indebtedness to net capital as of the trail balance date in accordance with the capital rules of at least one (1) of the exchanges listed in which it is a member.

120.17 The broker-dealer shall prepare the trial balances once each month, and shall prepare the computations of minimum net capital and the ratio of aggregate indebtedness to net capital in accordance with SEC regulations.

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 121 EMPLOYMENT RECORDS

121.1 Any broker-dealer maintaining employment records pursuant to SEC or FINRA rules shall be deemed to be in compliance with this section. Any broker-dealer not in compliance with SEC or FINRA employment records rules shall make and keep employment records, and other documents relating to business conducted in the District as specified in this section, and shall keep a copy of the questionnaire or application for employment executed by each "associated person" of the broker-dealer.

121.2 The questionnaire or application shall be approved in writing by an authorized representative of the broker-dealer and shall contain at least the following information with respect to the associated person:

(a) His or her name, address, social security number, and the starting date of his or her employment or other association with the broker-dealer;

(b) His or her date of birth;

(c) The educational institutions attended by him or her and whether or not he or she graduated therefrom;

(d) A complete, consecutive statement of all his or her business connections for at least the preceding ten (10) years, including his or her reason for leaving each prior employment, and whether the employment was part-time or full-time;

(e) A record of any denial of membership or registration, and of any disciplinary action taken, or sanction imposed, upon him or her by any federal or state agency, or by any national securities exchange or national securities association, including any finding that he or she was a cause of any disciplinary action or had violated any law;

(f) A record of any denial, suspension, expulsion or revocation of membership or registration of any broker-dealer with which he or she was associated in any capacity when the action was taken;

(g) A record of any permanent or temporary injunction entered against him or her or any broker-dealer with which he or her was associated in any capacity at the time the injunction was entered;

(h) A record of any arrests, indictments or convictions for any felony or any misdemeanor, except minor traffic offenses, of which he or she has been the subject;

(i) A record of any other name or names by which he or she has been known or which he or she has used. Provided, that if the associated person has been registered as a registered representative of the broker-dealer with, or his or her employment has been approved by, the FINRA, or the American Stock Exchange, the New York Stock Exchange, the Pacific Coast Stock Exchange, or the Philadelphia Stock Exchange, then retention of a full, correct, and complete copy of any and all application for the registration or approval shall be considered to satisfy the requirements of this subsection.

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 122 CUSTOMER RECORDS AND COMPLAINTS

122.1 Any broker-dealer maintaining customer records and complaints pursuant to SEC or FINRA rules shall be deemed to be in compliance with this section. Any broker-dealer not in compliance with SEC or FINRA customer records and complaints records rules shall make and keep customer records and complaints, and other documents relating to business conducted in the District as specified in this section. The records of customers shall be maintained by the broker-dealer in the form and manner as to reflect the customer's name, address, occupation, whether the customer is legally of age, the signature of the registered representative introducing the account to the broker-dealer and the signature of the partner, officer, or manager accepting the account for the broker-dealer. If the customer is associated with or employed by another broker-dealer, the name of the other broker-dealer shall be given.

122.2 In discretionary accounts, the broker-dealer shall also record the signature of each person authorized to exercise discretion in the account.

122.3 The broker-dealer shall maintain all written complaints of customers and the action taken by the broker-dealer, if any, or a separate record of the complaints and a clear reference to the file containing the correspondence connected with the complaint.

122.4 All complaints filed and decisions entered by any federal, state or self-regulatory body with respect to the broker-dealer's activities or with respect to any activities of any employee or associated person licensed under the Act no matter where they occurred.

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 123 PRESERVATION OF RECORDS

123.1 Each broker-dealer subject to § 120.1 shall preserve for a period of not less than six (6) years, the first two (2) years in an easily accessible place, all records required to be made or maintained pursuant to §§ 120.2, 120.3, 120.4, 120.6, 122.1, 122.2 and 122.5.

123.2 Each broker-dealer referred to in § 120.1 shall preserve for a period of not less than three (3) years, the first two (2) years in an easily accessible place the following records:

(a) All records required to be made or maintained pursuant to §§ 120.5, 120.7 through 120.15, 122.3, and 122.4;

(b) All check books, bank statements, cancelled checks and cash reconciliations;

(c) All bills receivable or payable (or copies) paid or unpaid, relating to the business of the broker-dealer;

(d) All trial balances, computations of minimum net capital and ratio or aggregate indebtedness to net capital, financial statements, branch office reconciliations and internal audit working papers, relating to the business of the broker-dealer as referred to in §§ 120.16 and 120.17;

(e) Originals of all communications received and copies of all communications sent by the broker-dealer (including inter-office memoranda and communications) to his or her business;

(f) All guarantees of accounts and all powers of attorney and other evidence of the granting of any discretionary authority given in respect of any account, and copies of resolutions empowering an agent to act on behalf of a corporation; and

(g) All written agreements (or copies) entered into by the broker-dealer relating to his or her business, including agreements with respect to any account.

123.3 Each broker-dealer referred to in § 120.1 shall preserve for a period of not less than six (6) years after the closing of any customer's account any account card or records which relate to the terms and conditions with respect to the opening and maintenance of the account.

123.4 Each broker-dealer referred to in § 120.1 shall preserve during the life of the enterprise and of any successor enterprise all partnership articles, or in the case of a corporation, all articles of incorporation or charter amendments, minute books, stock certificate books and stock transfer ledgers.

123.5 Each broker-dealer referred to in § 120.1 shall preserve and maintain in an easily accessible place all records required under § 121 until at least three (3) years after the "associated person" has terminated his or her employment and any other connection with the broker-dealer.

123.6 No rules of this chapter shall be considered to require a member of a national securities exchange to make or keep records of transactions cleared for a member by another member as are customarily made and kept by the clearing member.

123.7 No rules of this chapter shall be considered to require a broker-dealer licensed, pursuant to the Act, to make or kept records as required by § 120, reflecting the sales of United States Tax-Savings Notes, United States Defense Savings Stamps, or United States defense Savings Bonds, Series E, F, and G.

123.8 The records specified in §§ 121, 122, 123 of these regulations shall not be required with respect to any cash transaction of one hundred dollars ($ 100) or less involving only subscription rights or warrants which by their terms expire within ninety (90) days after its issuance.

123.9 After a record or document has been preserved for two (2) years, a photograph on film may be substituted for the balance of the required time.

123.10 If a broker-dealer licensed or required to be licensed under the Act, ceases to transact business in securities in the District, the broker-dealer shall for the remainder of the periods of time specified in this section, continue to preserve the records which it preserved pursuant to §§ 120 though 123.

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Final Rulemaking published at 42 DCR 659 (February 3, 1995); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 124 EXAMINATION PROCEDURES AND FEES

124.1 The Commissioner may make a periodic examination of broker-dealers and may charge a reasonable fee for the examination, consistent with these regulations.

124.2 When making any examination under these regulations, the Commissioner may retain or require the examinee to retain independent accountants, auditors, examiners, and other persons to perform the examination on behalf of the Commissioner.

124.3 The Commissioner may cooperate with national securities associations and national and regional securities exchanges, and with the Securities and Exchange Commission in administering examinations of any broker-dealer.

124.4 The fee for an on-site examination of a broker-dealer shall be the actual amount of the compensation paid to each employee for their time, including the preparation of any written report of the examination, audit, or investigation that reasonably be needed in the discharge of the Commissioner's duties.

124.5 The Commissioner may charge a reasonable fee in excess of the amount in § 124.4 involving an examination of a broker-dealer if extenuating or unforeseen circumstances arise during the course of the examination.

124.6 The Commissioner may charge a reasonable fee in excess of the amount in § 124.4 to defray the cost of any examination of a broker-dealer, which involves out-of-town travel.

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 125 NO ACTION AND OPINION LETTERS

125.1 Upon written request for a statement of the Department's position on the applicability of enforcement actions contemplated under the Act, the Director, in his or her discretion, may honor the requests by issuing a no action letter or interpretative opinion.

125.2 An "opinion" or "no action" letter represents the recommendation the Director would make to the Commissioner on the basis of the facts presented; it is not a formal administrative act of the Commissioner. The Director's opinion is predicated upon the assumption that the facts presented are a true and complete statement of all the circumstances surrounding the transaction in question and is of no effect unless the facts are as stated.

125.3 The Director shall maintain a record of all requests for no action letters or interpretive opinions, as well as any such actions taken pursuant to this section.

125.4 The letters or opinions shall also be kept in the Department's public files.

125.5 For requesting an "Opinion" or "No Action" letter from the Securities Bureau, the fee shall be two hundred and fifty dollars ($ 250).

125.6 The fees required in Section 125.5 shall be made payable to the "D.C. Treasurer" and shall be sent with the opinion or no action letter to the Department of Insurance, Securities and Banking, 810 First Street, N.E., Suite 601, Washington, D.C. 20002.

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 126 RESERVED

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 127 BACKGROUND CHECK REQUIREMENT

127.1 Each applicant applying for an initial license or registration; or person going from an inactive status to active status as an agent, broker-dealer, investment adviser, or investment adviser representative, shall obtain a criminal background check and shall be subject to the Fingerprint-Based Background Check Authorization Act of 2012, effective June 20, 2012 (D.C. Law 19-143, D.C. Official Code § 31-631 et seq.).

127.2 Criminal background checks shall be conducted in accordance with the DISB Fingerprint-Based Background Check Authorization Act of 2012, effective June 20, 2012, Sections 101 through 104 (D.C. Law 19-143; D.C. Official Code § 31-631 et seq.)

127.3 An applicant who has been denied based on information obtained from a criminal background check shall have an opportunity for a hearing as outlined in 26B DCMR § 300 et seq., or pursuant to the Office of Administrative Hearings Rules of Practice and Procedure, 2 DCMR § 2800 et seq., as applicable.

History

• SOURCE: Final Rulemaking published at 60 DCR 16653 (December 6, 2013).

26-B DCMR § 128 CONFIDENTIALITY

128.1 All fingerprints and resulting criminal record information obtained by the Commissioner or his or her designee pursuant to D.C. Official Code § 31-632 shall be treated as confidential records by the Department of Insurance, Securities, and Banking. Confidential records shall:

Not be deemed to be a public record within the meaning of the District of Columbia Administrative Procedure Act of 1976, effective March 25, 1977 (D.C. Law 1-96; D.C. Official Code § 2-531 et seq.);

Be kept confidential by law;

Be maintained as privileged documents; and

Not be subject to discovery or admissible in any private civil action.

History

• SOURCE: Final Rulemaking published at 60 DCR 16653 (December 6, 2013).

26-B DCMR § 129 FINGERPRINT REQUIREMENT

129.1 Each applicant applying for an initial license, or who is going from inactive to active status as an agent, broker-dealer, investment adviser, or investment adviser representative, shall obtain a criminal background check and shall be subject to the Fingerprint-Based Background Check Authorization Act of 2012, effective June 20, 2012 (D.C. Law 19-143, D.C. Official Code § 31-631 et seq.).

129.2 All fingerprinting shall be clearly legible and shall be recorded on the forms as authorized and currently in use by the Federal Bureau of Investigation.

History

• SOURCE: Final Rulemaking published at 60 DCR 16653 (December 6, 2013).

26-B DCMR § 130 FEES

130.1 The filing fees shall be as follows:

For initial and renewal licenses of each broker-dealer, the fee shall be two hundred and fifty dollars ($ 250);

For initial and renewal application as an investment adviser, the fee shall be two hundred and fifty dollars ($ 250);

For initial and renewal license of each agent, the fee shall be forty-five dollars ($ 45);

For initial and renewal applications as an investment adviser representative, the fee shall be forty-five dollars ($ 45);

For transfer of an agent's license, the fee shall be forty-five dollars ($ 45);

For transfer of the license of an investment adviser representative, the fee shall be forty-five dollars ($ 45);

For processing of fingerprints, the fee shall be fifty dollars ($ 50).

130.2 Fees paid pursuant this section shall be paid directly to the Financial Industry Regulatory Authority (“FINRA”) through the IARD or FINRA Central Registration Depository system. However, any applicant not a member of FINRA shall pay the fees pursuant to this section to the Commissioner, made payable to the "D.C. Treasurer" and shall be sent with the application for a license, or other request for services as set forth in these regulations, to the Department of Insurance, Securities and Banking, 810 First Street, N.E., Suite 601, Washington, D.C. 20002.

130.3 All payments of fees made directly to the District of Columbia, except for payment of civil penalties under Section 602 (b)(4) of the Act (D.C. Official Code § 31-5606.02(b)(4); D.C. Register at 47 DCR 7877) as set forth below, shall be made by check, money order, United States postal money order, certified check, bank cashier's check, credit card, bank money order, or any manner of electronic transfer of funds acceptable to the Commissioner, payable to the "D.C. Treasurer".

130.4 No third party check or money order endorsed over to the "District of Columbia" shall be accepted as payment of any fee.

130.5 All payments for civil penalties under Section 602 of the Act (D.C. Official Code § 31-5606.02; D.C. Register at 47 DCR 7877) shall be made by United States postal money order, certified check or bank cashier's check, payable to the "D.C. Treasurer".

130.6 Any person whose payment of fees is returned to the Department due to insufficient funds or for a similar reason shall pay to the District the amount of fee owed plus an additional fee in the amount of twenty-five dollars ($ 25.00) for each payment returned.

130.7 The Commissioner may require any person to make payment of fees in the form of a United States postal money order, certified check, bank cashier's check or bank money order if any previous payment of fees has been returned to the Department due to insufficient funds or for a similar reason.

History

• SOURCE: Final Rulemaking published at 60 DCR 16653 (December 6, 2013).

26-B DCMR § 131 RESERVED

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 132 RESERVED

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 133 RESERVED

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 134 RESERVED

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 135 RESERVED

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 136 RESERVED

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 137 RESERVED

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 138 RESERVED

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 139 RESERVED

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 140 RESERVED

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 141 RESERVED

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 142 RESERVED

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 143 RESERVED

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 144 RESERVED

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 145 RESERVED

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 146 RESERVED

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 147 RESERVED

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 148 RESERVED

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 149 RESERVED

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 150 NOTICE FILING FOR FEDERAL COVERED ADVISERS AND HEDGE FUND ADVISERS

150.1 Each federal covered adviser required to provide an initial notice or a renewal notice to the Commissioner pursuant to § 203(d) and (e) of the Act (D.C. Register at 47 DCR 7846) shall file the following with the Investment Adviser Registration Depository ("IARD"):

(a) A copy of its complete, most recent, Form ADV, including all parts and schedules, on file with the U.S. Securities and Exchange Commission;

(b) A non-refundable notice filing or renewal fee in the amount of $ 250 for the federal covered adviser and a non-refundable registration or renewal fee in the amount of $ 45 for each investment adviser representative required to be registered in the District. Payment of fees shall be maid by a method specified in § 161.3; and

(c) A consent to service of process (the Form U-2 and, if applicable, the Form U-2A), pursuant to § 706 of the Act (D.C. Register at 47 DCR 7883).

150.2 Except as provided in § 150.3, an investment adviser representative employed by or associated with an investment adviser exempt from the licensing requirements under the Act shall be exempt from the licensing requirements of § 152.

150.3 An investment adviser representative shall not be exempt from the licensing requirements of the § 152 if he or she has a place of business in the District or provides investment advisory services in the District on a temporary basis.

History

• SOURCE: Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 151 INTERNET COMMUNICATIONS

Investment advisers and investment adviser representatives who use the Internet to distribute information on available products and services through communications made on the Internet directed generally to anyone having access to the Internet, and transmitted through Internet communications shall not be considered to be transacting business "in the District" for purposes of the Act, provided that:

(a) The Internet communication contains a legend in which it is clearly stated that:

(1) the investment adviser or investment adviser representative in question may only transact business in this state if first licensed, excluded, or exempted from the District investment adviser or investment adviser representative licensing requirements; and

(2) follow-up, individualized responses to persons in this state by the investment adviser or investment adviser representative that involve either effecting or attempting to effect transactions in securities, or rendering of personalized investment advice for compensation, will not be made without compliance with the District investment adviser or investment adviser representative licensing requirements, or an applicable exemption or exclusion;

(b) The Internet communication contains a mechanism, which includes but is not limited to, technical "firewalls" or other implemented policies and procedures, designed reasonably to ensure that before any subsequent, direct communication with prospective customers or clients in the District, the investment adviser and investment adviser representative are first licensed in the District or qualify for an exemption or exclusion from the licensing requirement. Nothing in this paragraph shall be construed to relieve a District licensed investment adviser or investment adviser representative from any applicable securities licensing requirement in the District;

(c) The Internet communication is limited to the dissemination of general information on products and services and does not involve either effecting or attempting to effect transactions in securities, or rendering personalized investment advice for compensation in the District over the Internet; and

(d) In the case of an investment adviser representative:

(1) The affiliation of the investment adviser representative with the investment adviser is prominently disclosed within the Internet communication;

(2) The investment adviser with whom the investment adviser representative is associated retains responsibility for reviewing and approving the content of any Internet communication by an investment adviser representative;

(3) The investment adviser with whom the investment adviser representative is associated first authorizes the distribution of information on the particular products and services through the Internet communication; and

(4) In disseminating information through the Internet communication, the investment adviser representative acts within the scope of the authority granted by the investment adviser.

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 152 INVESTMENT ADVISER LICENSING AND RENEWAL

152.1 It shall be unlawful for any person to transact business in the District as an investment adviser or as an investment adviser representative unless the person is registered under the Act.

152.2 An application for an investment adviser license, pursuant to Section 202 of the Act (D.C. Register at 47 DCR 7845), shall be filed with the LARD on Part 1A and Part 1B of Form ADV (the Uniform Application for Investment Adviser Registration) promulgated by the Securities and Exchange Commission (17 C.F.R. 279.1)) or any successor form, and shall include the additional information and materials required by these regulations.

152.3 The initial application shall include an irrevocable consent appointing the Commissioner to be the attorney to receive service of any lawful process in any non-criminal suit, action, or proceeding against the applicant or its successor, executor or administrator which arises under the Act, these regulations or order hereunder after the consent has been filed, with the same force and validity as if served personally on the applicant filing the consent.

152.4 The application for an initial license shall also be accompanied by the following:

(a) Proof of compliance by the investment adviser with the examination requirements of § 160;

(b) A statement of financial condition of the applicant, prepared in accordance with generally accepted accounting principles in such detail as to disclose the nature and amount of assets, liabilities, and capital. This requirement may be satisfied by either of the following:

(1) An audited statement of financial condition as of the end of the applicant's most recent fiscal year which complies with the requirement of § 177; provided that such statement is no more than 45 days prior to the date of filing; or

(2) An unaudited balance sheet. Such balance sheet shall be accompanied by an oath or affirmation that the statement is true and correct to the best of his or her knowledge and belief and shall be made before a person duly authorized to administer the oath or affirmation. Such balance sheet shall be as of a date within thirty (30) days of the date on which the application is filed; and

(3) As a part of the statement of financial condition, the Director may require the filing of the following separate schedules;

(4) Listing the securities owned by the applicant valued at the market; and

(5) Stating material contractual commitments of the applicant not otherwise reflected in the statements;

(c) The fee required by § 161;

(d) Except for an investment adviser that is a sole proprietorship, or the substantial equivalent, each investment adviser licensed with the Department shall register with the Department at least one investment adviser representative;

(e) A copy of the Surety Bond required by § 179; and

(f) Any other information required by statute or requested from the applicant by the Director.

152.5 Applications for initial and renewals licenses as an investment adviser shall be deemed an incomplete application for purposes of § 164 unless the required fee and all required submissions have been received by the Department.

152.6 The license of an investment adviser and investment adviser representative shall expire on December 31 of each year.

152.7 The application for renewal as an investment adviser or an investment adviser representative shall be filed with the Department through IARD, together with the fee required by § 161. An investment adviser shall file the renewals of its investment adviser representatives with the Department on a form provided by the Director, prior to the IARD's acceptance of renewals for investment adviser representatives.

152.8 The license of an investment adviser representative is not effective during any period when the representative is not employed or associated with an investment adviser licensed under the Act. The investment adviser shall promptly notify the Commissioner when the representative is not employed or associated with an investment adviser registered under the Act. No investment adviser representative may be registered with more than one (1) investment adviser unless the investment adviser which employs or associates with the investment adviser representative is under common ownership or control.

152.9 Applicants for licensure with the Commissioner as an investment adviser, must complete and file the IARD with the Department Part 1A and Part 1B of Form ADV by following the instructions in the Form.

152.10 An investment adviser applying for a license shall file electronically with the IARD, unless the investment adviser has received a hardship exemption under § 156. Each Form ADV will be considered filed with the Department upon acceptance by the IARD.

152.11 Until the IARD begins to accept Part 2A and Part 2B of Form ADV (the "brochure"), an investment adviser shall file Part II of Form ADV in paper form with the Department.

152.12 An investment adviser shall pay FINRA (the operator of the IARD) a filing fee, the amount of which is provided in the instructions to Form ADV, no portion of which is refundable. An application for registration will not be accepted by NASDR, and thus will not be considered filed with the Department, until the appropriate fee has been paid.

152.13 Once an investment adviser has filed a Form ADV [17 CFR 279.1] (or any amendments to Form ADV) electronically with the IARD, any Form ADV-W must be filed with the IARD, the IA must file unless a hardship exemption has been granted for such filing pursuant to § 157.

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 153 DUTY TO AMEND INFORMATION PREVIOUSLY FILED

153.1 If the information contained in Form ADV for a license as an investment adviser or investment adviser representative, or any amendment thereto, is or becomes inaccurate or incomplete in any material respect for any reason, the applicant or registrant shall promptly file a correcting amendment with the IARD. An investment adviser shall file an amendment with the Department on Form ADV, prior to the implementation of the IARD system.

153.2 In the case of any statement made in Form ADV or related exhibit(s) which becomes incorrect or inaccurate, the investment adviser shall file with the Department as an amendment on Form ADV.

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 154 SOLICITORS

154.1 It shall be unlawful for any investment adviser or investment adviser representative licensed or required to be licensed under the Act to compensate, directly or indirectly, any person who acts as a solicitor, unless such person is licensed as an investment adviser representative. Any person engaged in impersonal investment advisory services shall not be required to be licensed as an investment adviser representative.

154.2 A "Solicitor" is any person or entity who for compensation, acts as an agent of an investment adviser or investment adviser representative licensed or required to be licensed under the Act.

154.3 "Impersonal investment advisory services" means investment advisory services provided solely by means of (i) written materials or oral statements which do not purport to meet the objectives or needs of the a particular client or prospective client of the investment adviser or investment adviser representative, (ii) statistical information containing no expression of opinions as to the investment merits of particular securities, or (iii) any combination of the foregoing services.

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 155 WITHDRAWAL FROM INVESTMENT ADVISER LICENSING

155.1 An investment adviser or federal covered adviser shall file Form ADV-W [17 CFR 279.2] to withdraw an investment adviser license with the Department (or to withdraw a pending application).

155.2 Once an investment adviser has filed a Form ADV [17 CFR 279.1] (or any amendments to Form ADV) electronically with the IARD, any Form ADV-W must be filed with the IARD, unless a hardship exemption has been granted for such filing pursuant to § 156.

155.3 Each Form ADV-W filed under this section is effective upon acceptance by the IARD.

155.4 The Commissioner, in his or her discretion, may institute a disciplinary proceeding pursuant to Section 207 of the Act (D.C. Official Code § 31-5602.07; D.C. Register at 47 DCR 7849) after the effective date of a termination or withdrawal of a license, as provided in Section 209 of the Act (D.C. Official Code § 31-5602.09; D.C. Register at 47 DCR 7852).

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 156 TERMINATION AND WITHDRAWAL OF REGISTRATION AS AN INVESTMENT ADVISER REPRESENTATIVE AND ASSOCIATED PERSON OF AN INVESTMENT ADVISER

156.1 Every investment adviser shall promptly file with the Department a notice as to the termination of employment of any person licensed in the District as an investment adviser representative and any associated person for such investment adviser in the District, and shall also furnish the reason or reasons for such termination.

156.2 An investment adviser shall file any withdrawals, cancellations, or terminations of registrations of registration with the Department through the IARD, except as provided in § 165.4. Notice of any termination of employment of an associated person shall be sent to the Department in paper form.

156.3 Prior to the date on which IARD begins to process filings regarding Investment Adviser registration, all persons shall file on forms prescribed below. Those exempt from filing through the IARD shall file any withdrawals, cancellations, or terminations of registrations with the Department on the forms prescribed in § 165.5.

156.4 An investment adviser shall be responsible for the acts, practices, and conduct of investment adviser representatives in connection with the purchase and sale of securities or in connection with the rendering of investment advice until such time as they have been properly terminated as provided in these regulations; and such investment adviser may be subject disciplinary action pursuant to Section 207 of the Act (D.C. Official Code § 31-5602.07; D.C. Register at 47 DCR 7849), for such associated persons as have been terminated but for whom the appropriate termination notices have not been filed at date of license renewal.

156.5 An investment adviser shall provide notice for effected investment adviser representatives of on the Uniform Termination Notice for Securities Industry Registration (Form U-5). An investment adviser shall provide notice for effected associated persons in a letter to the Department.

156.6 The Commissioner, in his or her discretion, may institute a disciplinary proceeding pursuant to Section 207 (D.C. Official Code § 31-5602.07)of the Act after the effective date of a termination or withdrawal of a license, as provided in Section 209 of the Act (D.C. Offical Code § 31-5602.09; D.C. Register at 47 DCR 7852).

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 157 HARDSHIP EXEMPTIONS

157.1 An investment adviser required to submit electronic filings on the IARD system that experiences unanticipated technical difficulties that prevent it from submitting a filing to the IARD system, may request a temporary hardship exemption from the requirements of these regulations to file electronically.

157.2 To request a temporary hardship exemption, an investment adviser shall:

(a) File Form ADV-H [17 CFR 279.3] in paper format with FINRA no later than one business day after the filing that is the subject of the ADV-H was due; and

(b) Submit the filing that is the subject of the Form ADV-H in electronic format to FINRA no later than seven business days after the filing was due.

(c) The temporary hardship exemption will be granted when the investment adviser files a completed Form ADV-H with NASDR.

157.3 A "small business", as defined in § 156.7, investment adviser may apply for a continuing hardship exemption. The period of the exemption may be no longer than one year after the date on which the investment adviser applies for the exemption.

157.4 To apply for a continuing hardship exemption, an investment adviser must file Form ADV-H with the Department at least ten business days before a filing is due. The Director will grant or deny the continuing hardship exemption within ten business days after filing Form ADV-H.

157.5 An investment adviser shall not be exempt from the electronic filing requirements until and unless the Director approves the application. If the Director approves the application, an investment adviser may submit its filings to the Department in paper form for the period of time for which the exemption is granted.

157.6 An application for a continuing hardship exemption will be granted only if the investment adviser demonstrates that the electronic filing requirements are prohibitively burdensome or expensive.

157.7 For purposes of these sections, an investment adviser is a "small business" if it is required to answer Item 12 of Form ADV [17 CFR 279.1] and checks "no" to each question in Item 12 that it is required to answer.

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 158 AMENDMENTS TO APPLICATION FOR LICENSING

158.1 An investment adviser shall promptly file an amendment to Part 1A or Part 1B of its Form ADV if either Part has a material omission or misrepresentation or otherwise becomes materially inaccurate. An investment adviser shall promptly file an amendment to Part II of its Form ADV if it contains a material omission or misrepresentation or otherwise becomes materially inaccurate.

158.2 Except as provided in § 158.4, an investment adviser licensed with the Department shall amend its Form ADV by electronically filing a completed Part 1A and Part 1B of Form ADV with the IARD.

158.3 An investment adviser with a pending application shall amend its Form ADV by electronically filing a completed Part 1A and Part 1B of Form ADV with the IARD.

158.4 An investment adviser that has received a hardship exemption under § 275.203-3 of the Securities Exchange Act of 1934, shall file a completed Part 1A and Part 1B of Form ADV on paper with IARD when it is required to amend its Form ADV by the schedule in subparagraph (i) of this paragraph.

158.5 If an investment adviser files Part 1A and Part 1B of Form ADV with the IARD, is shall file all subsequent amendments to its Form ADV with the IARD, unless it receives a hardship exemption.

158.6 An investment adviser shall pay IARD an annual filing fee at the time it files the annual updating amendment, no portion of which is refundable. An amended Form ADV will not be accepted by, IARD and thus will not be considered filed with the Department, until the filing fee has been paid.

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 159 INVESTMENT ADVISER REPRESENTATIVE LICENSING

159.1 Prior to the implementation of the IARD system, the application for an initial license as an investment adviser representative pursuant to the Act shall be filed upon Form U-4 (the Uniform Application for Securities Industry Registration or Transfer) or any successor form with the Department. The application for an initial license shall be filed with the IARD on or after the date which the Director designates. IARD will be the equivalent of filing investment adviser representative form. An initial license for an investment adviser representative shall be filed manually with the Department on Form U-4.

159.2 The initial application shall include the consent to service of process required by Section 706 of the Act (D.C. Register at 47 DCR 7883).

159.3 The application for an initial license shall also provide the following:

(a) The name and broker-dealer Central Registration Depository ("CRD") number, if any, of the investment adviser representative;

(b) Proof of compliance by the investment adviser representative with the examination requirements in this section; and

(c) Any other information required by statute or requested from the applicant by the Commissioner.

159.4 Applications for initial and renewal licensure as an investment adviser representative shall be deemed incomplete until the required fee and all required submissions have been received by the Department.

159.5 The license of an investment adviser representative shall expire on December 31 of each year.

159.6 The application for renewal of a license as an investment adviser representative shall be filed with the Department, no later than December 1 of each year on a form provided by the Department, and shall contain such amendments to the initial registration as may be required by applicable provisions of the Act or rules thereunder.

159.7 An investment adviser representative who remains in “CE Inactive” status under § 161.5 for a full calendar year shall be ineligible for licensure or renewal as an investment adviser representative until the investment adviser representative completes all required continuing education credits for all outstanding reporting periods.

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001); as amended by Final Rulemaking published at 69 DCR 007987 (July 1, 2022). District of Columbia Municipal Regulations Securities 26-B DCMR § 159

26-B DCMR § 160 EXAMINATION/QUALIFICATION REQUIREMENTS

160.1 Any person applying to be licensed as an investment adviser or investment adviser representative in the District, including a designated principal pursuant to § 168.2, shall provide the Commissioner with proof of a passing score on one of the following examinations:

(a) The Uniform Investment Adviser Law Examination (Series 65 examination); or

(b) The General Securities Representative Examination (Series 7 examination) and the Uniform Combined State Law Examination (Series 66 examination).

160.2 Any person who is licensed as an investment adviser or investment adviser representative in any jurisdiction in the United States on the effective date of this regulation shall not be required to satisfy the examination requirements for continued registration, except that the Commissioner may require additional examination requirements for any individual found to have violated any District of Columbia, state or federal securities or insurance law. An individual who is licensed in any jurisdiction not requiring an examination as a prerequisite to licensure shall be required to comply with the examination requirements of § 159.1.

160.3 An individual who has not been licensed as an agent or investment adviser representative in any jurisdiction within a period of two (2) years shall be required to comply with the examination requirements of § 159.1.

160.4 Subject to the discretion of the Commissioner, the examination requirements of § 159.1 shall not apply to any person who holds in good standing one of the following professional designations:

(a) Certified Financial Planner (CFP) awarded by the Certified Financial Planner Board of Standards, Inc.;

(b) Chartered Financial Consultant (ChFC) awarded by the American College, Bryn Mawr, Pennsylvania;

(c) Personal Financial Specialist (PFS) awarded by the American Institute of Certified Public Accountants;

(d) Chartered Financial Analyst (CFA) awarded by the Institute of Chartered Financial Analyst;

(e) Chartered Investment Counselor (CIC) awarded by the Investment Counsel Association of America, Inc., or

(f) Such other professional designation as the Commissioner may in his or her discretion recognize.

160.5 Without otherwise restricting the discretionary authority granted to the Commissioner by Section 208 (6) of the Act (D.C. Official Code § 31-5602.08(6); D.C. Register at 47 DCR 7852), the Commissioner will consider the factors listed in this subsection in determining whether a waiver from the examination requirements. The following factors are set forth for illustrative purposes only and do not constitute the entire range of considerations that may form the basis for granting or denying a waiver request.

(a) Whether the applicant has disciplinary history;

(b) Whether the applicant has certified to Department staff persons that the applicant has reviewed the act and this title.

(c) Whether the applicant has substantial long-term and continuous experience as a principal, agent or employee, other than in a clerical capacity, of a broker-dealer or investment adviser. Staff persons also will consider whether the applicant has similar experience in a responsible position, other than in a clerical capacity, in the securities, banking, finance or other related business.

(d) Whether the applicant has some continuous experience in a responsible position, other than in a clerical capacity, in the securities, banking, finance or other related business and also possesses educational credentials or professional designations such as one of the following:

(1) An advanced degree obtained through graduation from a formal degree program of an accredited educational institution with a concentration in economics, finance, mathematics, business, business administration or similar subjects.

(2) A license in good standing with the relevant licensing authority as a certified public accountant.

(e) Whether the applicant is a member of the bar in good standing of any state.

(f) Whether the applicant previously has passed the examination and has remained continuously employed in the securities industry or possesses some employment experience in the securities industry and has not had a significant lapse of this employment as of the date of filing of the application for registration with the Department.

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001); as amended by Final Rulemaking published at 57 DCR 126 (January 1, 2010). District of Columbia Municipal Regulations Securities 26-B DCMR § 160

26-B DCMR § 161 INVESTMENT ADVISER REPRESENTATIVE CONTINUING EDUCATION REQUIREMENTS

161.1 An investment adviser representative licensed under § 159 of this Chapter shall complete the following continuing education requirements for each reporting period:

Six (6) credits of IAR Regulatory and Ethics Content offered by an Authorized Provider, with at least three (3) hours covering ethics; and

(b) Six (6) credits of IAR Products and Practice Content offered by an Authorized Provider.

161.2 For purposes of this section, the term “credit” means a unit that has been designated by NASAA, or its designee, as at least 50 minutes of educational instruction.

161.3 An investment adviser representative who is also registered as an agent of a FINRA member broker-dealer and who complies with FINRA’s continuing education requirements is considered to be in compliance with § 161.1(b) if FINRA continuing education content meets all of the following criteria:

The continuing education content focuses on compliance, regulatory, ethical, and sales practices standards;

The continuing education content is derived from District or federal investment advisory statutes, rules and regulations, securities industry rules and regulations, and accepted standards and practices in the financial services industry; and

(c) The continuing education content requires that its participants demonstrate proficiency in the subject matter of the educational materials.

161.4 Credits of continuing education completed by an investment adviser representative who was awarded and currently holds a credential that qualifies for an examination waiver under § 160 shall be deemed to be in compliance with §161.1, if:

The investment adviser representative completes the credits of continuing education as a condition of maintaining the credential for the relevant reporting period;

The credits of continuing education completed during the relevant reporting period by the investment adviser representative are mandatory to maintain the credential; and

(c) The continuing education content provided by the credentialing organization during the relevant reporting period is approved IAR Continuing Education Content.

161.5 An investment advisor representative shall be responsible for ensuring that the Authorized Provider reports the investment adviser representative’s completion of applicable continuing education requirements.

161.6 An investment adviser representative who fails to complete the required continuing education requirements within a reporting period shall be designated as “CE Inactive” at the end of the reporting period, and shall remain designated as “CE Inactive” until the investment adviser representative completes all required continuing education credits for each outstanding reporting period.

161.7 An investment adviser representative who completes credits of continuing education in excess of the amount required for any reporting period may not carry forward excess credits to a subsequent reporting period.

161.8 An investment adviser representative whose license is expired, suspended or revoked shall complete the required continuing education for each reporting period that occurred while the license was expired, suspended, or revoked, unless the investment adviser representative:

(a) Takes and passes a qualifying examination under § 160.1; or

(b) Receives an examination waiver in accordance with § 160.4.

161.9 An investment adviser representative registered or required to be registered in the District who is registered as an investment adviser representative in another state where the investment adviser representative maintains their principal place of business shall be deemed to be in compliance with §161.1 if:

The continuing education requirements in the other state are at least as stringent as the requirements of this section; and

(b) The investment adviser representative has complied with the continuing education requirements of the other state.

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001); as amended by Final Rulemaking published at 60 DCR 16653 (December 6, 2013); as amended by Final Rulemaking published at 69 DCR 007987 (July 1, 2022). District of Columbia Municipal Regulations Securities 26-B DCMR § 161

26-B DCMR § 162 FILING PROCEDURES

162.1 All relevant time periods in the Act for processing of filings will begin running on the first business day after the date the document is received by the Department.

162.2 Any electronic method acceptable to the Department may be used to make any filings. The filing of documents and information using such an electronic method is equivalent to paper filing of documents and information with the Department.

162.3 Filings, other than those required to be filed on the IARD system, that are directed to the Department by means of facsimile will be accepted as complying with the requirements of the Act and these regulations, provided the filer sends the original signed document to the Department postmarked not later than the next business day after the facsimile transmission.

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 163 TRANSFER PROCEDURES

163.1 An investment adviser may apply to the Commissioner to transfer its investment adviser's license in order to transfer the affiliate of the investment adviser representative to another licensed investment adviser. The investment adviser representative may not conduct the activity of an investment adviser representative on behalf of the other investment adviser until the transferred registration is effective.

163.2 An investment adviser shall transfer an investment adviser representative's affiliation from the investment adviser by filing with the Department a signed, complete FINRA Form U-4, or its successor, with 'DC" checked, together with the applicable fee as provided in § 161.

163.3 An investment adviser shall transfer an investment adviser's affiliation from another investment adviser by filing the appropriate application with the Department, or any successor system, and shall comply with applicable rules regarding filing requirements, dates, and payments of applicable fees set out in § 161.

163.4 An application filed under this subsection is processed as an initial application in accordance with § 152.

163.5 A licensed investment adviser may register a successor by filing with the Department the following:

(a) a current, complete, and signed copy of SEC Form ADV, or its successor, with "DC" checked; and

(b) a list of investment adviser representatives associated or to be associated with the successor investment adviser;

163.6 If an investment adviser succeeds to and continues the business of another investment adviser, the license of the predecessor investment adviser is effective as the registration of the successor investment adviser for sixty (60) days after that succession or until the last day of the calendar year, whichever is sooner, but only if the successor investment adviser has filed the SEC Form ADV or its replacement, with the Department within thirty (30) days after the succession or before the last day of the calendar year, whichever occurs earlier.

163.7 If a investment adviser partnership that is not licensed with the Department succeeds to and continues the business of a predecessor partnership that was licensed as an investment adviser and files an SEC Form ADV, or its successor, with the Department to reflect changes in the partnership the Commissioner will treat a SEC Form ADV, or its successor, as an application for licensure. The Commissioner will take this action even though the form filed may be designated as an amendment to an existing license of the predecessor partnership.

163.8 An investment adviser effecting a mass transfer of investment adviser representatives licenses pursuant to Section 205 of the Act (D.C. Register at 47 DCR 7849) shall be exempt from the fee requirement of § 161.

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 164 INCOMPLETE OR DEFICIENT FILINGS

164.1 An application for license or renewal as an investment adviser or an investment adviser representative, or any other filing required by these regulations, shall be deemed incomplete for purposes of § 202 of the Act (D.C. Register at 47 DCR 7845) if it omits documents or material facts specified and required by the Act (D.C. Register at 47 DCR 7845), and rules promulgated thereunder.

164.2 If the Department finds that a registrant's application contains a misrepresentation, omits a document or material fact required, the Department will notify the applicant of the deficiency by letter. Notwithstanding the requirements of this section, the filer remains responsible for ensuring the accuracy of its filings with the Department.

164.3 A deficiency letter shall require the applicant to perfect the application within twenty-one (21) days after issuance of the deficiency letter.

164.4 A deficiency letter shall postpone the effectiveness of the applicant's registration application for thirty (30) days after the applicant perfects the application.

164.5 The Director may accelerate the effective date of a license once the Director determines that the application is complete and that all applicable requirements are satisfied.

164.6 An investment adviser or investment adviser representative whose application was denied under Section 207 of the Act (D.C. Register at 47 DCR 7849) shall not reapply for licensing until one (1) year after the initial application was acted upon, unless the Department in its discretion declares otherwise.

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 165 RESERVED

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 166 [RESERVED]

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001); as amended by Final Rulemaking published at 60 DCR 16653 (December 6, 2013).

26-B DCMR § 167 EXEMPTION/SUBSECTION FOR CERTAIN BROKER-DEALERS

167.1 An investment adviser licensed as a broker-dealer pursuant to Section 15 of the Securities Exchange Act of 1934 shall be exempt from Section 201 of the Act (D.C. Offical Code § 31-5602.01; D.C. Register at 47 DCR 7845) in connection with any transaction in relation to which that broker-dealer acts as an investment adviser:

(a) Solely by means of publicly distributed written materials or publicly made oral statements;

(b) Solely by means of written material or oral statements not purporting to meet the objectives or needs of specific individuals or accounts;

(c) Solely through the issuance of statistical information containing no expressions of opinion as to the investment merits of a particular security; or

(d) Any combination of the foregoing services.

167.2 This exemption shall apply only if the materials and oral statements disclose that, if the purchaser of the advisory communication uses the investment adviser's services in connection with the sale or purchase of a security which is a subject of the communication, the investment adviser may act as principal for its own account or as agent for another person. Compliance by the investment adviser with the disclosure requirement of this section shall not relieve it of any other disclosure obligations under the Act.

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 168 SUPERVISION

168.1 Every investment adviser registered or required to be licensed under the Act shall exercise diligent supervision over the investment advisory activities of its investment adviser representatives and employees.

168.2 Each investment adviser representative and other office employees shall be subject to the supervision of a designated principal.

168.3 Written procedures, a copy of which shall be kept in each business office, shall be established, maintained, and enforced and shall set forth the standards and procedures adopted to comply with the requirement imposed by the Act and rules promulgated thereunder.

168.4 Each office location shall be periodically inspected by the designated supervisor to assure that the written procedures are complied with.

168.5 It shall be the responsibility of each investment adviser to ascertain that investment adviser representatives have been properly licensed prior to rendering investment advice.

168.6 It shall be the responsibility of each investment adviser and its supervisory personnel to ensure that all employees of such investment adviser are properly trained regarding the disclosure requirements and the civil and criminal liability provisions of the Act.

168.7 For the purposes of this section, no person shall be deemed to have failed reasonably to supervise any other person if:

(a) There have been established procedures, and a system for applying such procedures, which would reasonably be expected to prevent and detect, insofar as practicable, any such violation by such other persons; and

(b) Such person has reasonably discharged the duties and obligations incumbent upon such person by reason of such procedures and system without reasonable cause to believe that such procedures were not being complied with.

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 169 SENIOR-SPECIFIC CERTIFICATIONS, DESIGNATIONS, AND CREDENTIALS

169.1 The use, directly or indirectly, of a certification, professional designation, or credential by any person in connection with the offer, sale, or purchase of securities, or the providing of advice as to the value of or the advisability of investing in, purchasing, or selling securities that indicates or implies that the user has special certification or training in advising or servicing seniors or retirees, in such a way as to mislead, constitutes an unethical and dishonest practice pursuant to section 207(a)(9) of the Securities Act of 2000, effective October 26, 2000 (D.C. Law 13-203; D.C. Official Code § 31-5602.07(a)(9) (2001)).

169.2 The uses prohibited by subsection 169.1 include, but are not limited to, the following:

(a) Use of a certification, professional designation, or credential by a person who has not actually earned the certification, professional designation, or credential or is otherwise ineligible to use the certification, professional designation, or credential;

(b) Use of a nonexistent or self-conferred certification, professional designation, or credential;

(c) Use of a certification, professional designation, or credential, that indicates or implies a level of occupational qualifications obtained through education, training, or experience that the person using the certification, professional designation, or credential does not have; or

(d) Use of a certification, professional designation, or credential obtained from an organization that:

(1) Is primarily engaged in the business of instruction in sales or marketing; or

(2) Does not have reasonable standards and procedures for assuring the competence of those persons to whom it provides certifications, designations, or credentials.

169.3 There is a rebuttable presumption that a designating, certifying, or credentialing organization is not disqualified solely based on subsection 169.2(d) if:

The certification, designation, or credential does not primarily apply to sales or marketing; and

(b) The organization has been accredited by:

(1) The American National Standards Institute;

(2) The National Commission for Certifying Agencies;

(3) An organization that is on the U.S. Department of Education’s list entitled “Accrediting Agencies Recognized for Title IV Purposes”; or

(4) Any other nationally-recognized accreditation organization designated by the Commissioner.

169.4 In determining whether a combination of words or an acronym constitutes a certification, professional designation, or credential indicating or implying that a person has special certification or training in advising or servicing seniors or retirees, factors to be considered shall include:

(a) The use of words such as “senior” and “retirement” combined with words such as “certified,” “registered,” “chartered,” “adviser,” “specialist,” “consultant,” or “planner” in the title of the certification, professional designation, or credential; and

(b) The context or manner in which those words are used together.

169.5 For the purposes of this section, a certification, professional designation, or credential does not include a job title within a financial services organization that is licensed or registered by a state or federal regulatory agency, unless it is used in a manner that would confuse or mislead a reasonable consumer, if that job title:

(a) Indicates seniority or standing within the organization: or

(b) Specifies an individual area of specialization within the organization.

169.6 Nothing in this rule shall limit the Commissioner’s authority to enforce the provisions of the Securities Act of 2000, D.C. Official Code § 31-5601.01 et seq. (“Securities Act of 2000”), and the implementing regulations of the Securities Act of 2000.

History

• SOURCE: Final Rulemaking published at 57 DCR 6723, 6726 (July 30, 2010).

26-B DCMR § 170 RESERVED

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 171 RESERVED

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 172 WRITTEN DISCLOSURE STATEMENTS (Brochure Rule)

172.1 Unless otherwise provided in this section, an investment adviser, registered or required to be registered pursuant to the Act, shall, in accordance with the provisions of this section, furnish each advisory client with a written disclosure statement, which may be either a copy of Part II of its Form ADV or a written document containing at least the information then so required by Part II of Form ADV.

172.2 An investment adviser, except as provided in § 172.3, shall deliver the statement required by this section to an advisory client or prospective advisory client as follows:

(a) Not less than forty-eight (48) hours prior to entering into any written or oral investment advisory contract with such client, or

(b) At the time of entering into any such contract, if the advisory client has a right to terminate the contract within five (5) business days after entering into the contract.

172.3 Delivery of the statement required by § 172.2 shall not be required in connection with entering into a contract for impersonal advisory services.

172.4 An investment adviser, except as provided in § 172.5, annually shall, without charge, deliver or offer in writing to deliver upon written request to each of its advisory clients the statement required by this section.

172.5 The delivery or offer required by § 172.2 shall not be required to be made to advisory clients receiving advisory services solely pursuant to a contract for impersonal advisory services requiring a payment of less than $ 200.00.

172.6 With respect to an advisory client entering into a contract or receiving advisory services pursuant to a contract for impersonal advisory services, which requires a payment of $ 200.00 or more, an offer of the type specified in § 172.5 shall also be made at the time of entering into an advisory contract.

172.7 Any statement requested in writing by an advisory client pursuant to an offer required by this section shall be mailed or delivered within seven (7) days of the receipt of the request.

172.8 If an investment adviser renders substantially different types of investment advisory services to different advisory clients, any information required by Part II of Form ADV may be omitted from the statement furnished to an advisory client or prospective advisory client if such information is applicable only to a type of investment advisory service or fee which is not rendered or charged, or proposed to be rendered or charged, to that client or prospective client.

172.9 Nothing in this section shall relieve an investment adviser from any obligation pursuant to any provision of the Act or the rules thereunder or other federal or state law to disclose any information to its advisory clients or prospective advisory clients not specifically required by this section.

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 173 PERFORMANCE BASED COMPENSATION

173.1 An investment adviser may enter into, extend, or renew an investment advisory contract, which provides for compensation to the investment adviser on the basis of a share of capital gains upon or capital appreciation of the funds, or any portion of the funds, of the client if the conditions of §§ 172.3 through 172.8 are met.

173.2 The client entering into the contract shall be:

(a) A natural person or a company who, immediately after entering into the contract has at least $ 750,000 under the management of the investment adviser; or

(b) A person who the investment adviser and its investment adviser representatives reasonably believe, immediately before entering into the contract, is a natural person or a company whose net worth, at the time the contract is entered into, exceeds $ 1,500,000. The net worth of a natural person may include assets held jointly with that person's spouse.

(c) For purposes of this section, each equity owner of any such company will be considered a person.

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 174 FINANCIAL AND DISCIPLINARY INFORMATION THAT INVESTMENT ADVISERS MUST DISCLOSE TO CLIENTS

174.1 An investment adviser shall promptly disclose in writing the financial and disciplinary history of an investment adviser representative employed or associated with the investment adviser upon the request of a current or prospective client. Disclosure of financial and disciplinary history shall be consistent with the provisions of this section.

174.2 It shall constitute a dishonest practice within the meaning of Section 207 (a)(9) of the Act (D.C. Offical Code § 31-5602.07(a)(9); D.C. Register at 47 DCR 7851) for any investment adviser to fail to disclose to any client or prospective client all material facts with respect to:

(a) A financial condition of the investment adviser that is reasonably likely to impair the ability of the investment adviser to meet contractual commitments to clients.

(b) A legal or disciplinary event that is material to an evaluation of the investment adviser's, a management person's, as defined in § 174.6, or an investment adviser representative's conduct or integrity, or ability to meet contractual commitments to clients.

(c) A failure to comply with any arbitration award issued in connection with doing business as an investment adviser, or investment adviser representative.

174.3 It shall constitute a rebuttable presumption that the following legal or disciplinary events involving the investment adviser, or their representative (hereinafter referred to a "person"), that were not resolved in the persons favor or subsequently reversed, suspended, or vacated are material within the meaning of this section for a period of 10 years from the time of the event. No affirmative or negative presumption of materiality shall be created under this section for events not specifically set forth in this subsection.

(a) A criminal or civil action in a court of competent jurisdiction in which the person:

(1) Was convicted or pleaded guilty or nolo contendere ("no contest") to a felony or misdemeanor, or is the named subject of a pending criminal proceeding (any of the foregoing referred to hereafter as "action"), and such action involved: an investment related business; fraud, false statements, or omissions; wrongful taking of property; or bribery, forgery, counterfeiting, or extortion;

(2) Was found to have been involved in a violation of an investment-related statute or rule; or

(3) Was the subject of any order, judgment, or decree permanently or temporarily enjoining the person or otherwise limiting the person from engaging in any investment related activity.

(b) An administrative proceeding before the SEC, the Department, or any federal or state agency (any of the foregoing being referred to hereafter as "agency") in which the person:

(1) Was found to have caused an investment related business to lose its authorization to do business; or

(2) Was found to have been involved in a violation of an investment-related statute or rule, and was the subject of an order by the agency denying, suspending, or revoking the authorization of the person to act in, or barring or suspending the person's association with, an investment-related business; or otherwise significantly limiting the person's investment-related activities.

(c) An SRO proceedings in which the person:

(1) Was found to have caused an investment-related business to lose its authorization to do business; or

(2) Was found to have been in violation of the SRO's rules and was the subject of an order by the SRO barring or suspending the person from membership or from association with other members, or expelling the person from membership; fining the person more than $ 2,500; or otherwise significantly limiting the person's investment-related activities.

174.4 For purposes of calculating the 10-year period during which events are presumed to be material under these regulations, the date of the reportable event shall be the date on which the final order, judgment, or decree was entered, or the date on which any rights of appeal from preliminary orders, judgments, or decrees lapsed.

174.5 There shall be a rebuttable presumption that the following legal or disciplinary events involving the investment adviser or a management person of the adviser (any of the foregoing being referred to hereafter as "person") that were not resolved in the person's favor or subsequently reversed, suspended, or vacated are material for a period of ten years from the time of the event:

(a) A criminal or civil action in a court of competent jurisdiction in which the person:

(1) Was convicted, pleaded guilty or nolo contendere ("no contest") to a felony or misdemeanor, or is the named subject of a pending criminal proceeding (any of the foregoing referred to hereafter as "action"), and such action involved: an investment-related business, fraud, false statements, or omissions; wrongful taking of property; or bribery, forgery, counterfeiting, extortion;

(2) Was found to have been involved in a violation of an investment-related statute or regulation; or

(3) Was the subject of any order, judgment, or decree permanently or temporarily enjoining the person from, or otherwise limiting the person from, engaging in any investment-related activity.

(b) Administrative proceedings before the Department, United States Securities and Exchange Commission, any other federal regulatory agency or any other state agency (any of the foregoing being referred to hereafter as "agency") in which the person:

(1) Was found to have caused an investment-related business to lose its authorization to do business; or

(2) Was found to have been involved in a violation of an investment-related statute or regulation and was the subject of an order by the agency denying, suspending, or revoking the authorization of the person to act in, or barring or suspending the person's association with any investment-related business or otherwise significantly limiting the person's investment-related activities; or

(3) Was found to have engaged in an act or a course of conduct which resulted in the issuance by the agency of an order to cease and desist the violation of the provisions of any investment-related statute or rule.

(c) SRO proceedings in which the person:

(1) Was found to have caused an investment-related business to lose its authorization to do business; or

(2) Was found to have been involved in a violation of the SRO's rules and was the subject of an order by the SRO barring or suspending the person from membership or from association with other members, or expelling the person from membership; fining the person more than two thousand five hundred dollars ($ 2,500.00); or otherwise significantly limiting the person's investment-related activities.

174.6 For purposes of this section:

(a) "Management person" means a person with power to exercise, directly or indirectly, a controlling influence over the management or policies of an investment adviser which is not a natural person or to determine the general investment advice given to clients;

(b) "Found" means determined or ascertained by adjudication or consent in a final SRO proceeding, administrative proceeding, or court action;

(c) "Investment-related" means pertaining to securities, commodities, banking, insurance, or real estate, including, but not limited to, citing as or being associated with a broker-dealer, investment company, investment adviser, government securities broker or dealer, municipal securities dealer, bank, savings and loan association, entity or person required to be registered under the Commodity Exchange Act (7 U.S.C. 1 et seq.), or fiduciary;

(d) "Involved" means acting or aiding, abetting, causing, counseling, commanding, inducing, conspiring, with or failure reasonably to supervise another in doing an act; and,

(e) "Self-Regulatory Organization" or "SRO" means any national securities or commodities exchange, registered association, or registered clearing agency.

174.7 For purposes of calculating the ten-year period during which events are presumed to be material under § 176.3, the date of a reportable event shall be the date on which the final order, judgment, or decree was entered, or the date on which the time for review of or appeal from preliminary orders, judgments, or decrees expired.

174.8 Compliance with this section shall not relieve any investment adviser from the obligations of any other disclosure requirement under the Act, the rules and regulations thereunder, or under any other federal or state law.

174.9 With respect to federal covered advisers, the provisions of this section only apply to the extent the practice involves fraud or deceit and only to the extent permitted by Section 203A of the Investment Advisers Act of 1940.

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 175 CUSTODY OR POSSESSION OF CLIENTS FUNDS OR SECURITIES

175.1 It shall constitute a dishonest practice within Section 207 (a)(9) of the Act (D.C. Offical Code § 31-5602.07; D.C. Register at 47 DCR 7851) for any investment adviser who has custody or possession of any funds or securities in which any client has any beneficial interest to do any act or take any action, directly or indirectly, with respect to any funds or securities, unless:

(a) The investment adviser notifies the Department in on Form ADV that the investment adviser has or may have custody. This notification may be given;

(b) The securities of each client are segregated, marked to identify the particular client who has the beneficial interest therein, and held in safekeeping in someplace reasonably free from risk of destruction or other loss;

(c) All such funds of such clients are deposited in one or more bank accounts which contain only clients' funds; such account or accounts are maintained in the name of the investment adviser as agent or trustee for such clients; and the investment adviser maintains a separate record for each such account which shows the name and address of the bank where such account is maintained, the dates and amounts of deposits in and withdrawals from such account, and the exact amount of each client's beneficial interest in this account;

(d) Immediately after accepting custody or possession of such funds or securities from any client, the investment adviser notifies the client in writing of the place and manner in which such funds and securities will be maintained, and, subsequently, if and when there is any change in the place or manner in which such funds or securities are being maintained, the investment adviser gives written notice thereof to the client;

(e) At least once every three (3) months, the investment adviser sends each such client an itemized statement showing the funds and securities in the investment adviser's custody or possession at the end of such period, and all debits, credits, and transactions, in such client's account during this period; and

(f) At least once every calendar year, an independent certified public accountant or an independent public accountant verifies all client funds and securities of clients by actual examination at a time chosen by the accountant without prior notice to the investment adviser.

175.2 A report of such accountant, stating that he has made an examination of such funds and securities and describing the nature and extent of such examination, shall be filed with the Department promptly after each such examination.

175.3 The accountant's report shall comply with the usual technical requirements as to dating, salutation, and manual signature and include in general terms an appropriate description of the scope of the physical examination of the securities and examination of the related books and records.

175.4 This section shall not apply to an investment adviser also registered as a broker-dealer under Section 15 of the Securities Exchange Act of 1934 if the dealer is subject to and in compliance with Securities and Exchange Department Rule 15c3-1 under the Securities Exchange Act of 1934 or the dealer is a member of an exchange whose members are exempt from Rule 15c3-1, under the provisions of paragraph (b)(2) thereof, and the dealer is in compliance with all rules and settled practices of such exchange imposing requirements with respect to financial responsibility and the segregation of funds or securities carried for the account of customers.

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 176 UNLAWFUL, UNETHICAL OR DISHONEST CONDUCT OR PRACTICES

176.1 For purposes of Section 207 (a)(9) of the Act (D.C. Offical Code § 31-5602.07(a)(9); D.C. Register at 47 DCR 7851), the following are deemed to be unlawful, unethical, or dishonest conduct or practice by an investment adviser or investment adviser representative of an investment adviser without limiting those terms to the practices specified herein:

(a) Recommending to a client to whom investment supervisory, management or consulting services are provided the purchase, sale or exchange of any security without reasonable grounds to believe that the recommendation is suitable for the client on the basis of information furnished by the client after reasonable inquiry concerning the client's investment objectives, financial situation and needs, and any other information known by the investment adviser;

(b) Exercising any discretionary power in placing an order for the purchase or sale of securities for a client without obtaining written discretionary authority from the client within ten (10) business days after the date of the first transaction placed pursuant to oral discretionary authority, unless the discretionary power relates solely to the price at which, or the time when, an order involving a definite amount of a specific security shall be executed, or both;

(c) Inducing trading in a client's account that is excessive in size or frequency in view of the financial resources, investment objectives and character of the account;

(d) Placing an order to purchase or sell a security for the account of a client without authority to do so;

(e) Placing an order to purchase or sell a security for the account of a client upon instruction of a third party without first having obtained a written third-party trading authorization from the client;

(f) Borrowing money or securities from a client unless the client is a broker-dealer, an affiliate of the investment adviser, or a depository institution engaged in the business of lending funds;

(g) Lending money to a client unless the investment adviser is a depository institution engaged in the business of loaning funds or the client is an affiliate of the investment adviser;

(h) Misrepresenting to any advisory client, or prospective advisory client, the qualifications of the investment adviser or any employee of the investment adviser, or to misrepresent the nature of the advisory services being offered or fees to be charged for such service, or to omit to state a material fact necessary to make the statements made regarding qualifications, services or fees, in light of the circumstances under which they are made, not misleading;

(i) Providing a report or recommendation to any advisory client prepared by someone other than the investment adviser without disclosing that fact. This prohibition does not apply to a situation where the adviser uses published research reports or statistical analyses to render advice or where an adviser orders such a report in the normal course of providing service;

(j) Charging a client an unreasonable advisory fee;

(k) Failing to disclose to clients in writing before any advice is rendered any material conflict of interest relating to the investment adviser or any of its employees which could reasonably be expected to impair the rendering of unbiased and objective advice including:

(1) Compensation arrangements connected with advisory services to clients which are in addition to compensation from such clients for such services; and,

(2) Charging a client an advisory fee for rendering advice when a commission for executing securities transactions pursuant to such advice will be received by the investment adviser or its employees;

(l) Guaranteeing a client that a specific result will be achieved (e.g. gain or no loss), with advice which will be rendered;

(m) Publishing, circulating or distributing any advertisement which does not comply with Rule 206(4)-1 under the Investment Advisers Act of 1940;

(n) Disclosing the identity, affairs, or investments of any client unless required by law to do so, or unless consented to by the client;

(o) Taking any action, directly or indirectly, with respect to those securities or funds in which any client has any beneficial interest, where the investment adviser has custody or possession of such securities or funds and the adviser's action does not comply with the requirements of Rule 206(4)-2 under the Investment Advisers Act of 1940; and,

(p) Entering into, extending or renewing any investment advisory contract unless such contract is in writing and discloses, in substance, the services to be provided, the term of the contract, the advisory fee, the formula for computing the fee, the amount of prepaid fee to be returned in the event of contract termination or non-performance, whether the contract grants discretionary power to the adviser and that no assignment of such contract shall be made by the investment adviser without the consent of the other party to the contract.

(q) Failing to establish, maintain and enforce written policies and procedures reasonably designed to prevent the misuse of material nonpublic information contrary to the provisions of Section 204A of the Investment Advisers Act of 1940.

(r) Entering into, extending or renewing any advisory contract contrary to the provisions of Section 205 of the Investment Advisers Act of 1940. This provision shall apply to all investment advisers licensed or required to be licensed under the Act.

(s) Indicating, including in an advisory contract, any condition, stipulation or provisions binding any person to waive compliance with any provision of the Act or of the Investment Advisers Act of 1940, or any other practice contrary to the provisions of Section 215 of the Investment Advisers Act of 1940.

(t) Engaging in any act, practice or course of business which is fraudulent, deceptive or manipulative, contrary to the provisions of Section 206(4) of the Investment Advisers Act of 1940, notwithstanding the fact that such investment adviser is not registered or required to be registered under Section 203 of the Investment Advisers Act of 1940.

(u) Engaging in conduct or any act, indirectly or through or by any other person, which would be unlawful for such person to do directly under the provisions of the Act or any rule or regulation thereunder.

(v) Entering into any contract with a customer if the contract contains any condition, stipulation or provision binding the customer to waive any rights under the Act, or any rule or order thereunder.

176.2 The conduct set forth in this section is not exclusive. It also includes employing any device, scheme, or artifice to defraud or engaging in any act, practice or course of business which operates or would operate as a fraud or deceit.

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 177 AGENCY CROSS TRANSACTIONS

177.1 It shall be a violation of section 207(a)(9) of the Act (D.C. Offical Code § 31-5602.07(a)(9); D.C. Register at 47 DCR 7851) for any investment adviser while acting as a principal for his own account, knowingly to sell any security to or purchase any security from a client, or acting as a broker-dealer for a person other than such client, to knowingly effect any sale or purchase of any security for the account of such client, without disclosing to such client in writing before the completion of the transaction, the capacity in which it is acting and obtaining the consent of the client. The prohibitions of this paragraph shall not apply to any transaction with a customer of a broker-dealer is such broker-dealer is not acting as an investment adviser in relation to such transaction.

177.2 For purposes of this section, "agency cross transaction for an advisory client" means a transaction in which a person acts as an investment adviser in relation to a transaction in which the investment adviser, or any person controlling, controlled by, or under common control with such investment adviser, including an investment adviser representative, acts as a broker for both the advisory client and another person on the other side of the transaction. When acting in such capacity such person is required to be registered as a broker-dealer in the District of Columbia unless excluded from the definition of "broker-dealer" in Section 101 (4) of the Act (D.C. Register at 47 DCR 7838).

177.3 An investment adviser, or any person identified in subsection 177.1 effecting an agency cross transaction for an advisory client shall be in compliance with the Act if the following conditions are met:

(a) The advisory client executes a written consent prospectively authorizing the investment adviser to effect agency cross transactions for such client;

(b) Before obtaining such written consent from the client, the investment adviser makes full written disclosure to the client that, with respect to agency cross transactions, the investment adviser will act as broker-dealer for, receive commissions from and have a potentially conflicting division of loyalties and responsibilities regarding both parties to the transactions;

(c) At or before the completion of each agency cross transaction, the investment adviser or any other person relying on this section sends the client a written confirmation. The written confirmation shall include:

(1) A statement of the nature of the transaction;

(2) The date the transaction took place;

(3) An offer to furnish, upon request, the time when the transaction took place; and

(4) The source and amount of any other remuneration the investment adviser received or will receive in connection with the transaction.

(d) In the case of a purchase, if the investment adviser was not participating in a distribution, or, in the case of a sale, if the investment adviser was not participating in a tender offer, the written confirmation may state whether the investment adviser has been receiving or will receive any other remuneration and that the investment adviser will furnish the source and amount of such remuneration to the client upon the client's written request;

(e) At least annually, and with or as part of any written statement or summary of the account from the investment adviser, the investment adviser or any other person relying on this section sends the client a written disclosure statement identifying:

(1) The total number of agency cross transactions during the period for the client since the date of the last such statement or summary; and

(2) The total amount of all commissions or other remuneration the investment adviser received or will receive in connection with agency cross transactions for the client during the period.

(f) Each written disclosure and confirmation required by this section shall include a conspicuous statement that the client may revoke the written consent required under § 177.2(a) at any time by providing written notice to the investment adviser; and

(g) No agency cross transaction may be effected in which the same investment adviser recommended the transaction to both any seller and any purchaser.

177.4 Nothing in this section shall be construed to relieve an investment adviser or investment adviser representative from acting in the best interests of the client, including fulfilling his duty with respect to the best price and execution for the particular transaction for the client nor shall it relieve any investment adviser representative of any other disclosure obligations imposed by the Act.

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 178 FINANCIAL STATEMENTS AND REPORTS

178.1 Every investment adviser whose principal place of business is located in the District who has custody of client funds or securities or who requires payment of advisory fees six months or more in advance and in excess of $ 500 per client shall file with the Department an audited balance sheet as of the end of the investment adviser's fiscal year. Each balance sheet filed pursuant to this section shall be:

(a) Examined in accordance with generally accepted auditing standards and prepared in conformity with generally accepted accounting principles;

(b) Audited by an independent public accountant or an independent certified public accountant; and

(c) Accompanied by an opinion of the accountant as to the report of financial position and by a note stating the principles used to prepare it, the basis of included securities, and any other explanations required for clarity.

178.2 The financial statements required by this section shall be filed with the Department as soon as possible but no later than 90 days from the date of the end of the investment adviser's fiscal year.

178.3 For the purposes of this section, "custody of client funds or securities" shall apply to persons only if the client's funds or securities are held for the purposes of engaging in the business of an investment adviser.

178.4 Every investment adviser licensed or required to be licensed under the Act may be required by the Department to file a financial statement showing the financial condition of such investment adviser as of the most recent practicable date. The financial statements shall not be required to be audited.

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 179 FINANCIAL REQUIREMENTS FOR INVESTMENT ADVISERS

179.1 For purposes of this section, "net capital" shall have the same meaning as set forth in SEC Rule 15c3-1 under the Securities Exchange Act of 1934, and any amendments thereto.

179.2 An investment adviser whose principal place of business is located in the District and is required to provide a balance sheet pursuant to Part II, item 14 of Form ADV shall:

(a) Maintain a minimum net capital of $ 25,000.00; and

(b) An investment adviser licensed or required to be licensed whose minimum net capital does not exceed $ 35,000.00 pursuant to monthly calculations shall post a Surety Bond in the amount of $ 10,000.00 within thirty (30) days after the computation which reflects the deficiency and the Surety Bond shall remain in effect for not less than twelve months thereafter. If the investment adviser's minimum net capital remains below the $ 35,000.00 at the end of twelve months in which the bond is required, the investment adviser shall maintain the Surety Bond on a continuing basis.

179.3 An investment adviser licensed or required to be licensed in the District shall notify the Department by the close of business on the next day if the minimum net capital as set forth in § 179.1 of this section falls below the minimum required.

179.4 After transmitting the notice, the investment adviser shall, by the close of business on the following business day, file with the Department a report of its financial condition, including the following:

(a) A trial balance of all ledger accounts;

(b) A computation of net capital as defined in subsection 179.1;

(c) A statement of all client funds, securities, or assets that are not segregated;

(d) A computation of the aggregate amount of client debit balances; and

(e) A statement as to the number of client accounts and details of client accounts for any District residents.

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 180 SURETY BOND

180.1 An investment adviser whose principal of business is located in the District and subject to the requirements of paragraph 179.2(b) shall file with the Department a Surety Bond in the amount of ten thousand dollars ($ 10,000.00).

180.2 The text of the required Surety Bond Form shall be as follows:

Surety Bond

___ of ___ as principal, and ___ a corporation, incorporated under the laws of the state of ___ and authorized to write bonds in the District of Columbia, as Surety, are held and firmly bound to the District of Columbia. Department of Insurance and Securities Regulation of the District of Columbia for the use and benefit of any persons damaged by any breach of this obligation in the sum of $ 10,000.00 for the payment of which sum we bind our selves, our heirs, executors, administrators, successors and assigns, jointly and severally by these presents. The conditions of the bond are as follows:

(1) The above mentioned principal has applied or will apply for a registration as an investment adviser under the provisions of the Act.

(2) The above named principal is required to file a surety bond in accordance with provisions of the Section 203 (g)(1)(a) of the Act (D.C. Register at 47 DCR 7847), and § 179.2(b) thereunder.

(3) This bond is a continuing obligation and shall cover the full period or periods of registration of the principal, including initial and renewal registrations.

(4) The surety shall not be obligated on this bond unless the principal fails to count for all money and securities, or fails to discharge all obligations imposed on it by the Act and rules adopted thereunder.

(5) The liability of the surety for any one or more claims by any one or more persons shall not be cumulative and shall not exceed in the aggregate the sum of this bond.

(6) Any persons who may have a cause of action arising under the Act, or condition (4) of this bond, may bring suit on this bond.

(7) In the event that either the principal or the surety, or both, are served with notice of any suit on this bond, the person served with such notice shall immediately give written notice of the filing of such action to the District of Columbia Department of Insurance and Securities Regulation of the District of Columbia.

(8) No suit may be maintained to enforce any liability on the bond unless brought within two (2) years after the sale or other act upon which said liability is based.

(9) The surety or principal may cancel this bond by delivering sixty (60) days written notice to the District of Columbia Department of Insurance and Securities Regulation of the District of Columbia and to the other party(ies) to the bond. However, such cancellation shall not affect any liability incurred or accrued hereunder prior to the termination of said sixty-day period.

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 181 INVESTMENT ADVISER RECORDKEEPING

181.1 An investment adviser whose principal place of business is located in the District shall maintain and preserve the following books, ledgers, and records:

(a) A journal or journals, including cash receipts and disbursements records and any other records of original entry forming the basic of entries in any ledger;

(b) General and auxiliary ledgers (or other comparable records) reflecting assets, liability, reserve, capital, income and expense accounts;

(c) A memorandum of each order given by the investment adviser for the purchase or sale of any security or assets, of any instruction received by the investment adviser from the client concerning the purchase, sale, receipt, or delivery of a particular security or asset, and of any modification or cancellation of any order or instruction. These memoranda shall show the terms and conditions of the order, instruction, modification or cancellation, shall identify the person connected with the investment adviser who recommended the transaction to the client and the person who placed the order, and shall show the account for which entered, the date of entry, whether the order was entered pursuant to the exercise of discretionary power and, when appropriate, the bank, broker-dealer or other entity or person by or through which the transaction was effected;

(d) All checkbooks, bank statements, cancelled checks, and cash reconciliations of the investment adviser;

(e) All bills or statements, or copies thereof, paid or unpaid, relating to the business of the investment adviser as such;

(f) All trial balances, financial statements, and internal audit working papers relating to the business of the investment adviser;

(g) Originals of all written communications received, and copies of all written communications sent, by the investment adviser relating to any recommendation made or proposed to be made and any advice given or proposed to be given, any receipt, disbursement or delivery of funds, securities or assets, or the placing or execution of any order to purchase or sell any security or asset, provided that:

(1) The investment adviser shall not be required to keep any unsolicited market letters and other similar communications of general public distribution not prepared by or for the investment adviser; and

(2) If the investment adviser sends any notice, circular or other advertisement offering any report, analysis, publication or other investment advisory service to more than 10 persons, the investment adviser shall not be required to keep a record of the names and addresses of the persons to whom it was sent, except that if the notice, circular or advertisement is distributed to persons named on any list, the investment adviser shall retain with a copy of the notice, circular, or advertisement a memorandum describing the list and the source thereof;

(h) A list or other record of all accounts in which the investment adviser is vested with any discretionary power with respect to the funds, securities, assets, or transactions of any client;

(i) All powers of attorney and other evidences of the granting of any discretionary authority by any client to the investment adviser, or copies thereof;

(j) All written agreements, or copies thereof, entered into by the investment adviser with any client or otherwise relating to the business of the investment adviser as such;

(k) A copy of each notice, circular, advertisement, newspaper article, investment letter, bulletin or other communication that the investment adviser circulates or distributes, directly or indirectly, to 10 or more persons, (other than persons connected with the investment adviser), and, if the notice, circular, advertisement, newspaper article, investment letter, bulletin, or other communication recommends the purchase or sale of a specific security or asset, and does not state the reasons for this recommendation, a memorandum of the investment adviser indicating the reasons therefor.

181.2 Records of Securities or Asset Transactions shall be maintained and preserved for the following:

(a) A record of every transaction involving a security or asset in which the investment adviser or any investment adviser representative of the investment adviser has, or by reason of the transaction acquires, any direct or indirect beneficial ownership, except transactions effected over which neither the investment adviser nor any advisory representative of the investment adviser has any direct or indirect influence or control, and transactions in securities that are direct obligations of the United States.

(b) The record shall state the title and amount of the security or asset involved, the date and nature of the transaction (that is, purchase, sale, or other acquisition or disposition), the price at which it was effected, and the name of the broker-dealer, bank or other entity or person with or through which the transaction was effected.

(c) A transaction shall be recorded not later than ten (10) days after the end of the calendar quarter in which the transaction was effected.

(d) The record may also contain a statement declaring that the reporting or recording of the transaction will not be construed as an admission that the investment adviser or investment adviser representative has any direct or indirect beneficial ownership in the security or asset.

(e) An investment adviser will not be deemed to have violated the provisions of this subsection by the investment adviser's failure to record securities or asset transactions of any investment adviser representative if the investment adviser establishes that it instituted adequate procedures and used reasonable diligence to obtain prompt reports of all transactions required to be recorded.

(f) For purposes of this section, the term "advisory representative" shall mean any partner, officer or director of the investment adviser; any employee who makes any recommendation, who participates in the determination of which recommendation shall be made, or whose functions or duties relate to the determination of which recommendation shall be made; any employee who, in connection with his duties (other than clerical, ministerial or administrative duties), obtains any information concerning which securities are being recommended prior to the effective dissemination of such recommendations or of the information concerning such recommendations; and any of the following persons who obtain information concerning securities recommendations being made by such investment adviser prior to the effective dissemination of such recommendations or of the information concerning such recommendations:

(1) Any person in a control relationship to the investment advisor, "control" shall have the same meaning as that set forth in Section 2(a)(9) of the Investment Company Act of 1940, as amended;

(2) Any affiliated person of such controlling person; and

(3) Any affiliated person of such affiliated person.

181.3 Records of Securities or Assets Involving Direct or Indirect Beneficial Ownership shall maintain and preserve the following:

(a) Notwithstanding the provisions of § 181.2 when the investment adviser is primarily engaged in a business other than advising registered investment companies or other advisory clients, a record shall be maintained of every transaction involving a security or asset in which the investment adviser or any investment adviser representative of the investment adviser has, or by reason of the transaction acquires, any direct or indirect beneficial ownership, except transactions effected in any account over which neither the investment adviser nor any investment adviser representative of the investment adviser has any direct or indirect influence or control, and transactions in securities that are direct obligations of the United States.

(b) The record shall state the title and amount of security or asset involved, the date and nature of the transaction (i.e. purchase, sale, or other acquisition or disposition), the price at which it was effected, and the name of the broker-dealer, bank or other entity or person with or through which the transaction was effected.

(c) A transaction shall be recorded not later than ten (10) days after the end of the calendar quarter in which the transaction was effected.

(d) The record may also contain a statement declaring that the reporting or recording of the transaction will not be construed as an admission that the investment adviser or investment adviser representative has any direct or indirect beneficial ownership in the security or asset.

(e) An investment adviser is "primarily engaged in a business or businesses other than advising registered investment companies or other advisory clients" if, for each of its three (3) most recent fiscal years or for the period of time since organization, whichever is less, the investment adviser derived from such other business or businesses, on an unconsolidated basis, more than 50 percent of both its total sales and revenues and its income (or loss) before income taxes and extraordinary items.

(f) An investment adviser shall not be deemed to have violated the provisions of this subsection by its failure to record securities or asset transactions of any investment adviser representative if the investment adviser establishes that it instituted adequate procedures and used reasonable diligence to obtain prompt reports of all transactions required to be recorded.

(g) For purposes of this subsection, the term "advisory representative" shall mean any partner, officer or director of the investment adviser; any employee who makes any recommendation, who participates in the determination of which recommendation shall be made, or whose functions or duties relate to the determination of which recommendation shall be made; any employee who, in connection with his duties (other than clerical, ministerial or administrative duties), obtains any information concerning which securities are being recommended prior to the effective dissemination of such recommendations or of the information concerning such recommendations; and any of the following persons who obtain information concerning securities recommendations being made by such investment adviser prior to the effective dissemination of such recommendations or of the information concerning such recommendations:

(1) Any person in a control relationship to the investment advisor, "control" shall have the same meaning as that set forth in Section 2(a)(9) of the Investment Company Act of 1940, as amended;

(2) Any affiliated person of such controlling person; and

(3) Any affiliated person of such affiliated person.

181.4 A copy of each written statement, and each amendment or revision thereof, given or sent to any client or prospective client of the investment adviser in accordance with the provisions of section 172 and a record of the dates that each written statement, and each amendment, or revision thereof, was given, or offered to be given, to any client or prospective client who subsequently became a client.

181.5 All accounts, books, internal working papers, and any other records or documents that are necessary to form the basis for or demonstrate the calculation of the performance or rate of return of any or all managed accounts or securities or assets recommendations in any notice, circular, advertisement, newspaper article, investment letter, bulletin or other communication that the investment adviser circulates or distributes, directly or indirectly, to ten (10) or more persons, other than persons connected with the investment adviser, provided that, with respect to the performance of managed accounts, the retention of all account statements, if they reflect all debits, credits and other transactions in a client's account for the period of the statement, and all work sheets necessary to demonstrate the calculation of the performance or rate of return of all managed accounts, shall be deemed to satisfy the requirements of this subsection.

181.6 If any investment adviser subject to § 181 has custody or possession of securities, assets, or funds of any client, the records required to be made and kept shall include:

(a) A journal or other record showing all purchases, sales, receipts and deliveries of securities (including certificate numbers) and other assets (including identifying or descriptive materials as appropriate) for these accounts, as well as all other debits and credits to the accounts;

(b) A separate ledger account for each client showing all purchases, sales, receipts, and deliveries of securities or assets, the date and price of each purchase and sale, and all debits and credits;

(c) Copies of confirmations of all transactions affected by or for the account of each client; and

(d) A record of each security or asset in which each client has a position or ownership interest, which record shall show the name of the client having the position or interest, the amount of the position or interest, and the location of each security or asset.

181.7 An investment adviser subject to § 181 who renders any investment supervisory or management service to any client shall, with respect to the portfolio being supervised or managed and to the extent that the information is reasonably available to or obtainable by the investment adviser, make and keep the following:

(a) True, accurate, and current records showing separately for each client the securities or assets purchased and sold, and the date, amount, and price of each purchase and sale; and

(b) For each security or asset in which any client has a current position, true, accurate, and current information from which the investment adviser can promptly furnish the name of each client, and the current amount or interest of each client.

181.8 Books or records required by this section may be maintained by the investment adviser in a manner such that the identity of any client to whom the investment adviser renders investment advisory services is indicated by numerical or alphabetical code or some similar designation.

26-B DCMR § 182 All actual expenses of the examination by the Department of the books and records of a broker-dealer or investment adviser shall be paid by the company examined. The company shall promptly pay the District upon receipt of itemized bills provided by the Commissioner. For purposes of this section, actual expenses of the examination may include, but shall not be limited to, travel, food, lodging, copying, facsimile, and telephone costs.

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 183 RECORD RETENTION SCHEDULE

183.1 Books and records required to be made under the provisions of § 181.1 to paragraph 181.7(a), inclusive except for books and records required to be made under the provisions of §§ 181.1(k) and 181.5 shall be maintained and preserved in an easily accessible place for a period of not less than five (5) years from the end of the fiscal year during which the last entry was made on the record, and for the first two (2) years shall be maintained in an appropriate office of the investment adviser.

183.2 Partnership articles and any amendments thereto, articles of incorporation, charters, minute books, and stock certificate books of the investment adviser and of any predecessor, shall be maintained in the principal office of the investment adviser and preserved until at least three (3) years after termination of the enterprise.

183.3 Books and records required to be made under the provisions of §§ 181.1(k) and 181.5 shall be maintained and preserved in an easily accessible place for a period of not less than five (5) years, the first two (2) years in an appropriate office of the investment adviser, from the end of the fiscal year during which the investment adviser last published or otherwise disseminated, directly or indirectly, the notice circular advertisement, newspaper article, investment letter bulletin or other communication.

183.4 Before ceasing to conduct or discontinuing business as an investment adviser, an investment adviser subject to §§ 181.1 through 181.5 shall arrange for and be responsible for the preservation of the books and records required to be maintained and preserved under § 181 for the remainder of the period specified herein, and shall notify the Department in writing of the exact address at which the books and records will be maintained during this period.

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 184 PRESERVATION AND MAINTENANCE OF INVESTMENT ADVISER RECORDS

184.1 The records required to be maintained and preserved pursuant to § 181 may be immediately produced or reproduced by photographic film or, as provided in § 184.2 on magnetic disk, tape or other computer storage medium, and be maintained and preserved for the required time in that form. If the records are produced or reproduced by photographic film or computer storage medium, the investment advisor shall:

(a) Arrange the records and index the films or computer storage medium so as to permit the immediate location of any particular record;

(b) Be ready at all times to provide, and promptly provide, any facsimile enlargement of film or computer printout or copy of the computer storage medium that the Department may request;

(c) Store separately from the original, a copy of the film or computer storage medium for the time required;

(d) With respect to records stored on computer storage medium, maintain procedures for maintenance and preservation of, and access to, records so as to reasonably safeguard records from loss, alteration, or destruction; and

(e) With respect to records stored on photographic film, at all times have available for examination of its records pursuant to the Act facilities for immediate, easily readable projection of the film and for producing easily readable facsimile enlargements.

184.2 Pursuant to subsection 184.1, an adviser may maintain and preserve on computer tape or disk or other computer storage medium records which, in the ordinary course of the adviser's business, are created by the adviser on electronic media or are received by the adviser solely on electronic media or by electronic data transmission.

184.3 Any book or other record made, kept, maintained, and preserved in compliance with Rule 17a-3 under the Securities Exchange Act of 1934, which is substantially the same as the book or other record required to be made, kept, maintained and preserved under this regulation shall be deemed to be made, kept, maintained and preserved in compliance with this section.

184.4 A record made and kept pursuant to any provision of §§ 181.1 through 181.5 which contains all the information required under any other provision of § 180 need not be maintained in duplicate in order to meet the requirement of the other provisions of § 181.

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 185 EXAMINATION PROCEDURES AND FEES

185.1 The Commissioner may conduct examinations of investment advisers and may charge a reasonable fee for the examination, consistent with these regulations, as provided in Section 206 of the Act (D.C. Offical Code § 31-5602.06; D.C. Register at 47 DCR 7849).

185.2 When conducting any examination under these regulations, the Commissioner may retain or require the examinee to retain independent accountants, auditors, examiners, and other persons to perform the examination on behalf of the Commissioner.

185.3 The Commissioner may cooperate with national securities associations and national and regional securities exchanges, and with the Securities and Exchange Commission in administering examinations of any investment adviser.

185.4 The fee for an on-site examination of an investment adviser shall be the actual amount of the compensation paid to each employee for their time, including the preparation of any written report of the examination, audit, or investigation that reasonably be needed in the discharge of the Commissioner's duties.

185.5 The Commissioner may charge a reasonable fee in excess of the amount in § 185.4 involving an examination of an investment adviser if extenuating or unforeseen circumstances arise during the course of the examination.

185.6 The Commissioner may charge a reasonable fee in excess of the amount in § 185.4 to defray the cost of any examination of an investment adviser administered by the Commissioner, which involves out-of-town travel.

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 186 INVESTMENT ADVISER OPINION AND NO ACTION LETTERS

186.1 Upon written request for a statement of the Department's position on the applicability of enforcement actions contemplated under the Act, the Director (or designee), in discretion, may honor such requests by issuing a no action letter or interpretative opinion.

186.2 An "opinion" or "no action" letter represents the recommendation the Director would make to the Commissioner on the basis of the facts presented; it is not a formal administrative act of the Commissioner. The Director's opinion is predicated upon the assumption that the facts presented are a true and complete statement of all the circumstances surrounding the transaction in question and is of no effect unless the facts are as stated.

186.3 Such letters or opinions shall also be kept in the Department's public files.

186.4 For obtaining an "opinion" or "No action" letter from the Department, the fee shall be two hundred and fifty dollars ($ 250);

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 187 RESERVED

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 47 DCR 1221 (February 25, 2000); as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).

26-B DCMR § 199 DEFINITIONS

199.1 The definitions of terms found in Section 101 of the Act (D.C. Register at 47 DCR 7837) and the following words and phrases shall apply to this chapter.

Act – shall mean the Securities Act of 2000, effective October 26, 2000 (D.C. Law 13-203; D.C. Official Code § 31–5601.01 et seq.).

Affiliate - shall have the same definition as in Section 2(a)(3) of the federal Investment Company Act of 1940, as now or hereafter amended.

Associated Person - shall mean a partner, officer, director, salesman, trader, manager, or any employee handling funds or securities or soliciting transactions or accounts for the broker-dealer.

Authorized provider – shall mean a person that the North American Securities Administrators Association, or its designee, has authorized to provide continuing education content.

Capital - shall have the same meaning as set forth in SEC Rule 15c3-1 (net capital requirements for brokers and dealers) under the Securities Exchange Act of 1934; and any amendments thereto.

Client's independent agent - shall mean any person who agrees to act as an investment advisory client's agent in connection with the contract but does not include the following:

(1) The investment adviser relying on this Chapter;

(2) An affiliated person of the investment adviser, including an investment adviser representative;

(3) An interested person of the investment adviser;

(4) A person who receives, directly or indirectly, any compensation in connection with the contract from the investment adviser, an affiliated person of the investment adviser, an affiliated person of an affiliated person of the investment adviser or an interested person of the investment adviser; or

(5) A person with any material relationship between himself (or an affiliated person of that person) and the investment adviser (or an affiliated person of the investment adviser) that exists or has existed at any time during the past two years.

Commissioner - shall mean the Commissioner of the Department of Insurance, Securities and Banking.

Company - shall mean a corporation, partnership, association, joint stock company, trust, limited liability company, limited liability partnership, or any organized group of persons, whether incorporated or not; or any receiver, trustee in a case under Title 11 of the United States Code, or similar official or any liquidating agent for any of the foregoing, in his capacity as such. "Company" shall not include the following:

(1) A company required to be registered under the federal Investment Company Act of 1940 but which is not so registered;

(2) A private investment company (for purposes of this subparagraph (2), a private investment company is a company which would be defined as an investment company under Section 3(a) of the federal Investment Company Act of 1940 but for the exception from that definition provided by Section 3(c)(1) of that Act);

(3) An investment company registered under the federal Investment Company Act of 1940; or

(4) A business development company as defined in Section 202(a)(22) of the federal Investment Advisers Act of 1940, unless each of the equity owners of any such company, other than the investment adviser entering into the contract, is a natural person or company within the meaning of paragraph AA09.1(c) of this section.

Complaint - shall mean any written statement of a customer of any person acting on behalf of a customer alleging a grievance involving the activities of the broker-dealer or persons under the control of the broker-dealer in connection with the solicitation or execution of any transaction in securities or commodities or the disposition of securities, commodities or funds of that customer.

Contract for impersonal advisory services - means any contract relating solely to the provision of investment advisory services:

(1) By means of written material or oral statements which do not purport to meet the objectives or needs of specific individuals or accounts; or

(2) Through the issuance of statistical information containing no expression of opinion as to the investment merits of a particular security; or

(3) Any combination of the foregoing services.

Director - shall mean the Director of the Securities Bureau of the Department of Insurance and Securities Regulation.

Entering into, - in reference to an investment advisory contract, does not include an extension or renewal without material change of any such contract which is in effect immediately prior to such extension or renewal.

FINRA – shall mean the Financial Industry Regulatory Authority.

Found - shall mean determined or ascertained by adjudication or consent in a final SRO proceeding, administrative proceeding, or court action;

IAR Ethics and Professional Responsibility Content – shall mean continuing education content, approved by the North American Securities Administrators Association, or its designee, that addresses an investment adviser representative’s ethical and regulatory obligations.

IAR Products and Practice Content – shall mean continuing education content, approved by the North American Securities Administrators Association, or its designee, that addresses an investment adviser representative’s continuing skills and knowledge regarding financial products, investment features, and practices in the investment advisory industry.

IARD - shall mean the Investment Adviser Registration Depository, which is operated by NASDR.

Interested person - shall mean:

(a) Any person of the immediate family of any affiliated person of the investment adviser;

(b) Any person who knowingly has any direct or indirect beneficial interest in or who is designated as trustee, executor, or guardian of any legal interest in any security issued by the investment adviser or by a controlling person of the investment adviser if that beneficial or legal interest exceeds:

(1) One tenth of one percent of any class of outstanding securities of the investment adviser or a controlling person of the investment adviser; or

(2) Five percent (5%) of the total assets of the person seeking to act as the client's independent agent; or

(c) Any person or partner or employee of any person who, at any time since the beginning of the last two years, has acted as legal counsel for the investment adviser.

Investment adviser representative – shall mean an individual who is licensed or required to be licensed in accordance with the Act, or who otherwise meets the definition of “investment adviser representative” under the Uniform Securities Act (2002) or 17 CFR § 275.203A3.

Investment advisory contract - shall mean a contract in which one person receives consideration from another person primarily for providing advisory services.

Investment company contract - shall mean a contract with an investment company registered under the Investment Company Act of 1940 which meets the requirements of Section 15(c) of that Act.

Investment-related - shall mean pertaining to securities, commodities, banking, insurance, real estate [including, but not limited to, citing as or being associated with a dealer, investment company, investment adviser, government securities broker or dealer, municipal securities dealer, bank, savings and loan association, entity or person required to be registered under the Commodity Exchange Act (7 U.S.C. 1 et seq.), or fiduciary];

Involved - shall mean acting or aiding, abetting, causing, counseling, commanding, inducing, conspiring, with or failure reasonably to supervise another in doing an act.

Management person - shall mean a person with power to exercise, directly or indirectly, a controlling influence over the management or policies of an investment adviser, which is not a natural person or to determine the general investment advice given to clients;

Mass transfer - shall mean the change of registration of all or substantially all agents of one broker-dealer to a new broker-dealer, or all or substantially all of the investment adviser representatives of one investment adviser to a new investment adviser as a result of a purchase, merger, or other reorganization.

Related person - shall mean another person is any person controlling, controlled by, under common control with, or any employee or employer of, such other person.

Reporting period – shall mean a twelve- (12-) month period beginning on January 1 and ending on December 31, which starts on January 1 of the first full year that the individual is licensed or required to be licensed with the District.

Time of Entry - shall mean the time when the broker-dealer transmits the order or instruction for execution or, if it is not transmitted, the time when it is received.

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001); as amended by Final Rulemaking published at 69 DCR 007987 (July 1, 2022). District of Columbia Municipal Regulations Securities 26-B DCMR § 199

26-B2 REGISTRATION OF SECURITIES OFFERINGS

26-B DCMR § 200 GENERAL PROVISIONS

200.1 An application to register securities in the District of Columbia pursuant to Title III and Title IV of the Securities Act of 2000 (D.C. Law 13-203, 47 DCR 7852) shall be filed with the Department of Insurance, Securities and Banking ("Department"), or any other entity designated by the Department, on forms provided for that purpose in accordance with the instructions for preparation and execution of the forms.

200.2 The registration requirements of Section 301(D.C. Offical Code § 31-5603.01) apply to securities that are being offered or sold to residents of the District of Columbia on or after June 1, 2001. If a securities issue is already being offered or sold in the District prior to June 1, 2001, the issue may continue to be sold while the application for registration and the required fee payment are being processed by the Department, so long as the application and fee payment are received on or before June 1, 2001. The Commissioner reserves the right to initiate an administrative or civil action for any securities offering that violates a provision of the Act.

200.3 The notice filing requirements for federal covered securities become applicable on June 1, 2001. If a securities issuer that is subject to notice filing requirements is already being offered or sold to residents of the District of Columbia prior to June 1, 2001, the issue may continue to be offered or sold to residents of the District of Columbia while the notice filing and required fee payment are being processed by the Department, so long as the notice filing and fee payment are received on or before June 1, 2001. Except for a security covered by § 18(b)(1) of the Securities Act of 1993 (48 Stat. 74; 15 U.S.C. § 77a et seq.), the Commissioner reserves the right to initiate an administrative action pursuant to § 308 (f) of the Act (D.C. Offical Code § 31-5608(f)).

200.4 The registration statement may be filed by the issuer, broker-dealer, or any other person on whose behalf the offering is to be made.

200.5 Whenever an application, notice, statement, report or other document ("Document") has been filed and the person who filed the document wishes to amend or otherwise ensure that the Document is current and accurate in all material respects, the person shall make a filing with the Commissioner constituting the amendment which also shall identify the Document being amended including, with respect to an amendment to a form authorized by these regulations, the name of the form, the date the form originally was filed with the Department and the items or schedules of the form which are being amended.

200.6 All relevant time periods in the Act for processing of filings by the Department will begin running on the first business day after the date the document is received by the Department.

200.7 Any electronic method acceptable to the Director of the Securities Bureau ("Director") may be used to make any filings with the Department. The filing of documents and information using such an electronic method shall be equivalent to paper filing of documents and information with the Department. The Bureau will accept conformed, stamped, or computer generated signatures in place of manual signatures for any notice or filing submitted to the Bureau, in paper or electronically, except that it will continue to require manual signatures for the Form U-2 Consent to Service of Process, and to any filing where there are any material changes.

200.8 All sales and advertising literature relating to an offering of securities for which a registration statement has been filed with the Department pursuant to §§ 302, 303, or 304 of the Act (D.C. Offical Code §§ 31-5603.02, 31-5603.03, and 31-5603.04) also shall be filed with the Department and have prominently displayed by legend or printed sticker on the front cover of the sales and advertising literature, in bold-face type, substantially the following statement:

"THIS SALES AND ADVERTISING LITERATURE MUST BE READ IN CONJUNCTION WITH THE PROSPECTUS IN ORDER TO UNDERSTAND FULLY ALL OF THE IMPLICATIONS AND RISKS OF THE OFFERING OF SECURITIES TO WHICH IT RELATES. A COPY OF THE PROSPECTUS MUST BE MADE AVAILABLE TO YOU IN CONNECTION WITH THIS OFFERING."

200.9 The Commissioner shall review the sales and advertising literature required to be filed under § 200.8 and, if 7 days after the filing of the material, he has not issued a stop-order or other order with respect to it, the material may be used in connection with the offering of securities to which it relates. If a stop order or other order is issued, then the sales and advertising literature, and the use of it, shall comply in all respects with the order.

200.10 As used in this section, "sales and advertising literature" includes any pamphlet, circular, form letter, advertisement or printed advertising communication, films, film strips, television and radio presentations, tape and cassette recordings, and any other public lecture addressed or intended for distribution to and/or delivered to prospective investors including clients or prospective clients of an agent or broker-dealer; provided, however, that "sales and advertising literature" does not include:

(a) Any prospectus used in conjunction with an offer or sale, or both, of securities;

(b) Any individual letter sent to a prospective investor where the issuer has filed a registration statement with the Commissioner relating to the offer or sale, or both, of securities to which the letter relates, provided, however, that the letter shall direct the prospective investor to the prospectus or be accompanied by a copy of the prospectus;

(c) Tombstone advertisements;

(d) Dividend notices, proxy statements and reports to shareholders, the content of which does not pertain to a current offering or sale, or both, of securities of the issuer;

(e) Literature disseminated in connection with the distribution of securities of an investment company registered under § 8 of the Investment Company Act of 1940 (54 Stat.; 15 U.S.C. § 80a-1 et seq);

(f) Literature relating to any securities, offer or sale, or both, of securities, to which is applicable one or more of the exemptions from registration contained within Title IV of the Act;

(g) Written or printed material relating to an offer or sale, or both, of securities pursuant to a:

(1) Qualified employee stock, or stock-option plan, or

(2) Merger, consolidation, exchange offer, reclassification of securities or sale of corporate assets in consideration of the issuance of securities of another issuer;

(h) A written or printed material which is otherwise required to be filed under the registration provisions of the Act.

200.11 Pursuant to the power granted in Section 307 of the District of Columbia Securities Act of 2000 (the "Act"), the Commissioner of the District of Columbia Department of Insurance, Securities and Banking hereby recognizes each of the securities manuals listed in § 200.12 to be a "nationally recognized securities manual" under Title IV, Section 402(2)(D) of the Act and the conditions attached therein. The term "manual" for purposes of this order shall include all commonly recognized formats of publications, including CD-ROM and electronic dissemination over the Internet.

200.12 The Department recognizes the following securities manuals:

(a) Mergent's Industrial Manual;

(b) Mergent's Transportation Manual;

(c) Mergent's Public Utility Manual;

(d) Mergent's Bank and Finance Manual;

(e) Mergent's International Manual;

(f) Standard & Poor's Standard Corporation Descriptions;

(g) Fitch's Individual Stock Bulletin; and

(h) Mergent's OTC Industrial Manual.

History

• AUTHORITY: Unless otherwise note, the authority for this chapter is §16(e) of the District of Columbia Securities Act, P.L. 88-503, 78 Stat, 132, D.C. Code §2-2616(d) (1988 Repl. Vol.).
• SOURCE: Amended by Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001).

26-B DCMR § 201 REGISTRATION BY NOTIFICATION

201.1 Applicants for Registration by Notification shall file with the Commissioner two copies of an application, including a statement demonstrating the applicant's eligibility for Registration by Notification, and a registration statement meeting the requirements of § 302(b) of the Act (D.C. Offical Code § 31-5603.02(b)). The application shall be signed by a duly authorized corporate official.

201.2 The prospectus referred to in § 302(c) of the Act (D.C. Offical Code § 31-5603.02(c)) shall consist of the registration statement. The prospectus shall meet the formal requirements set forth in §§ 210 through 239 of these regulations.

201.3 The registration of securities under § 302 of the Act (D.C. Offical Code § 31-5603.02) will be effective when so ordered by the Director.

201.4 Applicants for Registration by Notification shall pay a filing fee as provided in § 249.1.

History

• SOURCE: Amended by Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001).

26-B DCMR § 202 REGISTRATION BY COORDINATION

202.1 A securities offering for which a registration statement has been filed with the Securities and Exchange Commission ("SEC) under the Securities Act of 1933 may be registered by coordination.

202.2 A registration statement filed under this section shall contain the following information and be accompanied by the following documents and fee:

(a) A completed application Form U-1, Uniform Application to Register Securities, and a statement specifying the amount of securities sold in the District;

(b) An irrevocable consent appointing the Commissioner agent for service of process, executed by the applicant on Form U-2, Uniform Consent to Service of Process;

(c) Two copies of the latest prospectus or offering circular filed under the Securities Act of 1933;

(d) A filing fee as provided in § 249.1;

(e) Any other document or information requested by the Commissioner before the effective date of the offering.

202.3 A registration by coordination shall become effective in the District simultaneously with the registration statement filed with the SEC, provided the following conditions have been met:

(a) All documents and information required by § 241 and any other information required by § 303 of the Act or these regulations for registration by coordination have been filed with the Department;

(b) No stop order is in effect and a proceeding is not pending under § 307 of the Act (D.C. Offical Code § 31-5603.07);

(c) The registration statement has been filed with the Department for at least 10 business days;

(d) A statement of the maximum and minimum proposed offering prices and the maximum underwriting discounts and commissions have been on file with the Department for at least two full business days; and,

(e) The fee required by § 202.2(d) has been received by the Department.

202.4 Any amendments and addendums to the registration statement filed with the SEC shall also be filed promptly with the Department. No fee is required for amendments, except for amendments that increase the number of shares or dollar amount that was originally reported.

202.5 The issuer shall notify the Department in writing when the offering is concluded.

202.6 The Commissioner will permit the use of the Uniform Application Form adopted by the National Association of Securities Commissioners and the Uniform Application to Register Securities (Form U-1) adopted by the Midwest Securities Commissioners Association to satisfy the requirements of § 303(b) of the Act, provided, however, that no instruction, undertaking, or other matter appearing in the forms shall be deemed to modify, or in any way affect, the application of the requirements of the Act and of the rules and regulations under it to the registration.

History

• SOURCE: Amended by Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001).

26-B DCMR § 203 REGISTRATION BY COORDINATION OF SHELF REGISTRATIONS PURSUANT TO SEC RULE 415 OF THE 1933 ACT

203.1 Securities which are qualified to be registered on a Shelf Registration Statement with the SEC pursuant to Rule 415, and which are to be offered in series or offered and sold on a continuous or delayed basis, may be registered by coordination by filing the following documents and fee:

(a) By filing Form U-1, Uniform Application to Register Securities;

(b) Together with any supplements or amendments to the initial registration statement; and

(c) A one-time filing fee with the initial registration statement as provided in § 249.2.

203.2 In all other respects, registrations by coordination of shelf registrations under this section shall comply with the general provisions applicable to registrations by coordination found in § 303 of the Act (D.C. Offical Code § 31-5603.03), and the other applicable provisions of these regulations.

History

• SOURCE: Amended by Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001).

26-B DCMR § 204 REGISTRATION BY QUALIFICATION

204.1 Any securities offering may be registered by qualification.

(a) Except as provided in § 205, an issuer who seeks to register a security by qualification shall file with the Department, the following documents and information:

(1) Form U-1, Uniform Application to Register Securities, (together with all exhibits, which shall include all information required under §§ 304 and 306 of the Act (D.C. Offical Code §§ 31-5603.04 and 31-5603.06));

(2) (A) One copy of an executed SEC Form S-1; or

(B) A completed Form U-7, Small Corporate Offerings Registration Form;

(3) An irrevocable consent appointing the Commissioner agent for the service of process, executed by the applicant on Form U-2, Uniform Consent to Service of Process, and accompanied by Form U-2A, Uniform Corporate Resolution;

(4) Two copies of any prospectus, pamphlet, circular, form letter, advertisement, or other sales literature intended, as of the effective date, to be used in connection with the offering;

(5) A filing fee as provided in § 249.1; and

(6) Any other document or information requested by the Director.

(b) Unless otherwise ordered by the Commissioner, the prospectus which is sent or given to each person to whom an offer is made shall contain all the information contained in the registration statement filed with the Department under subsection (a) of this section. The prospectus shall be written in plain English and presented in a format that is clear and easy to understand, with appropriate headings and subheadings.

(c) An application for registration by qualification shall become effective in the District when so ordered by the Commissioner.

History

• SOURCE: Amended by Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001).

26-B DCMR § 205 SMALL CORPORATE OFFERINGS REGISTRATION

205.1 Applicants that are eligible for small corporate offerings registration may register by using the Form U-7 (Small Corporate Offering Registration Form), if the conditions set forth in this section and in the instructions to Form U-7 are satisfied.

205.2 An application for registration under this section shall be filed with the Commissioner.

205.3 An application for registration under this section shall contain:

(a) All forms and exhibits required by the instructions in the Form U-7:

(b) If the issuer does not make the offering through a registered broker-dealer, an application for issuer agent registration prepared in accordance with § 246, unless the agents are exempt from registration; and

(c) A filing fee as provided in § 249.3.

205.4 An application to register securities under this section shall be prepared in accordance with the instructions set forth in the Form U-7 (Small Corporate Offering Registration Form) adopted by the Financial Industry Regulatory Authority (FINRA), on April 29, 1989, as it may be amended from time to time.

205.5 A completed Form U-7 that has been declared effective by the Commissioner shall serve as the prospectus for an offering registered under this section.

205.6

(a) To be eligible to register securities under this section, the issuer shall satisfy the following conditions:

(1) The issuer is a corporation organized under the laws of the District or one of the states or possessions of the United States;

(2) The issuer engages in, or proposes to engage in, a business other than petroleum exploration or mining or other extractive industries;

(3) The issuer is not an investment company subject to the Investment Company Act of 1940, 15 U.S.C. §§ 80a-1--80a-52;

(4) The issuer is not subject to the reporting requirements of § 13 or § 15(d) of the Securities Exchange Act of 1934, 15 U.S.C. §§ 78m, 78o(d).

(b) To be eligible for registration under this section, an offering shall satisfy the following conditions:

(1) The aggregate offering price in any 12-month period does not exceed $ 1,000,000 for an offering under 17 CFR § 230.504 (SEC Rule 504), or $ 5,000,000 for an offering under 17 CFR § 230.531 through 230.262 (SEC Regulation A), less the aggregate offering price for all securities sold within the 12 months prior to the commencement of, and during, the offering of the securities.

(2) The offering is not a "blind pool" offering or other offering for which the specific business or properties cannot be described at the time of the offering;

(3) The securities are to be offered and sold only on behalf of the issuer and not on behalf of any selling security holder;

(4) If the securities are common stock, the offering price equals or exceeds $ 1.00 per share;

(5) If the securities are options, warrants, or rights for common stock, the exercise price equals or exceeds $ 5 per share;

(6) If the securities are convertible into common stock, the conversion price equals or exceeds $ 5 per share; and

(7) The offering is exempt from registration with the SEC under 17 CFR § 230.501--230.508 (SEC Regulation D, Rules Governing the Limited Offer and Sale of Securities Without Registration Under the Securities Act of 1933).

205.7 An issuer may not register an offering under this section if the issuer, any of its officers, directors, beneficial owners of 10 per cent or more of any class of its equity securities, any promoters currently connected with it in any capacity, any selling agents of the securities to be offered, or any officer, director, or partner of such selling agent:

(a) Within 5 years before the filing of the application for registration under this section, has filed a registration statement which is currently the subject of a stop order under any state's or District's securities law;

(b) Within 5 years before the filing of the application for registration under this section, has been convicted of any felony or misdemeanor in connection with the offer, purchase, or sale of any security or any felony involving fraud or deceit, including, but not limited to, forgery, embezzlement, obtaining money under false pretenses, larceny, or conspiracy to defraud;

(c) Is currently subject to any federal, state, or District administrative enforcement order or judgment?

(1) That was entered within 5 years before the filing of the application for registration under this regulation; and

(2) In which fraud or deceit, including untrue statements of material facts or omissions of material facts, was found;

(d) Is subject to any federal, state, or District administrative enforcement order or judgment that prohibits, denies, or revokes the use of any exemption from registration in connection with the current offer, purchase, or sale of securities; or

(e) Is currently subject to any order, judgment, or decree of any court of competent jurisdiction, entered within 5 years before the filing of the application for registration under this regulation, temporarily, preliminarily, or permanently restraining or enjoining, the party from engaging in or continuing any conduct or practice in connection with the purchase or sale of any security or involving the making of any false filing with a district, state, or federal agency.

205.8 The disqualifications set forth in § 205.7 of this section do not apply if the:

(a) The license of the person subject to the disqualification has not been suspended or revoked, and there are no pending proceedings against the person; and

(b) Form BD or Form U-4 filed with the Commissioner discloses the disqualifying event.

205.9 The Commissioner, by order, may waive a disqualification set forth in § 205.7 if the Commissioner finds that the waiver is consistent with the public interest and within the purposes fairly intended by the policy and provisions of the Act.

History

• SOURCE: Amended by Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001).

26-B DCMR § 206 UNDERTAKING NOT TO SPLIT STOCK

206.1 By execution and filing of the Form U-7, the issuer undertakes not to split its common stock, or declare a stock dividend, for 2 years after the effectiveness of the registration.

206.2 Notwithstanding § 206.1 of this section, an issuer may apply to the Commissioner for approval to split its common stock or declare a stock dividend in connection with a subsequent registered public offering.

History

• SOURCE: Amended by Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001).

26-B DCMR § 207 RESERVED

History

• SOURCE: Amended by Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001).

26-B DCMR § 208 SMALL CORPORATE OFFERINGS REPORTS FILED WITH THE COMMISSIONER

208.1 An issuer that qualifies for a small corporate offering registration shall file quarterly reports with the Department that shall:

(a) Contain the information required by §§ 210 through 239; and

(b) Certify that no changes or amendments were made to the Form U-7 or any sales or advertising materials other than changes or amendments filed with and declared effective by the Commissioner.

208.2 After the registration statement has been declared effective, and while the offering is still in progress, the disclosure form shall be amended or supplemented to reflect material events concerning the issuer or the offering to make the disclosure form accurate and complete. A copy of the disclosure form as changed, revised or supplemented clearly marked to show changes from the previously filed version (including amendments to reflect registration effectiveness in other jurisdictions) shall be filed with the Commissioner. If any of the revisions are of such significance as to materially change the terms of the offering or the financial condition of the company, the disclosure document, as revised or supplemented, shall be recirculated to persons in the District that have previously subscribed, and they shall be given the opportunity to rescind or reconfirm their investment.

208.3 Annual financial reports shall be filed with the Department within 90 days after the close of the issuer's fiscal year for a period of three (3) years following the effective date of the registration. In the event the corporation ceases operation, such financial reports shall continue to be furnished to the Department unless the corporation is dissolved and all remaining assets distributed, if any. In such an event, the issuer shall furnish documentation to the Department to close the file.

208.4 The issuer shall file with the Department any reports that the Commissioner may require.

208.5 The issuer shall file with the Department all sales and advertising literature that the issuer or its agents use in connection with the offering.

History

• SOURCE: Amended by Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001).

26-B DCMR § 209 RESERVED

History

• SOURCE: Amended by Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001).

26-B DCMR § 210 PROSPECTUS

210.1 Sections 210 through 239 prescribe the form and content of the prospectus required to be filed as part of a registration statement for registration of securities by qualification and to be used in connection with the offering of securities so registered.

210.2 A prospectus filed as part of a registration statement for registration of securities by qualification shall contain all the information required by these regulations.

210.3 A prospectus filed with the Securities and Exchange Commission under the Securities Act of 1933 shall be provided to the Department as part of the registration statement for registration of securities by coordination.

210.4 A prospectus filed as part of a registration statement for registration of securities by notification shall contain all the information required by § 302 of the Act.

History

• SOURCE: Amended by Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001).

26-B DCMR § 211 LEGIBILITY OF PROSPECTUS

The prospectus and all notes to the financial statements and other tabular information included therein shall be printed, mimeographed, typewritten, or prepared by any similar process which will result in clear, legible copies. It shall be set in clear Roman type at least as large as 10-point modern type, with financial data or other statistical or tabular information at least as large as 8 point. All type shall be leaded at least 2 points.

History

• SOURCE: Amended by Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001).

26-B DCMR § 212 PRESENTATION OF INFORMATION IN PROSPECTUS

212.1 The prospectus shall contain the information called for by all items contained in §§ 220 through 239 (Form U-7) and shall be answered, except that no reference need be made to inapplicable items, and negative answers to any item may be omitted. None of the other information or documents filed as a part of the registration statement need be included in the prospectus.

212.2 Unless clearly indicated otherwise, information set forth in any part of the prospectus need not be duplicated elsewhere in the prospectus. When it is deemed necessary or desirable to call attention to the information in more than one part of the prospectus, this may be accomplished by appropriate cross-references. Instead of restating information in the form of notes to the financial statements, references may be made to other parts of the prospectus where the information is set forth.

212.3 All information contained in the prospectus shall be set forth under appropriate captions or headings reasonably indicative of the principal subject matter set forth under it.

212.4 Every prospectus shall include in its forepart a reasonably detailed table of contents showing the subject matter of the various sections or subdivisions and the page number on which each section or subdivision begins.

History

• SOURCE: Amended by Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001).

26-B DCMR § 213 DATE OF PROSPECTUS

213.1 Each prospectus used after the effective date of the registration statement shall be dated approximately as of the effective date, provided, however, that a revised or amended prospectus used after the effective date need only bear the date of its issuance.

213.2 Each supplement to a prospectus shall be separately dated with the date of its issuance.

History

• SOURCE: Amended by Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001).

26-B DCMR § 214 EXCHANGE OFFERS

214.1 No offer, sale, exchange or distribution of the securities shall be made pursuant to § 402(19) of the Act until the Commissioner has provided the issuer with a written opinion granting the exemption.

214.2 A request for a written opinion granting an exemption under § 402(19) of the Act shall be accompanied by a fee provided for in § 249.10.

History

• SOURCE: Amended by Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001).

26-B DCMR § 215 PRELIMINARY PROSPECTUS

A prospectus filed as part of a registration statement is a preliminary prospectus until the registration statement has become effective. Every preliminary prospectus shall bear on the outside front cover page the following caption underscored or in red ink, "Preliminary Prospectus", and the following statement, in type as large as that generally in the body of the prospectus:

"A registration statement relating to these securities has been filed with the Securities Bureau of the District of Columbia Department of Insurance, Securities and Banking, but has not yet become effective. Information contained herein is subject to completion or amendment. These securities may not be sold, nor may offers to buy be accepted prior to the time the registration statement becomes effective."

History

• SOURCE: Amended by Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001).

26-B DCMR § 216 REQUIRED LEGEND

Every prospectus shall bear the following legend in bold capital letters on the outside front cover page:

"THESE SECURITIES ARE OFFERED FOR SALE IN THE DISTRICT OF COLUMBIA PURSUANT TO REGISTRATION WITH THE DISTRICT OF COLUMBIA DEPARTMENT OF INSURANCE AND SECURITIES REGULATION, BUT REGISTRATION IS PERMISSIVE ONLY AND DOES NOT CONSTITUTE A FINDING THAT THIS PROSPECTUS IS TRUE, COMPLETE, AND NOT MISLEADING, NOR HAS THE DEPARTMENT OF INSURANCE AND SECURITIES REGULATION PASSED IN ANY WAY UPON THE MERITS OF, RECOMMENDED, OR GIVEN APPROVAL TO THESE SECURITIES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE."

History

• SOURCE: Amended by Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001).

26-B DCMR § 217 USE OF PROSPECTUS

217.1 It is a condition of registration of securities by notification or qualification that a prospectus satisfying the requirements of these regulations shall be sent or given to each person to whom an offer is made.

217.2 When a prospectus is used more than 9 months after the effective date of the registration statement, the information contained in it shall be as of a date not more than 16 months before the use, so far as the information is known to the user of the prospectus or can be furnished by the user without unreasonable effort or expense.

217.3 In addition to the requirements of § 229, if a prospectus becomes misleading or inaccurate in any material respect, its use shall be discontinued, and it shall be revised or supplemented in such a way that it may not be misleading or inaccurate in any material respect. Two copies of a revised or supplemented prospectus shall be promptly filed with the Commissioner. Nothing in this paragraph shall be taken to relieve any person from the requirements of § 217.

History

• SOURCE: Amended by Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001).

26-B DCMR § 218 ADDITIONAL INFORMATION

In addition to the information expressly required to be included in a prospectus or a registration statement by these regulations, or both, there shall be added such further information, if any, as may be necessary in order to make the statements made in a prospectus or a registration statement, or both, in the light of the circumstances under which they are made, not misleading.

History

• SOURCE: Amended by Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001).

26-B DCMR § 219 GUIDELINES

Issuers should consult releases issued by the Director from time to time respecting guidelines as to compliance with the procedural, form and contents requirements for a registration statement and a prospectus set forth in this regulation.

History

• SOURCE: Amended by Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001).

26-B DCMR § 220 DISTRIBUTION SPREAD

220.1 The information called for by the following table shall be given, in substantially the tabular form indicated, on the outside front cover page of the prospectus as to all securities being offered which are to be offered for cash (estimate, if necessary).

Price

Underwriters

Proceeds to

to

discounts and

issuer or

Public

commissions

other persons

Per Unit

...

...

...

Total

...

...

...

220.2 Any variation from the price set forth in the first column of the table at which any proportion of the offering is to be made to any person or class of persons other than the underwriters shall be disclosed following the table with a reference to it in the first column of the table. Specify the person or class and the proposed offering price to that person or class.

220.3 For purposes of this section, "commissions" means all cash commissions or discounts paid or to be paid, directly or indirectly, by the issuer or selling security holders to the underwriters in respect of the sale of the security to be offered. A commission paid or to be paid in connection with the sale of a security by a person in which the issuer has an interest or which is controlled or directed by, or under common control with, the issuer shall be deemed to have been paid by the issuer. Only commissions paid by the issuer or selling security holders are to be included in the table. Commissions paid by other persons shall be set forth following the table with a reference to it in the second column of the table.

220.4 If securities, contracts, or anything else of value (other than cash) is to accrue to the underwriters in connection with the offering, the amount and nature of the considerations shall be set forth following the table with a reference to it in the second column of the table.

220.5 If any finder's fees are to be paid in connection with the offering, the name and address of each recipient of it, together with the amount and nature of the fee, shall be set forth following the table with a reference to it in the second column of the table.

220.6 If the underwriting discounts or commissions are variable, set forth their maximum and minimum amounts in the second column of the table and set forth the maximum and minimum proceeds in the third column of the table. The basis of determining the discounts and commissions shall be set forth following the table with a reference to it in the second and third columns of the table.

220.7 An estimate of the aggregate selling expenses (other than underwriting discounts and commissions and finder's fees) payable by the issuer or selling security holders shall be set forth following the table with a reference to it in the third column of the table. The estimate shall include printing, legal, engineering, accounting and other charges.

220.8 If it is impracticable to state the price to the public, the method by which it is to be determined shall be explained. In addition, if the securities are to be offered at the market, indicate the market involved and the market price as of the latest practicable date.

220.9 If any of the securities being registered are to be offered for the account of security holders, the issuer shall refer on the outside front cover page of the prospectus to the information called for by § 227.

History

• SOURCE: Amended by Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001).

26-B DCMR § 221 PLAN OF DISTRIBUTION

221.1 If the securities being registered are to be offered through underwriters, the issuer shall give the names and addresses of the underwriters, their relationship, if any, to the issuer and state briefly the nature of the underwriters' obligation to take the securities.

221.2 All that is required as to the nature of the underwriters' obligation is whether it is a "firm commitment" under which the underwriters must take and pay for all of the securities, if any are taken, or whether it is merely an agency or "best efforts" arrangement under which the underwriters are required to take and pay for only such securities as they may sell to the public.

221.3 Issuers shall outline briefly the plan of distribution of any securities being registered which are to be offered otherwise than through an underwriter.

History

• SOURCE: Amended by Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001).

26-B DCMR § 222 USE OF PROCEEDS TO ISSUER

222.1 The issuer shall state the principal purposes for which the net proceeds to the issuer from the offering are intended to be used, and the approximate amount intended to be used for each purpose.

222.2 The issuer shall provide details of proposed expenditures are not to be given; for example, there need be furnished only a brief outline of any program of construction or addition of equipment.

222.3 The issuer shall include a statement as to the use of the actual proceeds if they are not sufficient to accomplish the purposes set forth and the order of priority in which they will be applied.

222.4 If any material amounts of other funds are to be used in conjunction with the proceeds, the issuer shall state the amounts and sources of the other funds.

222.5 If any material amount of the proceeds is to be used to acquire assets, otherwise than in the ordinary course of business, the issuer shall briefly describe the assets and give the names of the persons from whom they are to be acquired. The issuer shall state the purchase price of the assets, the names of any persons who have received or are to receive commissions in connection with the acquisition, the amounts of the commissions and any other expense in connection with the acquisition.

History

• SOURCE: Amended by Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001).

26-B DCMR § 223 SALES OTHERWISE THAN FOR CASH

If any of the securities being registered are to be offered otherwise than for cash, the issuer shall state briefly the general purposes of the distribution, the basis upon which the securities are to be offered, the amount of compensation and other expenses of distribution, and by whom they are to be borne.

History

• SOURCE: Amended by Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001).

26-B DCMR § 224 CAPITALIZATION AND LONG-TERM DEBT

224.1 The issuer shall furnish the information called for by the following table, in substantially the tabular form indicated, as to each class of securities of the issuer and each class of securities, other than those owned by the issuer or its totally-held subsidiaries, of all significant subsidiaries of the issuer.

Amount

Amount to be

outstanding

outstanding

Amount

as of a

if all

Title

authorized

specified

securities

of

or to be

date within

registered

class

authorized

90 days

are sold

224.2 Securities held by or for the account of the issuer thereof are not to be included in the amount outstanding, but the amount so held shall be stated in a note to the table.

224.3 If any of such securities were issued within the last 2 years or will be issued for a consideration other than cash at least equal to par value, the issuer shall disclose in appropriate footnotes to the table the amount and kind of the consideration.

History

• SOURCE: Amended by Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001).

26-B DCMR § 225 FINANCIAL STATEMENTS

225.1 The issuer shall furnish in comparative columnar form a profit and loss statement and analysis of surplus for each of the last 3 fiscal years of the issuer (or for the life of the issuer and its immediate predecessors, if less) preceding the date of the balance sheet furnished and for any period subsequent to the latest of the fiscal years and the date of the balance sheet.

225.2 If the prospectus is filed as part of a registration statement for registration of securities by notification, instead of the profit and loss statement and analysis of surplus required in § 225.1, the issuer shall furnish in comparative columnar form a summary of earnings for each of the 2 fiscal years preceding the date of the balance sheet and for any period between the close of the last fiscal year and the date of the balance sheet, or for the period of the issuer's and any predecessor's existence if less than 2 years.

History

• SOURCE: Amended by Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001).

26-B DCMR § 226 ORGANIZATION OF ISSUER

With respect to the issuer and any significant subsidiary of the issuer, the issuer shall state:

(a) The year in which it was organized;

(b) Its form or organization, (such as "a corporation", "an unincorporated association" or other appropriate statement);

(c) The name of the state or other jurisdiction under the laws of which it was organized; and

(d) The address of its principal executive offices.

History

• SOURCE: Amended by Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001).

26-B DCMR § 227 SELLING SECURITY HOLDERS

With respect to each person on whose behalf any part of the offering is to be made in a non-issuer distribution, the issuer shall provide the following information:

(a) His name and address;

(b) The amount of securities of the issuer held by him as of the date of the filing of the registration statement; and

(c) A statement of his reasons for making the offering.

History

• SOURCE: Amended by Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001).

26-B DCMR § 228 DESCRIPTION OF BUSINESS

228.1 The issuer shall briefly describe the business done and intended to be done by the issuer and its significant subsidiaries, and the general development of the business during the past 5 years. If the business consists of the production or distribution of different kinds of products or the rendering of different kinds of services, the issuer shall indicate, insofar as practicable, the relative importance of each product or service, or class of similar products or services, which contributed 15 percent or more to the gross volume of business done during the last fiscal year.

228.2 The issuer shall provide a description, which may not relate to the powers and objects specified in the charter, but to the actual business done and intended to be done.

228.3 In describing developments, the issuer shall provide information to be given as to matters such as the following:

(a) The nature and results of any bankruptcy, receivership, or similar proceedings with respect to the issuer or any of its significant subsidiaries;

(b) The nature and results of any other materially important reorganization, readjustments, or succession of the issuer or any of its significant subsidiaries;

(c) The acquisition of any material amount of assets otherwise than in the ordinary course of business;

(d) Any materially important changes in the types of products produced or services rendered by the issuer and its significant subsidiaries; and

(e) Any materially important changes in the mode of conducting the business, such as fundamental changes in the methods of distribution.

228.4 The issuer shall indicate briefly, to the extent material, the general competitive conditions in the industry in which the issuer and its significant subsidiaries are engaged or intend to engage, and the position of the enterprise in the industry. If several products or services are involved, separate consideration should be given to the principal products or services or classes of products or services.

History

• SOURCE: Amended by Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001).

26-B DCMR § 229 DESCRIPTION OF PROPERTY

229.1 The issuer shall state briefly the location and general character of the principal plants, mines, and other materially important physical properties of the issuer and its significant subsidiaries. If any such property is not held in fee or is held subject to any major encumbrance, so state and briefly describe how it is held.

229.2 The issuer shall provide a description which should be limited to information essential to an investor's appraisal of the securities being registered. In the case of a manufacturing enterprise, for example, the answer should be limited to such over-all statements as will reasonably inform investors as to the suitability, adequacy, and productive capacity of the facilities used in the enterprise. In the case of an extractive enterprise, appropriate information should be given as to production and reserves. Detailed descriptions of the physical characteristics of individual properties, or legal descriptions by metes and bounds, are not required and should not be given.

History

• SOURCE: Amended by Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001).

26-B DCMR § 230 ORGANIZATION WITHIN 3 YEARS

If the issuer was organized within the past 3 years otherwise than as the successor to one or more predecessors, the issuer shall furnish the following information:

(a) The names, addresses, and principal occupations for the past 5 years of the promoters; state the nature and amount of anything of value (including money, property, contracts, options, or rights of any kind) received or to be received by each promoter directly or indirectly from the issuer, and the nature and amount of any assets, services, or other consideration therefore received or to be received by the issuer;

(b) As to any assets acquired or to be acquired by the issuer from a promoter, the amount at which acquired or to be acquired and the principle followed or to be followed in determining the amount. Identify the persons making the determination and state their relationship, if any, with the issuer or any promoter. If the assets were acquired by the promoter within 2 years before their transfer to the issuer, state the cost of it to the promoter; and

(c) A description of any other material interest of a promoter in any material transaction with the issuer or any significant subsidiary effected or proposed to be effected.

History

• SOURCE: Amended by Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001).

26-B DCMR § 231 PENDING LEGAL PROCEEDINGS

231.1 The issuer shall briefly describe any material pending legal proceedings, other than ordinary routine litigation incidental to the business, to which the issuer or any of its subsidiaries is a party, or of which any of their property is the subject. The description shall include the name of the court in which the proceedings are pending, the date instituted and the principal parties to it, and include similar information as to any proceedings known to be contemplated by governmental authorities.

231.2 If the business ordinarily results in actions for negligence or other claims, an action or claim need not be described by the issuer, unless it departs from the normal kind of actions.

231.3 Information need not be given with respect to any proceeding which involves primarily a claim for damages if the amount involved, exclusive of interest and costs, does not exceed 15 percent of the current assets of the issuer and its subsidiaries on a consolidated basis. However, if any proceeding presents in large degree the same issues as other proceedings pending or known to be contemplated, the amount involved in the other proceedings shall be included in computing such percentage.

231.4 Notwithstanding the provisions of §§ 231.2 and 231.3, the issuer shall describe any bankruptcy, receivership, or similar proceeding with respect to the issuer or any of its significant subsidiaries. Any proceeding in which any of the following persons has an interest adverse to the issuer of its subsidiaries shall also be described, including the following:

(a) Any director, officer, or affiliate of the issuer;

(b) Any security holder named in answer to § 237; or

(c) Any person having a material relationship with the director, officer, or security holder.

History

• SOURCE: Amended by Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001).

26-B DCMR § 232 CAPITAL STOCK BEING REGISTERED

232.1 If capital stock is being registered, the issuer shall state the title of the class and furnish the following information:

(a) Dividend rights;

(b) Voting rights;

(c) Liquidation rights;

(d) Pre-emptive rights;

(e) Conversion rights;

(f) Redemption provisions;

(g) Sinking fund provisions; and

(h) Liability to further calls or to assessment by the issuer.

232.2 If the rights of holders of a stock may be modified otherwise than by a vote of a majority or more of the shares outstanding, voting as a class, the issuer shall state and explain briefly.

232.3 The issuer shall outline briefly any restriction on the repurchase or redemption of shares by the issuer while there is any arrearage in the payment of dividends or sinking fund installments. If there is no such restriction, so state.

232.4 The issuer shall provide a brief summary of the pertinent provisions from an investment standpoint is required. A complete legal description of the provisions referred to is not required and should not be given. The issuer need not set forth the provisions of the governing instruments verbatim. Only a succinct resume is required.

232.5 If the rights evidenced by the securities being registered are materially limited or qualified by the rights of any other class of securities, the issuer shall include the information regarding such other securities as will enable investors to understand the rights evidenced by securities being registered. Information need not be given, however, as to any class of securities, all of which will be redeemed and retired, provided appropriate steps to assure the redemption and retirement will be taken before or upon delivery by the issuer of the securities being registered.

History

• SOURCE: Amended by Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001).

26-B DCMR § 233 LONG-TERM DEBT BEING REGISTERED

233.1 If long-term debt is being registered, the issuer shall state the title of the issue and outline any of the following provisions that are relevant:

(a) Provisions with respect to interest, maturity, conversion, redemption, amortization, sinking fund, or retirement;

(b) Provisions with respect to the kind and priority of any lien, restricting the declaration of dividends or requiring the maintenance of any ratio of assets, the creation or maintenance of reserves, or the maintenance of properties; and

(c) Provisions permitting or restricting the issuance of additional securities, the incurring of additional debt, the release or substitution of assets securing the issue, the modification of the terms of the security, and similar provisions.

233.2 The issuer need not describe the provisions permitting the release of assets upon the deposit of equivalent funds, property no longer required in the business, obsolete property, or property taken by eminent domain.

233.3 The issuer shall provide the name of the trustee and the nature of any material relationship with the issuer or any of its affiliates, the percentage of securities of the class necessary to require the trustee to take action, and what indemnification the trustee may require before proceeding to enforce the lien.

233.4 The issuer shall provide a brief summary of the pertinent provisions from an investment standpoint is required. A complete legal description of the provisions referred to is not required and should not be given. The issuer need not set forth the provisions of the governing instruments verbatim. Only a succinct resume is required.

History

• SOURCE: Amended by Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001).

26-B DCMR § 234 OTHER SECURITIES BEING REGISTERED

234.1 If securities other than capital stock or long-term debt are being registered, the issuer shall outline briefly the rights evidenced by it. If subscription warrants or rights are being registered, the issuer shall state the title and amount of securities called for, the period during which and the prices at which the warrants or rights are exercisable.

234.2 The issuer shall provide a brief summary of the pertinent provisions from an investment standpoint is required. A complete legal description of the provisions referred to is not required and should not be given. The issuer need not set forth the provisions of the governing instruments verbatim. Only a succinct resume is required.

History

• SOURCE: Amended by Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001).

26-B DCMR § 235 DIRECTORS AND OFFICERS

235.1 The issuer shall list the names and addresses of all directors and officers of the issuer and all persons chosen to become directors or officers. Indicate all positions and offices with the issuer held by each person named, and the principal occupations during the past 5 years of each officer and each person chosen to become an officer. The issuer shall state the amount and type of securities of the issuer held by each person named as of a specified date within 30 days of the filing of the registration statement, and the amount of the securities covered by the registration statement to which he has indicated his intention to subscribe.

235.2 The issuer shall state whether any person chosen to become a director or officer has not consented to act as such.

History

• SOURCE: Amended by Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001).

26-B DCMR § 236 REMUNERATION OF DIRECTORS AND OFFICERS

236.1 The issuer shall state the amount of the aggregate remuneration which the issuer (together with all predecessors, parents, subsidiaries, and affiliates) paid to, or set aside or accrued for the benefit of all directors and officers as a group during the past 12 months and estimate the remuneration for the next 12 months.

236.2 This item applies to any person who was a director or officer of the issuer at any time during the fiscal year. However, remuneration is not to be included for any portion of the period during which the person was not a director or officer of the issuer.

236.3 To the extent that the remuneration is to be computed upon the basis of a percentage of profits, it will suffice to state the percentage without estimating the amount of profits to be paid.

236.4 The issuer shall state separately the total amount set aside or accrued during the periods pursuant to all pension, retirement or other deferred compensation plans for the benefit of directors or officers.

History

• SOURCE: Amended by Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001).

26-B DCMR § 237 PRINCIPAL HOLDERS OF EQUITY SECURITIES

237.1 The issuer shall furnish the following information, in substantially the tabular form indicated, as to each person who owns of record, or beneficially if known, 10 percent or more of the outstanding shares of any class of equity security of the issuer as of a specified date within 30 days before the date of filing.

(1)

(2)

(3)

(4)

(5)

Title of

Type of

Amount

Percent

Name and Address

Class

Ownership

Owned

of Class

237.2 The issuer shall indicate by footnotes the amount of the securities covered by the registration statement to which any person named in the table has indicated his intention to subscribe.

History

• SOURCE: Amended by Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001).

26-B DCMR § 238 INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS

238.1 The issuer shall describe briefly, and where practicable state the approximate amount of any material interest, direct or indirect, of any of the persons specified below in any material transactions during the last 3 years, or in any material proposed transactions, to which the issuer or any of its subsidiaries was or is to be a party:

(a) Any director or officer of the issuer;

(b) Any security holder named in § 237;

(c) Any person on whose behalf any part of the offering is to be made in non-issuer distribution; and

(d) Any person (other than the issuer or its subsidiaries) with whom any of the foregoing persons had a material relationship.

238.2 The issuer shall state the dates of, the parties to, and the general effect of every management or other material contract made or to be made otherwise than in the ordinary course of business, if it is to be performed in whole or in part at, or after, the filing of the registration statement, or was made within the past 2 years.

History

• SOURCE: Amended by Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001).

26-B DCMR § 239 OPTIONS TO PURCHASE SECURITIES

239.1 The issuer shall furnish the following information as to options to purchase securities from the issuer or any of its subsidiaries, which are outstanding as of a specified date within 30 days before the date of filing, or which are to be created in connection with the offering.

239.2 The issuer shall describe the options, stating the material provisions including the consideration received, or to be received, by the grantor of it and the market value of the securities called for on the granting date. If, however, the options are "restricted stock options" as defined in § 421 of the Internal Revenue Code of 1954 only the following is required:

(a) A statement to that effect;

(b) A brief description of the terms and conditions of the options or the plan pursuant to which they were issued; and

(c) A statement of the provisions of the plan or options with respect to the relationship between the option price and the market price of the securities at the date when the options were granted, or with respect to the terms of any variable price option.

239.3 The issuer shall provide the following information:

(a) The title and amount of the securities called for by the options;

(b) The purchase prices of the securities called for and the expiration dates of the options; and

(c) The market value of the securities called for by the options as of the latest practicable date.

239.4 The issuer shall state the amount of the options held or to be held by each of the following persons:

(a) Any director or officer of the issuer;

(b) Any security holder named in § 237;

(c) Any promoter named in § 237;

(d) Any person on whose behalf any part of the offering is to be made in a non-issuer distribution;

(e) Any underwriter or recipient of a finder's fee;

(f) Any person who holds or will hold 10 percent or more in the aggregate of the options.

239.5 As used in this section, the term "options" as used in this section includes all options, warrants, and rights other than those issued to security holders as such on a pro rata basis.

History

• SOURCE: Amended by Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001).

26-B DCMR § 240 NOTICE FILINGS FOR OFFERINGS OF INVESTMENT COMPANY SECURITIES

240.1 In the case of initial filings, issuers of securities that are federal covered securities under Section 18(b)(2) of the Securities Act of 1933 and that are not otherwise exempt under Section 18(b)(1) of the Securities Act of 1933 shall, prior to offering the securities to residents of the District of Columbia, file:

(a) A Form NF, Uniform Investment Company Notice Filing Form, or its successor;

(b) A Form U-2, a consent to service of process; and

(c) A filing fee as provided in §§ 249.4, 249.5, and 249.6.

240.2 In the case of renewal filings, issuers of securities that are federal covered securities under Section 18(b)(2) of the Securities Act of 1933 and that are not otherwise exempt under Section 18(b)(1) of the Securities Act of 1933 that will continue to offer the securities to the residents of the District of Columbia after the expiration of a notice filing period shall file:

(a) A Form NF, Uniform Investment Company Notice Filing Form,;

(b) A Form U-2, a consent to service of process, or a statement that the previously filed Form U-2 is current; and

(c) A filing fee (including sales report, if applicable) as provided in §§ 249.4 or 249.5.

240.3 In the case of final filings, issuers of securities that are federal covered securities under Section 18(b)(2) of the Securities Act of 1933 and that are not otherwise exempt under Section 18(b)(1) of the Securities Act of 1933 that will not continue to offer the securities to the residents of the District of Columbia after the expiration of the current notice filing period shall file a Form NF that indicates that the subject offering is being terminated or withdrawn, and pay a filing fee for the period (including sales report, if applicable) as provided in §§ 249.4, and 249.5.

240.4 Initial notice filings shall be made before the issuer begins to offer or sell the securities that are the subject of the filing to residents of the District of Columbia. Renewal filings and final filings shall be filed on or before the 60th day following the last date of effectiveness of the filing that is being renewed or is the final filing.

240.5 The effective period for initial notice filings of face amount certificate and open-end management companies shall begin on the later of the date on which the Department receives the last of the items required by § 240.1 for initial filings or the date on which the registration statement for the securities is declared effective by the SEC, and shall end on the last day of the issuer's fiscal year that occurs soonest after the beginning date. The effective period for renewal notice filings of face amount certificate and open-end management companies terms shall be for the twelve months beginning the day after the end of the initial period, provided that the filer complies with the renewal filing requirements in this section.

240.6 The initial effective period for unit investment trusts and closed-end management companies shall be for the twelve months beginning on the later of the date on which the Department receives the last of the items required by § 240.1 or the date on which the registration statement for the securities is declared effective by the SEC. At the time of filing the unit investment trust filer may obtain an eighteen month period of effectiveness by submitting a request for the extended period that is accompanied by an additional fee as provided in § 249.5.

240.7 The issuer shall notify the Department promptly of fundamental corporate changes, changes in the nature of the subject security, changes in the fiscal year of the issuer, name changes, address changes or changes in the name of the contact person or third party filer, by sending a letter to the Director, Securities Bureau, or by filing with the Department a copy of the amended documents filed with the SEC or a revised Form NF.

240.8 Form NF may be filed with the Department in electronic form in compliance with instructions to be issued by the Commissioner.

240.9 Form NF may be executed by an authorized individual by electronic signature in compliance with instructions to be issued by the Commissioner.

History

• SOURCE: Amended by Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001).

26-B DCMR § 241 NOTICE FILING OF SECURITIES COVERED UNDER SECTIONS 18(B)(3) AND 18(B)(4)(A)--(C) OF THE SECURITIES ACT OF 1933

241.1 An issuer that intends to offer or sell federal covered securities under § 18(b)(3) or (b)(4)(A)--(C) of the Securities Act of 1933 shall submit a notice filing with the Department. A notice filing under this section shall contain the following information and be accompanied by the following fees and documents:

(a) A copy of each document filed, if any, with the SEC under the Securities Act of 1933 with respect to the offer or sale of federal covered securities;

(b) Form U-2, Uniform Consent to Service of Process; and,

(c) Pay a filing fee as provided in § 249.7.

History

• SOURCE: Amended by Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001).

26-B DCMR § 242 NOTICE FILING FOR SECURITIES COVERED UNDER SECTION 18(B)(4)(D)--SEC REGULATION D

An issuer of a security that is a federal covered security under Section 18(b)(4)(D) of the Securities Act of 1933 shall submit a notice filing with the Commissioner. A notice filing under this section shall contain the following information and be accompanied by the following documents and fee:

(a) Securities and Exchange Commission Form D;

(b) Form U-2, consent to service of process, within 15 days of the first sale of a federal covered security in the District; and,

(c) Pay a filing fee as provided in § 249.8.

History

• SOURCE: Amended by Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001).

26-B DCMR § 243 NOTICE FILING REQUIREMENT FOR ISSUERS CLAIMING AN EXEMPTION UNDER THE ACT

243.1 Issuers relying upon the exemptions from registration found in §§ 401(7), (8), (10), (12); or §§ 402 (12), (16), (18), or (19) of the Act (D.C. Offical Code § 31-564.01)shall comply with the notice filing and fee requirements of this section. The burden of proving a claim to an exemption or an exception from a definition is upon the person claiming it.

243.2 Except for the exemptions found in the sections referenced in § 243.1, issuers relying upon the exemptions from registration found in §§ 401 and 402 of the Act (D.C. Offical Code §§ 31-5604.01 and 31.5604.02) shall not file any notice, or pay any fee to the Department.

243.3 An issuer relying upon an exemption found in §§ 401(8) or 401(12) of the Act (D.C. Offical Code § § 31-5604.01(8) and 31.5604.01(12))shall file a written notice with the Commissioner at least ten (10) days prior to the first offering of sale pursuant to the exemption. The notice filing under this subsection shall contain the following information:

(a) The identity of the issuer;

(b) The amount and type of securities to be sold pursuant to the exemption;

(c) A description of the use of proceeds of the securities;

(d) The person or persons by whom offers and sales will be made;

(e) An affirmation that a commission or remuneration for soliciting any prospective buyer will not be paid except to a broker-dealer or issuer's agent registered in the District; and

(f) An affirmation that all prospective buyers will receive, before any sale, a disclosure document containing the material terms of the proposed offering.

243.4 The notice filed with the Commissioner pursuant to § 243.3 shall be accompanied by the following:

(a) Offering document, containing material terms of the proposed sale; copies of any sales and advertising literature to be used to sell the securities;

(b) Certified copies of articles of incorporation and bylaws, or documents that serve those purposes;

(c) Evidence of tax exempt status; and, audited financial statements for the most recent fiscal year or calendar year;

(d) Form U-2, Uniform Consent to Service of Process; and

(e) A fee required by § 249.11.

243.5 An issuer relying upon an exemption from registration found in §§ 401(7), (10); or §§ 402(16), (18), or (19) of the Act (D.C. Official Code § 31-5604.01)shall file a written notice with the Commissioner at least twenty (20) days prior to the first offering of sale pursuant to such claim. The notice filing under this subsection shall contain the following information:

(a) The identity of the issuer;

(b) The amount and type of securities to be sold pursuant to the exemption;

(c) A description of the use of proceeds of the securities;

(d) The person or persons by whom offers and sales will be made;

(e) An affirmation that a commission or remuneration or soliciting any prospective buyer will not be paid except to a broker-dealer or issuer's agent registered in the District; and

(f) An affirmation that all prospective buyers will receive, before any sale, a disclosure document containing the material terms of the proposed offering.

243.6 The notice filed with the Commissioner pursuant to § 243.5 shall be accompanied by the following:

(a) Offering document, containing material terms of the proposed sale; copies of any sales and advertising literature to be used to sell the securities;

(b) Form U-2, Uniform Consent to Service of Process; and

(c) A fee required by § 249.11.

243.7 The exemption from registration found in § 402(12)(A) of the Act (D.C. Offical Code § 31-5604.02)shall only be available to issuers that would otherwise be required to file a prospectus with the Department.

243.8 An issuer offering securities pursuant to rule 504 of SEC Regulation D, 17 C.F.R. § 230.504, may use the exemption found in § 402(12)(A) of the Act. Such issuers shall be prohibited from making offers to more than ten (10) persons, during any period of twelve (12) consecutive months. For purposes of calculating the number of persons pursuant to this subsection, the issuer should refer to the definition of "person" found in § 101(23) of the Act.

243.9 An issuer relying upon an exemption found in § 402(12)(A) of the Act (D.C. Official Code § 31-5604.02)shall file a written notice with the Commissioner at least twenty (20) days prior to the first offering of sale pursuant to such claim. The notice filing under this subsection shall contain the following information:

(a) The identity of the issuer;

(b) The amount and type of securities to be sold pursuant to the exemption;

(c) A description of the use of proceeds of the securities;

(d) The person or persons by whom offers and sales will be made;

(e) An affirmation that a commission or remuneration for soliciting any prospective buyer will not be paid except to a broker-dealer or issuer's agent registered in the District; and

(f) An affirmation that all prospective buyers will receive, before any sale, a disclosure document containing the material terms of the proposed offering.

243.10 The notice filed with the Commissioner pursuant to this § 243.9 shall be accompanied by the following:

(a) Offering document, containing material terms of the proposed sale; copies of any sales and advertising literature to be used to sell the securities;

(b) Form U-2, Uniform Consent to Service of Process; and

(c) A fee required by § 249.11.

243.11 Issuers relying on an exemption covered by this section shall not pay any commission or remuneration for soliciting any prospective buyer, except to a broker-dealer or issuer's agent registered in the District.

243.12 Issuers relying on an exemption covered by this section shall provide, prior to any sale, all prospective buyers with a disclosure document containing the material terms of the proposed offering.

243.13 An exemption for an offering made pursuant to this section shall be effective for 1 year from the date that the notification filing is accepted by the Commissioner. An exemption may be extended for successive 1-year periods by complying with the applicable notice filing and fee provisions of this section.

243.14 If an exemption covered by this section is disallowed by the Commissioner, the offering must be registered under Section 302, 303 or 304 of the Act, unless another exemption is available.

243.15 The Commissioner retains the right to take action under the Act against an issuer or other person that fails to comply with the requirements of this section.

History

• SOURCE: Amended by Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001).

26-B DCMR § 244 LIMITED OFFERING EXEMPTION (SEC RULE 505)

244.1 Pursuant to Sections 401 and 402 of the Act (D.C. Offical Code §§ 31-5604.01 and 31-5604.02), transactions involving securities offered or sold in compliance with Rules 501, 502, 503, and 505 of SEC Regulation D, 17 C.F.R. Sec. 230.501 (1990); 17 C.F.R. Sec. 230.502 (1990); 17 C.F.R. Sec. 230.503 (1990); 17 C.F.R. Sec. 230.505 (1990), are exempt from the registration of section 301 of the Act, provided the requirements of section 306(c) of the Act and the following conditions and limitations are met:

(a) No commission, finders fee, or other remuneration shall be paid or given to any dealer, or salesman for soliciting any prospective purchaser in connection with sales of securities in reliance on this exemption.

(b) No exemption under this section shall be available for the securities of any issuer, if the issuer or any of its affiliates:

(1) Is subject to any order, judgment, or decree of any court of competent jurisdiction temporarily or preliminarily restraining or enjoining or is subject to any order, judgment or decree of any court of competent jurisdiction, entered within five years prior to commencement of the offering, permanently restraining or enjoining such person from engaging in or continuing any conduct or practice in connection with the purchase or sale of any security or involving the making of any false filing with any state or District;

(2) Has been convicted within five years prior to commencement of the offering of any felony or misdemeanor in connection with the purchase or sale of any security or any felony involving fraud or deceit including but not limited to forgery, embezzlement, obtaining money under false pretenses, theft by conversion, theft by deception, larceny, or conspiracy to defraud;

(3) Is subject to any order, judgment, or decree issued by any state or District securities administrator, the United States Securities and Exchange Commission, the United States Commodities Futures Trading Commission, or the United States Postal Service in which fraud, deceit or registration violations were found, after notice and opportunity for hearing, if the order was entered within five years prior to the commencement of the offering in reliance upon this exemption; or

(4) Is subject to any order barring or suspending membership in any self-regulatory organization registered pursuant to the Securities Exchange Act of 1934 (48 Stat. 881; 15 U.S.C. § 78a et seq.), if the order was entered within five years prior to the commencement of the offering in reliance upon this exemption.

(c) The disqualification referred to in subparagraph (b) above shall not apply:

(1) If the issuer or its affiliate subject to the disqualification is currently registered or licensed to conduct securities-related business in the jurisdiction where the administrative order or judgment was entered against such issuer or affiliate;

(2) The license of the person subject to the disqualification has not been suspended or revoked, and there are no pending proceedings against the person; or

(3) If the Commissioner, in his discretion, waives the disqualification.

(d) The issuer shall file with the Commissioner a notice of intention to sell using SEC Form D (17 C.F.R. § 239.500), or any successor form, to the extent such information is available, prior to the sale or the receipt, in escrow or otherwise, of consideration from an investor in the District in reliance upon this exemption. Said notice of intention to sell shall be accompanied by the following:

(1) A non-refundable filing fee as provided in § 249.2;

(2) A consent to service of process in Form U-2 which has been executed by the applicant; and

(3) A copy of any prospectus as defined in the Act and these regulations that is to be used in connection with the offer and sale of securities to unaccredited purchasers pursuant to this exemption.

244.2 The exemption provided in this section shall not apply to those transactions offered and sold in reliance under rule 504 of SEC Regulation D, 17 C.F.R. § 230.504.

244.3 In the event the offering is to continue pursuant to this exemption more than twelve months after the date on which the Commissioner issues his certificate, then it shall be necessary for the issuer to file a renewal application prior to the expiration date of the original certificate, containing the following:

(a) A completed SEC Form D; and

(b) A copy of any prospectus as defined in these regulations to be used in connection with the offer and sale of securities to unaccredited purchasers pursuant to this exemption.

244.4 The applicant shall promptly furnish any additional information requested by the Commissioner. A final report is not required unless specifically requested by the Commissioner.

244.5 Any notice on or amendment to SEC Form D required by this section shall be manually signed by a person authorized by the issuer.

244.6 If more than one notice is required to be filed pursuant to this section, notices other than the original notice need only report the information required by Part C and any material change in the facts from those set forth in parts A and B of SEC Form D.

244.7 Any filing pursuant to the exemption provided in this section shall be amended by filing promptly with the Department such information and changes as may be necessary to correct any material misstatement or omission in the filing. Any prospectus required by these regulations that was not prepared at the time of filing, or which materially differs from a prospectus included in the filing, shall be delivered or mailed to the Commissioner prior to its use. There shall be no fees charged for amendments to filings pursuant to this section.

244.8 The Commissioner shall notify the applicant of a deficient filing. This notification shall serve as a certificate of noncompliance, and if the deficiencies are not corrected within 60 days the filing may be deemed abandoned without further notice to the applicant.

244.9 Unless otherwise indicated in these regulations or in conflict with the requirements of sections 306 and 403, the standards, definitions, and conditions imposed by Rules 501, 502, 503, and 505 of SEC Regulation D shall be applicable to offers and sales made in the District pursuant to the Rule.

244.10 Nothing in this section is intended to or should be construed as in any way relieving issuers or persons acting on behalf of issuers from the antifraud provisions of the Act.

244.11 The aggregate number of unaccredited purchasers of securities sold under this exemption shall not exceed 35 purchasers in the District during any 12-month period, exclusive of purchasers acquiring securities that are registered pursuant to the Act.

History

• SOURCE: Amended by Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001).

26-B DCMR § 245 COORDINATED REGISTRATION

The Commissioner may enter into cooperative and reciprocal agreements with securities administrators of this and other jurisdictions in the United States (and Canada and U.S. territories) to participate in a coordinated review of securities offerings in lieu of conducting a separate review.

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001).

26-B DCMR § 246 INITIAL AND RENEWAL REGISTRATION AS ISSUER AGENT

246.1 An applicant for initial registration as an issuer agent shall file with the Commissioner:

(a) An application upon Form U-4 (Uniform Application for Securities Industry Registration or Transfer);

(b) A statement or certificate demonstrating that the applicant has satisfied the examination requirement of section 246.2 of the regulation; and

(c) A fee provided in § 249.9.

246.2 An application for initial registration as an issuer agent shall have passed, with a score of 70 percent or better, the series 63 examination and either the Series 6 or Series 7 examination administered by the NASD unless:

(a) The applicant exclusively engages in the purchase and sale of securities in connection with offerings that are exempt under section 401 of the Act or transactions that are exempt under section 402 of the Act; or

(b) The Commissioner in his discretion waives the examination requirement.

246.3 An applicant for renewal registration as an issuer agent shall file with the Commissioner:

(a) An application on the form as required by the Commissioner; and

(b) A renewal fee as provided in § 249.9.

History

• SOURCE: Amended by Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001).

26-B DCMR § 247 NO ACTION LETTERS AND INTERPRETIVE OPINIONS

247.1 In case of any question concerning the Act, the Director's staff may in his sole discretion entertain a request for a no-action letter or interpretive opinion. If issued, a no-action letter or an interpretive opinion only expresses the current position of the Director with respect to possible enforcement action, and is not binding on the Commissioner or third parties. A request for a no-action letter or interpretive opinion must be in writing and in the format described in SEC Release No. 33-6269, (Procedures Applicable to Request for No-Action and Interpretive Letters, December 5, 1980).

247.2 No person may rely on oral statements by the staff of the Department or represent that the staff or any unit of the Department has taken a no-action position or issued an interpretation based on an oral statement by a staff member.

247.3 The Securities Bureau will maintain all no-action letters and interpretive opinions issued. Copies of such letters may be reviewed in the Department's office and copies thereof obtained upon payment of reasonable costs of duplication.

247.4 A person requesting a no action letter or interpretive opinion shall pay a fee as provided in § 249.10.

History

• SOURCE: Amended by Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001).

26-B DCMR § 248 RESERVED

History

• SOURCE: Amended by Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001).

26-B DCMR § 249 SECURITIES REGISTRATION FEES

249.1 An issuer filing an application for registration by Notification pursuant to § 201, Coordination pursuant to § 202, or Qualification pursuant to § 204 shall pay a filing fee in the amount of 1/10 of 1% of the maximum aggregate offering price with a minimum of $ 500 and maximum of $ 1500.

249.2 An issuer filing an application for registration by Coordination of Shelf Registration pursuant to SEC Rule 415 of the 1933 Act, as provided in § 203 shall pay a fee in the amount of 1/10 of 1% of the maximum aggregate offering price with a minimum of $ 500 and maximum of $ 1500; and the Limited Offering Exemption pursuant to § 244 shall pay a fee in the amount of 1/10 of 1% of the maximum aggregate offering price with a minimum of $ 250 and maximum of $ 1500.

249.3 An issuer filing an application for Small Corporate Offering registration pursuant to § 205 shall pay a fee in the amount of 1/10 of 1% of the maximum aggregate offering price with a minimum of $ 250 and maximum of $ 1000.

249.4 An issuer making a notice filing for offerings of investment company securities pursuant to § 240 shall pay a fee in the amount of a $ 400 non-refundable notice filing fee per class at the time of an initial notice filing, and shall pay an additional amount per class as provided below for the period covered by that notice filing at the time of filing a renewal filing or a final filing as provided in §§ 240.2 and 240.3. At the expiration of a notice filing period, the issuer has the option of paying: (1) an additional flat fee of $ 1300 per class; or (2) an additional fee of 1/10 of 1% of gross sales in the District less the initial payment of $ 400. Issuers that elect option (2) must file a sales report that sets forth the dollar volume of sales of the subject securities to residents of the District for each class for which that option is elected. For example, electing option (2) is shall be required to pay a $ 400 non-refundable fee paid at the time of the initial filing. If gross sales in the District equal $ 900,000, 1/10 of 1% of gross sales equals $ 900. The additional fee would be $ 500 ($ 900 -- 400). If 1/10 of 1% of gross sales is less than $ 400, then no additional fee is required. The renewal fee is $ 400 per class payable at the time of the renewal filing.

249.5 A unit investment trust that requests a notice filing period of 18 months as provided in § 240.6, shall pay an additional fee of $ 200 for a total of $ 600 due at the time of the notice filing. At the expiration of the eighteen month notice filing period, the issuer has the option of paying: (1) a flat fee of $ 1950 per class; or (2) a fee of 1/10 of 1% of gross sales in the District less the initial payment of $ 600. Issuers that elect option (2) must file a sales report that sets forth the dollar volume of sales of the subject securities to residents of the District for each class for which that option is elected.

249.6 As provided in § 240.6, the period of effectiveness of a notice filing for a unit investment trust and closed-end management company shall be 12 months from the effective date of the initial filing, and the anniversary date of that filing for subsequent years, so long as the requirements of § 240 are complied with. The period of effectiveness of face amount certificate and open-end management companies shall expire on the day the issuer's fiscal year ends. If the effective date of the initial notice filing of face amount certificate, and open-end management companies is not the first day of the issuer's fiscal year, the $ 1300 payment that is an option at the end of the notice filing period shall be prorated on the basis of one twelfth of $ 1300 for each month or portion of a month between the effective date of the filing and the expiration date of the filing. For example, if the initial notice filing effective date is June 1, 2001, and the issuer has a fiscal year end of December 31, 2001, the fee under option (1) of § 249.4 would be $ 758.33 (7/12 x $ 1300).

249.7 An issuer filing an application for securities covered under §§ 18(B)(3) and (B)(4)(A) through (B)(4)(C), pursuant to § 241 shall pay a fee in the amount of $ 250 due at the time of notice filing.

249.8 An issuer filing an application for securities covered under §§ 18(B)(4)(D), pursuant to § 242 shall pay a fee in the amount of $ 250 due at the time of notice filing.

249.9 An applicant for initial or renewal registration as an issuer agent license shall pay a fee in the amount of $ 45.00.

249.10 A person requesting a no action letter or interpretive opinion shall pay a fee in the amount $ 250.00.

249.11 An issuer claiming an exemption under § 243 shall pay a fee in the amount of $ 100.00, due at the time of the filing."

249.12 All fees due under §§ 249.1 through 249.11 shall be paid by check or money order made payable to the "D.C. Treasurer".

249.13 There shall be a nonrefundable filing fee of $250.00 for every notice of claim of exemption filed under Section 250.

History

• SOURCE: Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001); as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001); as amended by Final Rulemaking published at 57 DCR 126 (January 1, 2010); as amended by Final Rulemaking published at 61 DCR 11203 (October 24, 2014). District of Columbia Municipal Regulations Securities 26-B DCMR § 249

26-B DCMR § 250 DISTRICT OF COLUMBIA-ONLY SECURITIES OFFERINGS EXEMPTION

250.1 The purpose of this subchapter is to promote and encourage the growth of small business in the District of Columbia by facilitating the ability to raise capital by selling securities to District of Columbia residents. This subchapter will provide an exemption from the requirements of Section 301 of the Securities Act of 2000, D.C. Official Code § 31-5603.01 for issuers who offer such securities exclusively in the District of Columbia. This exemption will be known as the District of Columbia-Only Securities Offerings Exemption.

250.2 Pursuant to D.C. Official Code § 31-5604.03, an offer or sale of a security in the District of Columbia that complies with all of the provisions of Section 250 shall be exempt from the requirements of D.C. Official Code § 31-5603.01, § 31-5603.07, and § 31-5604.05 of the Securities Act of 2000, effective October 26, 2000 (D.C. Law 13-203; D.C. Official Code §§ 31-5601.01 et seq. (2012 Repl.)) ("Act"), if the offer is conducted in accordance with the following requirements:

The issuer must be an entity that is organized under the laws of the District of Columbia (“District”), is authorized to do business in the District, and has its principal place of business in the District;

The transaction must meet the conditions of the federal exemption for intrastate offerings in Section 3(a)(11) of the Securities Act of 1933 (15 U.S.C. § 77c(a)(11)) and Rule 147 adopted under the Securities Act of 1933 (17 C.F.R. § 230.147); and

Unless the purchaser is an accredited investor as defined by § 31-5601.01 of the Act, the issuer shall not accept:

From any single purchaser who is a natural person, more than $10,000, if the purchaser’s annual gross income is less than $100,000;

From any single purchaser who is a natural person, more than $25,000, if the purchaser’s annual gross income is less than $200,000; or

An offer from any purchaser other than a natural person, unless the purchaser’s annual gross income or net worth is more than $1 million ($1,000,000).

History

• SOURCE: Final Rulemaking published at 61 DCR 11203 (October 24, 2014). District of Columbia Municipal Regulations Securities 26-B DCMR § 250

26-B DCMR § 251 SOLICITATION OR ADVERTISING ADDRESSED TO DISTRICT OF COLUMBIA RESIDENTS ONLY

251.1 A general solicitation or advertising may be published in connection with the offer to sell or sale of the securities, provided, that at least 20 calendar days before any sale of the security, the issuer has filed with the Commissioner a notice setting forth the material terms of the proposed sale and copies of any sales and advertising literature to be used and the Commissioner, by order, does not disallow the exemption within 10 business days after the filing is received by the Commissioner.

History

• SOURCE: Final Rulemaking published at 61 DCR 11203 (October 24, 2014). District of Columbia Municipal Regulations Securities 26-B DCMR § 251

26-B DCMR § 252 CASH AND CONSIDERATION LIMITS

252.1 The sum of all cash and other lawful consideration to be received for all sales of the securities in reliance on the exemption under this subsection shall not exceed the following amounts:

$500,000, if the issuer has financial statements, including balance sheets, income statements and cash flow statement for the past three years, or as much of that time as the issuer has been in operation, that are certified by the principal executive officer to be true and complete in all material respects.

$1,000,000, less the aggregate amount received for all sales of securities by the issuer within the 12 months before the first offer or sale made in reliance on the exemption under this subsection, if the issuer has undergone a financial review of the financial statements of its most recently completed fiscal year, which complies with generally accepted accounting principles.

$2,000,000, less the aggregate amount received for all sales of securities by the issuer within the 12 months before the first offer or sale made in reliance on the exemption under this subsection, if the issuer has undergone an audit of the financial statements of its most recently completed fiscal year, which complies with generally accepted accounting principles.

252.2 An offer or sale to an officer, director, partner, trustee, or individual occupying similar status or performing similar functions with respect to the issuer or to a person owning 10 percent or more of the outstanding shares of any class or classes of securities of the issuer does not count toward the monetary limitation in subparagraphs 252.1(a), (b), and (c).

252.3 No offer or sale of a different class or series of security shall have been made by the issuer in reliance on the exemption under this subsection during the immediately preceding 12-month period.

History

• SOURCE: Final Rulemaking published at 61 DCR 11203 (October 24, 2014). District of Columbia Municipal Regulations Securities 26-B DCMR § 252

26-B DCMR § 253 FILING REQUIREMENTS

253.1 The issuer or applicant shall file the following documents with the Commissioner no later than 20 calendar days prior to offer or sale of any offering made in reliance on the exemption under this subsection.

253.2 A written notice of claim of exemption from registration, specifying that the issuer will be conducting an offering in reliance on the exemption under this subsection, accompanied by the filing fee set forth in Section 249.

253.3 A copy of the offering document to be provided to prospective investors in connection with the offering, containing all of the following:

A description of the company, the type of entity, the address and telephone number of its principal office, its history, its business plan, and the intended use of the offering proceeds, including any amounts to be paid, as compensation or otherwise, to any owner, executive officer, director, managing member, or other person occupying a similar status or performing similar functions on behalf of the issuer;

The identity of all persons owning more than 10 percent of the ownership interests of any class of securities of the company;

The identity of the executive officers, directors, managing members, and other persons occupying a similar status or performing similar functions in the name of and on behalf of the issuer, including their titles and their prior experience;

For persons reported in (a) and (b), each such individual will provide to the Department on a confidential basis, an affidavit in the form of Attachment A, which includes the date of birth, address and social security number of the individual and a statement signed under penalty of perjury that the individual is not disqualified from participating in this offering;

The terms and conditions of the securities being offered and of any outstanding securities of the company; the amount of securities being offered; either the percentage ownership of the company represented by the offered securities or the valuation of the company implied by the price of the offered securities; the price per share, unit, or interest of the securities being offered; any restrictions on transfer of the securities being offered; and a disclosure of any anticipated future issuance of securities that might dilute the value of securities being offered;

The identity of any person who has been or will be retained by the issuer to assist the issuer in conducting the offering and sale of the securities, excluding persons acting solely as accountants or attorneys and employees whose primary job responsibilities involve the operating business of the issuer rather than assisting the issuer in raising capital;

For each person identified as required under subparagraph (ii)(E), a description of the consideration being paid to the person for such assistance. Any such consideration must be paid into a registered bank account;

A description of any litigation, legal proceedings, or pending regulatory action involving the company or its executive officers;

Any additional information material to the offering, including, if appropriate, a discussion of significant factors that make the specific offering speculative or risky. This discussion shall be concise and organized logically and may not be limited to risks that could apply to any issuer or any offering under this section. There must be set forth under an appropriate caption, a carefully organized series of short, concise paragraphs, summarizing the most significant factors that make the offering speculative or substantially risky. Issuers should avoid generalized statements and include only factors that are specific to the issuer;

The issuer’s business plan for the next five fiscal years;

The issuer’s financial statements, for the three most recent fiscal years, or for as much time as the issuer has been in existence, if less than three years;

A statement of the issuer’s proposed use of funds to be derived from the offering;

All sales material that is distributed or made available to potential purchasers during the offering period;

If any material change occurs in the information that an issuer submits to the Commissioner in a statement filed under subparagraph (ii), the issuer shall, within 5 calendar days of the change, notify the Commissioner and make corresponding changes to the disclosures in the offering document; and

An escrow agreement with a bank, savings bank, savings and loan association, or credit union chartered under the laws of this district or an agency of the federal government in which all investor funds will be deposited into an interest-bearing account, providing that all offering proceeds, plus accrued interest, will be released to the issuer only when the aggregate capital raised from all investors is equal to or greater than the offering amount specified in the disclosure document, and all the funds so released are used in accordance with the disclosure document, provided, if that target offering amount is not raised by the time stated in the disclosure document, the depository institution shall refund all investor funds raised in the offering, with accrued interest.

History

• SOURCE: Final Rulemaking published at 61 DCR 11203 (October 24, 2014). District of Columbia Municipal Regulations Securities 26-B DCMR § 253

26-B DCMR § 254 DISQUALIFICATIONS

254.1 An issuer is not eligible for this exemption if, either before or as a result of the offering, an investment company, as defined in Section 3 of the Investment Company Act of 1940 (15 U.S.C. § 80a-3), or an entity that would be an investment company but for the exclusions provided in Section 3 (c) of the Investment Company Act of 1940 (15 U.S.C. § 80a-3(c)), or subject to the reporting requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m or 78o (d)), or a development stage company that either has no specific business plan or purpose or has indicated that its business plan is to engage in a merger or acquisition with an unidentified company or companies, or other entity or person.

254.2 Neither the issuer nor any of the officers, shareholders, employees or contractors referred to in this rulemaking would be disqualified from participating in an offering under Regulation A under the Securities Act of 1933, by virtue of 17 C.F.R. Section 230.262, as Section 230.262 may be amended from time to time.

History

• SOURCE: Final Rulemaking published at 61 DCR 11203 (October 24, 2014). District of Columbia Municipal Regulations Securities 26-B DCMR § 254

26-B DCMR § 255 ADDITIONAL REQUIREMENTS FOR ISSUERS

255.1 An offering document shall be delivered to each offeree at least 24 hours prior to any sale of securities in reliance upon the District of Columbia intrastate exemption. The offering document must:

Inform all prospective purchasers of securities offered under this subsection that the securities have not been registered under federal or district securities law and that the securities are subject to limitations on resale.

Shall display the following legend conspicuously on the cover page of the disclosure document:

“IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE ISSUER AND THE ISSUER’S DISCLOSURE STATEMENT, INCLUDING THE TERMS OF THE OFFERING AND THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES REGULATOR OR THE DEPARTMENT OF INSURANCE, SECURITIES AND BANKING OR OTHER REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED BY SUBSECTION (e) OF SEC RULE 147 (17 C.F.R. § 230.147(e)) AS PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE APPLICABLE DISTRICT OF COLUMBIA SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.”

The offering document must be signed by a duly authorized representative of the issuer who by such action shall certify that the issuer has made reasonable efforts to verify the material accuracy and completeness of the information therein contained.

255.2 An issuer shall maintain records of all offers and sales of securities and shall provide ready access to the records to the Department, upon request.

255.3 An issuer of a security, the offer and sale of which is exempt under this section, shall provide, free of charge, an annual report to the issuer's investors and shall file a copy of the report with the Department, for each of the three fiscal years of the issuer, of which the first ends first after the offering is begun. An issuer may satisfy the delivery requirement of this subsection by making the information available on the issuer’s website, if the information is made available within 60 days after the end of each fiscal year and remains available until the succeeding annual report is issued. The report shall contain all of the following:

(a) Compensation received by each director and executive officer, including cash compensation earned since the previous report and on an annual basis and any bonuses, stock options, other rights to receive securities of the issuer or any affiliate of the issuer, or other compensation received;

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(b) An analysis by management of the issuer of the business operations and financial condition of the issuer;

(c) Operating results and financial statement; AND

(d) A statement of the use of the proceeds of the offering.

255.4 All statements and representations made in filings with the Department by the issuer and the executive officers and more than ten percent (10%) shareholders of the issuer in connection with this offering shall be subject to Section 502 of the Securities Act of 2000, D.C. Official Code § 31-5605.02, and the Department may bring enforcement actions under Sections 602 or 603 of the Act or refer the violations to the US Attorney for the District of Columbia or the Attorney General of the District of Columbia pursuant to Section 604 of the Act. Purchasers of the securities offered under this exemption may bring actions under Section 607 of the Act for violations of the Act or these regulations.

History

• SOURCE: Final Rulemaking published at 61 DCR 11203 (October 24, 2014). District of Columbia Municipal Regulations Securities 26-B DCMR § 255

26-B DCMR § 256 OFFERINGS THROUGH INTERNET SITES

256.1 The following requirements apply to any offer or sale of securities through Internet sites pursuant to the exemption:

Any person acting as an Internet site operator must be an issuer, broker-dealer licensed in the District, or a Funding Portal that is in compliance with all District, SEC and FINRA requirements, including if it is a Funding Portal, making any required notice filings with the Department of Insurance, Securities and Banking.

Internet site operators must comply with all District, SEC and FINRA requirements applicable to intrastate offerings through the internet.

Internet site operators shall maintain records of all offers and sales of securities effected through its Internet site.

History

• SOURCE: Final Rulemaking published at 61 DCR 11203 (October 24, 2014). District of Columbia Municipal Regulations Securities 26-B DCMR § 256

26-B DCMR § 299 DEFINITIONS

As used in this chapter, the following terms shall have the meanings indicated:

Act shall mean the Securities Act of 2000, effective September 29, 2000 (D.C. Law 13-203; 47 DCR 7837; D.C. Official Code §§ 31-5601.01 et seq. (2001 ed.)).

Affiliate of, or person "affiliated" with, a specified person, is a person who directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the person specified.

Agent has the same meaning as in the Act.

Audit shall mean an examination of the financial statements by an independent accountant in accordance with generally accepted auditing standards, as may be modified or supplemented by the Commission, for the purpose of expressing an opinion thereon.

Issuer agent means an agent, other than a broker-dealer agent, who represents an issuer in effecting or attempting to effect the purchase or sale of securities, and who is not exempt from registration under Title II of the Act.

Blind pool offering means an offering in which either:

(A) The offering materials do not describe specific operational plans.

(B) Eighty per cent or more of the net offering proceeds are not specifically allocated for the purchase, construction, or development of identified property or products, for the payment of indebtedness or overhead expenses, or for other activities set forth in the issuer's business plan.

Control (including the terms "controlling," "controlled by" and "under common control with") means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise.

Director means any director of a corporation or any person performing similar functions with respect to any organization whether incorporated or unincorporated.

Equity security means any:

(A) Stock or similar security;

(B) Security convertible, with or without consideration, into such a security, or carrying any warrant or right to subscribe to or purchase such a security; or

(C) Such warrant or right.

Executive officer means the president, any vice president in charge of a principal business unit, division or function (such as sales, administration or finance), any other officer who performs a policy making function, or any other person who performs similar policy making functions for the issuer. Executive officers of subsidiaries may be deemed executive officers of the issuer if they perform such policy making functions for the issuer.

Financial Review means a limited inquiry and analytical procedure of much narrower scope than an audit, undertaken by a CPA for the purpose of expressing limited assurance that financial statements are presented in accordance with generally accepted accounting principles (“GAAP”).

Funding portal means any person acting as an intermediary in a transaction involving the offer or sale of securities for the account of others, solely pursuant to Section 4(6) of the Securities Act of 1933 (15 U.S.C.§ 77d(6)), that does not—

Offer investment advice or recommendations;

Solicit purchases, sales, or offers to buy the securities offered or displayed on its website or portal;

Compensate employees, agents, or other persons for such solicitation or based on the sale of securities displayed or referenced on its website or portal;

Hold, manage, possess, or otherwise handle investor funds or securities; or

(E) Engage in such other activities as the Securities Exchange Commission, by rule, determines appropriate.’’

Material when used to qualify a requirement for the furnishing of information as to any subject, limits the information required to those matters as to which an average prudent investor reasonably ought to be informed before purchasing the security registered.

Officer means a president, vice-president, secretary, treasurer or principal financial officer, comptroller or principal accounting officer, and any other person performing similar functions with respect to any organization, whether incorporated or unincorporated.

Predecessor means a person, the major portion of the business and assets of which another person acquired in a single succession, or in a series of related successions, in each of which the acquiring person acquired the major portion of the business and assets of the acquired person.

Principal office means the location of the primary office of a business where the business and financial records are kept and/or where executive level management employees work.

Promoter includes any person who:

(A) Acting alone or in conjunction with one or more other persons, directly or indirectly takes initiative in founding and organizing the business or enterprise of an issuer;

(B) In connection with the founding and organizing of the business or enterprise of an issuer, directly or indirectly receives in consideration of services or property, or both services and property, 10 percent or more of any class of securities of the issuer or 10 percent or more of the proceeds from the sale of any class of securities. However, a person who receives the securities or proceeds either solely as underwriting commissions or solely in consideration of property may not be deemed a promoter within the meaning of this subsection if the person does not otherwise take part in founding and organizing the enterprise.

Significant subsidiary means a subsidiary meeting any one of the following conditions:

(A) The assets of the subsidiary, or the investments in and advances to the subsidiary by its parent and the parent's other subsidiaries, if any, exceed 15 percent of the assets of the parent and its subsidiaries on a consolidated basis.

(B) The sales and operating revenues of the subsidiary exceed fifteen percent (15 %) of the sales and operating revenues of its parent and the parent's subsidiaries on a consolidated basis;

(C) The subsidiary is a parent of one or more subsidiaries and, together with the subsidiaries would, if considered in the aggregate, constitute a significant subsidiary.

Subsidiary of a specified person is an affiliate controlled by that person directly, or indirectly through one or more intermediaries.

Succession means the direct acquisition of the assets comprising a going business, whether by merger, consolidation, purchase, or other direct transfer. The term does not include the acquisition of control of a business, unless followed by the direct acquisition of its assets. The terms "succeed" and "successor" have meanings correlative to the foregoing.

History

• SOURCE: Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001); as amended by Final Rulemaking published at 61 DCR 11203 (October 24, 2014). District of Columbia Municipal Regulations Securities 26-B DCMR § 299

26-B3 RULES OF PRACTICE AND PROCEDURES FOR HEARINGS

26-B DCMR § 300 APPLICABILITY

300.1 These rules apply to administrative hearings to be conducted pursuant to the authority in §§ 207, 307, 601 and 602 of the Securities Act of 2000, effective October 26, 2000 (D.C. Law 13-203; D.C. Official Code §§ 31-5602.07, 31-5603.07, 31-5606.01, and 31-5606.02).

300.2 In any proceeding, the Commissioner may, for good cause shown and in the interest of justice or to prevent hardship, waive any provision of this chapter, which is not required by any applicable statute after duly advising the parties of the intention to do so.

History

• SOURCE: As amended by final rulemaking published at 49 DCR 9285 (October 11, 2002).

26-B DCMR § 301 DELEGATION OF HEARING AUTHORITY

301.1 The Commissioner may, in his or her discretion, delegate authority to conduct a hearing to a hearing officer. The Commissioner shall serve a notice of delegation on all parties and on the hearing officer.

301.2 The designated hearing officer shall issue, within 20 days of the close of the hearing, a proposed decision and order that includes proposed findings of fact and conclusions of law.

301.3 The Commissioner may, at his or her discretion, revoke all or part of the authority delegated to the hearing officer. If only part of the delegation has been revoked, the Commissioner shall specify in the order of revocation the portions of the matter for which the delegation has been revoked. The revocation order shall be effective on the date the order was signed by the Commissioner, unless a different date appears in the order.

301.4 The final decision issued by the Commissioner or proposed decision issued by the designated hearing officer shall reflect the revocation of delegation, and a copy of the revocation order shall be included as part of the record, and served on all parties to the proceeding.

History

• SOURCE: As amended by final rulemaking published at 49 DCR 9285 (October 11, 2002).

26-B DCMR § 302 TIME, PLACE OF FILING, AND COMPUTATION OF TIMING

302.1 Papers required or permitted to be filed under this chapter shall be filed with the Department of Insurance, Securities and Banking, 810 First Street, NE, Suite 701, Washington, D.C. 20002, or such other places as the Commissioner may designate.

302.2 Unless otherwise specifically provided by law or these rules, computation of any time period prescribed by these rules or by an order of the Commissioner begins with the first day following the act or event that initiates the time period. If the last day of the time period so computed is a Saturday, Sunday, District of Columbia holiday, or any other day on which the Department is closed, in which event the period runs until the end of the next business day.

302.3 If a notice or other filing is served by mail and the party served is entitled or required to take some action within a prescribed time period after service:

(a) The date of mailing is the date of service; and

(b) Three (3) days are added to the prescribed time period.

302.4 Except where time periods are prescribed by statute, when an act is required or allowed to be done at or within a specific time, the Commissioner, at his or her sole discretion, may order the period enlarged.

302.5 Except where time periods are prescribed by statute, the Commissioner may order an enlargement of time made pursuant to a motion that is filed with the Commissioner before the expiration of the period prescribed, for good cause shown.

History

• SOURCE: As amended by final rulemaking published at 49 DCR 9285 (October 11, 2002).

26-B DCMR § 303 SUBPOENAS

303.1 The Commissioner may issue subpoenas for the attendance of witnesses, or the production of books, papers, records, or other documents at any hearing.

303.2 Subpoenas issued pursuant to this section shall be under seal of the Commissioner, and shall describe the document or name the person ordered to be produced, or required to attend the hearing.

303.3 A subpoena may be served in the same manner as in, and by any person authorized by the Rules of Civil Procedure of the Superior Court of the District of Columbia. A person serving a subpoena shall note the manner, place, and time of service in an affidavit, the original of which shall be made part of the official record.

History

• SOURCE: As amended by final rulemaking published at 49 DCR 9285 (October 11, 2002).

26-B DCMR § 304 NOTICE OF INTENT TO ISSUE ORDERS TO DENY, SUSPEND, REVOKE, FINE, REQUIRE RESTITUTION, AND SUMMARY AND PERMANENT CEASE AND DESIST ORDERS

304.1 A formal disciplinary action shall commence on the date the Department issues a notice of intent to issue an order to deny, suspend, revoke, fine, or require restitution, or a summary cease and desist order. The Department may also initiate an action for the entry of a permanent order to cease and desist by issuing a notice of intent.

304.2 The Commissioner shall serve the notice of intent or summary cease and desist order upon each respondent named in the notice or order. Service may be made by personal service or by registered or certified mail.

304.3 If the Commissioner is unable to serve any respondent with a summary cease and desist order or notice of intent, proper service may be made by serving the Commissioner as attorney for service of process in accordance with D.C. Official Code § 31-5607.06.

304.4 In addition to any contents required by statute, a summary cease and desist order or notice of intent shall advise the respondent of the:

(a) Respondent's right to a hearing;

(b) Time period within which the respondent must request a hearing;

(c) Respondent's obligation to file an answer; and

(d) Effect of a failure to file an answer and to request a hearing.

304.5 The applicant for licensure shall have the burden of proof in a notice of intent hearing when the Commissioner has proposed to deny an application for licensure.

304.6 The Department shall have the burden of proof in a hearing involving a notice of intent to suspend, revoke, require restitution, fine, or summary cease and desist order when the Commissioner has proposed to take disciplinary action against a licensee.

304.7 A respondent shall file with the Commissioner a written answer to a notice of intent or summary cease and desist order within ten (10) days of service of the order and within five (5) days of service of any amended order. The parties and the staff of the Department may agree to extend the time for filing the answer up to 30 days. Any additional extension of time may only be granted by order of the Commissioner.

304.8 The answer shall admit or deny each factual allegation in the notice of intent or summary cease and desist order and shall set forth affirmative defenses, if any. A respondent without knowledge or information sufficient to form a belief as to the truth of an allegation shall so state.

304.9 The answer shall indicate whether the respondent requests a hearing concerning the notice of intent or summary cease and desist order.

304.10 If a respondent fails to file a timely answer, the allegations of the notice of intent shall be deemed admitted, and the Commissioner may issue a proposed or final decision adverse to that respondent.

History

• SOURCE: As amended by final rulemaking published at 49 DCR 9285 (October 11, 2002).

26-B DCMR § 305 RESERVED

History

• SOURCE: As amended by final rulemaking published at 49 DCR 9285 (October 11, 2002).

26-B DCMR § 306 RESERVED

History

• SOURCE: As amended by final rulemaking published at 49 DCR 9285 (October 11, 2002).

26-B DCMR § 307 RESERVED

History

• SOURCE: As amended by final rulemaking published at 49 DCR 9285 (October 11, 2002).

26-B DCMR § 308 CONDUCT OF HEARINGS

308.1 The Commissioner shall preside at all hearings unless the Commissioner has delegated his or her authority to conduct the hearing to a hearing officer in accordance with these rules.

308.2 All hearings shall be open to the public. The Commissioner, for good cause shown, may grant a request by a party to keep confidential any proprietary or personal information introduced as evidence in a hearing.

308.3 The proceedings shall be handled in the following manner:

(a) The Commissioner shall call the hearing to order;

(b) The Commissioner shall explain briefly the purpose and nature of the hearing and the issues involved;

(c) The Commissioner may allow the parties to present preliminary matters;

(d) The parties may make opening statements;

(e) The Commissioner shall state the order of the presentation of evidence;

(f) Witnesses shall be sworn or put under affirmation to tell the truth;

(g) The parties may present closing summations and arguments; and

(h) The Commissioner shall exclude any irrelevant, immaterial, and unduly repetitious evidence.

308.4 During the hearing, the Commissioner:

(a) Shall administer the oath or affirmation to each witness;

(b) Shall rule on the admissibility of evidence;

(c) Shall maintain order and take such action as necessary to avoid delay in the conduct of the hearing; and

(d) May question any witness at any time as to any matter that the Commissioner considers relevant and material to the proceeding.

308.5 On a genuine issue of relevant fact necessary to the determination of a contested case, each party may:

(a) Call witnesses;

(b) Offer direct evidence;

(c) Cross-examine witnesses; and

(d) Make opening and closing statements.

308.6 The Commissioner may take official notice of a fact, which may be judicially noticed by the District of Columbia courts and may take official notice of general, technical or scientific facts within his or her specialized knowledge or experience. The Commissioner shall notify all parties of the material so noticed and shall permit a party, upon timely request, to contest the facts noticed. The Commissioner may use his or her technical experience, technical competence, and specialized knowledge in the evaluation of the evidence presented.

308.7 The Commissioner may impose sanctions on a party that does not comply with his or her orders, including entering orders for decision on one or more issues, limiting the introduction of evidence or a party's participation in the proceeding, and addressing other matters he or she deems appropriate.

History

• SOURCE: As amended by final rulemaking published at 49 DCR 9285 (October 11, 2002).

26-B DCMR § 309 APPEARANCE AT PUBLIC HEARING

309.1 All persons present at a hearing shall conduct themselves in a manner consistent with the standards of decorum commonly observed in the District of Columbia courts. The Commissioner may issue orders appropriate to maintain order, including the exclusion of a disorderly person from the hearing. If the person excluded is a party or its representative, the Commissioner may decide against the party with prejudice.

309.2 In a proceeding before the Commissioner, an individual may appear in his or her own behalf; a receiver or trustee may appear in such capacity; a general partner of a partnership may represent the partnership; an officer or director of a corporation may represent the corporation; an officer or director of an association may be represent the association; and an official of any District, Federal, or State governmental agency may represent such agency.

309.3 A party has the right to waive the right to be present at the hearing, and may be represented by counsel who shall be licensed by the highest court of the District of Columbia or any state.

History

• SOURCE: As amended by final rulemaking published at 49 DCR 9285 (October 11, 2002).

26-B DCMR § 310 FAILURE TO APPEAR

310.1 If a party fails to appear at the hearing, either personally or through counsel, the Commissioner may proceed to hold the hearing in that party's absence.

310.2 The Commissioner may also hold the absent party in default and may issue a proposed or final decision and order against the defaulted party.

310.3 A party defaulted as a result of a failure to appear at a hearing may file a written motion, within five days of the service of the order of default, requesting reconsideration by the Commissioner. The motion shall state the grounds for the request, and include a proposed order.

History

• SOURCE: As amended by final rulemaking published at 49 DCR 9285 (October 11, 2002).

26-B DCMR § 311 PREHEARING CONFERENCES

311.1 The Commissioner may require parties to appear at a specified date, time, and place for a pre-hearing conference for the purpose of addressing the following matters:

(a) Simplification of issues;

(b) Admissions or stipulations of fact;

(c) Requests for official notice;

(d) Discovery disputes, where discovery is expressly allowed by statute, or by order of the Commissioner;

(e) Preliminary motions;

(f) Admissibility of evidence;

(g) Order of presentation;

(h) Limitation of the number of witnesses;

(i) Exchange of prepared testimony and exhibits between the parties;

(j) Scheduling; and

(k) Other matters that will promote the orderly and efficient conduct of the hearing.

311.2 The Commissioner shall make any action taken at a pre-hearing conference part of the record.

History

• SOURCE: As amended by final rulemaking published at 49 DCR 9285 (October 11, 2002).

26-B DCMR § 312 RECORD OF PROCEEDINGS

312.1 The Department shall cause all oral proceedings, including testimony, to be recorded by a stenographer or by tape recorder or other device. The recording of the proceedings, which need not be transcribed, shall be maintained in the custody of the Department. If the Commissioner orders that the proceeding be transcribed by an official court reporter, the respondent shall bear the costs of such recording of the proceeding. If the proceeding is recorded only by audio tape, the cost of any subsequent preparation of a transcript of the proceeding from the audio tape, for any reason, including an appeal by the respondent, shall be borne by respondent, and two complete copies of the transcript shall be provided to the Commissioner at the respondent's expense.

312.2 The record of a hearing shall include:

(a) All pleadings, motions, orders, and related papers filed with the Commissioner;

(b) All documentary and tangible evidence;

(c) A statement of matters officially noticed;

(d) Recordings and any transcripts of oral proceedings;

(e) The findings of fact and conclusions of law proposed by each party;

(f) Any exceptions filed by the parties and the Commissioner's rulings on those exceptions;

(h) If a case has been delegated to a hearing officer for a proposed decision:

(1) The notice of delegation,

(2) Any notice of revocation,

(3) The proposed decision, including proposed findings of fact and proposed conclusions of law, of the hearing officer,

(4) Any exceptions filed by the parties,

(5) The Commissioner's rulings on any exceptions and proposed findings of fact or conclusions of law, and

(6) Any additional information or documentation submitted to the Commissioner by the parties;

(g) The final findings of fact, conclusions of law, and final decision and order of the Commissioner; and

(j) Other documents or material placed in the record as required by law or at the discretion of the Commissioner.

312.3 Upon compilation, the record shall be available for public inspection at the Department during normal business hours unless the contents are otherwise protected by law, or by order of the Commissioner.

312.4 The Department, upon request of any person, shall arrange for a copy of the record to be made, if the requesting person pays in advance to the Department the estimate of the reasonable cost of making the copy. The copy may be certified by the Commissioner upon request by any person.

History

• SOURCE: As amended by final rulemaking published at 49 DCR 9285 (October 11, 2002).

26-B DCMR § 313 MOTIONS AND OTHER PLEADINGS: COMMUNICATIONS WITH THE COMMISSIONER

313.1 Except by leave of the Commissioner during a hearing, a party seeking an order or other relief or action from the Commissioner regarding a pending matter that is the subject of public hearing, shall file a written motion with the Commissioner, which shall become part of the public record.

313.2 Responses to written motions shall be filed with the Commissioner no later than ten (10) calendar days after the motion has been served.

313.3 All motions and responses shall be accompanied by a memorandum setting forth:

(a) a statement of the facts;

(b) legal points and authorities in support thereof; and

(c) a proposed order.

313.4 No rejoinders or replies to responses will be accepted without leave of the Commissioner.

313.5 The Commissioner may, when deemed necessary, act upon a motion at any time without awaiting responses.

313.6 Unless otherwise ordered by the Commissioner, no hearing shall be convened on motions.

313.7 Any person who is seeking to inform the Commissioner of relevant information regarding a pending hearing, but is not seeking any relief in the form of an order, shall so inform the Commissioner by filing such information in the form of a typewritten letter, which shall become part of the public record. The person filing such letter shall serve it on all parties to the proceeding.

313.8 Any person filing a motion, pleading, letter, or other document shall sign and date the filing and include the address and telephone number of the filing party. The document shall contain a certification of service indicating that the filing has been served on all parties to the proceeding.

History

• SOURCE: As amended by final rulemaking published at 49 DCR 9285 (October 11, 2002).

26-B DCMR § 314 SERVICE OF PLEADINGS

314.1 Written motions and all other pleadings shall be served on all parties.

314.2 When filed, these pleadings shall be accompanied by proof of service upon all parties. Proof of service of any pleading shall be by certificate of service, affidavit or affirmation, or receipt.

314.3 Service of pleadings shall be made by one of the following methods:

(a) United States mail, with first-class postage prepaid;

(b) By personal delivery to the respondent; or

(c) By leaving it at the respondent's place of business with a person in charge or an employee or, if the office is closed or the respondent has no place of business, by leaving it at the party's usual place of residence with a person of suitable age and discretion who is at least sixteen (16) years of age or older residing there.

314.4 Service by mail is complete upon mailing.

314.5 Service on a general partner shall be valid service on the partnership.

314.6 Service on an officer or director or registered agent of a corporation or association shall be valid service on that corporation or association.

314.7 When any party is represented by an attorney, service of all pleadings shall be made upon the attorney and that service shall be considered service upon that party or those parties.

History

• SOURCE: As amended by final rulemaking published at 49 DCR 9285 (October 11, 2002).

26-B DCMR § 315 EX PARTE COMMUNICATIONS

315.1 From the start of the proceeding until the rendering of a final decision, no person may communicate ex parte with the Commissioner, or designated hearing officer, regarding the merits of the proceeding.

315.2 The Commissioner shall not be prohibited from communicating with officials of the District government and members of the Department not representing the Department in the proceeding on policy and procedural matters during the course of a proceeding before the Commissioner.

315.3 The Commissioner shall not be prohibited from communicating with any party that is a regulated entity or person of the Department on matters not related to the merits of a matter before the Commissioner.

315.4 If the Commissioner determines that a person has violated the prohibition on ex parte communications, he or she may impose appropriate sanctions against that person, which may include excluding the person from the proceeding or deciding against it with prejudice.

315.5 As used in this section, the term "ex parte" shall mean any oral or written communication related to the merits of a pending matter made to the Commissioner, not in the public hearing record, with respect to which reasonable prior notice to all parties to the proceeding is not given. An inquiry about the status of a proceeding is not considered an ex parte communication.

History

• SOURCE: As amended by final rulemaking published at 49 DCR 9285 (October 11, 2002).

26-B DCMR § 316 POST-HEARING PROCEDURES

316.1 If the matter is heard before a hearing officer, the hearing officer shall serve proposed findings of fact, proposed conclusions of law, and a proposed order to on all parties and the Commissioner within 20 days of the close of the hearing to the Commissioner for adoption, amendment, or rejection.

316.2 A party served with proposed findings of fact, proposed conclusions of law, and a proposed order shall have the right to file exceptions within 20 days of service of the proposed order to the proposed findings of fact, proposed conclusions of law, and a proposed order. In addition, the party shall have the right to present argument to the Commissioner, who shall consider the exceptions and argument, and renders his or her final findings of fact, conclusions of law and order within 10 days after receiving the exceptions, replying to exceptions, or hearing oral arguments, whichever is later.

316.3 If the matter is heard before the Commissioner, the Commissioner shall make a written final order within 30 days of the close of a hearing. A final order shall be in writing. A final order shall include findings of fact, conclusions of law, and an order. A copy of a final order shall be delivered or mailed to each party or to that party's attorney of record.

316.4 A party affected by any final order of the Commissioner may, within 10 days after the issuance of the order, file with the Commissioner a motion for reconsideration or modification of the final order. A party requesting a stay of the final order shall include such request in the motion. The Commissioner shall, within 20 days after receiving the motion for reconsideration or modification, grant or deny the motion.

History

• SOURCE: As amended by final rulemaking published at 49 DCR 9285 (October 11, 2002).

26-B DCMR § 317 APPEAL RIGHTS

317.1 Judicial review of final order of the Commissioner shall be by petition to the District of Columbia Court of Appeals.

History

• SOURCE: As amended by final rulemaking published at 49 DCR 9285 (October 11, 2002).

26-B DCMR § 318 SEVERABILITY

318.1 If any section or portion of a section of these rules, or the applicability thereof to any person or circumstance is held invalid by any court of competent jurisdiction, the remainder of these rules, or the applicability thereof to other persons or circumstances, will not be affected thereby.

History

• SOURCE: As amended by final rulemaking published at 49 DCR 9285 (October 11, 2002).

26-B DCMR § 399 DEFINITIONS

399.1 When used in this chapter, the following words and terms shall have the meanings ascribed:

Commissioner - means the Commissioner of the Department of Insurance, Securities and Banking or designated hearing officer.

District - means the District of Columbia.

Party - means the Mayor and any person or agency named or admitted as a party, in any proceeding before the Mayor or an agency, but nothing herein shall be construed to prevent the Mayor or an agency from admitting or an agency from admitting the Mayor or any person or agency as a party for limited purposes.

Person - means any natural or artificial person, including but not limited to, individuals, partnerships, associations, trusts, or corporations.

Respondent - means a person against whom an adverse action is contemplated, proposed, or taken.

Notice of Intent - means a charging document issued by the Commissioner that alleges facts that constitute a violation of, or a failure to comply with, the law by the respondent and that directs the respondent to file an answer in response to the alleged facts.

Summary Cease and Desist Order - means an order issued by the Commissioner that alleges facts that constitute a violation of, or failure to comply with, the law by the respondent and that directs the respondent immediately to take actions or refrain from certain actions. Summary cease and desist orders include, inter alia,

(a) A stop order issued by the Commissioner;

(b) A summary postponement or suspension; and

(c) A summary denial or revocation.

History

• SOURCE: As amended by final rulemaking published at 49 DCR 9285 (October 11, 2002).

26-C BANKING AND FINANCIAL INSTITUTIONS

26-C1 GENERAL PROVISIONS

26-C DCMR § 100 PURPOSE

100.1 The purpose of these rules shall be as follows:

(a) To provide for the organizing, chartering, and regulating of financial institutions organized to do business in the District of Columbia and to facilitate the expansion of financial services for District residents, including residents of underserved and low- and moderate-income areas;

(b) To promote and maintain an economic climate and regulatory framework that will encourage persons to organize District banks;

(c) To establish standards and guidelines in order to ensure that all financial institutions subject to the Commissioner's authority, including all banks and bank holding companies seeking to enter the District to do business or to expand the scope of their activities within the District, provide financial services in the following manner:

(1) To foster the development and revitalization of housing and commercial corridors in underserved neighborhoods in the District;

(2) To help meet the credit and deposit service needs of lower income and minority residents of the District; and

(3) To expand financial and technical support for small, minority, and woman-owned businesses.

History

• SOURCE: Final Rulemaking published at 35 DCR 6276-6277 (August 19, 1988).

26-C DCMR § 101 SCOPE

101.1 These rules shall govern the chartering, licensing and granting of authorization to do business for:

(a) Banks, trust companies, or other financial institutions including District branches and agencies of foreign banks seeking to establish in the District, pursuant to D.C. Official Code §§ 26-101 et seq., an office or banking house where deposits or savings are received;

(b) Savings and loan associations and similar thrift institutions seeking to establish in the District, pursuant to D.C. Official Code §§ 26-201 et seq., an office doing a thrift business; and

(c) National banks converting to a District bank charter.

101.2 These rules shall govern the supervision of the following:

(a) Any entity organized or chartered pursuant to D.C. Official Code §§ 26-101 et seq.;

(b) Any District bank organized pursuant to the laws of the District of Columbia;

(c) Any regional bank holding company wishing to do business, doing business, or expanding the scope of its business in the District;

(d) Any nonregional bank holding company wishing to do business, doing business, or expanding the scope of its business in the District;

(e) Any District savings and loan association, savings bank, or similar thrift institution organized pursuant to the laws of the District of Columbia;

(f) Any District branch or agency of a foreign bank;

(g) Changes in control of covered District financial institutions; and

(h) The opening and establishing of branches and other business offices by financial institutions.

101.3 [RESERVED]

101.4 These rules establish procedures for the following:

(a) Reserving a name under which a financial institution may do business; and

(b) Obtaining a certificate of authority or of good standing from the Commissioner.

History

• SOURCE: Final Rulemaking published at 35 DCR 6276, 6277-6278 (August 19, 1988).

26-C2 APPLICATIONS

26-C DCMR § 200 APPLICATIONS TO DO BUSINESS

200.1 Any application required by these rules shall be made by filing the Form(s) designated by the section(s) of these rules governing the activity for which approval is being sought. Any application required to be filed with the Commissioner for information only shall not be subject to any fee and need not be approved by the Commissioner before commencement of the activities described in the application.

200.2 Except as provided in subsection 200.3 of these rules, any person applying to conduct in the District a business within the scope of these rules, whether de novo, by acquisition, directly or indirectly, shall file the appropriate application with the Commissioner for approval.

200.3 Any bank or bank holding company applying to conduct a business described in D.C. Official Code §§ 1301 et seq. or any element of a business described in that section shall be subject to the approval requirements of subsection 200.2.

200.4 The Commissioner may modify the information required by an application form upon a determination that the information provided in response to the requirement is insufficient to provide a complete answer to the question posed in the application or is repetitious of current information that is already on file with the Commissioner.

History

• SOURCE: Final Rulemaking published at 35 DCR 6276 (August 19, 1988).

26-C DCMR § 201 APPLICATIONS TO DO BUSINESS GENERALLY

201.1 Any person required to file an application under subsection 200.2 of these rules shall file with the Commissioner a Form 1, which is incorporated into these rules by reference.

201.2 Any financial institution wishing to open a branch or other business office in the District, including a branch or agency of a foreign bank, shall file with the Commissioner a Form 1. In the case of a foreign bank wishing to establish a branch or agency, a Form 2 shall also be filed with the Commissioner. Form 2 is incorporated into these rules by reference.

201.3 At a minimum, an application shall include a business plan which describes the applicant's proposed capital investment in the District and a community development program. The community development program shall set forth the applicant's plan to: assist in the development of economically disadvantaged and underserved neighborhoods in the District; assist in meeting the credit and deposit service needs of low and moderate income and minority District residents; assist in expanding support for small, minority, and woman-owned businesses; and market and publicize the community development program. In designating underserved areas, the Commissioner shall place emphasis on areas located within Development Zones.

Any commitment made as part of a community development program submitted pursuant to subsection 201.3 of these rules may be satisfied, in part, by investment in the District of Columbia Economic Development Finance Corporation, established pursuant to the District of Columbia Economic Development Finance Corporation Act of 1984, effective June 29, 1984 (D.C. Law 5-89; D.C. Official Code §§ 2.1207.01 et seq. (2001)

EDITOR’S NOTE: Section 201.4 was repealed by section 7 of the Technical Amendments Act of 2002, D.C. Law 14-213, 49 DCR 8140 (Aug. 23. 2002).

History

• SOURCE: Final Rulemaking published at 35 DCR 6276, 6279 (August 19, 1988).

26-C DCMR § 202 APPLICATIONS FOR DEPOSIT-TAKING CHARTERS

202.1 Any person wishing to organize a bank in the District, other than a national bank, where deposits or savings are received or who wishes to convert from a national bank charter to a District bank charter, shall obtain, pursuant to D.C. Official Code Title 29, a Certificate of Incorporation and shall file with the Commissioner Form 2. A recommendation from the Commissioner and approval of the Council must be obtained before commencing business.

202.2 The recommendation of the Commissioner required by subsection 202.1 shall be obtained before any action by the Council and shall be in addition to any approvals required by federal law.

202.3 Any person wishing to organize and establish in the District, pursuant to D.C. Official Code §§ 26-201 et seq., a savings and loan association doing a thrift business shall file with the Commissioner Form 2, and obtain a recommendation of the Commissioner and approval of the Council before commencing business.

202.4 [RESERVED]

202.5 The recommendation of the Commissioner required by subsection 202.3 of these rules shall be obtained before any action by the Council and shall be in addition to any approvals required by federal law.

202.6 The application for a charter shall be in addition to the application required by section 201 of these rules.

History

• SOURCE: Final Rulemaking published at 35 DCR 6276, 6280 (August 19, 1988). EDITOR’S NOTE: Pursuant to D.C. Law 17-59, the Bank Charter Modernization Amendment Act of 2007, effective December 11, 2007, (D.C. Official Code § 26-704) the requirement that the Council of the District of Columbia approve applications for Deposit Taking Charters was repealed.

26-C DCMR § 203 APPLICATIONS BY PERSONS, AND REGIONAL BANK HOLDING COMPANIES

203.1 Any person or Regional bank holding company wishing to acquire, pursuant to D.C. Official Code §§ 26-701, et seq., a District bank or District bank holding company shall file with the Commissioner an application on Form 3, incorporated into these rules by reference, and obtain a recommendation of the Commissioner and approval of the Council before consummating the acquisition.

203.2 The Commissioner's recommendation shall be obtained before any action by the Council, and is in addition to any approvals required by federal law.

203.3 Any District bank or District bank holding company applying to acquire, pursuant to a state statute that is comparable to D.C. Official Code § 26-702, a bank or bank holding company located outside the District shall file with the Commissioner Form 4, incorporated into these rules by reference, for information only.

203.4 This application shall be in addition to the application required by section 201 of these rules. If a charter application is required, this application shall be in addition to the charter application.

History

• SOURCE: Final Rulemaking published at 35 DCR 6276, 6280-6281 (August 19, 1988).

26-C DCMR § 204 APPLICATIONS BY NONREGIONAL BANK HOLDING COMPANIES

204.1 Any nonregional bank holding company applying to acquire, pursuant to D.C. Official Code § 26-706.01 a District bank or District bank holding company shall file with the Commissioner Form 5, incorporated into these rules by reference, and obtain a recommendation of the Commissioner and approval of the Council before consummating the acquisition.

204.2 The Commissioner's recommendation shall be obtained before any action by the Council, and is in addition to any approvals required by federal law.

204.3 Such a nonregional bank holding company shall also file, as part of its application, information required by Form 3.

204.4 These applications shall be in addition to the application required by section 201 of these rules. If a charter application is required, these applications shall be in addition to the charter application.

204.5 Any nonregional bank holding company may make application to the Commissioner to acquire only the following:

(a) Any District bank that was in existence on December 18, 1985, and continuously operating for at least two (2) years prior to that date; or

(b) Any District bank holding company, all of the District bank subsidiaries of which were in existence on December 18, 1985, and that had been in existence and continuously operating for at least two (2) years prior to that date.

204.6 Form 5 contains detailed requirements prescribed by D.C. Official Code § 26-706.01. Under these requirements, a nonregional bank holding company applicant shall, at a minimum, do the following:

(a) Commit to make loans in a target economic development project in the District, in an aggregate amount equal to or greater than .0625 percent of the applicant's total assets (but not less than fifty million dollars ($50,000,000)). An applicant shall not be required to commit more than one hundred million dollars ($100,000,000);

(b) Commit to open at least two (2) additional banking offices in target banking development areas of the District within three (3) years after the date of acquisition;

(c) Agree to cash District and federal government checks for nondepositors as well as depositors within target banking development areas, subject to normal and prudent banking practices for verifying that the person presenting the check is legally entitled to payment;

(d) Agree to sell food coupons pursuant to 7 U.S.C. §§ 2011 et seq.;

(e) Commit to employ at least 200 District residents or at least one (1) District resident for each two million five hundred thousand dollars ($2,500,000) of total assets (but in no event less than fifty (50) employees) within three (3) years after the date of acquisition;

(f) Agree to promote international trade and finance within the District; and

(g) Submit an irrevocable letter of credit for ten million dollars ($10,000,000) naming the District as beneficiary (or the equivalent) in the event these commitments and agreements are not fulfilled.

204.7 Any commitment made pursuant to subsection 204.6(a) of these rules may be satisfied, in part, by investment in the District of Columbia Economic Development Finance Corporation, established pursuant to the District of Columbia Economic Development Finance Corporation Act of 1984, effective June 29, 1984 (D.C. Law 5-89; D.C. Official Code §§ 2.1207.01).

204.8 In designating target economic development projects, the Commissioner shall place special emphasis on projects located within Development Zones.

History

• SOURCE: Final Rulemaking published at 35 DCR 6276, 6281-6283 (August 19, 1988).

26-C DCMR § 205 LICENSES FOR BRANCHES AND AGENCIES OF FOREIGN BANKS

205.1 No foreign bank shall establish or maintain an agency or branch office unless the Commissioner shall have first recommended approval of an application filed in accordance with subsection 201.2 of these rules, for the establishment of such office, and issued a license authorizing such bank to maintain the office. However, nothing in this subsection shall be deemed to prohibit a foreign bank from establishing or maintaining a federal agency or federal branch in the District.

205.2 If the Commissioner finds the following with respect to an application by a foreign bank for approval to establish an agency or branch office, the Commissioner shall recommend approval of such application:

(a) That the bank, any controlling person of the bank, the directors and executive officers of the bank or of any controlling person of the bank, and the proposed management of the office are each of good character and sound financial standing;

(b) That the financial history and condition of the bank are satisfactory;

(c) That the management of the bank and the proposed management of the office are adequate;

(d) That it is reasonable to believe that, if authorized to maintain the office, the bank will operate the office in a safe and sound manner and in compliance with all applicable laws, regulations, and orders;

(e) That the bank's plan to establish and to maintain the office affords reasonable promise of successful operation;

(f) That the bank has committed to promote international trade and finance within the District;

(g) That the bank's establishment and maintenance of the office will promote the public convenience and advantage; and

(h) In case the office is to be a branch office, that the foreign nation where the bank is domiciled permits banks organized under the laws of the District and national banks headquartered in the District to establish and maintain in such foreign nation offices substantially equivalent to agencies, offices substantially equivalent to branch offices, or wholly (except for directors' qualifying shares) owned banks organized under the laws of such foreign nation.

205.3 If the Commissioner finds otherwise, the Commissioner shall recommend disapproval of the application.

205.4 Whenever an application by a foreign bank for approval to establish an agency or branch office has been approved and all conditions precedent to the issuance of a license authorizing the bank to maintain the office have been fulfilled, including approval of the application by the Council, the Commissioner shall issue the license.

History

• SOURCE: Final Rulemaking published at 35 DCR 6276, 6283-6284 (August 19, 1988).

26-C DCMR § 206 BRANCHES, ADDITIONAL OFFICES (DISTRICT BANKS AND SAVINGS AND LOANS) AND CERTIFICATES OF AUTHORITY (FOREIGN SAVINGS AND LOANS)

206.1 No financial institution organized under the laws of the District of Columbia shall establish a branch or additional office without prior approval of the Commissioner in accordance with this section. No foreign association shall establish a branch or other office in the District of Columbia, nor shall such an association make loans of any kind or transact any savings and loan or building and loan association business within the District of Columbia without prior approval by the Commissioner.

206.2 Application to conduct any of the activities described in subsection 206.1 of these rules shall be made by filing with the Commissioner a Form 1, for approval.

206.3 Applications shall be accompanied by a business plan that meets the requirements of subsection 201.3 of these rules.

206.4 Applications under this section shall be deemed to be privileged and confidential until publication of the notice required by subsection 206.9 of these rules. In the event that no publication is required, the application shall be deemed privileged and confidential until the preliminary approval referred to in subsection 206.8 of these rules has been granted.

206.5 An application under this section shall be approved or disapproved by the Commissioner within sixty (60) days after publication of the notice required by subsection 206.9 of these rules unless the Commissioner, with respect to a particular application, extends such period. In the event that no publication is required, the application shall be approved or disapproved within sixty (60) days after filing.

206.6 No application for permission to open a branch or office under this section shall be approved if, at the date on which such application is filed with the Commissioner the applicant does not submit in support of its application evidence giving reasonable assurance that the proposed branch or office, if approved, will be opened within 6 months after the date on which the application is approved. The Commissioner may extend this period for good cause.

206.7 No application for permission to establish a branch or office shall be approved if, in the opinion of the Commissioner, the policies, condition, management, ownership or operation of the applicant afford a basis for supervisory objection to the application or if approval would have an adverse impact on the safety and soundness of the financial institution or would adversely impact the convenience and needs of the public.

206.8 Upon determination by the Commissioner that an application under this section is complete, that the applicant is eligible and if it has been preliminarily determined that there is no basis for supervisory objection to approval of the application, the Commissioner shall advise the applicant that the application has been preliminarily approved.

206.9 If the application is for permission to open a branch, office or additional office, the Commissioner shall inform the applicant of the preliminary approval and shall advise the applicant, in writing, to publish, within fifteen (15) days from the date of such advice, in at least one (1) newspaper printed in the English language and having general circulation in the community to be served by the proposed branch or office, a notice of the filing of the application in the following form:

Notice of Filing of [Branch] [Office] Application

Notice is hereby given that, pursuant to section 206 of the Rules of the Department of Insurance, Securities and Banking, the [Bank] [Association] of __________, has filed an application with the Commissioner of the Department of Insurance, Securities and Banking for the District of Columbia for permission to establish a [branch] [office] at, or in the immediate vicinity of, __________.

The application has been delivered to the Commissioner at the Department of Insurance, Securities and Banking, located at 810 First Street, N.E., Suite 810, Washington, D.C. 20002. Any person may file communications in favor or in protest of said application at the aforesaid Office within twenty (20) days after the date of this publication.

A hearing, in Washington, D.C., may be held if any interested person, within (20) days after the publication of this notice, files a written protest which is coupled with a request for a hearing. The complete application, together with all communications in favor or in protest thereof, are available for inspection by interested persons at the aforesaid Department.

[Bank] [Association]

206.10 Within twenty (20) days after the date of publication of said notice, any person may file, at the Department of Insurance, Securities and Banking, communications in favor or in protest of the application.

206.11 Within ten (10) days after publication of the notice, the applicant shall transmit one copy thereof to the Commissioner accompanied by one copy of a publisher's affidavit of publication.

206.12 The application, together with all communications in favor or in protest thereof, shall be available at the Department of Insurance, Securities and Banking during regular working hours for inspection by interested persons following the date of publication of the notice required in subsection 206.9 of these rules.

206.13 A hearing shall be held upon an application under this section in any case in which a written protest requesting a hearing has been filed with the Commissioner in accordance with subsection 206.10 of these rules, unless the Commissioner, for good cause, determines that a hearing is not necessary. Notice of the hearing shall be published in the D.C. Register and shall be sent to the applicant and to all persons who have timely filed written statements protesting approval of the application.

206.14 In any case in which the Commissioner has disapproved an application without a hearing, a hearing may be held, at the discretion of the Commissioner, if such hearing is requested by the applicant within thirty (30) days after receipt by it of advice that the Commissioner has disapproved the application.

206.15 Not withstanding any other provision of this section, the Commissioner may at any time, in the Commissioner's discretion, order a hearing on any application under this section.

206.16 Hearings shall be conducted in accordance with sections 404, 405, and 406 of these rules.

206.17 Upon a determination by the Commissioner that a financial institution organized under the laws of the District of Columbia applying for permission to open a branch or additional office has satisfied the requirements of this section, the Commissioner shall issue a notice of approval to the financial institution.

206.18 Upon a determination by the Commissioner that a foreign association has satisfied the applicable requirements of this section and those contained in D.C. Official Code § 26-206 (2001), the Commissioner shall issue a Certificate of Authority to the association.

206.19 Certificates of Authority issued under this section shall be issued for a period of one year; they may be renewed annually, in accordance with D.C. Official Code § 26-206(b) (2001).

History

• SOURCE: Final Rulemaking published at 35 DCR 6276, 6284-6287 (August 19, 1988).

26-C3 POWERS

26-C DCMR § 300 POWERS OF DEPOSIT-TAKING BUSINESSES

300.1 Basic charter powers shall be granted upon approval of the charter. Even if an institution chooses initially to exercise less than the full range of basic powers, no subsequent approval shall be necessary before engaging in the other basic powers.

300.2 [RESERVED]

History

• SOURCE: Final Rulemaking published at 35 DCR 6276, 6288 (August 19, 1988).

26-C DCMR § 301 BASIC POWERS BESTOWED BY BANK CHARTER

301.1 A District bank's charter shall authorize the District bank, without further approval, to exercise the following powers:

(a) To adopt and use a corporate seal;

(b) To have succession from the date of its organization until dissolution by its shareholders owning two-thirds (2/3) of its stock, forfeiture of its charter for violations of law or these rules, termination by an act of the Council or of the United States Congress, or liquidation after being placed in receivership;

(c) To make contracts;

(d) To sue and be sued;

(e) To elect or appoint directors and, by its board of directors, to appoint officers and define their duties, to provide for the removal of officers;

(f) To prescribe, by its board of directors, by-laws not inconsistent with law, regulating the manner in which its stock shall be transferred, its directors elected or appointed, its officers appointed, its property transferred, its general business conducted, and the privileges granted to it by law exercised and enjoyed;

(g) To exercise all such incidental powers as shall be necessary to carry on the business of banking by discounting and negotiating promissory notes, drafts, bills of exchange and other evidences of debt; by receiving deposits; and by making and servicing loans, but loans and other extensions of credit shall be subject to the limitations applicable to national banks under 12 U.S.C. § 84 and regulations of the Comptroller of the Currency issued under that section (12 C.F.R. Part 32);

(h) To offer international banking services;

(i) To indemnify officers and directors for negligence but explicitly exclude indemnification for willful misconduct;

(j) To engage in transactions with affiliates subject to the limitations of section 23A of the Federal Reserve Act (12 U.S.C. § 371c);

(k) To provide investment or financial advice;

(l) To lease personal or new property if the lease is the functional equivalent of an extension of credit, the interest of the lessor is nonoperating; and the lease may be characterized as full payout;

(m) To perform data processing and data transmission services for financial, banking, or economic data;

(n) To act as an insurance agent or broker for insurance directly related to an extension of credit or other financial service and for fidelity insurance and property and casualty insurance for itself and any affiliate;

(o) To offer courier services;

(p) To offer management consulting services to depository institutions;

(q) To offer money orders, savings bonds and traveler's checks;

(r) To engage in real estate and personal property appraising;

(s) To arrange commercial real estate equity financing;

(t) To engage in securities brokerage activities, provided that the activities are limited to the buying and selling of securities without recourse solely upon the order and for the account of customers, and in no case for its own account, and do not involve securities underwriting or dealing;

(u) To underwrite and deal in government obligations and related money market instruments;

(v) To offer foreign exchange advisory and transactional services;

(w) To act as a futures commission merchant;

(x) To offer investment advice on financial futures and options on futures;

(y) To offer check-guarantee services;

(z) To operate a collection agency;

(aa) To operate a credit bureau;

(bb) To offer employee benefit counseling; and

(cc) To offer credit card related services.

History

• SOURCE: Final Rulemaking published at 35 DCR 6276, 6288-6291 (August 19, 1988).

26-C DCMR § 302 ADDITIONAL BANKING POWERS REQUIRING SPECIFIC APPROVAL

302.1 [RESERVED]

302.2 A bank's community investment record and commitments shall be considered at the time the Commissioner considers an application for additional banking powers.

History

• SOURCE: Final Rulemaking published at 35 DCR 6276, 6291 (August 19, 1988).

26-C DCMR § 303 BASIC POWERS BESTOWED BY SAVINGS AND LOAN CHARTER

303.1 A District savings and loan association's charter shall authorize the District savings & loan association, without further approval, to exercise the following powers:

(a) To accept deposits that the depositor has a legal right to withdraw on demand only from a person with which it has a business, commercial, or agricultural loan relationship as are authorized by its charter and bylaws;

(b) To accept savings and time deposits; and

(c) To make loans and other investments consistent with the provisions of section 5(d)(1) of the Home Owners' Loan Act of 1933, as amended (12 U.S.C. § 1464(c)(1)).

History

• SOURCE: Final Rulemaking published at 35 DCR 6276, 6291 (August 19, 1988).

26-C DCMR § 304 LIMITATION ON POWERS OF DISTRICT BRANCHES AND AGENCIES OF FOREIGN BANKS

304.1 No foreign bank shall transact business in the District except at an agency or branch office authorized under these rules to transact such business. This limitation shall not be deemed to prohibit:

(a) Any foreign bank which maintains a federal agency or federal branch in the District from transacting at such federal agency or federal branch such business as it may be authorized to transact under applicable federal laws and regulations;

(b) Any foreign bank which does not maintain an agency or branch office from making in the District loans secured by liens on real property located in the District; or

(c) Any foreign bank which does not maintain an agency or branch office from transacting trust business under the D.C. Official Code.

304.2 For purposes of this section, no foreign bank shall be deemed to be transacting business in the District merely because a majority-owned subsidiary transacts business in the District.

304.3 No foreign bank shall be licensed to maintain any agency or branch office unless it is qualified to transact business in the District under subsection 201.2 of these rules.

304.4 No foreign bank shall be licensed to maintain a retail branch office unless the deposits in such office are insured by the Federal Deposit Insurance Corporation in accordance with the provisions of the Federal Deposit Insurance Act.

History

• SOURCE: Final Rulemaking published at 35 DCR 6276, 6291-6292 (August 19, 1988).

26-C4 ADMINISTRATIVE PROCEDURES

26-C DCMR § 400 GENERAL PROCEDURES

[RESERVED]

History

• SOURCE: Final Rulemaking published at 35 DCR 6276, 6292 (August 19, 1988).

26-C DCMR § 401 APPLICATION PROCEDURES

401.1 With the exception of an application filed for information only, no application required by Chapters 1 through 3 shall be complete unless it is accompanied by the application fee prescribed by section 207 of these rules.

EDITOR’S NOTE: Section 207 of this chapter was repealed by Final Rulemaking effective February 15, 2008 and a new chapter 6, entitled “Fees and Assessments” was added that applies to banks and other depository institutions operating or proposing to operate in the District of Columbia. See Final Rulemaking published at 55 DCR 1574-1575 (February 15, 2008)

401.2 The Commissioner shall prepare a periodic bulletin listing all pending applications filed pursuant to D.C. Official Code § 26-704(a) (application for permission to organize a new financial institution), 26-704(c) (application by a regional bank holding company for permission to acquire a District bank or bank holding company), and 26-706.01 (application by a nonregional bank holding company to acquire a District bank or bank holding company). The bulletin shall be published in the D.C. Register and shall be mailed without charge to any person upon request.

401.3 Prior to deciding whether to recommend approval of the application, the Commissioner shall accept public comment on the application and if required by statute or these rules, shall hold a public hearing on the application. The hearing shall be in accordance with section 404 of these rules.

History

• SOURCE: Final Rulemaking published at 35 DCR 6276, 6292-6293 (August 19, 1988).

26-C DCMR § 402 APPLICATIONS OTHER THAN FROM BANK HOLDING COMPANIES

402.1 Upon the filing of a complete application required by section 201 on Form 1 or section 202 of these rules on Form 2, the procedures in this section shall apply.

402.2 The Commissioner shall make either a favorable or unfavorable recommendation on the application and explain the reasons for his or her recommendation.

402.3 The Commissioner shall transmit to the Council his or her recommendation, a copy of the application, and any other relevant information or submissions within ninety (90) days after receipt of the application.

402.4 The Commissioner may extend this ninety (90) day period for up to an additional sixty (60) days.

402.5 No entity for which federal deposit insurance is required shall commence operations until the applicant has submitted evidence that the insurance has been obtained.

402.6 No applicant shall commence business until its application is approved.

History

• SOURCE: Final Rulemaking published at 35 DCR 6276 (August 19, 1988). EDITOR’S NOTE: Pursuant to D.C. Law 17-59, the Bank Charter Modernization Amendment Act of 2007, effective December 11, 2007, (D.C. Official Code § 26-704) the requirement for the Commissioner to transmit a recommendation to the Council, a copy of the application, and any other relevant information within ninety (90) days of the receipt of an application, pursuant to subsection 402.3 was repealed.

26-C DCMR § 403 APPLICATIONS FROM BANK HOLDING COMPANIES

403.1 Upon the filing of a complete application under section 203 on Form 3 or section 204 on Form 5 of these rules, the procedures in subsections 403.2 through 403.8 of these rules shall apply.

403.2 A person, regional or nonregional bank holding company that seeks to acquire a District bank holding company or a District bank shall file a copy of the complete draft of the application required to be filed with the Federal Reserve Board no later than one hundred thirty (130) days prior to filing an application with the Federal Reserve Board for approval of an acquisition in accordance with 12 U.S.C. § 1842. An applicant may file an application with the Federal Reserve Board at any time subsequent to issuance of a final recommendation by the Commissioner.

403.3 The Commissioner shall make either a favorable or unfavorable recommendation on the application and explain the reasons for the recommendation, and shall transmit to the Council the recommendation, a copy of the application, and any other relevant information or submissions within sixty (60) days from the date of receipt of the application.

403.4 The Commissioner shall consider the following:

(a) The financial and managerial resources of the bank holding company;

(b) The future prospects and stability of the subsidiaries of the bank holding company and the bank whose assets or shares the bank holding company seeks to acquire;

(c) The financial history of the bank holding company or its subsidiary;

(d) The adequacy of the community development program; and

(e) Whether the acquisition may result in an undue concentration of resources or a substantial decrease of competition in the District.

403.5 The Commissioner shall submit a copy of the final recommendation to the Federal Reserve Board.

403.6 The applicant shall include a copy of the Commissioner's final recommendation with its application to the Federal Reserve Board.

403.7 Any applicant which files an application with the Commissioner pursuant to this section shall also file, on the same day, a notification copy of the application with the Council.

403.8 Nothing in this section shall prohibit the applicant from resubmitting to the Commissioner a disapproved application. Any resubmitted application shall be considered in accordance with the procedures set forth in this section.

History

• SOURCE: Final Rulemaking published at 35 DCR 6276, 6293-6294 (August 19, 1988). EDITOR’S NOTE: Pursuant to D.C. Law 17-59, the Bank Charter Modernization Amendment Act of 2007, effective December 11, 2007, (D.C. Official Code § 26-704) the requirement for the Commissioner to transmit a recommendation to the Council, a copy of the application, and any other relevant information within ninety (90) days of the receipt of an application, pursuant to subsection 403.3, was repealed.

26-C DCMR § 404 HEARING PROCEDURES

404.1 The Commissioner shall cause a public hearing to be convened, and shall accept public comment prior to deciding whether to recommend approval of an application filed pursuant to the following sections of the D.C. Official Code:

(a) 26-704(a) (application for permission to organize a new financial institution);

(b) 26-704(c) (application by a regional bank holding company for permission to acquire a District bank or bank holding company); or

(c) 26-706.1 (application by a nonregional bank holding company to acquire a District bank or bank holding company).

404.2 The Commissioner or designated hearing officer shall preside at the hearing on the application.

404.3 Notice of the hearing shall be given as follows:

(a) By publishing it in the D.C. Register at least fifteen (15) days in advance of the hearing;

(b) By posting a copy of the notice of the public hearing in the Department of Insurance, Securities and Banking at least fifteen (15) days prior to the hearing; and

(c) By providing copies of the notice of the public hearing to the public library system in the District of Columbia. These copies of the notice shall be mailed or delivered to the library system at least fifteen (15) days prior to the hearing.

History

• SOURCE: Final Rulemaking published at 35 DCR 627, 6295 (August 19, 1988).

26-C DCMR § 405 CONDUCT OF HEARING

405.1 The hearing officer shall take the testimony and any documentary evidence offered in the following order:

(a) the testimony or statement of the applicant;

(b) testimony or statement(s) of any District Government agency witnesses, including any statements or testimony offered by the Department of Insurance, Securities and Banking;

(c) statement(s) or testimony from other state or Federal agencies; and

(d) statements or testimony of public witnesses.

History

• SOURCE: Final Rulemaking published at 35 DCR 6276, 6295-6296 (August 19, 1988).

26-C DCMR § 406 FINDINGS

406.1 In those instances where a hearing officer, other than the Commissioner, conducts the public hearing, the hearing officer shall make written findings and recommendations to the Commissioner within fifteen (15) days after the close of the public hearing.

406.2 In those instances where the Commissioner conducts the hearing, the written findings and recommendation regarding the application shall be made within thirty (30) days following the close of the hearing.

406.3 In any event, the findings and recommendation of the Commissioner, together with a copy of the application and any other relevant information or submissions, shall be transmitted to the Council within sixty (60) days (in the case of applications by regional and nonregional bank holding companies considered pursuant to D.C. Official Code § 26-704(c) and 26-706.1, respectively) and within ninety (90) days (in the case of applications for charters considered pursuant to D.C. Official Code § 26-704 (a)) after the filing of the application, unless the time period is extended by the Commissioner in accordance with applicable statutory provisions.

History

• SOURCE: Final Rulemaking published at 35 DCR 6276, 6296 (August 19, 1988). EDITOR’S NOTE: Pursuant to D.C. Law 17-59, the Bank Charter Modernization Amendment Act of 2007, effective December 11, 2007, (codified at D.C. Official Code § 26-704) the requirement for the Commissioner to transmit findings and recommendation and any other relevant to the Council, together with a copy of the application, and any other relevant information and submissions to the Council within sixty (60) days, in the case of applications by regional and nonregional bank holding companies considered pursuant to D.C. Official Code §§ 26-704(c) and 26-706.1, and (in the case of applications for charter considered pursuant to D.C. Official Code § 704(a) after the filing of the application) within ninety (90) days after the filing of an application, pursuant to subsection 406.3, was repealed.

26-C DCMR § 407 CONSUMER COMPLAINT PROCEDURES

[RESERVED]

History

• SOURCE: Final Rulemaking published at 35 DCR 6296 (August 19, 1988).

26-C DCMR § 408 MISCELLANEOUS REQUESTS

408.1 Requests for a certificate of good standing with respect to a District financial institution shall be submitted to the Commissioner in writing and shall include the appropriate fee prescribed by section 207 of these rules. The Commissioner may for good cause grant a request to waive the fee.

History

• SOURCE: Final Rulemaking published at 35 DCR 6276, 6296 (August 19, 1988). EDITOR’S NOTE: Section 207 of this chapter was repealed by Final Rulemaking effective February 15, 2008 and a new chapter 6, entitled “Fees and Assessments” was added that applies to banks and other depository institutions operating or proposing to operate in the District of Columbia. See Final Rulemaking published at 55 DCR 1574-1575 (February 15, 2008)

26-C6 FEES AND ASSESSMENTS

26-C DCMR § 600 INSTITUTIONS' FEES AND ASSESSMENTS

600.1 All fees shall be paid by certified check or money order payable to the D.C. Treasurer.

600.2 A separate fee must be paid with each activity requested.

History

• SOURCE: Final Rulemaking published at 55 DCR 1574 (February 15, 2008).

26-C DCMR § 601 DEPOSITORY INSTITUTIONS

601.1 The following schedule of fees shall apply to applications from depository institutions and examinations by the Department of Insurance, Securities and Banking:

Charter

Offering Circular

$10,000

$5,000

Articles of Incorporation and By-Laws

$3,000

Conversion of charter

$7,500

Branch (includes Out-of-State Bank application to operate in the District)

$2,500

Branch, agency or representative office of a foreign bank

$3,000

Branch (S&L)

$2,500

Bank Examination (for specialty exams only)

$100/hr/per

Merger

$5,000

Office Relocation

$2,000

Fiduciary or other addt'l powers

$2,500

Operating subsidiary

$2,000

BHC formation

$6,000

BHC acquisition

$6,000

Non-branch facilities (electronic)

$1,000

Non-branch facilities (brick & mortar)

$1,000

Certificate of good standing

$200

Reservation of name

$1,000

601.2 Except as provided in section 601.4 below, District chartered banks also shall be subject to an annual assessment at a rate of $25,000 per year, plus $50 per million dollars of assets.

601.3 The assessment shall be determined and billed, on a semi-annual basis, upon assets as of June 30th and December 31st of each year.

601.4 A District of Columbia chartered bank shall be exempt from assessment for the first two (2) years of operations, if the bank began operations as a de novo District of Columbia bank.

History

• SOURCE: Final Rulemaking published at 55 DCR 1574-1575 (February 15, 2008).

26-C11 MORTGAGE LENDERS, MORTGAGE BROKERS AND MORTGAGE LOAN ORIGINATORS

26-C DCMR § 1100 SCOPE AND APPLICABILITY

1100.1 This chapter shall apply to any person who engages in business as a mortgage lender, mortgage broker, or mortgage loan originator in the District or who issues, makes, services, brokers, or originates a mortgage loan as defined in the Act.

History

• SOURCE: Final Rulemaking published at 56 DCR 4356 (June 5, 2009).

26-C DCMR § 1101 EXEMPTIONS

1101.1 The provisions of this chapter shall not apply to any bank, trust company, savings bank, savings and loan association, or credit union incorporated or chartered under the laws of the United States, any state or territory of the United States, or the District, and any other financial institution incorporated or chartered under the laws of the District or of the United States, that accepts deposits and is regulated under Title 26 of the District of Columbia Official Code.

1101.2 The provisions of this chapter shall not apply to a mortgage loan originator or loan officer who is registered with and maintains a unique identifier through the NMLSR and who is an employee of an institution described in § 1101.1 above.

History

• SOURCE: Final Rulemaking published at 56 DCR 7457-7458 (September 11, 2009).

26-C DCMR § 1102 GENERAL LICENSING REQUIREMENTS

1102.1 An applicant for a license to engage in business as a mortgage lender shall file a mortgage lender license application with the Department.

1102.2 An applicant for a license to engage in business as a mortgage broker shall file a mortgage broker license application with the Department.

1102.3 An applicant for a license to engage in business as a mortgage lender and a mortgage broker shall file a dual mortgage lender and broker license application with the Department.

1102.4 An applicant for a license to engage in business as a mortgage loan originator shall file a mortgage loan originator license application with the Department.

1102.5 A license to engage in the activity of a mortgage broker, mortgage lender, mortgage lender and mortgage broker (mortgage dual authority), or mortgage loan originator will be issued to an applicant if the Commissioner, upon review of the application and all other relevant information, determines that all of the requirements of the Act have been met.

1102.6 A license application shall be filed on a form prescribed by the Department, including all information required by the Department, and be accompanied by the required fees as prescribed in Appendix A. For purposes of this chapter, a license application means an application processed through the Department or its designee such as the Nationwide Mortgage Licensing System and Registry or any other person or third party prescribed by the Commissioner. Any fees paid in connection with the processing of an application shall be non refundable.

1102.7 The application shall, at a minimum, contain information to demonstrate that:

(a) The applicant has never had a mortgage-related license revoked in any governmental jurisdiction;

(b) The applicant and each of its officers, directors, partners, and owners of a controlling interest have not been convicted of, or pled guilty or nolo contendere to a felony in a domestic, foreign, or military court:

(1) During the seven (7) year period preceding the date of the application for licensing and registration; or

(2) At any time preceding such date of application, if such felony involved an act of fraud, dishonesty, or a breach of trust, or money laundering.

(c) The applicant has demonstrated financial responsibility, character, and general fitness such as to warrant a determination that the applicant will operate honestly, fairly, and efficiently within the purposes of the Act;

(d) The applicant has met the applicable capital and/or surety bond requirements required pursuant to the Act and sections 1107 and 1109 of these rules; and

(e) The applicant has paid all applicable fees as described in Appendix A of these rules.

(f) In the case of an applicant for a mortgage loan originator’s license,

(1) The applicant has completed the pre-licensing education requirement described in the Act;

(2) The applicant has passed a written test that meets the requirements described in the Act; and

(3) The applicant has identified the sponsor or sponsoring agent with whom the mortgage loan originator is employed or associated.

1102.8 The Department shall deny a license application if the application is incomplete, not accompanied by the fees required pursuant to section 1102.6 of these rules, or if there are any outstanding fees due to the Department.

1102.9 The Department shall approve or deny a license application not later than sixty (60) days from the date the Department determines that the application is complete.

1102.10 A licensee may challenge information entered into the Nationwide Mortgage Licensing System and Registry by the Commissioner. Such challenge must be in writing and include the specific information being challenged and supporting information to evidence that information being challenged is incorrect, invalid, or inappropriate.

1102.11 A challenge pursuant to subsection 1102.8 shall be filed within forty-five (45) business days from the date the information is received.

1102.12 The Department will respond to the challenge within fourteen (14) business days with one (1) of the following responses:

(a) Granting the challenge and entering the requested change;

(b) Granting the challenge and allowing the licensee to submit information to be entered into the system; or

(c) Denying the challenge.

1102.13 Acquisition of control applications filed pursuant to the Act shall be accompanied by the fee described in Appendix A of these rules.

History

• SOURCE: Final Rulemaking published at 56 DCR 4356, 4357-4359 (June 5, 2009); as amended by Final Rulemaking published at 56 DCR 7457, 7458 (September 11, 2009).

26-C DCMR § 1103 TERMINATION AND REASSIGNMENT OF MORTGAGE LOAN ORIGINATOR

1103.1 A mortgage loan originator shall disclose the mortgage loan originator’s license number to all clients and residential mortgage loan applicants in writing at the time a fee is paid or a mortgage loan application is accepted.

1103.2 Upon the termination of the relationship between a mortgage loan originator and a sponsoring agent, the sponsor shall fully set forth the reason(s) for termination and shall submit such statement to the Commissioner.

1103.3 For a period of one (1) year after the termination of employment or association, the mortgage loan originator may request re-assignment of the license to another entity by submitting an application for a change to the Department and paying the required fee, as determined by the Commissioner.

1103.4 Upon the termination of the relationship between the sponsoring agent and the mortgage loan originator, the license shall become inactive and the mortgage loan originator shall not be authorized to engage in any residential mortgage loan origination activity unless and until the mortgage loan originator’s license is sponsored by another District licensed mortgage broker or lender and all required procedures have been followed to re-assign and reactivate such license.

1103.5 If the mortgage loan originator license has not been re-assigned to another sponsoring agent within one (1) year of termination of the sponsoring relationship or affiliation, it shall be cancelled.

History

• SOURCE: Final Rulemaking published at 56 DCR 4356, 4359 (June 5, 2009); as amended by Final Rulemaking published at 56 DCR 7457, 7458 (September 11, 2009).

26-C DCMR § 1104 BACKGROUND CHECKS

1104.1 To assist the Commissioner in his determination for licensure, an applicant for an original mortgage loan originator’s license shall furnish the Department or its designee information concerning the applicant’s identity, including, but not limited to the following:

(a) Fingerprints, less than ninety (90) days old, for submission to the Federal Bureau of Investigation, and any governmental agency or entity authorized to receive such information for a state, national and international criminal history background check; and

(b) Personal history and experience in a form prescribed by the Department or its designee, including the submission of authorization for the Department or its designee to obtain the following:

(1) An independent credit report obtained from a consumer reporting agency described in section 603(p) of the Fair Credit Reporting Act; and

(2) Information related to any administrative, civil or criminal findings by any governmental jurisdiction.

History

• SOURCE: Final Rulemaking published at 56 DCR 4356, 4359-4360 (June 5, 2009).

26-C DCMR § 1105 PRE-LICENSING EDUCATION REQUIREMENTS FOR MORTGAGE LOAN ORIGINATORS

1105.1 In order to meet the pre-licensing education requirements for a mortgage loan originator, an applicant shall complete at least twenty (20) hours of pre-licensing education approved in accordance with subsection 1105.2.

1105.2 The twenty (20) hours of pre-licensing education requirements shall include at least the following courses approved by the Nationwide Mortgage Licensing System:

(a) Three (3) hours of federal law and regulations on mortgage and real estate related subject matter;

(b) Three (3) hours of ethics which shall include instruction on mortgage and real estate related fraud, consumer protection, and fair lending issues;

(c) Two (2) hours of training related to lending standards for the non-conventional mortgage product marketplace;

(d) Three (3) hours of District of Columbia mortgage lending laws and regulations; and

(e) Nine (9) hours of elective courses on mortgage and real estate related subject matter.

1105.3 An applicant for an original mortgage loan originator license, who is already licensed in another state, that requires testing, will be required to complete at least three (3) hours of District mortgage related courses.

1105.4 An applicant for an original mortgage loan originator license, who is already licensed in another state, that does not require testing, will be required to comply with the requirements of section1105.2.

1105.5 If the Nationwide Mortgage Licensing System and Registry has not approved twenty (20) hours of pre-licensing education requirements at the time of the submission of an application, and all other licensure requirements have been met, the application will be contingently approved until the first renewal cycle. By the first renewal cycle the applicant shall have taken the required pre-licensing education requirements.

History

• SOURCE: Final Rulemaking published at 56 DCR 4357, 4360-4361 (June 5, 2009).

26-C DCMR § 1106 TESTING

1106.1 In order to meet the written test requirement an individual shall pass, in accordance with the standards established under this section, a qualified written test developed by the Nationwide Mortgage Licensing System and Registry and administered by a test provider approved by the Nationwide Mortgage Licensing System and Registry.

1106.2 A written test shall not be treated as a qualified written test for purposes of the preceding paragraph unless the test adequately measures the applicant’s knowledge and comprehension in appropriate subject areas, including the following:

(a) Ethics;

(b) Federal law and regulation pertaining to mortgage origination;

(c) State law and regulation pertaining to mortgage origination; and

(d) Federal and state law and regulation, including instruction on fraud, consumer protection, the non-conventional mortgage marketplace, and fair lending issues.

1106.3 The test shall contain a national portion and a District of Columbia portion and the applicant must take and pass both parts, with a test score of not less than seventy-five percent (75%) on each part, unless excepted under subsection 1106.4.

1106.4 If the applicant has taken and passed the national portion in another jurisdiction, which has also issued to the applicant a mortgage loan originator license, the applicant is only required to take and pass, with a test score of not less than seventy-five percent (75%), the District of Columbia portion of the test.

1106.5 An individual shall not be considered to have passed a qualified written test unless the individual achieves a test score of not less than seventy-five (75%) percent correct answers to questions.

1106.6 An individual may retake a test three (3) consecutive times. Each consecutive test may not occur less than thirty (30) days after the preceding test.

1106.7 After failing three (3) consecutive tests, an individual shall wait at least six (6) months before taking the test again.

1106.8 A formerly licensed mortgage loan originator who fails to maintain a valid license for a period of five (5) years or longer shall retake the test.

1106.9 If the Nationwide Mortgage Licensing System and Registry has not developed a qualified written test, to be administered by a test provider approved by the Nationwide Licensing System and Registry at the time of the submission of an application, and all other licensure requirements have been met, the application will be contingently approved until the first renewal cycle. By the first renewal cycle the applicant shall have taken and passed, in accordance with the standards established under this section, the qualified written test developed and administered by the Nationwide Mortgage Licensing System and Registry.

History

• SOURCE: Final Rulemaking published at 56 DCR 4356, 4361-4362 (June 5, 2009).

26-C DCMR § 1107 EVIDENCE OF FINANCIAL RESPONSIBILITY

1107.1 For purposes of this section, references in the Nationwide Mortgage Licensing System and Registry to the terms “net worth” and “capital” are interchangeable

1107.2 A mortgage lender shall demonstrate and maintain capital of not less than two hundred thousand dollars ($200,000) per licensed location; a mortgage broker shall demonstrate and maintain capital of not less than twenty-five thousand dollars ($25,000) per licensed location. A mortgage dual authority licensee shall demonstrate and maintain capital of not less than two hundred and twenty-five thousand dollars ($225,000) per licensed dual authority location. Higher levels of capital may be required pursuant to section 1107.3.

1107.3 Where the Commissioner reasonably determines, that the financial history or condition, managerial resources and/or active earnings prospects of a licensee are not adequate, or where a licensee has sizeable off-balance sheet or funding risks, excessive interest rate risk exposure, or a significant volume of classified or criticized assets, the Commissioner may prescribe a capital requirement for a licensee that is greater than the minimum.

1107.4 The amount and time frames for attaining a higher level of capital prescribed under this section shall be set forth in either:

(a) A final report of examination approved by the Commissioner;

(b) A corporate resolution executed by the licensee and approved by the Commissioner;

(c) A written memorandum of understanding or other agreement between the licensee and the Commissioner; or

(d) As a provision in a temporary or permanent cease and desist order or other enforcement action issued by the Commissioner.

The maintenance of the minimum capital standards specified under this section shall be a requirement for continued licensure under the Act. Failure to meet and maintain such minimum standards may constitute grounds for the issuance of a cease and desist order and may also constitute grounds for license suspension or revocation under the Act.

Failure to meet the minimum capital standards under the Act may constitute grounds for the denial of an application, the issuance of a cease and desist order, license suspension, or license revocation.

History

• SOURCE: Final Rulemaking published at 56 DCR 4356, 4362-4363 (June 5, 2009).

26-C DCMR § 1108 CREDIT REPORT

1108.1 An applicant for a mortgage loan originator’s license and each officer, director, partner, and owner of a controlling interest in an applicant for a mortgage lender or mortgage broker license shall provide authorization for the Department to obtain a credit report.

1108.2 Any credit report relied upon to grant a license must be less than ninety (90) days old.

History

• SOURCE: Final Rulemaking published at 56 DCR 4356, 4363 (June 5, 2009).

26-C DCMR § 1109 SURETY BOND

1109. An applicant for a mortgage lender, mortgage broker or mortgage dual authority license shall file a surety bond with each original application and any renewal application.

1109.2 The surety bond shall:

(a) Run to the Commissioner for the benefit of the District and any person who has been damaged by a licensee as a result of violating any law or regulation governing the activities of mortgage loan originators, mortgage lenders, or mortgage brokers;

(b) Be issued by a surety company authorized to do business in the District;

(c) Be conditioned upon the applicant complying with all District and federal laws regulating the activities of mortgage lenders, mortgage brokers, and mortgage loan originators and performing all written agreements with borrowers or prospective borrowers, accounting for all funds received by the licensee in conformity with a standard system of accounting consistently applied;

(d) Be continuously maintained thereafter for as long as any license issued under this chapter remains in force; and

(e) Be issued in the legal and trade name of the licensee.

A bond filed by a mortgage lender, mortgage broker, or mortgage dual authority licensee shall cover all mortgage loan originators sponsored by the licensee.

1109.4 If an applicant for a mortgage lender, mortgage broker, or mortgage dual authority license has not conducted such business in the District in any of the three (3) calendar years preceding the year in which an original application for a license is filed, the surety bond required under this subsection shall be in the amount of twelve thousand five hundred dollars ($12,500).

1109.5 If an applicant has conducted business as a mortgage lender, mortgage Broker, or mortgage dual authority licensee in the District in any of the three (3) calendar years preceding the year in which an original or renewal application is filed, the applicant shall provide a sworn statement setting forth the total dollar amount of mortgage loans applied for and accepted or mortgage loans applied for, procured, and accepted by the mortgage lender, mortgage broker, or mortgage dual authority licensee during the latest calendar year such business was conducted. The bond required in this circumstance shall be determined as follows:

(a) Where the total dollar amount of stated loans was one million dollars ($1,000,000) or less, the bond shall be in the amount of twelve thousand five hundred dollars ($12,500);

(b) Where the total dollar amount of stated loans was more than one million dollars ($1,000,000) but not more than two million dollars ($2,000,000), the bond shall be in the amount of seventeen thousand five hundred dollars ($17,500);

(c) Where the total dollar amount of stated loans was more than two million dollars ($2,000,000) but not more than three million dollars ($3,000,000), the bond shall be in the amount of twenty-five thousand dollars ($25,000); and

(d) Where the total dollar amount of stated loans was more than three million ($3,000,000), the bond shall be in the amount of fifty thousand dollars ($50,000).

1109.6 Subject to approval by the Commissioner, if an applicant files four (4) or more original or renewal applications at the same time, the applicant may provide a blanket surety bond for all licensed offices in the amount of two hundred thousand dollars ($200,000).

1109.7 When an action is commenced on a licensee’s bond the Commissioner may require the filing of a new bond.

1109.8 Immediately upon recovery upon any action on the bond the licensee shall file a new bond pursuant to the requirements of this section.

Any person who may be damaged by noncompliance of a licensee with any condition of such bond may proceed on such bond against the principal or surety thereon, or both, to recover damages. Regardless of the number of years the bond remains in effect, the number of premiums paid, the number of renewals of the license, or the number of claims made, the aggregate liability under the bond shall not exceed the penal sum of the bond.

History

• SOURCE: Final Rulemaking published at 56 DCR 4356, 4363-4365 (June 5, 2009); as amended by Final Rulemaking published at 56 DCR 7457, 7450 (September 11, 2009).

26-C DCMR § 1110 FINANCIAL STATEMENTS

1110.1 An applicant for a mortgage lender, mortgage broker, or mortgage dual authority license shall submit financial statements prepared in accordance with generally accepted accounting principles.

1110.2 The financial statements shall include, but not be limited to, a balance sheet, income statement, statement of cash flows, and all relevant notes thereto.

1110.3 The financial statements shall include information for the current year to date through the most recent quarter ending date and for the preceding fiscal year, and shall include any other financial information as the Commissioner may require.

History

• SOURCE: Final Rulemaking published at 56 DCR 4356, 4365 (June 5, 2009).

26-C DCMR § 1111 RENEWAL OF LICENSE

1111.1 In order to renew a license, a licensee shall:

File all required forms and fees that are to be filed directly with the Department, as noted on the NMLS, by no later than October 15 of a given year. If October 15 falls on a Saturday, Sunday, or legal holiday, then the required forms and fees shall be filed no later than the next business day.

When the NMLS renewal period opens, file with the NMLS a renewal license application at least thirty (30) days before the expiration date of the licensee’s current license, on a form prescribed by the Department, which shall be accompanied with the required fees as prescribed in Appendix A and any other required information.

1111.2 All mortgage licenses shall expire on December 31st of each year.

1111.3 The minimum standards for license renewal for mortgage loan originators shall include the following:

(a) The mortgage loan originator continues to meet the minimum standards for license issuance under the Act;

(b) The mortgage loan originator has satisfied the annual continuing education requirements described in section 1112; and

(c) The mortgage loan originator has met applicable criminal background check requirements.

1111.4 If a mortgage loan originator has failed to complete continuing education requirements during the time period in which completion of the education requirements is due, as described in the Act, the mortgage loan originator’s license shall be ineligible for renewal and shall be deemed to be inactive.

1111.5 A renewal license application filed after the renewal-filing deadline set forth in section 1111.1 above, shall be subject to, and accompanied by, a late renewal fee described in Appendix A in addition to any other fees imposed as prescribed in Appendix A.

1111.6 A license that remains expired after the last day of February of any year, or such other date that may be selected by the NMLS for the same purpose, cannot be renewed. The licensee must apply for a new license.

1111.7 A renewal license application filed after the license expiration deadline set forth in subsection 1111.2, but before the last day of February of any year, shall be subject to, and accompanied by, a reinstatement fee as prescribed in Appendix A.

1111.8 Any fees paid pursuant to this section shall be non-refundable.

1111.9 The Department shall approve or deny a renewal license application no later than sixty (60) days after the date a complete application is filed with the Department. For purposes of this section, an application is complete when the licensee has satisfied all District of Columbia and NMLS licensure requirements.

History

• SOURCE: Final Rulemaking published at 56 DCR 4356, 4365-4366 (June 5, 2009); as amended by Notice of Emergency and Proposed Rulemaking published at 57 DCR 7908 (August 27, 2010)[EXPIRED]; as amended by Notice of Final Rulemaking published at 57 DCR 12219 (December 24, 2010).

26-C DCMR § 1112 CONTINUING EDUCATION REQUIREMENTS FOR MORTGAGE LOAN ORIGINATORS

1112.1 In order to meet the continuing education requirements, a licensed mortgage loan originator shall complete, annually at least eight (8) hours of education, at least sixty (60) days prior to expiration of the license. The continuing education requirements shall include, but not be limited to, the following:

(a) Three (3) hours of federal law and regulations pertaining to mortgage related activity subject matters;

(b) Two (2) hours of ethics, which shall include instruction on fraud, consumer protection, and fair lending issues;

(c) Two (2) hours of training related to lending standards for the nontraditional mortgage product marketplace; and

(d) One (1) hour of District of Columbia law and regulations pertaining to mortgage related activity subject matters.

The continuing education courses shall be reviewed, and approved by the Nationwide Mortgage Licensing System and Registry. If the Nationwide Mortgage Licensing System and Registry has not reviewed and approved continuing education courses at the time of the submission of an application, and all other licensure requirements have been met, the application will be contingently approved until the first renewal cycle. By the next renewal cycle the applicant shall have taken and passed the required continuing education courses.

1112.3 A licensed mortgage loan originator may:

(a) Only receive credit for a continuing education course in the year in which the course is taken; and

(b) Not receive credit for taking the same course more than once in the same or successive years to meet the annual requirements for continuing education.

1112.4 A licensed mortgage loan originator, who is an instructor of an approved continuing education course, may receive credit for the licensed mortgage loan originator’s own annual continuing education requirement at the rate of two (2) credit hours for every one (1) hour taught.

History

• SOURCE: Final Rulemaking published at 56 DCR 4356, 4366-4367 (June 5, 2009).

26-C DCMR § 1113 NOTIFICATION OF SIGNIFICANT EVENTS BY LICENSEE

1113.1 A mortgage lender, mortgage broker, mortgage dual authority licensee, or mortgage loan originator licensed under the Act shall notify the Commissioner in writing within five (5) business days of the occurrence of any fact or condition that exists that has a negative impact on the licensee’s financial condition and ability to maintain the financial requirements under section 1107 or to perform financial obligations to fund mortgage commitments which preclude the licensee from operating in a safe and sound manner consistent with the Act, these regulations and in the best interest of District of Columbia consumers.

1113.2 A mortgage lender, mortgage broker, mortgage dual authority licensee, or mortgage loan originator licensed under the Act shall notify the Commissioner in writing within five (5) business days of the occurrence of any of the following significant developments:

(a) A charge of or conviction of any criminal felony offense;

(b) A charge of or conviction of any criminal misdemeanor offense involving financial services or a financial services related business; or any charge involving fraud, false statements or omissions, theft or wrongful taking of property, bribery, perjury, forgery, counterfeiting, or extortion;

(c) Receipt of notification of license denial, cease and desist order, initiation of suspension or revocation proceedings, issuance of formal orders of suspension or revocation or other imposed disciplinary action, or other formal or informal regulatory action, from any state or federal agency against the licensee, and the reasons thereof;

(d) Receipt of notification of the initiation of any action against the licensee by the District of Columbia Office of the Attorney General or of any other state or federal agency, pursuant to the Act, or any other comparable consumer protection statute, and the reasons thereof;

(e) Settlement or resolution of any civil action or proceeding against the licensee involving fraud, misrepresentation, or wrongful taking of property; or

(f) Filing of a bankruptcy petition by the licensee or being the subject of an involuntary bankruptcy petition.

History

• SOURCE: Final Rulemaking published at 56 DCR 4356, 4367-4368 (June 5, 2009).

26-C DCMR § 1114 ANNUAL REPORTING REQUIREMENTS

1114.1 A mortgage lender, mortgage broker, and mortgage dual authority licensee shall submit an annual report to the Department on a form prescribed by the Commissioner.

1114.2 A mortgage loan originator shall file annually, a call report with the Nationwide Mortgage Licensing System and Registry on a form prescribed by the Nationwide Mortgage Licensing System and Registry.

History

• SOURCE: Final Rulemaking published at 56 DCR 4356, 4368 (June 5, 2009).

26-C DCMR § 1115 ANNUAL ASSESSMENTS

1115.1 Each licensed mortgage lender, mortgage broker, or mortgage dual authority licensee who held a license during the prior licensing period shall be subject to an assessment as prescribed in Appendix A. The assessment shall be determined to be the sum of a fixed amount based on the license type plus a variable amount based on the number of loans originated, brokered, or serviced in the previous license period as prescribed in Appendix A.

1115.2 A licensee who has been charged and pays an annual assessment fee shall not be subject to an examination fee in the same year unless the following occurs:

The Commissioner determines that an out-of-state examination is necessary; or

(b) The Commissioner determines that a special investigation is necessary.

1115.3 All annual assessments are due on or before October 15 of each calendar year. Failure to file an annual assessment by October 15 of a calendar year shall subject the licensee to the late fees prescribed in Appendix A.

1115.4 In addition to the imposition of any fees prescribed in Appendix A, the Commissioner may initiate an enforcement action within his or her authority to enforce the provisions of this section.

History

• SOURCE: Final Rulemaking published at 56 DCR 4356, 4368-4369 (June 5, 2009); as amended by Notice of Emergency and Proposed Rulemaking published at 57 DCR 7908 (August 27, 2010)[EXPIRED]; as amended by Notice of Final Rulemaking published at 57 DCR 12219, 12220 (December 24, 2010).

26-C DCMR § 1116 MORTGAGE LOAN APPLICATION AND APPROVAL PROCESS

1116.1 Each application for a proposed mortgage loan must be signed and dated by each borrower on each page of the mortgage loan application and shall contain, or have attached to the application, at a minimum, the following information:

(a) The name, social security number, address, telephone number, and source of income of each borrower;

(b) The address and legal description, if available, of the real property that is being secured by the loan;

(c) The principal amount of the loan requested;

(d) The current income and current debt of each borrower as provided by each borrower;

(e) The current assets and current liabilities of each borrower as provided by each borrower;

(f) Disclosure as to whether the loan will refinance a prior loan secured by the same real property;

(g) If the loan will refinance a prior loan secured by the same real property, the purpose of the refinancing, and the amount of the loan that is being refinanced; and

(h) The unique identifier of the mortgage loan originator.

1116.2 The following additional information shall be included in, or attached to, a mortgage loan application if available at the time of the application:

(a) The cost of the mortgage loan, including the annual percentage rate, interest rate, broker compensation, lender compensation, and finance charge;

(b) The date of maturity of the proposed loan;

(c) Disclosure as to whether the interest rate is fixed or variable;

(d) For proposed loans with a proposed variable rate of interest, disclosure of the index used for adjustments, limits on adjustments, and the adjustment period;

(e) Disclosure as to whether the loan may result in a balloon payment; and

(f) Non-conventional mortgage disclosure requirements as prescribed by the Act.

1116.3 If a mortgage loan application is approved and executed without the information in sections 1116.1 and 1116.2, the mortgage loan application shall be voidable by the borrower(s) prior to the loan closing and any fees submitted by the borrower(s) in connection with the application shall be returned to the borrower(s) in the event the borrower(s) voids the mortgage loan application.

1116.4 The current income, current debt, currents assets, current liabilities, employment, and other sources of revenue of each borrower shall be verified and documented in order to determine the borrower’s ability to repay a loan secured by a residential lien instrument.

1116.5 A licensee shall demonstrate the preparation and use of an analysis of the borrower’s ability to repay the loan and such analysis shall be retained in the loan file. The licensee shall act in good faith in the best interest of the borrower.

1116.6 A borrower may withdraw a mortgage loan application at anytime, with no penalty or fee, except for any reasonable application fee, prior to signing a financing agreement or written commitment.

History

• SOURCE: Final Rulemaking published at 56 DCR 4356, 4369-4370 (June 5, 2009); as amended by Final Rulemaking published at 56 DCR 7457, 7459 (September 11, 2009).

26-C DCMR § 1117 WRITTEN COMMITMENTS, FINANCING AGREEMENTS, AND LOCK-IN AGREEMENTS

1117.1 A written commitment shall include the following:

(a) If available, identification of the real property intended to secure the mortgage loan;

(b) The principal amount and maturity term of the mortgage loan;

(c) The interest rate and points for the mortgage loan if the commitment agreement is also a lock-in agreement, or a statement that the mortgage loan will be made at the mortgage lender’s prevailing rate and points for such loans at the time of closing or a specified number of days prior to closing;

(d) The amount of any commitment fee and the time within which the commitment fee must be paid;

(e) Disclosure as to whether funds will be escrowed and, if so, the purpose of the escrow;

(f) Disclosure as to whether private mortgage insurance or any other type of insurance is required;

(g) The length of the commitment period;

(h) A statement that if the mortgage loan is not closed, for any reason, within the commitment period, the mortgage lender is no longer obligated by the commitment agreement and any commitment fee paid shall be refunded to the borrower;

(i) A statement that the agreement is binding on both parties. The statement shall be disclosed in bold-faced type and at least a font size greater than the other language in the agreement;

(j) Any other reasonable terms and conditions that the mortgage lender elects to disclose in the commitment agreement; and

(k) The unique identifier of the mortgage loan originator, mortgage lender and mortgage broker.

1117.2 A financing agreement containing the information required in section 14 of the Act may be submitted and executed by the mortgage lender and the borrower in lieu of a written commitment if the financing agreement is not subject to a future determination, change, or alteration, and the financing agreement meets the requirements of section 1117.1.

1117.3 A written commitment executed by the mortgage lender and the borrower pursuant to section 15(a)(8) of the Act may be submitted in lieu of a financing agreement if the written commitment contains the information required in section 14 of the Act and the information required in section 1117.1.

1117.4 The mortgage lender may enter into a lock-in agreement if the mortgage lender and each borrower execute the agreement, and the agreement contains the information required in section 1117.5.

1117.5 A lock-in agreement shall include the following:

(a) The interest rate and points for the mortgage loan, and if the rate is an adjustable rate, disclosure of the initial rate, the index used for adjustments, limits on adjustments, and the adjustment period;

(b) The amount of any lock-in fee and the time within which the lock-in fee must be paid;

(c) The length of the lock-in period;

(d) A statement that if the mortgage loan is not closed within the lock-in period, for any reason, the mortgage lender is no longer obligated by the lock-in agreement and any lock-in fee paid by the borrower shall be refunded;

(e) A statement that any terms not locked-in by the lock-in agreement are subject to change until the mortgage loan is closed at settlement; and

(f) Any other reasonable terms and conditions of the lock-in agreement required by the mortgage lender.

1117.6 A written commitment, financing agreement, or lock-in agreement executed pursuant to this section may be deemed voidable and unenforceable unless the agreement is signed by the borrower and contains the information required by this section.

History

• SOURCE: Final Rulemaking published at 56 DCR 4356, 4370-4372 (June 5, 2009); as amended by Final Rulemaking published at 56 DCR 7457, 7459 (September 11, 2009).

26-C DCMR § 1118 MORTGAGE LENDER AND MORTGAGE BROKER FEES

1118.1 For purposes of this section, a fee shall include the rate of interest, annual percentage rate, finance charge, points, yield spread premium, or any other monetary costs charged to a borrower, or paid on behalf of the borrower, for the origination, service, or brokering of a mortgage loan.

1118.2 A licensee shall charge fees that are reasonable and for services actually performed by the licensee or a third party providing services on behalf of the licensee.

1118.3 Unless otherwise stated, any fee charged shall be disclosed and charged in accordance with applicable District and federal law, including TILA and RESPA.

History

• SOURCE: Final Rulemaking published at 56 DCR 4356, 4372 (June 5, 2009).

26-C DCMR § 1119 APPRAISAL

1119.1 A mortgage loan originator, mortgage lender, a mortgage broker, or a mortgage dual authority licensee shall not use an appraisal conducted for real property located in the District of Columbia, which will be used to secure a mortgage loan, unless the appraisal was conducted by an appraiser that is licensed and authorized to conduct business in the District of Columbia.

History

• SOURCE: Final Rulemaking published at 56 DCR 4356, 4373 (June 5, 2009).

26-C DCMR § 1120 RECORDKEEPING

1120.1 For each mortgage loan brokered or originated, a licensee shall retain a file of all documents, invoices and/or other obligations for at least three (3) years after final payment is made on any mortgage loan or after the mortgage loan is sold, whichever first occurs. Such file shall contain at a minimum, the following:

(a) Mortgage loan application;

(b) Settlement statements or forms required to be executed or completed pursuant to RESPA;

(c) Forms or documents required to be executed or completed pursuant to TILA;

(d) Financing agreement;

(e) Non-conventional mortgage loan disclosure;

(f) Written commitment;

(g) Lock-in agreement, if applicable;

(h) Promissory note;

(i) Documents related to any litigation against or by the licensee;

(j) Copies of all printed or other advertising materials circulated by the licensee; and

(k) Any other document that the Department may require the licensee to maintain.

1120.2 In addition to the requirements of section 1120.1, a mortgage lender shall maintain the following, as applicable:

(a) A copy of the Deed of Trust;

(b) Lien release;

(c) Certification of satisfaction; and

(d) Any other document that the Department may require the mortgage lender to maintain.

1120.3 In addition to the requirements of section 1120.1, a mortgage broker shall maintain:

(a) A copy of the mortgage loan broker agreement containing the signature(s) of applicant(s);

(b) A copy of all invoices or other evidence of expenses incurred in connection with the mortgage loan including, but not limited to, the property appraisal, title certificate, and credit report;

(c) A record of all fees collected by the broker and copies of all receipts provided to the applicant(s) for amounts paid to the broker; and

(d) Any other document that the Department may require the broker to maintain.

1120.4 The licensee shall provide a copy of the documents listed in section 1120.1 to the borrower within ten (10) business days of execution or completion of the document unless federal law prescribes a different timeframe.

History

• SOURCE: Final Rulemaking published at 56 DCR 4356, 4373-4374 (June 5, 2009).

26-C DCMR § 1121 ESCROW ACCOUNTS

1121.1 A borrower may elect not to make escrow payments to the mortgage lender when the borrower has made a down payment equaling twenty percent (20%) or more of the total purchase price of the property or has an equity interest in the property equal to, or greater than, twenty percent (20%) of the fair market value of the property.

1121.2 A mortgage lender may not impose a penalty or fee, including an increase in interest or other finance charges, when a borrower is not required, pursuant to section 16 of the Act, to make advance payments of real estate taxes or insurance premiums.

History

• SOURCE: Final Rulemaking published at 56 DCR 4356, 4374 (June 5, 2009).

26-C DCMR § 1122 APPLICABILITY OF FEDERAL LAW

1122.1 Unless otherwise stated in the Act, a licensee or person required to be licensed under the Act shall comply with applicable federal law and any rule, regulation, order, or interpretation promulgated or issued pursuant to the applicable federal law.

History

• SOURCE: Final Rulemaking published at 56 DCR 4356, 4374-4375 (June 5, 2009).

26-C DCMR § 1123 EXAMINATIONS AND INVESTIGATIONS

1123.1 To defray the costs of examination, every mortgage lender, mortgage broker, and mortgage loan originator required to be licensed under this chapter shall be subject to an examination fee as prescribed in Appendix A.

1123.2 A licensee who has been charged and pays an examination fee, shall not be subject to an annual assessment fee in the same year unless the following occurs:

(a) The Commissioner determines that an out-of-state examination is necessary; or

(b) The Commissioner determines that a special investigation is necessary.

1123.3 The Commissioner may examine a licensee located outside the District of Columbia and charge the licensee for the cost of actual travel and housing expenses incurred to conduct the examination.

History

• SOURCE: Final Rulemaking published at 56 DCR 4356, 4375 (June 5, 2009).

26-C DCMR § 1124 COMPLAINTS

1124.1 Each licensee shall file with the Department a written notice designating a contact person to serve as the point of contact for complaints filed with the Department against the licensee. The notice shall include the designee’s name, title, e-mail address, telephone number, and address.

1124.2 All complaints shall be filed with the Department, on a form prescribed by the Department, and in accordance with any procedures or processes adopted by the Department.

1124.3 The Commissioner may provide information on consumer complaints to the Nationwide Mortgage Licensing System and Registry, and other state and federal regulatory agencies.

History

• SOURCE: Final Rulemaking published at 56 DCR 4356, 4375 (June 5, 2009).

26-C DCMR § 1125 REVOCATION AND SUSPENSION OF LICENSE

1125.1 A person to whom an order is issued pursuant to sections 18 and 19 of the Act shall be given reasonable notice and the opportunity for a hearing. The order shall issue and be served, either by hand or by United States certified mail, return receipt requested, postage prepaid, on the respondent, applicant, licensee, person required to be licensed or the registered agent of the person. Service shall be made on the person required to be served at the last known address of that person or at the last known address maintained by the Department for that person.

1125.2 The order shall include:

(a) The date the order was entered;

(b) The basis for the proposed action;

(c) The date by which the person shall file a written request for a hearing;

(d) Notice that the failure of the person to file a written request for a hearing with the Department within the specified time period shall constitute a waiver of a hearing and shall constitute a default; and

(e) The date by which the Department shall consider the order to be final.

1125.3 The Department may issue a temporary order taking enforcement action against a person, if the Department determines that the person has engaged in conduct that is likely to cause one or more of the conditions as set forth in section 117(b) of the 21st Century Financial Modernization Act of 2000, effective June 9, 2001 (D.C. Law 13-308; D.C. Official Code § 26-551.17(b) (2001)).

1125.4 If the person files a request for a hearing, the written response shall include:

(a) An explanation of why the proposed action or temporary order is not warranted; and

(b) Any other relevant information, mitigating circumstance, documentation, or other evidence in support of the person’s position.

1125.5 The Department shall issue a final order within fifteen (15) days after a hearing has been held.

1125.6 Unless otherwise required by the Act, a final order, temporary order, or any other type of enforcement action taken by the Department shall be issued or conducted in accordance with subchapter IV of the 2lst Century Financial Modernization Act of 2000, effective June 9, 2001 (D.C. Law 13-308; D.C. Official Code §§ 26-551.13 through 551.21(2001)).

1125.7 The Commissioner may make public, a final order, temporary order or any other type of enforcement action taken by the Department.

All hearings held pursuant to this section shall be conducted pursuant to the Rules of Practice and Procedure for Hearings set out in Chapter 38 of Title 26 of the District of Columbia Municipal Regulations.

1125.9 Any order issued by the Commissioner pursuant to sections 18 and 19 of the Act shall remain in full force and effect until and unless later modified or vacated by the Commissioner.

History

• SOURCE: Final Rulemaking published at 56 DCR 7457, 7459-7461 (September 11, 2009).

26-C DCMR § 1126 ADMINISTRATIVE PENALTIES

1126.1 Any licensee that fails to file an annual report at the time prescribed by section 11 of the Act, shall be assessed a late penalty in the amount of one hundred dollars ($100) per business day following the date the annual report is due until the annual report is filed with the Department.

1126.2 Any licensee, or any person required to have a license under the Act, shall be assessed up to the maximum penalties upon a violation of the Act as follows:

(a) Five thousand dollars ($5000) for each occurrence of each violation of the Act if the person committing the violation is licensed by the Department, and the licensee has no more than one (1) violation of the Act during the current license period;

(b) Twenty-five thousand dollars ($25,000) for each occurrence of each violation of the Act if the person committing the violation is not licensed by the Department.

The Commissioner, in his or her discretion, may reduce the penalty imposed by section 1126.2 above upon good cause shown, in writing, by the person against whom the penalty would be imposed.

History

• SOURCE: Final Rulemaking published at 56 DCR 4356, 4377 (June 5, 2009).

26-C DCMR § 1199 DEFINITIONS

1199.1 For the purpose of this chapter, the following terms have the meaning ascribed:

Applicant - a person filing an application for a license, a renewal license, or a change in control under the Act, for an individual office location.

Commissioner - the Commissioner of the Department of Insurance, Securities and Banking.

Department - the Department of Insurance, Securities and Banking.

Fair Credit Reporting Act - 15 USC §§ 1681 et seq. and implementing rules and regulations.

Lock-in agreement - an agreement that guarantees an interest rate during a specified period.

Mortgage Dual Authority licensee - a licensee with both a mortgage lender and a mortgage broker license.

Mortgage Servicer - a person who engages in the business of servicing mortgage loans for others or collecting or otherwise receiving mortgage loan payments directly from borrowers for distribution to any other person.

RESPA - the Real Estate Settlement Procedures Act (12 USC §§ 2601 et seq.) and implementing rules and regulations.

Sponsor or Sponsoring Agent - The District licensed mortgage lender or mortgage broker with whom the mortgage loan originator is employed or associated.

TILA - the Truth In Lending Act (15 USC §§ 1601 et seq.) and implementing rules and regulations.

History

• SOURCE: Final Rulemaking published at 56 DCR 4356, 4377-4378 (June 5, 2009), as amended by Final Rulemaking published at 56 DCR 7457, 7461 (September 11, 2009); as amended by Notice of Emergency and Proposed Rulemaking published at 57 DCR 7908 (August 27, 2010)[EXPIRED]; as amended by Notice of Final Rulemaking published at 57 DCR 12219, 12221 (December 24, 2010). APPENDIX A MORTGAGE LENDER, MORTGAGE BROKER, MORTGAGE LOAN ORIGINATOR, AND MORTGAGE DUAL AUTHORITY LICENSE FEES Mortgage Loan Originator License Mortgage Broker License Mortgage Lender License Mortgage Dual Authority License DISB Initial Application Fee $300 + NMLSR Fee $1,100 + NMLSR Fee $1,200 + NMLSR Fee $1,300 + NMLSR Fee DISB Renewal Application Fee $300 + NMLSR Fee $900 + NMLSR Fee $1,000 + NMLSR Fee $1,200 + NMLSR Fee DISB Amendment Fee $100 $100 $100 $100 DISB Late Fee $300 $300 $ 300 $300 DISB Reinstatement Fee $400 $400 $ 400 $400 DISB Acquisition of Control Fee n/a $500 $500 $500 DISB Annual Assessment Fee n/a $400 + $6.60 per loan $800 + $6.60 per loan $1,200 + $ 6.60 per loan DISB Examination Fee $400 per examiner day $400 per examiner day $400 per examiner day $400 per examiner day

26-C18 AUTOMATED TELLER MACHINES

26-C DCMR § 1800 SCOPE AND APPLICABILITY

1800.1 Except as provided in § 1800.2, this chapter shall apply to any person who operates an automated teller machine or point of sale terminal in the District of Columbia.

1800.2 This chapter shall not apply to any commercial bank, savings bank, savings and loan association, credit union, or trust company incorporated or chartered under the laws of the United States, any state of the United States, or the District of Columbia.

History

• SOURCE: Final Rulemaking published at 50 DCR 10324, 20325 (December 5, 2003).

26-C DCMR § 1801 REGISTRATION OF AUTOMATED TELLER MACHINES

1801.1 No person shall operate an automated teller machine unless a registration application is filed and approved by the Commissioner.

1801.2 A registration application shall be filed on a registration form as prescribed by the Commissioner and accompanied with a non-refundable registration fee in the amount of five hundred dollars ($500) for the first automated teller machine operated by the operator in the District and fifty dollars ($50) for each additional automated teller machine operated by the operator in the District.

1801.3 The registration application shall contain, at a minimum, the following information:

(a) The name and address of the applicant;

(b) The type of business structure;

(c) The state of incorporation;

(d) The name of a registered agent if the applicant is a corporation, association, entity or partnership operating under the laws of a state other than the District of Columbia;

(e) The safety policies and procedures for each automated teller machine to be operated by the applicant;

(f) The number of automated teller machines that will be operated in the District by the applicant and the date of installation of each automated teller machine; and

(g) The fees charged for each service provided or offered by each automated teller machine operated in the District.

1801.4 The Commissioner may require additional information to be included or submitted with a registration application.

1801.5 The Commissioner shall approve or deny a registration application not later than sixty (60) days from the date of filing the registration application.

1801.6 The registration of an automated teller machine shall expire one year from the date the registration application was approved by the Commissioner.

History

• SOURCE: Final Rulemaking published at 50 DCR 10324, 10325-10326 (December 5, 2003).

26-C DCMR § 1802 RENEWAL OF REGISTRATION APPLICATION

1802.1 In order to renew a registration required pursuant to this chapter, an operator shall file a renewal registration application, on a form prescribed by the Commissioner, for the operation of an automated teller machine not later than ninety (90) days before the expiration date of the operator's current registration for the automated teller machine.

1802.2 The renewal registration application shall be accompanied with a non-refundable renewal registration fee in the amount of five hundred dollars ($500) for the first automated teller machine operated by the operator in the District and fifty dollars ($50) for each additional automated teller machine operated by the operator in the District.

1802.3 The Commissioner shall approve or deny the renewal registration application not later than thirty (30) days from the date of filing the renewal registration application, except if the Commissioner extends the time within the thirty (30) day time frame for approving or denying a renewal.

History

• SOURCE: Final Rulemaking published at 50 DCR 10324, 10326 (December 5, 2003).

26-C DCMR § 1803 REVOCATION AND SUSPENSION OF REGISTRATION

1803.1 Except as provided in § 1803.2, the Commissioner may revoke or suspend the registration of an operator upon a finding that the operator:

(a) Violated any applicable District or federal law, rule or regulation;

(b) Made a material misstatement in the registration application or any other document or statements provided to the Department;

(c) Engaged in any fraudulent, dishonest, or unsafe activity in connection with the operation of an automated teller machine;

(d) Demonstrated a lack of competence in connection with the operation of an automated teller machine; or

(e) Violated any order or written agreement issued by the Commissioner.

1803.2 Except as provided by § 1803.3, the Commissioner, prior to taking action pursuant to § 1803.1, shall issue and serve, by U.S. Mail, on an operator written notice of his or her intent to revoke or suspend the operator's registration. A notice of intent to revoke or suspend an operator's registration shall include:

(a) The reasons for the proposed action;

(b) The date by which the operator may file a written response with the Commissioner; and

(c) The date by which the Commissioner will issue a final order revoking or suspending the operator's registration in the event the operator fails to respond to the notice of intent to revoke or suspend an operator's registration by the date provided in the notice of intent.

1803.3 The Commissioner may issue a temporary order revoking or suspending an operator's registration without providing the operator with a prior notice of intent if the Commissioner determines that the operator's continued operation may be a danger to public safety or health.

1803.4 A temporary order shall provide the operator with an opportunity to make a written response in accordance with § 1803.5.

1803.5 An operator may file a written response to a notice of intent to revoke or suspend the operator's registration or a temporary order within 15 days from the date of service of the notice of intent or temporary order. The written response shall include:

(a) An explanation of why the proposed action or temporary order is not warranted; and

(b) Any other relevant information, mitigating circumstance, documentation, or other evidence in support of the operator's position. The failure by an operator to file a written response with the Commissioner to a notice of intent or a temporary order within the specified time period, shall constitute a waiver of the opportunity to respond and shall constitute consent to a final order under § 1803.1 or § 1803.3.

1803.6 The Commissioner, after considering any response filed pursuant to § 1803.5, shall issue a final order pursuant to § 1803.1 or § 1803.3 within fifteen (15) business days after receiving a response from the operator pursuant to § 1803.5, or after the deadline upon which a response from the operator was due pursuant to § 1803.5.

History

• SOURCE: Final Rulemaking published at 50 DCR 10324, 10326-10327 (December 5, 2003).

26-C DCMR § 1804 RECORD KEEPING

1804.1 An operator shall not make any material false or misleading statements or material omissions in its records or any other documents filed with the Commissioner.

History

• SOURCE: Final Rulemaking published at 50 DCR 10324, 10328 (December 5, 2003).

26-C DCMR § 1805 DISCLOSURE OF SURCHARGES

1805.1 A disclosure of surcharges on an automated teller machine and point of sale terminal shall be printed or typewritten in the English language. A disclosure of surcharges on an automated teller machine shall be provided electronically.

1805.2 A point of sale terminal shall have the disclosure of surcharges displayed on the front side of the point of sale terminal and the language shall be printed or typewritten in a conspicuous manner.

History

• SOURCE: Final Rulemaking published at 50 DCR 10324, 10328 (December 5, 2003).

26-C DCMR § 1806 PROOF OF REGISTRATION

1806.1 An operator of an automated teller machine shall affix a registration decal, issued by the Commissioner, to each automated teller machine operated in the District and registered pursuant to the Act.

1806.2 The registration decal required pursuant to § 1806.1 shall be affixed to the front side of the automated teller machine as directed by the Commissioner.

1806.3 No automated teller machine shall be operated in the District without a valid registration decal issued by the Commissioner.

History

• SOURCE: Final Rulemaking published at 50 DCR 10324, 10328 (December 5, 2003).

26-C20 PREDATORY LENDING

26-C DCMR § 2000 SCOPE

2000.1 Unless specified otherwise, these rules shall govern the brokering, arranging, making, funding, and servicing of covered loans and predatory lending protections in the District of Columbia, as governed by the Act.

History

• SOURCE: Final Rulemaking published at 49 DCR 10779 (November 29, 2002).

26-C DCMR § 2001 COVERED LOANS

2001.1 A lender that makes a covered loan, as defined under section 101(7)(A) of the Act, shall be subject to Title II of the Act and shall remain subject to Title II of the Act in the event the covered loan is sold or assigned to another person with respect to actions taken prior to the sale or assignment of the covered loan.

2001.2 The purchase or assignment of a covered loan, as defined under section 101(7)(A) of the Act, by a federally-regulated lender shall not relieve the originating lender, or previous purchaser or assignee, if any, of any liability with respect to a violation of the Act.

2001.3 A federally regulated lender that purchases a mortgage loan that was a covered loan under section 101(7)(A) of the Act at the time of origination shall be subject to section 102 of the Act with respect to the purchased mortgage loan if the purchased mortgage loan meets the definition of a covered loan under section 101(7)(B) of the Act.

2001.4 A covered loan, as defined under section 101(7)(A) of the Act, that is purchased by a federally regulated lender and subsequently sold or assigned to a person other than a federally regulated lender, shall be a covered loan, as defined under section 101(7)(A) of the Act, with respect to the purchaser or assignee, and the purchaser or assignee shall only be liable for complying with Title II of the Act with respect to the covered loan, when applicable, for acts taken by the purchaser or assignee subsequent to the purchase or assignment of the covered loan from the federally regulated lender.

2001.5 A covered loan, as defined under section 101(7)(B) of the Act, that is sold or assigned to a person other than a federally regulated lender, shall be a covered loan, as defined under section 101(7)(A) of the Act, with respect to the purchaser or assignee, and the purchaser or assignee shall only be liable for complying with Title II of the Act with respect to the covered loan, when applicable, for acts taken by the purchaser or assignee subsequent to the purchase or assignment of the covered loan from the federally regulated lender.

History

• SOURCE: Final Rulemaking published at 49 DCR 10779, 10780 (November 29, 2002).

26-C DCMR § 2002 MEDIAN FAMILY INCOME

2002.1 For purposes of the Act, the median family income amount for Washington, D.C. shall be the most recent estimate from the Office of Policy and Research Development of the U.S. Department of Housing and Urban Development.

2002.2 The median family income amount for Washington, D.C. can be obtained from the U.S. Department of Housing and Urban Development website (www.huduser.org/datasets/il.html).

2002.3 The following provides an example for calculating 120% of the median family income amount. It requires multiplying the borrower(s)'s income by 1.20. For example, if the income of the borrower(s) is $50,000, 120% of $50,000 is calculated as follows: $50,000 x 1.20 = $60,000. Thus, 120% of the borrower(s)'s income in the example would be $60,000. The Fiscal Year 2002 median family income estimate for the District of Columbia, as determined by §§ 2002.1 and 2002.2 is $64,100. Because 120% of the borrower(s) income is lesser than the median family income estimate for the District of Columbia ($64,100), the requirements of section 202(a) of the Act concerning insufficient repayment ability would apply to the borrower(s).

2002.4 The Department shall periodically make the most recent median family income amount for Washington, D.C., as set forth in §§ 2002.1 and 2002.2, available on the Department's website (www.dbfi.dc.gov).

History

• SOURCE: Final Rulemaking published at 49 DCR 10779, 10780 (November 29, 2002).

26-C DCMR § 2003 NO ENCOURAGEMENT OF DEFAULT

2003.1 No lender shall encourage or recommend that a borrower default on an existing loan or other debt.

2003.2 For purposes of § 2003.1, "default" shall include failure to make any payment when due, without relying on a grace period or late payment period, or failure to perform all the terms and conditions of an existing loan or other debt.

2003.3 A lender shall not encourage or recommend any action by the borrower on existing loans or other debt that will create a default on an existing loan or other debt of the borrower.

History

• SOURCE: Final Rulemaking published at 49 DCR 10779, 10781 (November 29, 2002).

26-C DCMR § 2004 LIST OF HOME IMPROVEMENT CONTRACTORS

2004.1 For purposes of the Act, a list of home improvement contractors that are bonded and in good standing shall be available from the Department.

History

• SOURCE: Final Rulemaking published at 49 DCR 10779, 10781 (November 29, 2002).

26-C DCMR § 2005 RED FLAG WARNING DISCLOSURE NOTICE

2005.1 The "Red Flag" Warning Disclosure Notice ("Notice"), attached in the Appendix, Form 1, shall be used to comply with the notice requirement established in section 211 of the Act and may be used to comply with section 219 of the Act.

2005.2 The requirement of sending the Notice shall be satisfied if a mortgage broker or mortgage lender sends the disclosure notice to the borrower(s), whether or not it is sent on behalf of a specific lender.

2005.3 The delivery of the Notice shall be made by any means in which the Notice is received by the borrower(s), including but not limited to, personal delivery, facsimile delivery, delivery in electronic format, or regular, certified or registered U.S. Mail with postage prepaid and a return receipt for certified or registered U.S. Mail. Unless the lender has been requested to send the disclosure notice to a different address by the borrower, the Notice shall be sent to the borrower(s)'s address or facsimile number as listed on the loan application.

2005.4 The lender shall have the burden of proving that the borrower(s) received the Notice.

2005.5 The signature of the borrower(s) on the signature line of the Notice shall be deemed to be sufficient confirmation of the borrower(s)'s receipt of the Notice.

History

• SOURCE: Final Rulemaking published at 49 DCR 10779, 10781 (November 29, 2002).

26-C DCMR § 2006 MAYOR'S STANDARD FOR ARBITRATION

2006.1 For purposes of this Act, the standard for arbitration shall be policies and procedures of the American Arbitration Association.

2006.2 Arbitration clauses that comply with policies and procedures of the American Arbitration Association and § 2006.3 shall be presumed not to be oppressive and not to violate section 218 of the Act.

2006.3 Persons using arbitration with respect to a covered loan shall, where applicable, comply with the procedures established in D.C. Official Code §§ 16-4301 et seq. (2001).

History

• SOURCE: Final Rulemaking published at 49 DCR 10779, 10781-10782 (November 29, 2002).

26-C DCMR § 2007 FILING REQUIREMENTS AND PROCEDURES WITH THE DEPARTMENT OF INSURANCE, SECURITIES AND BANKING

2007.1 Within 14 days after the funding of a covered loan, as defined under section 101(7)(A) of the Act, a lender shall submit copies of the settlement statement, the FP 7/C Form filed with the Office of the Recorder of Deeds, the final Truth in Lending Act disclosure, and the note to the Department.

2007.2 In addition to the documents described in § 2007.1, the lender shall submit a letter of transmittal in a form similar to, and containing the same information, as the sample letter of transmittal found in the Appendix, Form 2, to the Department.

2007.3 The letter of transmittal shall also contain a certification by the lender that the documents submitted pursuant to § 2007.1 are true copies of the original documents.

2007.4 The lender shall deliver the transmittal letter and loan documents package to: Department of Insurance, Securities and Banking, 810 First Street, N.E., Suite 701, Washington, DC 20002.

2007.5 Pursuant to D.C. Official Code § 26-1109, the lender shall retain copies of the note, settlement statement, truth-in-lending disclosure, and such other papers or records relating to the loan for at least 3 years after final payment is made on any mortgage loan or after the mortgage loan is sold, whichever comes first.

History

• SOURCE: Final Rulemaking published at 49 DCR 10779, 10782 (November 29, 2002).

26-C DCMR § 2008 INVESTIGATIONS

2008.1 The Commissioner may initiate an investigation of any person or entity if the Commissioner has reasonable cause to believe that the person or entity has engaged, is engaging, or may engage in one or more of the prohibited predatory lending activities as defined in section 102 or Title II of the Act.

2008.2 All investigations shall be conducted in conformity with the requirements of D.C. Official Code § 26-702.01 (2001) and D.C. Official Code § 26-551.12 (2001).

History

• SOURCE: Final Rulemaking published at 49 DCR 10779, 10782 (November 29, 2002).

26-C DCMR § 2009 ENFORCEMENT

2009.1 Pursuant to section 302 of the Act, the Department may conduct examinations, initiate investigations, and issue orders pursuant to section 303 of the Act in order to enforce the provisions of the Act.

2009.2 Any findings by the Commissioner of violations shall also be referred to the District of Columbia Office of the Attorney General Counsel for further enforcement.

History

• SOURCE: Final Rulemaking published at 49 DCR 10779, 10783 (November 29, 2002).

26-C DCMR § 2010 PUBLICATION OF FINAL DECISIONS

2010.1 A decision of the Department under D.C. Official Code §§ 2-501 et seq. (2001) shall be enforceable in a court of competent jurisdiction.

2010.2 Final decisions shall be published in the D.C. Register by the Department within 60 days after the effective date of the final decision.

History

• SOURCE: Final Rulemaking published at 49 DCR 10779, 10783 (November 29, 2002).

26-C DCMR § 2011 NOTICE OF ASSIGNEE LIABILITY

2011.1 Any person who sells or assigns a covered loan shall include, with the covered loan a notice, in a form similar to, and containing the same information, as the sample notice found in the Appendix, Form 3.

History

• SOURCE: Final Rulemaking published at 49 DCR 10779, 10783 (November 29, 2002).

26-C DCMR § 2099 DEFINITIONS

2099.1 For the purpose of this chapter, the following terms have the meaning ascribed:

"Act" - the Home Loan Protection Act of 2002 (D.C. Law 14-132; D.C. Official Code §§ 26-1151.01 et seq. (2001)).

"Department" - the Department of Insurance, Securities and Banking.

"District" - the District of Columbia.

"Federally regulated lender" - a lender regulated and supervised by a supervising federal agency, as defined by section 101(26) of the Act, and the Federal National Mortgage Association, or the Federal Home Loan Mortgage Corporation.

History

• SOURCE: Final Rulemaking published at 49 DCR 10779, 10783 (November 29, 2002). APPENDIX FORM 1 - "RED FLAG" WARNING DISCLOSURE NOTICE FORM 2 - SAMPLE LETTER OF TRANSMITTAL FORM 3 - NOTICE OF COVERED LOAN FORM 1 "RED FLAG" WARNING DISCLOSURE NOTICE This notice concerns your application for a loan to be secured by your home. Your mortgage broker or lender should provide this notice to you at least 3 days before the closing of your loan. You should fully understand the information in this form before you close on your loan or sign any loan documents or agreements. This form will assist you in determining whether your mortgage broker or lender may be engaging in predatory lending practices in violation of District of Columbia law and provide you with information regarding mortgage loans and housing counseling. REMEMBER: · A MORTGAGE GIVES A LENDER THE RIGHT TO FORECLOSE ON YOUR HOME! · IF YOU CANNOT OR DO NOT PAY THE MONTHLY MORTGAGE PAYMENTS ON TIME, YOUR HOME CAN BE SOLD AND YOU COULD LOSE YOUR EQUITY IN YOUR HOME AND BE EVICTED! If you answer yes to one or more of the following questions, your lender may be engaging in predatory lending practices in violation of the District of Columbia Home Loan Protection Act of 2002 (D.C. Law 14-132; D.C. Official Code §§ 26-1151.01 et seq. (2001)). Please note: This list is not exclusive and does not contain all the possible lending abuses and violations that may occur. The District of Columbia Department of Insurance, Securities and Banking ("Department") highly recommends that you seek assistance or advice from a housing counselor, your attorney, accountant or financial advisor before you sign any loan agreement. A list of housing counseling agencies is available from the Department's website which can be found at www.disbbfi@dc.gov, or from the Department at 810 First Street, N.E., Washington, D.C. 20002. 1. Red Flag Warning: Unaffordable Loan. Will you spend 50% or more of your gross monthly income for the new monthly mortgage payment or be unable to make the monthly payments on your new loan on a timely basis? If your answer is yes, your lender may be making a loan to you that you are unable to afford. 2(a). Red Flag Warning: Financed Credit Insurance. Have you purchased single-premium credit life, accident, health, or unemployment insurance with your new loan and is the single-premium credit insurance being financed through your loan? If your answer is yes, your lender may be engaging in a predatory lending activity. 2(b). Red Flag Warning: Disclosure Requirement. Have you purchased credit insurance on a basis other than a prepaid single premium basis and have you failed to receive a clear and conspicuous disclosure at least 3 days before the closing of your loan that states that the credit insurance is not a condition of the mortgage loan and that you may elect not to purchase the insurance? If your answer is yes, your lender may be engaging in a predatory lending activity. 2(c). Red Flag Warning: Insurance, Debt Cancellation, or Suspension Services. Have you purchased any insurance, debt cancellation, or suspension services and failed to receive a disclosure notice regarding the insurance, debt cancellation, or suspension services? If your answer is yes, your lender may be engaging in a predatory lending activity. 3. Red Flag Warning: Repeated Refinancings. Have you refinanced your home more than once in the last 18 months and your lender is financing points from your previous loan and other fees in your new loan in excess of $400 or 3% of the new loan principal? If your answer is yes, your lender may be engaging in repeated refinancings or "flipping" of your home in violation of the law. 4. Red Flag Warning: Encouraging Nonpayment. Have you been informed by your lender or broker that, because you are refinancing, you should not continue to pay on your existing loan? If your answer is yes, your lender or broker may be encouraging you to default on your existing loan in anticipation of refinancing in violation of the law. 5. Red Flag Warning: Unfair Steering. Do you have a new loan with an annual percentage rate greater than the rate you think you would otherwise have qualified for or did your lender or broker make a false, deceptive, or misleading statement regarding your ability to qualify for any mortgage loan based upon your credit score? If your answer is yes, your lender may be using your credit scores inaccurately or improperly in violation of the law. 6. Red Flag Warning: Failure To Report Good Payment History. Was your favorable payment history and information not reported to a nationally recognized credit reporting agency for a period of more than 12 months? If your answer is yes, your lender could be failing to report your favorable credit history and may be in violation of the law. 7(a). Red Flag Warning: Home Improvement Contracts. Will a home improvement contractor be paid from the proceeds of your loan without your approval or consent? If your answer is yes, your lender may be paying a home improvement contractor in violation of the law. 7(b). Red Flag Warning: Bonded and Licensed Home Improvement Contractors. Is the home improvement contractor working on your home not licensed with the District of Columbia Government? If your answer is yes, your lender or broker may be working with an unlicensed home improvement contractor in violation of the law. 8. Red Flag Warning: Increased Interest Rate On Default. Do you have a loan that includes a provision that increases the loan's interest rate upon default? If your answer is yes, your lender may be engaging in a predatory lending activity. 9. Red Flag Warning: Improper Fees. Have you been charged fees for services that are not actually performed or charged loan discount points that do not reduce your interest rate? If your answer is yes, your lender or broker may be engaging in a predatory lending activity. 10. Red Flag Warning: Failure To Provide Notice. Did you fail to receive a copy of this "Red Flag Warning Disclosure Notice" from your lender or broker at least 3 days prior to closing your loan? If your answer is yes, your lender or broker may have failed to timely send you a required disclosure notice in violation of the law. 11. Red Flag Warning: Prepayment Penalty. Have you been charged a prepayment premium, fee or charge payable more than 3 years after the closing of your loan? If your answer is yes, your lender may be engaging in a predatory lending activity. 12. Red Flag Warning: Balloon Payment. Do you have a loan with a scheduled balloon payment in less than 7 years? If your answer is yes, your lender may be engaging in a predatory lending activity. 13. Red Flag Warning: Call Provision. Does your loan contain a provision that permits your lender to accelerate your debt? If your answer is yes, your lender may be engaging in a predatory lending activity. 14. Red Flag Warning: Negative Amortization. Does your loan include a payment schedule with regular periodic payments that causes the principal balance to increase? If your answer is yes, your lender may be engaging in a predatory lending activity. 15. Red Flag Warning: Advance Payment. Does your loan include terms under which your regular periodic payments required by your loan are paid in advance using proceeds from your loan? If your answer is yes, your lender may be engaging in a predatory lending activity. 16. Red Flag Warning: Advance Waiver. Have you waived a violation of law with respect to any provision of your new loan in advance of finalizing your loan? If your answer is yes, your lender may be imposing an advance waiver provision on you in violation of the law. 17. Red Flag Warning: Oppressive Mandatory Arbitration. Does your new home loan contain any oppressive mandatory arbitration clauses? If your answer is yes, your lender may be engaging in a predatory lending activity. 18. Red Flag Warning: Homeownership Counseling. Has your lender failed to inform you of your right to obtain counseling in connection with your loan and failed to provide this notice to you within 3 days of the closing of your loan? If your answer is yes, your lender may be engaging in a predatory lending activity. REMEMBER A MORTGAGE GIVES A LENDER THE RIGHT TO FORECLOSE ON YOUR HOME! IF YOU CANNOT OR DO NOT PAY THE MONTHLY PAYMENTS ON TIME, YOUR HOME CAN BE SOLD AND YOU COULD LOSE YOUR EQUITY IN YOUR HOME AND BE EVICTED! Please sign below to acknowledge that you have received this notice and provide the date the lender or broker provided you with this notice: I hereby certify that this form was delivered to me. _____________________ Signature ____________________ Name (Please Print) ____________________ Date FORM 2 SAMPLE LETTER OF TRANSMITTAL SUBMISSION OF LOAN DOCUMENTS TO THE DEPARTMENT OF BANKING AND FINANCIAL INSTITUTIONS Gennet Purcell Acting Commissioner Department of Insurance, Securities and Banking, 810 First Street, N.E., Suite 701 Washington, D.C. 20002 Dear Commissioner Purcell: Pursuant to section 221 of the Home Loan Protection Act of 2002 and 26A DCMR § 2008, I am submitting the attached loan documents for the following loan: Name of borrower: Address of property: Lot and Square No. Loan Identification No. The attached loan documents include a copy of the settlement statement; the FP 7/C Form filed with the Office of the Recorder of Deeds; the final Truth-in-Lending Act disclosure; and the note. I hereby certify that the attached documents are true copies of the original documents. Thank you for your assistance. Ann Jones Compliance Officer ABC Mortgage Company Anywhere City, Anywhere State Zip code Telephone # Fax # E-Mail address FORM 3 NOTICE OF COVERED LOAN REGARDING SALE OR ASSIGNMENT OF A COVERED LOAN THE ATTACHED LOAN HAS BEEN DETERMINED TO BE A "COVERED LOAN" UNDER DISTRICT OF COLUMBIA LAW PLEASE NOTE THAT "COVERED LOANS" ARE ENTITLED TO VARIOUS PROTECTIONS UNDER THE HOME LOAN PROTECTION ACT OF 2002 (LAW 14-132; D.C. OFFICIAL CODE §§ 26-1151.01 et seq (2001)) ("ACT") AND ASSIGNEES MAY BE LIABLE UNDER THE ACT FOR VIOLATIONS OF THE ACT.

26-C21 OPPORTUNITY ACCOUNTS

26-C DCMR § 2100 SCOPE

2100.1 These regulations shall govern the implementation of the Act including all opportunity accounts in the District of Columbia funded under the Act. They provide the rules for opportunity account participants, the non-profit organizations which seek and are chosen to administer an opportunity account program, and banks and other savings institutions that participate by holding opportunity accounts.

History

• SOURCE: Final Rulemaking published at 49 DCR 4983 (May 31 2002).

26-C DCMR § 2101 FUNCTION OF OPPORTUNITY ACCOUNTS OFFICE, APPLICATION REQUIREMENTS AND PROCEDURES

2101.1 The Opportunity Accounts Office ("Office"), established pursuant to the Act, shall select, on a competitive basis, qualified non-profit organizations to administer the opportunity accounts programs. The non-profit organization shall administer the program, including selecting and enrolling qualified applicants, training in money management including budgeting and saving, training in the purchase and use of the participant's chosen asset, and assisting in the purchase of the chosen asset.

2101.2 The Office shall solicit applications from non-profit organizations serving the District of Columbia to administer Opportunity Account programs pursuant to the Act. The Office shall solicit further applications as appropriate considering the money available and the need for broader coverage within the District of Columbia.

2101.3 Each applicant shall submit an application to the Office, including forms and attachments, as required by the Office and consistent with the purpose of the Act and these rules.

2101.4 The Office shall review each application for completeness and eligibility and then rank them on program strength under the criteria set forth in subsection 2101.5 below.

2101.5 Each application shall contain the following information:

(a) The name and address of the applicant;

(b) A description of the qualifications of the applicant to administer an opportunity accounts program, including its history, funding sources, a summary of other programs, including those that will assist the account holders, and the population and area of the District of Columbia that the applicant organization has served;

(c) An estimate of the costs projected for the administration of the program;

(d) A description of the ability and plans of the applicant to provide or raise sufficient matching and operating funds;

(e) A description of groups to be targeted for priority participation in the opportunity accounts program;

(f) A description of the process the applicant will use to include account holders in the decision-making process regarding the implementation and administration of the opportunity account program;

(g) A description of the process that the applicant will use to require account holders to contribute funds from earned income;

(h) A description of the terms of the opportunity accounts which the applicant proposes to offer including:

(1) The match ratio and source for each dollar of matching funds;

(2) The overall maximum amount of participant's saving that will be matched, by asset type;

(3) A minimum monthly saving requirement; and

(4) A plan to encourage saving of Earned Income Tax Credit refunds.

(i) A description of the minimum or maximum savings period; and a time, other than the statutory time, for ending the opportunity account;

(j) A plan to provide opportunity accounts for youths under eighteen (18) years old and to ensure that the youths have an income for savings;

(k) A plan to publicize the availability of opportunity accounts and recruit participants;

(l) A plan to offer economic literacy training or arrangements for a partner to offer economic literacy training and to ensure that opportunity account holders complete the training satisfactorily;

(m) A description of the ability of the applicant to provide auxiliary services, such as counseling, to assist account holders with saving and resolving life problems that can prevent successful saving;

(n) A requirement that the account holder be provided adequate information on the requirements of the opportunity account program and this Act and the purposes for which an opportunity account may be used;

(o) A description of the process for offering or making available financial management courses or training on the use of funds for approved purposes, such as home ownership training for home ownership opportunity accounts; stay-in-school, tutoring, SAT prep and college counseling for education opportunity accounts; and business training for microenterprise opportunity accounts;

(p) A description of the process for regular evaluation and review of opportunity accounts to ensure compliance with the Act, District of Columbia regulations, and program rules by account holders;

(q) A description of the process for counseling account holders who are not in compliance with the Act or these rules;

(r) A description of the system for preventing withdrawal of matching funds for a purpose other than an approved purpose by maintaining the matching funds in a matching funds account separate from the opportunity account into which the account holder deposits his or her savings;

(s) If the applicant proposes to undertake any aspect of its proposal with the assistance of or in conjunction with a partner, the applicant shall include relevant information regarding any partner that the applicant proposes to utilize to implement and administer its proposal, including a signed agreement or letter specifying the role of the partner;

(t) A description of the applicant's key staff administering the opportunity account program by organizational chart and resume (or if not yet hired, job description);

(u) A description of the applicant's financial audits and, if available, program audits for the most recent fiscal year; and

(v) Such other information as the Office shall require.

History

• SOURCE: Final Rulemaking published at 49 DCR 4983-4986 (May 31 2002).

26-C DCMR § 2102 APPLICANT ORGANIZATION ELIGIBILITY AND ASSESSMENT

2102.1 In order to approve an application, the Office shall determine that the applicant is exempt from taxation under section 501(c)(3) of the Internal Revenue Code of 1986 (26 U.S.C. § 501 (c)(3)).

2102.2 In addition to section 2102.1 above, the Office shall consider the following factors in approving or disapproving applications filed pursuant to sections 2101.2 through 2101.5:

(a) The administrative and technical ability of the applicant to administer an opportunity account program;

(b) The fiscal accountability of the applicant including accounting procedures and audit reports;

(c) The ability of the applicant to provide or raise money for matching contributions;

(d) The ability of the applicant to establish and administer an opportunity account reserve fund to receive contributions from opportunity account program contributors;

(e) The amount and quality of proposed auxiliary services that the applicant will provide, including economic literacy training, asset training, counseling, and asset purchase assistance;

(f) The experience and training of the staff that the applicant will assign to the opportunity account program;

(g) The record of the applicant in administering an opportunity accounts program, or other asset-based programs such as homeownership, education community development, or social services;

(h) The likelihood that the applicant will be able to administer a successful opportunity account program; and

(i) Any other factors the Office considers relevant to ensure the creation and operation by the applicant of an efficient and effective opportunity account program.

History

• SOURCE: Final Rulemaking published at 49 DCR 4983, 4986-4987 (May 31 2002).

26-C DCMR § 2103 FINANCIAL INSTITUTIONS

2103.1 General approval is hereby granted to financial institutions that have a branch office located in the District of Columbia to establish opportunity accounts and opportunity account reserve funds accounts in compliance with the Act. These accounts shall be opened and managed under an agreement with an administering organization.

2103.2 Financial institutions establishing any opportunity account or opportunity account reserve fund account shall certify to the Office, on a form prescribed by the Office and accompanied by any documentation required by the Office, that the account has been established and that funds have been deposited into the account.

2103.3 A financial institution establishing an opportunity account shall:

(a) Maintain the account in the name of the account holder alone or in a sub-account of an escrow or custodial account in the name of the administering organization;

(b) Permit deposits to be made in the name of the account holder alone or in an administering organization on behalf of the account holder;

(c) Provide at least the rate of interest for similar accounts in the financial institution; and

(d) Permit the account holder, or, if in an escrow or custodial account, the administering organization to withdraw money from the account.

History

• SOURCE: Final Rulemaking published at 49 DCR 4983, 4987-4988 (May 31 2002).

26-C DCMR § 2104 OFFICE CONTRACT AGREEMENTS

2104.1 Following the selection of a non-profit organization to administer an opportunity account program, the Office shall enter into an agreement with the non-profit organization. In addition to the other requirements of the Office, the agreement shall provide that the administering organization will provide a report to the Office every six (6) months identifying the following:

(a) The number of opportunity account holders that the administering organization assists;

(b) The aggregate dollar amount in opportunity accounts contributed by account holders and in matching funds which are supervised by the administering organization;

(c) The sources of matching funds received and the amount received from each source;

(d) The amount available in the administering organization's opportunity account reserve account;

(e) The amounts withdrawn from opportunity accounts and the opportunity account reserve account and the use of those funds withdrawn;

(f) The activities undertaken by the administering organization to recruit opportunity account holders;

(g) The activities undertaken to raise the non-District of Columbia matching funds, either private or federal, (unless at the time of selection, the amount of non-District of Columbia matching funds, either private or federal, was in hand or committed to the administering organization);

(h) A list of financial institutions at which opportunity accounts or opportunity accounts reserve accounts are held that are supervised by the administering organization, including number of accounts and aggregate dollars at each; and

(i) Such other information as the Office requires.

2104.2 Each administering organization must also agree as follows:

(a) That the administering organization will use no more than twenty percent (20%) of the entire grant for operating funds over the entire life of the grant. For example, if an administering organization receives one hundred thousand dollars ($100,000), it can use only twenty thousand dollars ($20,000) of that amount for operating for the opportunity accounts funded with that grant even though some opportunity accounts may be open and active for five (5) years from the grant;

(b) That the administering organization shall establish procedures to assure that:

(1) All match rates provided by District of Columbia funds shall be a maximum of two dollars ($2) of matching funds to one dollar ($1) of participant's savings;

(2) All match rates provided by non-District of Columbia funds shall, at a minimum, equal the District of Columbia matching funds;

(3) No more than three thousand dollars ($3,000) of District of Columbia funds are provided to any opportunity account;

(4) The administering organization notifies financial institutions holding accounts of any changes in the status of the account, including the death of the account holder; and

(5) The administering organization meets other program and financial requirements as the Office requires.

2104.3 If the Office determines that an administering organization has failed to comply fully with the requirements of the Act, these rules, or its agreements with the Office, the Office may take such action as it deems appropriate, including establishing a deadline for complete compliance; temporary termination from participation in the program; and permanent termination of participation in the program.

History

• SOURCE: Final Rulemaking published at 49 DCR 4983, 4988-4989 (May 31 2002).

26-C DCMR § 2105 APPROVED USE OF OPPORTUNITY ACCOUNTS

2105.1 After the required saving and financial management training are both completed, the account holder shall be eligible to purchase the approved asset using both his or her savings and the matching funds.

2105.2 An account holder may withdraw his or her opportunity account funds and receive match funds for any of the following purposes, if approved by the administering organization:

(a) To pay educational costs for the account holder or a spouse, domestic partner, father, mother, child, or dependent of the account holder at an accredited institution of higher education;

(b) To pay job training costs for the account holder or a spouse, domestic partner, father, mother, child or dependent of the account holder at an accredited or licensed training program;

(c) To purchase a primary residence;

(d) To pay for major repairs or improvements to a primary residence;

(e) To fund the start-up of a business for the account holder or a spouse, domestic partner, father, mother, child, or dependent of the account holder;

(f) To pay for costs associated with a medical emergency for the account holder or a spouse, domestic partner, father, mother, child, or dependent of the account holder, to the extent that those costs are not covered by insurance;

(g) To pay for costs and expenses incurred during retirement;

(h) To purchase a federally qualified individual retirement account if such purchase takes place not earlier than five (5) years after the establishment of the opportunity account.

2105.3 Any saving by the participant left after the purchase shall remain the property of the participant.

2105.4 Unused matching funds shall return to the pool of matching funds available for other account holders.

History

• SOURCE: Final Rulemaking published at 49 DCR 4983, 4990 (May 31 2002).

26-C DCMR § 2106 WITHDRAWALS FROM OPPORTUNITY ACCOUNTS

2106.1 Withdrawals from opportunity accounts for purposes which are not permitted under the Act, these rules, or approved by the administering organization, shall, at a minimum, result in a reduction of the match made available to the participant in the match ratio. In addition, unless the withdrawal qualifies under subsection 2106.3:

(a) The account holder shall lose his or her matching funds and the matching funds shall be returned to the administering organization for use by other account holders or to the District of Columbia as the Office directs;

(b) The account holder shall be removed from the opportunity account program; and

(c) All funds deposited by the account holder into the opportunity account, plus interest earned on that amount, shall be returned to the account holder within thirty (30) days.

2106.2 An account holder may make an emergency withdrawal of his or her opportunity account funds without resulting in removal from the program in accordance with subsection 2106.3.

2106.3 An account holder may make an emergency withdrawal in the following circumstances:

(a) To pay the costs of medical care or the expenses necessary to obtain medical care for the account holder or a spouse, domestic partner, father, mother, child, or dependent of the account holder;

(b) To make a payment necessary to prevent the eviction of the account holder from the primary residence of the account holder or prevent foreclosure on a mortgage for the primary residence of the account holder; or

(c) To make payments necessary to enable the account holder to meet necessary living expenses following loss of employment.

2106.4 Except as provided in subsection 2106.5, an account holder making an emergency withdrawal shall only withdraw funds deposited by the account holder plus interest on those funds and shall not withdraw or have any right to withdraw matching funds.

2106.5 Account holders saving in medical emergency opportunity accounts may withdraw matching funds if the medical emergency is a permitted and approved use.

2106.6 An emergency withdrawal shall not be made unless authorized by an administering organization.

2106.7 An account holder shall deposit funds into the opportunity account in the same amount as the funds withdrawn from the account for the emergency withdrawal no later than twelve (12) months after the date of the withdrawal. If the account holder fails to redeposit the funds as required by this section, the account holder shall:

(a) Lose his or her matching funds and the matching funds shall be returned to the administering organization in the same amount as the matching funds were provided or solely to the administering organization for use by other account holders or to the District of Columbia as the Office directs;

(b) Be removed from the opportunity account program; and

(c) Receive all funds deposited by the account holder into the opportunity account, plus interest.

2106.8 Notwithstanding the provisions of this section, if the administering organization finds that extenuating circumstances of the account holder and the unapproved withdrawal justify retaining the account holder in the program, the administering organization may request, in writing, a waiver of the requirement that the account holder be removed from the program from the Office. The Office may grant such a waiver if it is consistent with the purpose of the Act to assist low-income families to purchase assets that will contribute to self-sufficiency. The Office may impose probationary terms and conditions to the waiver.

History

• SOURCE: Final Rulemaking published at 49 DCR 4983, 4991-4992 (May 31 2002).

26-C DCMR § 2107 TAXATION AND OTHER CONSEQUENCES

2107.1 Matching funds, spent by or for the benefit of the account holder for a use permitted by the Act and approved by the administering organization, are exempt from taxation under District of Columbia law, provided that any money withdrawn from a matching funds account by an account holder for an unapproved use shall be taxed as income to the account holder.

2107.2 Income earned on the deposits of the account holder in the opportunity account is earned income to the account holder and is subject to taxation by the District of Columbia.

2107.3 Funds in an Opportunity Account, including accrued interest, and matching funds available to the account holder shall not be considered in the determination of whether the account holder is eligible to receive public assistance or benefits, or the determination of the amount of public assistance or benefits available to the account holder.

History

• SOURCE: Final Rulemaking published at 49 DCR 4983, 4992-4993 (May 31 2002).

26-C DCMR § 2108 DISPOSITION OF OPPORTUNITY ACCOUNT UPON DEATH

2108.1 An account holder shall designate, in writing, a contingent beneficiary at the time the account is established on a form provided by the Office.

2108.2 In the event of the death of the account holder, ownership of the account shall be transferred to the contingent beneficiary. If the contingent beneficiary is deceased, or is not eligible to be an account holder, or otherwise cannot or will not accept ownership of the account, the matching funds shall be returned to the District of Columbia and the administering organization in the same amounts as the matching funds were provided. The funds in the opportunity account contributed by the account holder, plus interest, shall be disbursed in accordance with the District of Columbia law.

2108.3 The account holder may change his designation of the contingent beneficiary at any time, on a form provided by the Office.

History

• SOURCE: Final Rulemaking published at 49 DCR 4983, 4993 (May 31 2002).

26-C DCMR § 2199 DEFINITIONS

2199.1 For the purpose of this chapter, the following terms have the meaning ascribed in this section:

"Account holder" means a person who is the owner of an opportunity account.

"Administering organization" means an organization that is approved by the Office to implement and administer an opportunity account program.

"Audit report" means a report prepared by an independent certified accounting firm within six (6) months after the close of the administering organization's fiscal year. The report shall include an unqualified opinion and a Statement of Financial Position which shall indicate a positive unrestricted net asset balance.

"District of Columbia median income" means the most recent median income statistic for the District of Columbia published by the United States Department of Housing and Urban Development.

"Financial institution" means any bank, trust company, savings bank, credit union, or savings and loan association with an office in the District of Columbia.

"Fiscal accountability" means an unqualified audit conducted by an independent certified public accountant of an administering organization within the last fifteen (15) months which must include verification that (a) at least one (1) year's operating funds are banked or committed and capable of underwriting opportunity account program services or (b) the administering organization has been in operation for three years or more and demonstrated the ability to successfully sustain its operations.

"Medical emergency" means a debilitating or life-threatening illness.

"Opportunity account" means a financial instrument established pursuant to the Act and, where applicable, the associated matching funds account.

"Opportunity account reserve fund" means the fund created by an administering organization for the purposes of funding the costs incurred in the administration of an opportunity account program and for providing matching funds for opportunity accounts.

"Retirement" means the period after which a person becomes eligible for Social Security benefits.

History

• SOURCE: Final Rulemaking published at 49 DCR 4983, 4993-4994 (May 31 2002).

26-C22 MONEY TRANSMITTERS

26-C DCMR § 2200 SCOPE

2200.1 Unless specified otherwise, these rules shall govern persons engaged in the transmission of money in the District of Columbia whether it is within the United States or to locations abroad, by any means, including, but not limited to, payment instrument, wire, facsimile, or electronic transfer.

History

• SOURCE: Final Rulemaking published at 50 DCR 10329, 10330 (December 5, 2003).

26-C DCMR § 2201 REQUIREMENT FOR BUSINESS LOCATION IN THE DISTRICT

2201.1 No licensee shall engage in the transmission of money unless the licensee conducts such business at a location within the District of Columbia approved by the Department or through an authorized delegate approved by the Department and operating at a location within the District of Columbia approved by the Department.

History

• SOURCE: Final Rulemaking published at 50 DCR 10329, 10330 (December 5, 2003).

26-C DCMR § 2202 WAIVER OF PERMISSIBLE INVESTMENTS AND STATUTORY TRUST

2202.1 An applicant that seeks a waiver of the permissible investments and statutory trust requirement of section 6 of the Act shall file a request for a waiver of the permissible investments and statutory trust requirement with the Department.

2202.2 A request for a waiver of the requirements of section 6 of the Act shall be made in writing and shall include an explanation of the reason(s) the applicant is seeking the waiver. The request also shall include a calculation of the applicant's permissible investments and their aggregate market value, calculated in accordance with generally accepted accounting principles, and the amount of all outstanding payment instruments issued or sold by the applicant in the United States.

2202.3 Upon receipt of a request for a waiver pursuant to § 2202.2, the Department shall compare the applicant's total dollar volume of outstanding payment instruments to the applicant's posted bond or other security device as set forth in section 6 of the Act and shall determine if the dollar volume of the applicant's outstanding payment instruments does not exceed the bond or other security devices posted by the applicant pursuant to section 8 of the Act. In addition, the Department shall determine if just and reasonable cause exists for a waiver and if a waiver pursuant to § 2202.2 would be consistent with the purposes of the Act.

2202.4 Within sixty (60) days of receipt of a request for a waiver pursuant to § 2202.2 and upon completion of the review pursuant to § 2202.3, the Department shall determine whether to waive the permissible investments and statutory trust requirement of section 6 of the Act and whether to impose conditions for the waiver.

2202.5 A person that receives a waiver pursuant to § 2202.4 that contains conditions for the waiver shall comply with all of the conditions. In the event that any of the conditions are not satisfied, the waiver shall be deemed void.

History

• SOURCE: Final Rulemaking published at 50 DCR 10329, 10330-10331 (December 5, 2003).

26-C DCMR § 2203 WAIVER OF LICENSE APPLICATION REQUIREMENTS

2203.1 An applicant that seeks a waiver of any of the license application requirements of section 7(e) of the Act or who seeks to submit substituted information on its license application in lieu of the information required by section 7(e) of the Act shall request a waiver of the license application requirement or obtain authorization to submit substituted information from the Department.

2203.2 A request for a waiver pursuant to § 2203.1 shall be made in writing and shall include an explanation of the reason(s) the applicant is seeking the waiver.

2203.3 Upon receipt of a request for a waiver pursuant to § 2203.2, the Department shall review the request to determine if just and reasonable cause exists for the waiver and if the waiver pursuant to § 2203.2 would be consistent with the purposes of the Act.

2203.4 Within sixty (60) days of receipt of a request made pursuant to § 2203.2 and upon completion of the review pursuant to § 2203.3, the Department shall determine whether to waive any of the license requirements of section 7(e) of the Act or the Department shall determine whether to permit substituted information on the license application in lieu of the information required in section 7(e) of the Act.

History

• SOURCE: Final Rulemaking published at 50 DCR 10329, 10331 (December 5, 2003).

26-C DCMR § 2204 SUBSTITUTION OF OTHER SECURITY DEVICE

2204.1 An applicant that seeks to substitute a security device other than a surety bond or irrevocable letter of credit pursuant to section 8(a) of the Act shall file a request for approval for the substituted security device with the Department.

2204.2 The request for a substitute security device pursuant to § 2204.1 shall be made in writing and shall include an explanation of the reason(s) the applicant is seeking the substitution and why such other security device should be acceptable under the Act.

2204.3 Upon receipt of a request for a substitute security device pursuant to § 2204.2, the Department shall review the request to determine if the substituted security device is in a form satisfactory to the Department and if the substituted security device runs to the District of Columbia for the benefit of all claimants against the applicant to secure the faithful performance of the applicant with respect to the receipt, handling, transmission, or payment of money in connection with the sale and issuance of payment instruments or transmission of money. In addition, the Department shall determine if just and reasonable cause exists for a substitution and if a substitution pursuant to § 2204.2 would be consistent with the purposes of the Act.

2204.4 Within sixty (60) days of receipt of a request pursuant to § 2204.2 and upon completion of the review pursuant to § 2204.3, the Department shall determine whether to approve the substitute security device in lieu of a surety bond or irrevocable letter of credit.

History

• SOURCE: Final Rulemaking published at 50 DCR 10329, 10331-10332 (December 5, 2003).

26-C DCMR § 2205 DEPOSITING OF CASH, INTEREST-BEARING STOCKS AND BONDS, NOTES, DEBENTURES OR OTHER OBLIGATIONS

2205.1 An applicant that seeks to deposit cash, interest-bearing stocks and bonds, notes, debentures or other obligations, in lieu of a security device, pursuant to section 8(b) of the Act shall file a request for approval with the Department.

2205.2 A request filed pursuant to § 2205.1 shall be made in writing and shall include an explanation of the reason(s) the applicant is seeking substituted deposit(s) and why a substituted deposit should be acceptable to the Department. The request also shall include a calculation of the applicant's permissible investments and their aggregate market value, calculated in accordance with generally accepted accounting principles and the amount of all outstanding payment instruments issued or sold by the applicant in the United States.

2205.3 Upon receipt of a request filed pursuant to § 2205.2, the Department shall review the request to determine if the cash, interest-bearing stocks and bonds, notes debentures or other obligations the applicant proposes to use as a security device in lieu of a bond are issued or guaranteed by the United States or the District of Columbia or an agency or instrumentality of the United States or the District of Columbia. In addition, the Department shall determine if just and reasonable cause exists for a substitute deposit and if a substitute deposit pursuant to § 2205.2 would be consistent with the purposes of the Act.

2205.4 Within sixty (60) days of receipt of a request pursuant to § 2205.2 and upon completion of the review pursuant to § 2205.3, the Department shall determine whether to approve the substitute deposit.

History

• SOURCE: Final Rulemaking published at 50 DCR 10329, 10332 (December 5, 2003).

26-C DCMR § 2206 ELIMINATION OR REDUCTION OF SECURITY DEVICE

2206.1 An applicant that has ceased money transmission operations in the District of Columbia and proposes a waiver or a reduction of the security device requirements of section 8(c) of the Act shall request a waiver of the security device requirements or a reduction of the security device of the permissible investments and statutory trust requirement from the Department.

2206.2 A request for a waiver or reduction of the security device requirements pursuant to § 2206.1 shall be made in writing and shall include an explanation of the reason(s) the applicant is seeking the waiver or reduction. The request also shall include a calculation of the applicant's outstanding payment instruments in the District of Columbia.

2206.3 Upon receipt of a request for a waiver pursuant to § 2206.2, the Department shall compare the reduction in the applicant's total dollar volume of outstanding payment instruments in the District of Columbia to the applicant's posted bond or other security device. In addition, the Department shall determine if just and reasonable cause exists for a waiver or reduction and if a waiver or reduction pursuant to § 2206.2 would be consistent with the purposes of the Act.

2206.4 Within sixty (60) days of receipt of a request pursuant to § 2206.2 and upon completion of the review pursuant to § 2206.3, the Department shall determine whether the applicant's security device shall be reduced or eliminated prior to the 5-year holding period set forth in section 8(c) of the Act to the extent that the amount of the applicant's outstanding payment instruments in the District of Columbia are reduced.

History

• SOURCE: Final Rulemaking published at 50 DCR 10329, 10332-10333 (December 5, 2003).

26-C DCMR § 2207 SUBSTITUTION OF SECURITY DEVICE

2207.1 An applicant that has ceased money transmission operations in the District of Columbia and seeks to substitute a letter of credit or other security device in place of the security device that was in place at the time the applicant ceased money transmission operations in the District of Columbia, pursuant to the requirements of section 8(c) of the Act, shall request approval from the Department.

2207.2 The request for approval to substitute another security device pursuant to § 2207.1 shall be made in writing and shall include an explanation of the reason(s) the applicant is seeking a substitution. The request also shall include a calculation of the applicant's outstanding payment instruments in the District of Columbia.

2207.3 Upon receipt of a request for approval filed pursuant to § 2207.2, the Department shall compare the applicant's total dollar volume of outstanding payment instruments in the District of Columbia to both the applicant's posted bond or other security device and the applicant's proposed substituted security device. In addition, the Department shall determine if just and reasonable cause exists for a substitution and if a substitution pursuant to § 2207.2 would be consistent with the purposes of the Act.

2207.4 Within sixty (60) days of receipt of a request pursuant to § 2207.2 and upon completion of the review pursuant to § 2207.3, the Department shall determine whether to approve the substitution of another security device of the applicant to take the place of the applicant's security device in place at the time the applicant ceases money transmission operations in the District of Columbia.

History

• SOURCE: Final Rulemaking published at 50 DCR 10329, 10333 (December 5, 2003).

26-C DCMR § 2208 INVESTIGATIONS

2208.1 The Department may conduct an on-site investigation of an applicant, and its authorized delegate(s), for a license pursuant to section 10 of the Act.

2208.2 The Department shall charge a fee of sixty dollars ($60) an hour per person including applicable travel time, plus all reasonably incurred costs, for conducting an on-site investigation of an applicant, and its authorized delegate(s), for a license. Reasonably incurred costs shall include, but are not limited to, airfare, lodging, food, parking, car usage out of state and mileage.

History

• SOURCE: Final Rulemaking published at 50 DCR 10329, 10333-10334 (December 5, 2003).

26-C DCMR § 2209 ANNUAL RENEWAL REPORT

2209.1 The annual renewal report required under section 11 of the Act shall be in the form set forth in the attached Appendix.

2209.2 Every licensee shall complete the annual renewal report required in § 2209.1 and submit it to the Department at 810 First Street, N.E., Suite 701, Washington, DC 20002. The annual renewal report shall be submitted by December 31 of each year.

2209.3 Any licensee that fails to submit the annual renewal report as required by § 2209.2 shall be fined fifty dollars ($50) for each day after the due date set forth in § 2209.2 that the report is not submitted to the Department. This fine shall be made payable to the D.C. Treasurer and the licensee shall submit the fee, along with the annual renewal report, to the Department at the address set forth in § 2209.2.

History

• SOURCE: Final Rulemaking published at 50 DCR 10329, 10334 (December 5, 2003).

26-C DCMR § 2210 CHANGES IN CONTROL OF A LICENSEE

2210.1 In order to request approval for a change in control of a licensee, the applicant shall provide information to the Department as required under §§ 2210.2 and 2210.3.

2210.2 The.application for a change in control shall be made on a form as prescribed by the Commissioner.

2210.3 An application for a change in control filed pursuant to § 2210.2 shall be accompanied with financial and biographical information for the applicant, each new officer or employee of the applicant or licensee and any other person required by the Department.

2210.4 The application fee for a change in control of a licensee shall be three hundred and fifty dollars ($350) and shall be payable by check, made payable to the D.C. Treasurer. The application fee shall be submitted along with the application for a change in control as required in § 2210.2, to the Department at 810 First Street, N.E., Suite 701, Washington, DC 20002.

2210.5 A licensee that fails to submit the application for a change in control as required by § 2210.2 shall be fined one hundred dollars ($100) for each day after the date of the change in control that the application is not filed with the Department.

2210.6 Any fine assessed pursuant to § 2210.5, shall be payable by check, made payable to the D.C. Treasurer, and shall be submitted along with the application for a change in control, to the Department at the address set forth in § 2210.4.

History

• SOURCE: Final Rulemaking published at 50 DCR 10329, 10334 (December 5, 2003).

26-C DCMR § 2211 EXAMINATIONS

2211.1 The Department may conduct an on-site examination of a licensee and an authorized delegate of the licensee pursuant to section 14 of the Act.

2211.2 Each licensee or its authorized delegate(s) shall be subject to an examination at any time forty-five (45) days after the renewal of the licensee's license. The forty-five day notice required by section 14 of the Act shall be issued in conjunction with the renewal of the licensee's license.

2211.3 The licensee and its authorized delegate(s) shall each be assessed an examination fee of two hundred and fifty dollars ($250) per examination, plus sixty dollars ($60) per hour for each hour or fraction of each hour in excess of four (4) hours if an examination exceeds four (4) hours.

2211.4 In addition to the fee required by § 2211.3, the Department shall assess a licensee for all reasonably incurred costs, for conducting an on-site examination of a licensee or authorized delegate. Reasonably incurred costs shall include, but are not limited to, airfare, lodging, food, parking, car usage out of state and mileage.

History

• SOURCE: Final Rulemaking published at 50 DCR 10329, 10334-10335 (December 5, 2003).

26-C DCMR § 2212 AUTHORIZED DELEGATE CONDUCT

2212.1 The maximum remittance time for an authorized delegate to remit all monies owing to a licensee within the time required in accordance with the terms of the contract between the licensee and the authorized delegate, as set forth in section 18(c) of the Act, shall be thirty (30) calendar days.

History

• SOURCE: Final Rulemaking published at 50 DCR 10329, 10335 (December 5, 2003).

26-C DCMR § 2299 DEFINITIONS

2299.1 For the purpose of this chapter, the following terms have the meaning ascribed:

Act - The Money Transmitters Act of 2000, effective July 18, 2000 (D.C. Law 13-140; D.C. Official Code §§ 26-1001 et seq. (2001)).

Applicant - A person filing an application for a license, a renewal license, or a change in control under the Act.

Authorized Delegate - An entity designated by a licensee under the provisions of the Money Transmitters Act of 2000 to sell or issue payment instruments or engage in the business of transmitting money on behalf of the licensee.

Department - The Department of Insurance, Securities and Banking.

District - The District of Columbia.

Licensee - A person licensed pursuant to the Money Transmitters Act of 2000.

Person - An individual, corporation, partnership, association, limited liability company, joint venture, government, or any other legal or commercial entity or agent.

Shareholder with a controlling interest - A person who owns, directly or indirectly, more than ten percent of any class of stock of the applicant.

History

• SOURCE: Final Rulemaking published at 50 DCR 10329, 10335-10336 (December 5, 2003). APPENDIX ANNUAL RENEWAL REPORT FORM RENEWAL APPLICATION FOR A MONEY TRANSMITTER LICENSE Pursuant to the Money Transmitters Act of 2000 (D.C. Law 13-140; D.C. Official Code §§ 26-1001 et seq. (2001)) ("Act") Answer All Questions. If not applicable, indicate with an N/A. PART ONE - TO BE COMPLETED BY ALL APPLICANTS 1. Applicant's name:_______________________________ 2. Fictitious or trade name: _______________________________ 3. Applicant's Federal Employer Identification Number: _______________________________ 4. Applicant's principal business office: Street Address: _______________________________ City and State: _______________________________ Telephone number:Fax Number: ____________________________ E-Mail: _______________________________ 5. Money Transmitter License number, if applicable__ 6. Name and address of principal contact person: (license will be sent to this person) Name: _______________________________ Street Address: _______________________________ City and State: _______________________________ Telephone number: __________________________ Fax Number: _____________________________ E-Mail: _______________________________ 7. Address at which the applicant keeps its books and records (if different from answer to Question 4). Street Address: _______________________________ City and State: _______________________________ 8. Applicant is a(n): (Check appropriate classification) □ Individual □ Partnership □ Association □ Joint Stock Association □ Corporation □ Other (explain): __________ 9. Type of money transmission activity to be conducted (mark all that apply): □ Checks □ Travelers Checks □ Drafts □ Wire Transfers □ Money Orders □ Other (explain): __________ □ Stored Value 10. Money transmission sales are conducted through (marked all that apply): □ Company Owned Outlets □ Independent Authorized Delegates □ Subsidiaries or Affiliate; and/or □ Other (explain): __________________________ 11. Submit the following: (a) Complete name and address of each authorized delegate and each of the applicant's locations in the District of Columbia from which it conducts money transmission sales. (use separate 8 1/2 × 11 sheet of paper) State the total number of the applicant's locations in the District of Columbia: _______________________________ PART TWO INSTRUCTIONS: Please check either "yes" or "no" in response to the following questions regarding changes since the last application or renewal. IF THERE HAVE BEEN ANY CHANGES, PLEASE PROVIDE THE REQUESTED INFORMATION (Note that a response to the following questions does not constitute compliance with any separate statutory notice or reporting requirement): 1. Has there been any change in principal officers, directors, partners, or individuals with a 25% or more ownership interest in the applicant since the last application or renewal? □ Yes □ No If yes, please explain change(s) on a separate sheet, and include the name, title, business address and percentage ownership of each person who has acquired an ownership interest or become an officer or director of the applicant. 2. Has the applicant had its license suspended, revoked or renewal refused in any other state since the last application or renewal? □ Yes □ No If yes, please explain on a separate sheet. 3. Has the applicant been subject to any enforcement action by a licensing authority in any other state since the last application or renewal? □ Yes □ No If yes, please explain on a separate sheet. 4. Has there been any material litigation involving the applicant since the last application or renewal? Material litigation means litigation that, according to generally accepted accounting principles, is deemed significant to any licensee's financial health and would be required to be referenced in its annual audited financial statements, report to shareholders or similar documents. □ Yes □ No If yes, please explain on a separate sheet. 5. Has there been any felony indictment or criminal conviction of any principal officer or partner of the applicant, or any individual with a 25% or more ownership interest in the applicant since the last application or renewal? □ Yes □ No If yes, please explain on a separate sheet. 6. Has there been any substantive change to the form of instruments issued by the applicant since the last application or renewal, if not previously provided? □ Yes □ No If yes, please provide a specimen if not previously provided. 7. Has there been any change in the applicant's principal clearing banks, clearing bank address or account number since the last application or renewal? □ Yes □ No If yes, please list the name, address, contact name and account number on a separate sheet. 8. Has there been any material change to the applicant's authorized delegate contract since the last application or renewal? □ Yes □ No If yes, please provide a copy. 9. Has there been any change to the applicant's internal auditor(s) since the last application or renewal? □ Yes □ No If yes, please provide the new contact name and phone number on a separate sheet. 10. Has the applicant, or any principal officer, director, partner, or individual with a 25% or more ownership interest in the applicant, filed a petition in bankruptcy or reorganization since the last application or renewal? □ Yes □ No If yes, please describe the proceedings on a separate sheet, and provide a copy of the petition and a copy of the discharge if applicable. PART THREE - TO BE COMPLETED BY NON-CORPORATE APPLICANTS (If you are a Corporate Applicant, please go to Part Four) 1. For each of the applicant's principals and any other person(s) who will manage or control the applicant's money transmission business, provide: Name: _______________________________ Title: _______________________________ Business Address: _______________________________ Residence Address: _______________________________ Name: _______________________________ Title: _______________________________ Business Address: _______________________________ Residence Address: _______________________________ Name: _______________________________ Title: _______________________________ Business Address: _______________________________ Residence Address: _______________________________ Name: _______________________________ Title: _______________________________ Business Address: _______________________________ Residence Address: _______________________________ 2. Submit a copy of applicant's registration or qualification to do business in the District of Columbia. 3. For each of applicant's principals, submit a Personal Financial Statement (attached). 4. Submit a copy of applicant's audited financial statements (including balance sheet, statement of income or loss, and statement of changes in financial position) for the current year and, if available, for the prior two (2) years. PART FOUR - TO BE COMPLETED BY CORPORATE APPLICANTS 1. Submit the following: A. The most recent audited financial statements of the applicant, including the balance sheet, statement of income, statement of stockholder's equity and statement of cash flow for the prior two (2) years, prepared by an independent certified public accountant, if not previously provided. If the applicant is a wholly-owned subsidiary of another corporation, the applicant may submit either the parent's consolidated audited financial statements for the current year and prior two (2) years, or the parent's Form 10K reports filed with the United States Securities and Exchange Commission for the prior three (3) years in lieu of the financial statements. B. The most recent unaudited interim financial statements prepared for the applicant, dated no more than 120 days from the date of this application, if not previously provided. C. Submit the following: 1) The total dollar amount of the applicant's outstanding instruments and money transmissions in the District of Columbia. (a) As of the date of the most recent audited financial statement, and (b) As of the date of the interim financial statement filed in accordance with prior request 1(B). 2) The total dollar amount of the applicant's outstanding instruments and money transmissions in the United States. (a) As of the date of the most recent audited financial statement, and (b) As of the date of the unaudited interim financial statement filed in accordance with prior request 1(B). 2. Submit the number and dollar amount of payment instruments sold/issued and money transmissions conducted by the applicant from through the close of business ___________________ (12 month period): 3. Submit a list of the applicant's permissible investments, and the book or market value of the investments. (a) As of the date of the most recent audited financial statement, and (b) As of the date of the unaudited interim financial statement filed in accordance with prior request 1(B). 4. If audited financial statements are not provided, and if permissible investments are required, the following is required: A certification by an independent certified public accountant that the applicant's permissible investments, at all times possess a book or market value calculated in accordance with generally accepted accounting principles, of not less than the aggregate dollar amount of all outstanding payment instruments issued or sold by the licensee in the United States. 5. Submit proof of the surety bond required and/or a list of deposits and other obligations maintained in lieu of all or part of the corporate surety bond, as authorized by the Act. For each deposit, please designate the amount of each deposit, the financial institution in the District of Columbia that is the depository, and the account number. I certify that the foregoing responses are true, accurate and complete to the best of my knowledge and belief 6. For each executive officer, shareholder having a controlling interest, officer, manager or other person that will manage or direct the applicant's money transmission activities, provide the following: Name: _______________________________ Title: _______________________________ Business Address: _______________________________ Residence Address: _______________________________ Name: _______________________________ Title: _______________________________ Business Address: _______________________________ Residence Address: _______________________________ Name: _______________________________ Title: _______________________________ Business Address: _______________________________ Residence Address: _______________________________ Name: _______________________________ Title: _______________________________ Business Address: _______________________________ Residence Address: _______________________________ Name: _______________________________ Title: _______________________________ Business Address: _______________________________ Residence Address: _______________________________ 7. Copies of all filings made by the applicant with the United States Securities and Exchange Commission, or a similar regulator outside the United States, within the year preceding the date of this application. PART FIVE - TO BE SUBMITTED BY ALL APPLICANTS Applicants shall complete and attach to this application the following forms, as prescribed by the Commissioner: (1) Money Transmitter License Bond Form; (2) Clean Hands Before Receiving a License or Permit Act of 1996 Certification Form; (3) Personal Financial Statement; (4) Certified Resident Agent Appointment Form; and (5) If applicable, Non-U.S. Citizen Supplemental Information Form PART SIX - TO BE COMPLETED BY ALL APPLICANTS CERTIFICATION Having been duly sworn, and under the penalties of perjury, I hereby certify that the representations in this RENEWAL APPLICATION FOR MONEY TRANSMITTER LICENSE are true and correct to the best of my knowledge and belief. I understand that omissions or inaccuracies may result in denial of the APPLICATION. ________________________________ (Name of Licensee) By: _______________________________ Title: State of _______________________________ County of _______________________________ On this the day of, 20, before me, a Notary Public, appeared________________________________________________________, known to me to be the person(s) named in, and who executed the foregoing application and made oath that the statements and representations set forth are true to the best of his/her/their knowledge and belief. _______________________ Notary Public My Commission Expires: _______________________ Submit this renewal application along with the required documentation and fee, and direct inquiries concerning licensing, preparation or filing of this renewal application to: Department of Insurance, Securities and Banking 810 First Street, N.E., Suite 701 Washington, DC 20002

26-C25 CONSUMER RETAIL CREDIT

26-C DCMR § 2500 GENERAL PROVISIONS

2500.1 The provisions of this chapter were adopted by the District of Columbia Council as the "District of Columbia Consumer Retail Credit Regulations," Regulation No. 71-18, approved June 11, 1971, under the Council's powers to make police regulations for the protection of lives, limbs, health, comfort and quiet of all persons and the protection of all property within the District of Columbia.

2500.2 The District of Columbia Council has determined that an effective program for the protection of consumers in connection with retail installment credit transactions is necessary for the protection of the health, comfort and quiet of all persons, and the protection of all property within the District of Columbia.

History

• AUTHORITY: Unless otherwise noted, the authority for this chapter is § 2 of a Joint Resolution to regulate licenses to proprietors of theatres in the city of Washington, District of Columbia, and for other purposes, approved February 26, 1892, 27 Stat. 394, D.C. Official Code § 1-303.03 (2001).
• SOURCE: Preamble of the District of Columbia Consumer Retail Credit Regulation, Regulation No. 71-18, approved June 11, 1971.
• EDITOR'S NOTE: Under Regulation No. 71-18, general administration and enforcement was vested in the Commissioner. Those functions were transferred to the Mayor under § 422 of the District Charter. The Mayor's functions under the Regulation were reassigned to the Office of Consumer Protection by § 4(b)(1) of the District of Columbia Consumer Protection Procedures Act, D.C. Law 1-76 (D.C. Official Code § 28-3903(b)(1) (2001)). Under § 2(d) of the District of Columbia Consumer Protection Procedures Act Amendment Act of 1990, D. C. Law 8-234, the word "Department" replaced the word "Office." The intent of the replacement was to transfer the functions under the Retail Credit Regulation from the Office of Consumer Protection to the Department of Consumer and Regulatory Affairs. In conformance with D.C. Law 8-234, the word "Department" appears throughout this chapter.

26-C DCMR § 2501 TRUTH IN LENDING: FEDERAL LAW AND REGULATIONS

2501.1 Except as otherwise specifically provided in this chapter, the following sections of the federal "Truth in Lending Act" (Pub. L. 90-321, 82 Stat. 146), as amended, are incorporated in this chapter by reference:

(a) Section 106 - Determination of finance charge;

(b) Section 107 - Determination of annual percentage rate;

(c) Section 121 - General requirements of disclosure;

(d) Section 122 - Form of disclosure;

(e) Section 124 - Effect of subsequent occurrence;

(f) Section 127 - Open end consumer credit plans;

(g) Section 128 - Sales not under open end credit plans;

(h) Section 141 - Catalogs and multiple page advertisements;

(i) Section 142 - Advertising of down payments and installments;

(j) Section 143 - Advertising of open end credit plans;

(k) Section 144 - Advertising of credit other than open end plans; and

(l) Section 145 - Non-liability of media.

2501.2 Failure of any person covered by this chapter to comply with the sections of the "Truth in Lending Act" incorporated by reference in this section, as implemented by regulations issued by the Board of Governors of the Federal Reserve System, shall constitute a violation of this chapter.

2501.3 Except to the extent provided in this chapter, compliance with the incorporated sections of the "Truth in Lending Act" shall constitute compliance with this section.

History

• SOURCE: Regulation No. 71-18, 17 DCR 815 (June 28, 1971); 5P DCRR §3.101.

26-C DCMR § 2502 REGISTRATION OF RETAIL SELLERS AND FINANCE COMPANIES

2502.1 Any person who is a retail seller or a sales finance company shall register with the Department of Consumer and Regulatory Affairs (Department) as provided in this section.

2502.2 Any person not registered, whose registration has been denied or suspended, or who has been deregistered as provided in this section shall not engage in business as a "retail seller" or as a "sales finance company."

2502.3 Each person required to be registered shall furnish to the Department the registration information required on a form prescribed by the Department. The form shall require that the registrant provide the following information:

(a) Name of the person (registrant);

(b) Name under which business is transacted, if different from subparagraph (a);

(c) The names and addresses of the principal officers, if a corporation; if a partnership, the name and address of each partner;

(d) The address of the principal office, whether or not it is located inside the District;

(e) The addresses of all offices or retail stores, if any, in the District at which retail installment transactions are made, or in the case of a person taking assignments of obligations, the offices or places of business within the District at which that business is transacted;

(f) The names and home addresses of the persons who hold or own twenty-five percent (25%) or more of the interest in the person, firm, or organization engaged in retail installment transactions;

(g) The identity of all parent and subsidiary companies and companies under common ownership with the registrant which engage in retail installment transactions or sales financing in the District;

(h) If retail installment transactions are made otherwise than at an office or retail store in the District, a brief description of the manner in which they are made; and

(i) The name and address of the attorney-in-fact or general agent upon whom service of process may be made in the District.

2502.4 At the same time that the information is furnished under § 2502.3, each person required to be registered shall submit to the Department a copy of the retail installment contract forms used by the registrant at the time of submission in connection with transactions covered by this chapter.

2502.5 Each registration form shall be signed by the registrant or a principal officer of a registrant organization.

2502.6 If any information submitted pursuant to this section becomes inaccurate, the registrant shall furnish the accurate information to the Department within twenty (20) calendar days thereafter, except as otherwise provided in § 2503.

2502.7 No person whose registration has been suspended pursuant to the provisions of this chapter shall be re-registered other than in accordance with the terms of the order of suspension.

2502.8 No corporation or partnership shall be registered if a deregistration order is then outstanding against any individual who is an officer of the corporation, a partner in the partnership, or any individual who holds or owns twenty- five percent (25%) or more interest in the registrant.

2502.9 After a registration form has been submitted, the Department shall return a duplicate copy to the registrant which shall be validated by the Department to evidence the registrant's registration.

2502.10 The validated form shall contain a registration number furnished by the Department.

2502.11 The registration or a photocopy of the registration shall be posted and visible in a conspicuous place in each place of business in the District maintained by the registrant.

2502.12 If a registrant transacts business through door-to-door solicitation, the registrant shall provide, upon request, a copy of the validated registration form at the time a solicitation is made.

2502.13 Each registrant shall re-register every two (2) years beginning on the date stated in the validated copy of the registration form returned to the registrant by the Department under § 2502.9.

2502.14 Re-registration shall comply with the requirements of §§ 2502.3 through 2502.6, except that the information and materials required to be furnished shall be submitted to the Department no later than sixty (60) days before the expiration date of the registration.

History

• SOURCE: Regulation No. 71-18, 17 DCR 815 (June 28, 1971); 5P DCRR §§ 2.101 through 2.105.

26-C DCMR § 2503 APPOINTMENT OF ATTORNEY-IN-FACT OR GENERAL AGENT

2503.1 Each person covered under this chapter who is a nonresident of the District shall appoint or employ and maintain in the District an attorney-in-fact or general agent upon whom all judicial and other process or legal notice directed to the nonresident may be served relative to conduct subject to this chapter or other laws relating to retail installment transactions.

2503.2 The attorney-in-fact or general agent appointed or employed under this section must be a resident of the District.

2503.3 The nonresident registrant shall notify the Department of the appointment or employment and the name and address of the appointee or employee.

2503.4 Within five (5) business days after any change in the appointment or employment of the attorney-in-fact or general agent, the nonresident registrant shall notify the Department of the identity and the address of the substituted appointee or employee.

2503.5 If a person fails to appoint or maintain a registered agent in the District, or whenever the registered agent cannot with reasonable diligence be found at the registered office of that person in the District, or whenever the registration of that person shall be revoked, the Department shall be an agent upon whom any process or other legal notice may be served and upon whom any notice or demand required or permitted by law to be served upon such person may be served.

2503.6 Service on the Department of any process, notice, or demand shall be made by delivering to and leaving with the Director of the Department or the Director's designated agent duplicate copies of the process, notice, or demand.

2503.7 If the Department is served under § 2503.5, the Department shall cause one copy of the process, notice, or demand to be forwarded by registered or certified mail to the last known address of the registrant.

2503.8 The Department shall keep a record of all processes, notices, and demands served upon it under this section, and shall record the time of the service and the action taken by the Department under § 2503.7.

History

• SOURCE: Regulation No. 71-18, 17 DCR 815 (June 28, 1971); 5P DCRR § 2.106.

26-C DCMR § 2504 EXAMINATIONS AND INVESTIGATIONS

2504.1 For the purpose of discovering violations of this chapter, the Department may at any time investigate the transactions, business, and records of any person subject to this chapter relating to matters covered by this chapter.

2504.2 If any records subject to this section are located outside the District, the registrant shall at his or her option, either make them available to the Department at a convenient location within the District, or pay the reasonable and necessary expenses for the Director of the Department or his or her representative to examine them at the place where they are maintained.

2504.3 The Director of the Department may designate representatives, including comparable officials of the State in which the records are located, to inspect them on his or her behalf.

History

• SOURCE: Regulation No. 71-18, 17 DCR 815 (June 28, 1971); 5P DCRR §2.107.

26-C DCMR § 2505 RETAIL INSTALLMENT CONTRACTS: ADDITIONAL DISCLOSURES

2505.1 In addition to the disclosures required pursuant to § 2501, the additional disclosures set forth in this section are required to be set out in a retail installment contract, separately and below any disclosures required under § 2501, if not made in connection with § 2501.

2505.2 To the extent that the disclosure of "cash price" includes the cash price of delivery, installation, servicing, repairs, alterations or improvements, the charge made for such items shall be stated. For the purposes of this chapter, the amount by which the cash price stated in a retail installment contract exceeds the cash price of goods or services offered by the seller to other buyers in the ordinary course of business shall be deemed a finance charge.

2505.3 Each retail installment contract shall include the name, address, and telephone number, if any, of both the seller and the buyer.

2505.4 Each retail installment contract shall contain a description of the goods or services purchased, including, where applicable, the trade name, and the model number of the goods.

2505.5 If the goods are used, seconds, or damaged, the contract shall so state.

2505.6 If the seller takes collateral to secure the buyer's obligations under the agreement, a description of the collateral shall be set forth in the contract.

2505.7 The seller shall disclose whether a financial benefit could inure to the seller by way of commission, rebate, or otherwise resulting from the buyer's obtaining any insurance coverage offered or arranged for by the seller if the seller, in connection with a retail installment contract, offers or arranges for any of the following:

(a) Credit life, accident, or health insurance;

(b) Insurance against loss of or damage to property;

(c) Insurance against liability arising out of ownership or use of property; or

(d) Insurance protecting the seller against the buyer's default or other credit loss.

History

• SOURCE: Regulation No. 71-18, 17 DCR 815 (June 28, 1971); 5P DCRR § 3.103(A).

26-C DCMR § 2506 RETAIL INSTALLMENT CONTRACTS: FORM AND CONTENT

2506.1 Except in series of sales transactions, each retail installment contract shall be contained in a single document, each page of which shall be signed by both the buyer and the seller.

2506.2 At the top of the first page of the agreement, there shall be stated in at least twelve-point extra bold type the words "RETAIL INSTALLMENT CONTRACT."

2506.3 If the printed terms of each contract are contained on both sides of a page, there shall appear on the first page the following words in boldface type: "NOTICE: SEE OTHER SIDE FOR IMPORTANT INFORMATION."

2506.4 If the terms of a retail installment contract are contained on more than two (2) sides of each preceding page, the following words shall appear on each page in boldface type: "THE TERMS OF THIS CONTRACT ARE CONTAINED ON MORE THAN ONE PAGE."

History

• SOURCE: Regulation No. 71-18, 17 DCR 815 (June 28, 1971); 5P DCRR § 3-102(B).

26-C DCMR § 2507 RETAIL INSTALLMENT CONTRACTS: DELIVERY OF COPY OF CONTRACT

2507.1 Except as provided in § 2507.2, the seller shall deliver to the buyer, or mail to the buyer at his or her address shown on the retail installment contract, a legible, executed, and completed copy of the contract prior to the delivery of the consumer goods or services or prior to the consummation of the transaction, whichever occurs first.

2507.2 If the transaction is one of a series of sales, the other disclosures for the particular sale required by §§ 2505, 2506, and this section may be made at any time not later than the date the first payment for that sale is due if the seller furnishes the buyer a memorandum of the sale at the time the sale is consummated or the goods are delivered, whichever occurs first, that clearly sets forth the following:

(a) The cash price of the goods or services sold;

(b) A statement that the goods are used, seconds, or damaged, if applicable; and

(c) The insurance disclosure required by § 2505.7.

History

• SOURCE: Regulation No. 71-18, 17 DCR 815 (June 28, 1971); 5P DCRR § 3.102(C).

26-C DCMR § 2508 ADDITIONAL DISCLOSURES WITH RESPECT TO OPEN END CREDIT

2508.1 If the seller, in connection with an open end credit account offers or arranges for credit life, accident, or health insurance; insurance against loss of or damage to property or against liability arising out of ownership or use of property; or insurance protecting the seller against the buyer's default or other credit loss, the seller shall disclose whether a financial interest could inure to the seller by way of commission, rebate, or otherwise resulting from the buyer's obtaining the insurance coverage offered or arranged for the seller.

2508.2 The disclosure required by § 2508.1 shall be made before the first transaction on an open end credit account in a single written statement which the customer may retain.

2508.3 If any goods sold pursuant to an open end credit account are used, seconds, or damaged, the seller shall disclose that fact in writing to the buyer at the time of the sale. The disclosure may be made on a sales receipt issued in connection with the sale.

History

• SOURCE: Regulation No. 71-18, 17 DCR 815 (June 28, 1971); 5P DCRR § 3.103.

26-C DCMR § 2509 PROHIBITION AGAINST SIGNING BLANK OR INCOMPLETED CONTRACT FORM

2509.1 No person covered by this chapter shall cause or permit any contract or other document relating to a retail installment transaction to be signed by the buyer before all blank spaces (other than signature spaces) are filled in with easily legible writing and such seller has submitted to the buyer the completed contract or other document and given the buyer a reasonable opportunity to examine it.

2509.2 Each contract shall contain a notice, satisfactory to the Department stating in substance that the buyer shall not sign the contract in blank and that the buyer is entitled to a readable copy of the contract at the time he or she signs it. The notice required by this subsection shall be printed in bold type not smaller than ten point (10 pt.).

History

• SOURCE: Regulation No. 71-18, 17 DCR 815 (June 28, 1971); 5P DCRR § 3.104.

26-C DCMR § 2510 ACKNOWLEDGMENT OF DELIVERY OF CONTRACT

2510.1 Any acknowledgment by the buyer of delivery of a copy of the contract shall be a rebuttable presumption of that delivery.

2510.2 Acknowledgments may contain statements to the effect that "buyer acknowledges that before buyer signed the contract, seller submitted the contract to buyer with all blank spaces filled in; that buyer had a reasonable opportunity to examine it; and that thereafter a legible, executed, and completed copy was delivered to the buyer."

History

• SOURCE: Regulation No. 71-18, 17 DCR 815 (June 28, 1971); 5P DCRR § 3.105.

26-C DCMR § 2511 REQUIREMENT FOR PROPERTY INSURANCE PROHIBITED

2511.1 Unless otherwise required by law, no seller, as a condition to the extension of credit, shall require a buyer to obtain insurance against loss of or damage to property which is the subject of a sale, or against liability arising out of the ownership or use of the property.

2511.2 The provisions of § 2511.1 shall not apply to transactions where the sales price of the property is one thousand dollars ($ 1,000) or more.

2511.3 If the sales price of property sold is one thousand dollars ($ 1,000) or more, the amount of loss or damage insurance a seller may require a buyer to obtain, as a condition to the extension of credit to the buyer, shall not exceed the sales price of the property insured.

History

• SOURCE: Regulation No. 71-18, 17 DCR 815 (June 28, 1971); 5P DCRR § 3.106.

26-C DCMR § 2512 VALIDITY OF COMPLETION CERTIFICATE

2512.1 In any transaction involving the modernization, rehabilitation, repair, alteration, improvement, or construction of real property, a writing signed by the buyer that the work has been satisfactorily completed shall not be valid or of any effect unless the work to be performed by the seller has been actually completed prior to the time of signing.

History

• SOURCE: Regulation No. 71-18, 17 DCR 815 (June 28, 1971); 5P DCRR § 3.107.

26-C DCMR § 2513 WAIVER OF REGULATIONS PROHIBITED

2513.1 Except as provided in §§ 2519.2 through 2519.4, no provision shall be inserted in any retail installment contract, contract extension, or refinancing agreement designed to nullify and make ineffective the provisions of this chapter, or otherwise deprive a retail buyer of the protection afforded by this chapter.

2513.2 No provision shall be inserted in any contract or agreement by which the buyer waives or purports to waive any provision of this chapter.

2513.3 The insertion in any contract or agreement of a provision designed or intended to nullify this chapter, or to waive the requirements of this chapter, shall constitute a violation of this chapter, and, in addition, that provision shall be void and of no effect.

History

• SOURCE: Regulation No. 71-18, 17 DCR 815 (June 28, 1971); 5P DCRR § 3.108.

26-C DCMR § 2514 THIRD PARTY TRANSACTIONS

2514.1 Any promissory note taken in connection with a retail installment contract subject to this chapter shall state on its face: "THIS INSTRUMENT IS SUBJECT TO A RETAIL INSTALLMENT CONTRACT."

History

• SOURCE: Regulation No. 71-18, 17 DCR 815 (June 28, 1971); 5P DCRR § 3.109.

26-C DCMR § 2515 PROHIBITED CONTRACT FORM PROVISIONS

2515.1 No person subject to this chapter shall use any contract form or any other instrument arising in connection with a retail installment transaction which contains any of the following:

(a) Any schedule of payments under which any one installment, except the downpayment, is not equal or substantially equal to all other installments, excluding the downpayment, or under which the intervals between any consecutive installments differ substantially, except as follows:

(1) The intervals for the first installment payment may be longer or shorter than the other intervals;

(2) The final installment payment may be less in amount than the preceding installment payment; and

(3) If a buyer's livelihood is dependent upon seasonal or intermittent income, the seller and the buyer may agree that one or more installment payments in the schedule of payments may be reduced or deferred;

(b) Any provision for the acceleration of the time when any part or all of the indebtedness becomes payable other than for a substantial default in payment or performance by the buyer, or on the same grounds that would authorize an attachment before judgment under D.C. Official Code §§ 16-501(d)(3)-(5) (2001);

(c) Any provision by which the buyer agrees not to assert against a seller, or against an assignee, any claim or defense arising from the sale of the consumer goods or services which are the subject matter of the contract;

(d) Any provision by which the buyer grants authority to the seller or assignee to enter the buyer's premises without consent of the buyer obtained immediately prior to entering the premises to repossess the collateral, if any;

(e) Any provision by which the buyer waives any right of action against the seller, assignee, or other person acting on behalf of either, for any illegal act committed in the collection of payments under the contract or in the repossession of goods;

(f) Any provision whereby the buyer executes a power of attorney appointing the seller, assignee, or other persons acting in the seller's behalf, as the buyer's agent in the collection of payments under the contract or in the repossession of collateral security;

(g) Any provision for the payment by the buyer of attorney's fees incurred by the seller or the seller's assignee in the collection of the debt created by the contract; or

(h) Any provision permitting a seller or seller's assignee on default of the buyer to take possession of the goods sold under the contract, unless the contract expressly waives all claims against the buyer for any deficiency between the proceeds of the disposition and the outstanding balance due on the contract.

2515.2 Notwithstanding any other provision of this section, any written provision in a retail installment contract or agreement which provides for settlement by arbitration of any controversy thereafter arising out of or related to the contract or agreement or breach of the contract or agreement, or any agreement in writing to submit to arbitration of any controversy, shall not be unenforceable or made invalid by reason of this chapter.

History

• SOURCE: Regulation No. 71-18, 17 DCR 815 (June 28, 1971); 5P DCRR § 3.110.

26-C DCMR § 2516 RECEIPTS: STATEMENT OF ACCOUNT

2516.1 When any payment is made on account of any retail installment contract, the seller receiving the payment shall, if the payment is made in cash, give the buyer a written receipt for the payment including the date and amount of payment.

2516.2 If the buyer specifies that the payment is made on one of several obligations, the receipt shall state the obligation(s) to which the payment is to be applied.

2516.3 With respect to other than an open end credit plan, within six (6) months after the execution of a retail installment transaction, and within every six-month period thereafter until the buyer has discharged all obligations under the contract, the seller or a subsequent assignee, in addition to any other statements or notices required by this chapter, shall send to the buyer upon written request a statement of account which shall list the following items:

(a) The annual percentage rate or rates;

(b) The amounts, if any, which have become due but remain unpaid, setting forth any charge for delinquencies, expenses of repossession, and extensions; and

(c) The dollar amount not due but still to be paid and the remaining period the agreement is to run.

2516.4 The buyer shall be entitled to only one statement under § 2516.3 in any six-month period free of charge. The sum of one dollar ($ 1.00) may be charged for each additional written statement requested by the buyer before supplying the additional written statement.

History

• SOURCE: Regulation No. 71-18, 17 DCR 815 (June 28, 1971); 5P DCRR §4.101.

26-C DCMR § 2517 ACKNOWLEDGEMENT OF PAYMENT IN FULL

2517.1 Promptly on written request and in any event within sixty (60) days after payment of all sums for which the buyer is obligated under a retain installment contract, the seller or assignee shall mail or deliver to the buyer sufficient instruments to indicate payment in full and to release all security in the collateral, if any, under the contract.

2517.2 Delivery, including delivery by mail, of the instruments shall be to the buyer's last known address.

History

• SOURCE: Regulation No. 71-18, 17 DCR 815 (June 28, 1971); 5P DCRR § 4.102.

26-C DCMR § 2518 REPOSSESSION

2518.1 If a buyer is in default in the payment of any sum due under a contract subject to this chapter or in the performance of any lawful condition imposed by the contract, the seller or seller's assignee may when authorized by law repossess the goods secured under the contract.

2518.2 Unless the goods can be repossessed with the permission of the possessor obtained immediately prior to the repossession, and without use of force, intimidation, undue influence, fraud, or breach of the peace, the goods shall be not repossessed except by legal process.

2518.3 Nothing in this section shall be construed to authorize violation of the criminal laws of the District of Columbia.

2518.4 The disposition of repossessed goods and the application of any sums realized by the disposition, shall be in accordance with applicable statutory law, including D.C. Official Code§§ 28:9-610 and §§ 28:9-505 (1996 Repl. Vol.).

2518.5 The seller or the seller's assignee must account to the buyer for any surplus from the proceeds of disposition as provided by D.C. Official Code § 28:9-610(2) (2001.), notwithstanding the absence of buyer liability for a deficiency.

History

• SOURCE: Regulation No. 71-18, 17 DCR 815 (June 28, 1971); 5P DCRR §§ 5.101 and 5.103.

26-C DCMR § 2519 DUTIES ON REPOSSESSION AND BUYER'S RIGHT OF REDEMPTION

2519.1 Within five (5) days after any consumer goods are repossessed, the seller or subsequent assignee shall deliver to the buyer personally, or send to the buyer by registered or certified mail to his or her last known address, a written notice stating the following:

(a) A general description of the goods and a statement that the goods have been repossessed;

(b) The buyer's right to redeem and the amount due and payable;

(c) The buyer's rights with respect to resale of the goods; and

(d) The exact address where the consumer goods are stored and the exact address where any payment is to be made or notice delivered.

2519.2 For thirty (30) days after notice has been delivered personally or mailed, the seller or assignee shall retain the repossessed goods, during which period the buyer may redeem the goods and become entitled to take possession of the goods.

2519.3 If the seller or assignee does not maintain a place of business within the District at which the buyer may exercise redemption rights, goods repossessed within the District may not be removed from the District unless the goods are repossessed pursuant to legal process and an adequate bond is posted to protect the buyer.

2519.4 Whenever repossessed goods are removed from the District, no fee or cost shall be charged to the buyer for transporting the goods outside the District, and upon redemption the goods shall be returned and made available to the buyer within the District without additional transportation charges.

2519.5 Notwithstanding any other provisions of this chapter, the redemption period provided in this section may be waived by written agreement between the buyer and the seller following repossession of the goods.

2519.6 To redeem the consumer goods, the buyer shall do the following:

(a) Pay or tender the amount due under the installment contract;

(b) Perform or tender performance of any other promise for the breach of which the consumer goods were repossessed; and

(c) Pay actual and reasonable charges for repossession and storage.

History

• SOURCE: Regulation No. 71-18, 17 DCR 815 (June 28, 1971); 5P DCRR §5.102.

26-C DCMR § 2520 DE-REGISTRATION

2520.1 If the Director of the Department or his or her designee believes there is evidence to indicate a persistent pattern of conduct by a registrant in violation of this chapter, the Department may give notice to the registrant of the Department's intent to hold a hearing to determine whether the registrant's registration under this chapter should be suspended.

2520.2 The hearing shall be scheduled not sooner than fifteen (15) days from the date of the notice.

2520.3 The notice to be given by the Department shall state the time and place for the hearing and the basis upon which the Department proposes to suspend the registrant's registration.

2520.4 The notice shall be served upon the registrant personally or be served by one of the following means:

(a) By leaving the notice at the last business address (or home address, if there is no business address) of which the Department has been given notice by the registrant; or

(b) By mailing the notice by certified mail to the last business address (or home address if there is no business address) of which the Department has been given notice by the registrant; or

(c) In accordance with § 2503, if the registrant is a non-resident.

2520.5 Notice of the hearing shall be published in the D.C. Register at least fifteen (15) days prior to the date of the hearing.

2520.6 The Department shall conduct the hearing in accordance with the provisions of § 10 of the D.C. Administrative Procedure Act (D.C. Official Code § 2-509 (2001)).

2520.7 If, on the basis of the evidence, the Director of the Department or his or her designee is satisfied that the registrant has engaged in a persistent pattern of conduct that is in violation of this chapter, he or she may issue an order suspending the registrant's registration for such time and under such circumstances as the Department deems proper, including, but not limited to a permanent suspension of the registration.

2520.8 The Director of the Department is authorized to promulgate rules of procedure to govern such hearings, consistent with the D.C. Administrative Procedure Act.

History

• SOURCE: Regulation No. 71-18, 17 DCR 815 (June 28, 1971); 5P DCRR § 6.101.

26-C DCMR § 2521 CEASE AND DESIST ORDERS

2521.1 If the Director of the Department has a reasonable basis to believe that any person has violated this chapter, he or she may give notice to that person of intent to hold a hearing to determine whether a cease and desist order with respect to the violation(s) should be issued.

2521.2 The hearing shall be scheduled not sooner than fifteen (15) days from the date of the notice.

2521.3 The notice to be given by the Department shall state the time and place for the hearing and the basis upon which the Department proposes to suspend the registrant's registration.

2521.4 The notice shall be served upon the registrant personally or be served by one of the following means:

(a) By leaving the notice at the last business address (or home address, if there is no business address) of which the Department has been given notice by the registrant; or

(b) By mailing the notice by certified mail to the last business address (or home address if there is no business address) of which the Department has been given notice by the registrant; or

(c) In accordance with § 2503, if the registrant is a non-resident.

2521.5 Notice of the hearing shall be published in the D.C. Register at least fifteen (15) days prior to the date of the hearing.

2521.6 The Department shall conduct the hearing in accordance with the provisions of § 10 of the D.C. Administrative Procedure Act (D.C. Official Code § 2-509 (2001)).

2521.7 At the conclusion of the hearing, if the Director of the Department or his or her designee determines, upon the preponderance of testimony and evidence, that the person complained against has violated this chapter, the Director or designee shall do one of the following:

(a) State the findings and issue an order requiring the person complained against to cease and desist from the unlawful conduct and to take such affirmative action including restitution as will effectuate the purposes of this chapter, with notice that if the Department determines that the person complained against has not, after fifteen (15) calendar days following service of its order, corrected the unlawful practice and complied with the order, the Director of the Department will certify the matter to the Attorney General and to such other agencies, as may be appropriate, for enforcement; or

(b) Immediately certify the matter to the Attorney GeneralAttorney General for civil or criminal enforcement pursuant to this chapter.

2521.8 Failure to comply with an order issued pursuant to this section shall constitute grounds for suspension of registration under § 2520.

2521.9 Any certification under this subsection, for the purpose of a civil proceeding, shall constitute a determination that there exists a prima facie case of violation of this chapter.

2521.10 The Attorney General Attorney General may institute such civil proceedings in the name of the District of Columbia in an appropriate court, including the seeking of such restraining orders and temporary or permanent injunctions as are necessary to obtain complete compliance with the orders of the Department.

2521.11 If, at any time after a complaint has been filed, the Director of the Department believes that appropriate civil action to preserve the status quo or to prevent irreparable harm appears advisable, the Director shall certify the matter to the Attorney GeneralAttorney General who may bring, in the name of the District of Columbia, in an appropriate court, any action necessary to preserve such status quo or to prevent such harm, including the seeking of temporary restraining orders and preliminary injunctions.

2521.12 If, at the conclusion of the hearing, the Director or his or her designee shall determine upon the preponderance of the testimony and evidence, that the person complained against has not violated this chapter, the Director or designee shall state his or her findings and issue an order dismissing the complaint.

History

• SOURCE: Regulation No. 71-18, 17 DCR 815 (June 28, 1971); 5P DCRR § 6.102.

26-C DCMR § 2522 REMEDIES AND PENALTIES

2522.1 Civil fines, penalties, and fees may be imposed as alternative sanctions for any infraction of this regulation pursuant to titles I-III of the Department of Consumer and Regulatory Affairs Civil Infractions Act of 1985. Adjudication of any infraction of this regulation shall be pursuant to titles I-III of the Department of Consumer and Regulatory Affairs Infractions Act of 1985.

2522.2 Any person who violates any provision of this chapter shall be subject to a penalty or a fine not exceeding three hundred dollars ($ 300) or imprisonment for not more than ten (10) days for each violation.

2522.3 The remedies and penalties set forth in this chapter shall not be deemed to be mutually exclusive. The Department is authorized to pursue such remedies and penalties jointly and concurrently.

2522.4 Nothing in this chapter shall prevent any person from exercising any right or seeking any remedy to which he might otherwise be entitled, or from filing any complaint with any other agency.

2522.5 Nothing in this chapter shall be deemed to deprive any aggrieved party of such judicial review of orders of the Council or of any other agency or authority of the District of Columbia as may be available.

2522.6 If any section, subsection, sentence, clause, phrase or portion of this chapter is for any reason held invalid or unconstitutional by any court of competent jurisdiction, such section, subsection, sentence, clause, phrase, or portion shall be deemed a separate, distinct, and independent provision and such holding shall not affect the validity of the remaining provisions.

History

• SOURCE: Regulation No. 71-18, 17 DCR 815 (June 28, 1971); 5P DCRR §§ 6.103 through 6-105, 7.101 and 7.102; as amended by § 32 of the Department of Consumer and Regulatory Affairs Civil Infractions Act of 1985 Technical and Clarifying Amendments Act of 1990, D.C. Law 8-237, 38 DCR 314, 326 (January 11, 1991).

26-C DCMR § 2599 DEFINITIONS

2599.1 When used in this chapter, the following terms and phrases shall have the meanings ascribed:

Buyer - See: "Retail buyer."

Consumer goods - tangible chattels bought by a natural person for use primarily for personal, family, or household purposes, including certificates or coupons exchangeable for such goods. The term "consumer goods" does not include goods acquired for commercial or business use or for resale, nor does the term include any motor vehicle as that term is defined in § 399 of Title 16 of the District of Columbia Municipal Regulations.

Open end credit - consumer credit extended on an account pursuant to a plan under which the following apply:

(a) The seller may permit the customer to make purchases or obtain services, from time to time, directly from the seller or indirectly by use of a credit card, or other device, as the plan may provide;

(b) The buyer has the privilege of paying the balance in full or in installments; and

(c) A finance charge, as determined by § 106(a) of the Truth in Lending Act (Pub. L. 90-321, 82 Stat. 146), as applicable to retail transactions, may be computed from time to time on an outstanding unpaid balance.

The term "open end credit" does not include negotiated advances under an open end real estate mortgage or a letter of credit.

Organization - a corporation, agency, trust, estate, partnership, cooperative, or association.

Person - a natural person or an organization.

Retail buyer or buyer - a natural person who buys consumer goods or services from a retail seller in a retail installment transaction.

Retail installment contract - a contract entered into by a retail buyer and a retail seller evidencing a retail installment transaction involving other than open end credit.

Retail installment transaction - any retail transaction between a retail seller and a retail buyer in which there is an agreement for the purchase of consumer goods or services, or both, for which the price is to be paid in one or more deferred installments and the "amount financed" (as defined by Regulation Z of the Board of Governors of the Federal Reserve System) does not exceed twenty-five thousand dollars ($ 25,000).

The term "retail installment transaction" shall include open end and other than open end transactions, and shall also include any transactions involving a contract in the form of a bailment or a lease if the bailee or lessee contracts to pay compensation for the use of the consumer goods or services, or both, which are the subject of that contract and it is agreed that the bailee or lessee is bound to become, or, for no further (or a merely nominal) consideration, has the option, upon full compliance with the provisions of the bailment or lease, of becoming the owner of the consumer goods or services, or both.

The term "retail installment transaction" shall not include any retail transaction in which all of the following conditions apply:

(a) The purchase price is to be paid in full within not more than ninety (90) days from the initial billing date;

(b) No security interest in the consumer goods is retained by the seller and no other collateral or security is required or accepted by the seller; and

(c) No charge is made as consideration for the deferral of payment or as an incident to the extension of credit.

For the purposes of this chapter, the terms "security interest," "collateral," and "security" shall not be construed to include any mechanics lien.

Retail seller or seller - a person engaged in the District of Columbia in the business of selling consumer goods or services involving retail installment transactions.

Sales finance company - any person who, in the District, regularly purchases retail installment contracts or evidences of indebtedness arising from retail installment transactions.

Series of sales - a series of consumer credit sales transactions made pursuant to an agreement providing for the addition of the deferred payment price of that sale to an existing outstanding balance, where the person to whom the credit is extended has approved in writing both the annual percentage rate or rates and the method of computing the finance charge or charges, and where the creditor retains no security interest in any property as to which he has received payments aggregating the amount of the sales price including any finance charges attributable thereto.

In the case of items purchased on different dates, the first purchased shall be deemed first paid for, and in the case of items purchased on the same date, the lowest priced shall be deemed first paid for.

Services - work, labor, or other kind of activity furnished, or agreed to be furnished, in connection with the delivery, installation, servicing, repair, or improvement of consumer goods; but the term "services" shall not include work, labor, or other activity furnished or agreed to be furnished for which the price or tariff charged or to be charged is required by law to be determined or approved by, or to be filed, subject to approval or disapproval, with the United States, or the District, or a department, division, agency, officer, or official of either of such governments.

History

• SOURCE: Regulation No. 71-18, 17 DCR 815 (June 28, 1971); 5P DCRR § 1.101.

26-C26 LOANING MONEY

26-C DCMR § 2600 GENERAL PROVISIONS

2600.1 The provisions of this chapter apply to all persons engaged in the District of Columbia in the business of loaning money, except the following:

(a) National banks;

(b) Licensed bankers;

(c) Trust companies;

(d) Savings banks; and

(e) Building and loan associations.

2600.2 For purposes of this chapter, the term "1901 Act" means §§ 1178, 1179 and 1180 of the Act of March 1, 1901, as amended.

2600.3 For purposes of this chapter, the term "1913 Act" means the Act of February 4, 1913, as amended.

2600.4 A person is "engaged in the business of loaning money" in the District if that person holds out, by the maintenance of a place of business in the District or in any other manner, that a loan or loans of money may be effected by or through the person so holding out, plus the performance in the District by that person of one or more acts which result in the making or in the collection of a loan of money. (See Horning v. District of .Columbia, 254 U.S. 135 (1920)).

2600.5 In no event shall any provision of the 1913 Act or the regulations promulgated pursuant to that act apply with respect to any loan or to the making of any loan:

(a) To any corporation that is unable to plead any statutes against usury in any action;

(b) Secured on real estate located outside of the District of Columbia;

(c) To a borrower residing, doing business, or incorporated outside of the District of Columbia; or

(d) Greater than twenty-five thousand dollars ($ 25,000).

History

• AUTHORITY: Unless otherwise noted, the authority for this chapter is §§ 1178, 1179 and 1180 of the Act approved March 3, 1901 (31 Stat 1377, ch. 854), and An Act approved February 4, 1913 (37 Stat 657, ch. 26; D.C. Official Code § 26-901 et seq.) (2001).
• SOURCE: Introduction and §§ 1(a), (b) and (i) of Regulations for the conduct of the business of loaning money, Commissioners' Order 275,403/13, promulgated September 6, 1949, 5Q DCRR Introduction, §§1 (a), (b) and (i), Special Edition (September 21, 1970); as amended by § 3 of the Money Lenders Licensing Amendment Act of 1986, D.C. Law 6-188, 33 DCR 7687 (December 12, 1988).

26-C DCMR § 2601 LICENSE REQUIREMENTS

2601.1 It shall be unlawful for any person to engage in the District of Columbia in the business of loaning money without first obtaining a money lender's license.

2601.2 A Money Lender's License Class A shall authorize the holder of the license to engage in the District of Columbia in the business of loaning money upon which a rate of interest in excess of six percent (6%) per annum is charged or received. The license fee for this license shall be eight hundred dollars ($ 800) per year.

2601.3 A Money Lender's License Class B shall authorize the holder of the license to engage in the District of Columbia in the business of loaning money upon which a rate of interest of six percent (6%) per annum or less is charged or received. The license fee for this license shall be three hundred nineteen dollars ($ 319) per year.

History

• SOURCE: Section 2 of Regulations for the conduct of the business of loaning money, Commissioners' Order 275,403/13, promulgated September 6, 1959, 5Q DCRR § 2.1, Special Edition (September 21, 1970).

26-C DCMR § 2602 APPLICATION FOR LICENSE

2602.1 In addition to the requirements of § 2 of the 1913 Act, as amended (D.C. Official Code § 26-902 (2001)), each application for a money lender's license shall include the verified signature under oath and the true and lawful name of the applicant if an individual, or each member of a firm or association applicant, or the president or other executive officer of a corporate application.

2602.2 In the case of a corporate applicant, there shall be furnished with the application a list, sworn to by the secretary of the corporation, stating the name of each person owning stock of the corporation together with the class and number of shares of stock owned by each such person.

2602.3 If ten percent (10%) or more of any class of stock of a corporate applicant is owned by another corporation, the application shall include (for each such other corporation) a list sworn to by the secretary of the other corporation of the following:

(a) The names and addresses of all persons owning ten percent (10%) or more of any class of stock of the other corporation;

(b) The names and addresses of the officers and directors of the other corporation; and

(c) The date and place of incorporation of the other corporation.

2602.4 Bond, as required by the 1913 Act (D.C. Official Code § 26-902 (2001)), shall be filed with the application.

2602.5 With each application for license there shall be filed under the oath of the applicant (if an individual, or of a member of a firm or association applicant, or of the secretary of a corporate applicant) a list of names and addresses of each person engaged in the business of insurance, or in the business of loaning money, or in the business of dealing in new or used motor vehicles or other chattels which, or liens on or interest in which, are acceptable to the applicant as collateral security for a loan of money, in which business(es) the individual applicant (or any member of a firm or association applicant; or any stockholder, officer, or director of the corporate applicant) has an interest.

2602.6 Each applicant shall file with the application a list of any and all insurance agents' or brokers' licenses, notary public commissions, or any other licenses or commissions issued by the District to engage in any business, profession, or calling which are held by the individual applicant (or any member of a firm or association applicant, or any director or officer of a corporate applicant), and any employee of the applicant, together with the name of each person holding such a license or commission.

History

• SOURCE: Section 2B of Regulations for the conduct of the business of loaning money, Commissioners' Order 275, 403/13, promulgated September 6, 1949, 5Q DCRR §§ 2.2, 2.3, and 2.5, Special Edition (September 21, 1970).

26-C DCMR § 2603 ISSUANCE OF LICENSES

2603.1 Each license certificate shall be issued in the true and lawful name of the individual (or of the person or persons comprising the firm, partnership, voluntary association; or of the joint-stock company or the corporation) authorized by the license to conduct the money lending business.

2603.2 Each license certificate shall contain the following:

(a) The name under which the business will be conducted;

(b) The address or addresses at which such business is to be conducted;

(c) The period for which the license is granted; and

(d) The date of issuance.

2603.3 Each license certificate shall be signed by the Director, Department of Consumer and Regulatory Affairs (also referred to in this chapter as the "Director") or the Director's designee.

History

• SOURCE: Section 3(a) of Regulations for the conduct of the business of loaning money, Commissioners' Order 275,403/13, promulgated September 6, 1949, 5Q DCRR § 3.1, Special Edition (September 21, 1970).

26-C DCMR § 2604 CONDUCT OF THE BUSINESS

2604.1 It shall be unlawful for any licensee to conduct this business under any other name than the name stated in the license certificate issued to the licensee.

2604.2 Any licensee desiring to conduct his or her business under a name other than that stated in the license certificate shall file with the Director or the Director's designee, an application to change the name and shall surrender the license certificate. The Director shall issue a new certificate setting forth the new name, together with the statement that licensee formerly conducted the business under the old name.

2604.3 A licensee may conduct business at any number of addresses that he or she may desire, but each separate address must appear upon the license certificate.

2604.4 A duplicate certificate bearing the same information appearing on the original shall be obtained from the Director or the Director's designee for each additional address.

2604.5 Each licensee shall frame the certificate of license (or duplicate) under glass and post it in a conspicuous public place in each place of business and keep the same available for inspection by any member of the Metropolitan Police Department, the Director or the Director's designee, or such other persons as the Mayor may designate.

2604.6 No person shall be the holder, directly or indirectly, by direct ownership, stock ownership, interlocking directorate, or otherwise, of any interest in more than one class of money lender's license at any one time.

History

• SOURCE: Sections 3(b), (c), (d) and (e) of Regulations for the conduct of the business of loaning money, Commissioners' Order 275,403/13, promulgated September 6, 1949, 5Q DCRR §§ 3.2 through 3.5, Special Edition (September 21, 1970).

26-C DCMR § 2605 DUTIES OF LICENSEES TO BORROWERS

2605.1 In addition to the duties imposed upon Class A licensees by the 1913 Act, Class A and Class B licensees shall deliver the following to each borrower at the time the loan of money is made:

(a) A statement in writing showing in clear and distinct terms the following:

(1) The actual amount of the loan;

(2) The date on which the loan is made;

(3) The terms of repayment of the loan, including the total number of installments and the amount of each installment, and listing as separate items principal, interest, insurance premiums, and each other charge included in the actual amount of the loan; and

(b) A copy of each writing relating to the loan and to the security for the loan which expresses any part of the obligations of the borrower to the lender or licensee or to any other person with respect to the loan and of the obligations of the lender or licensee or of any other person to the borrower with respect to the loan. If any of the original writing bears the signature of the borrower, the copy must be in the precise form as was the original at the time it was signed by the borrower.

2605.2 A licensee shall deliver to each borrower a complete and legible receipt for each payment made on account of a loan of money at the time the payment is made.

2605.3 Each receipt delivered pursuant to § 2605.2 shall show the following:

(a) The date and total amount of the payment; and

(b) The actual amount of the loan after receipt of the payment.

2605.4 Upon payment in full of the actual amount of the loan and of all lawful charges on the loan, a licensee shall give the borrower a receipt showing payment in full of the loan.

2605.5 Within ten (10) days of the payment in full, a licensee shall endorse, over the signature of the licensee (or of the member or officer of the licensee) the words "PAID IN FULL" upon the original note, and deliver to the borrower every original note and a release of the instrument of security.

History

• SOURCE: Section 4 of Regulations for the conduct of the business of loaning money, Commissioners' Order 275, 403/13, promulgated September 6, 1949, 5Q DCRR § 4.1, Special Edition (September 21, 1970).

26-C DCMR § 2606 INTEREST

2606.1 Interest shall be computed on the actual amount of the loan and shall not be charged or received to any greater rate than the maximum legal rate applicable to the loan of money.

2606.2 No lender or licensee shall charge or receive any unaccrued interest on a loan of money.

2606.3 No licensee shall accept as evidence of indebtedness of a borrower, or as an instrument of security for a loan of money, any evidence of indebtedness, instrument of security or other paper writing the face amount of which is in any amount greater than the actual amount of the loan; Provided, that licensees are authorized to accept as evidence of indebtedness and as instruments of security for loans of money paper writings the face amounts of which include, in addition to the actual amount of the loan, a premium on insurance specifically authorized by this chapter.

History

• SOURCE: Section 5 of Regulations for the conduct of the business of loaning money, Commissioners' Order 275,403/13, promulgated September 6, 1949, 5Q DCRR §§ 5.1, 5.2 and 5.3, Special Edition (September 21, 1970).

26-C DCMR § 2607 INSURANCE

2607.1 A licensee may require a borrower to pay the premium on insurance authorized by this section, but not otherwise.

2607.2 A copy of the policy of insurance on which the premium is required by the licensee to be paid by the borrower shall be delivered by the licensee to the borrower within twenty (20) days after the making of the loan.

2607.3 In no case shall life insurance be required in cases in which property is accepted as collateral security for a loan of money.

2607.4 No amount of money shall be charged or received by the licensee as premium on any policy of insurance unless the following is done:

(a) The evidence in writing of the loan of money describes each kind of insurance required by the licensee and states separately the term and premiums applicable to the insurance;

(b) An insurance policy or comparable evidence of a policy conforming to the term, description, and premiums set forth in the evidence of indebtedness has been furnished to the borrower prior to the date when any payment under that evidence of indebtedness is required to be made; and

(c) Prior to the date when the first payment under the evidence of indebtedness is required to be made, the licensee has furnished to the borrower an official receipt of the insurance company or its authorized representative, showing payment by the licensee to the insurance company on account or premium on the policy issued to the borrower of an amount not less than the amount of the premium set forth in said evidence of indebtedness.

2607.5 In the case of a policy of insurance issued on an automatic renewal basis for a term less than the term of the loan, the amount of premium which may be included in the evidence of indebtedness shall not exceed the premium on that policy for one policy period.

2607.6 If there is no collateral security for a loan of money, a reducing form of term life insurance on the life of the borrower in an amount not exceeding the actual amount of the loan for a term not exceeding the term of the loan may be required by the licensee.

2607.7 If a loan of money be made upon the collateral security of household furniture and furnishings, fire and extended coverage insurance for a term not exceeding the term of the loan in an amount not exceeding the fair market value of the collateral security property at the time policy is issued, payable to licensee and borrower as their interests may appear, may be required by the licensee.

2607.8 If a loan of money be made upon the collateral security of a vehicle, fifty dollars, seventy-five dollars, or one hundred dollars ($ 50, $ 75, or $ 100) deductible collision, as well as fire and theft insurance (or comprehensive in lieu of fire and theft) for a term that does not exceed the term of the loan payable to the licensee and the borrower as their interests may appear, may be required by the licensee.

History

• SOURCE: Section 6 of Regulations for the conduct of the business of loaning money, Commissioners' Order 275,403/13, promulgated September 6, 1949, 5Q DCRR §§ 6.1 through 6.7, Special Edition (September 21, 1970).

26-C DCMR § 2608 REPOSSESSION

2608.1 No person, except a licensee or the authorized agent of a licensee acting under or by virtue or a right or authority contained in the evidence of indebtedness of, or instrument of security for, a loan of money made by that licensee, shall repossess within the District of Columbia property which was accepted as collateral security for a loan of money.

2608.2 No person shall repossess, seize, or participate in any manner in the physical repossession or seizure of personal property offered as collateral security for a loan of money without first having three (3) sets of his or her fingerprints taken by the Metropolitan Police Department and filing the same with the Director or the Director's designee.

2608.3 In the case of the repossession of property which was accepted as collateral security for a loan of money, it shall be the duty of the licensee for whose account the property was repossessed to give four (4) days written notice to the borrower by registered mail of each of the following:

(a) The proposed date, time, and place of the sale or other disposition of the property;

(b) The actual amount of the loan and other charges due; and

(c) That the borrower may, within the four (4) day notice period, redeem the property by paying to the licensee the actual amount of the loan and lawful charges authorized by this chapter.

2608.4 If the borrower fails to redeem the property under § 2608.3(c), unless the period of redemption is extended by the licensee, the licensee shall effect the cancellation of any insurance on the property for which the premium has been paid by the borrower.

2608.5 Upon cancellation of an insurance policy under § 2608.4, the licensee shall ascertain the amount of unearned premium to be refunded by the insurance company, and shall apply the amount of that refund to the actual amount of the loan and charges authorized by this chapter.

2608.6 If the borrower fails to redeem the property under § 2608.3(c), the licensee shall sell or dispose of (or cause the sale or disposition of) the property at a price not less than the highest current market value of the property at the time of sale or disposition.

2608.7 Within ten (10) days after the sale or disposition of the property under this section, the licensee shall do the following:

(a) Apply the proceeds of the sale or disposition of the property to payment of the actual amount of the loan and lawful charges authorized by this chapter;

(b) Remit to the borrower any balance; and

(c) Deliver the note or other evidence of indebtedness to the borrower marked "PAID AND CANCELLED," along with a release of any evidence of indebtedness or instrument of security for the loan.

2608.8 If the price paid for property at sale or disposition is less than the total actual amount of the loan (plus lawful charges authorized under this chapter), the note or other evidence of indebtedness of the borrower shall be endorsed by the licensee to show curtailment of the actual amount of the loan in an amount equal to the sale or disposition price less lawful charges authorized by this chapter.

2608.9 Within five (5) days after the sale or disposition of the property, the licensee shall deliver to the borrower a full account giving the date, time, and place of the sale, the price for which the property was sold or disposed of, an itemized statement of expenses incident to the sale or disposition, and the name of the person to whom the property was sold or transferred.

2608.10 The licensee shall deliver a copy of the information provided to the borrower under § 2608.9 to the Director or the Director's designee.

2608.11 Whenever within the knowledge of the licensee in the repossession of collateral security, property other than the collateral is taken, it shall be the duty of the person secured by the instrument granting or purporting to grant authority for the repossession to tender delivery of the other property, in the same condition as it was at the time of the taking, to the person from whom that other property was taken, within forty-eight (48) hours after the taking.

2608.12 Each licensee shall make all repairs to repossessed property which will be compensated by the insurance covering the property at the time of repossession.

History

• SOURCE: Section 7 of Regulations for the conduct of the business of loaning money, Commissioners' Order 275,403/13, promulgated September 6, 1949, 5Q DCRR §§ 7.1 through 7.3, Special Edition (September 21, 1970).

26-C DCMR § 2609 REPOSSESSION REGISTER

2609.1 Each licensee shall maintain and have available at all times in the licensee's office or other place of business for inspection by the Director or the Director's designee in a separate bound register with non-removable pages to be provided by the licensee for that purpose, a record of all repossessions made by or on behalf of the licensee.

2609.2 The licensee shall enter the following information on the repossession register:

(a) The name and address of the person from whom property has been repossessed;

(b) The default for which the repossession was made;

(c) The name and address of each person who participated in the repossession;

(d) The date, time, and place of sale or disposition of the repossessed property;

(e) The name and address of the person to whom the repossessed property was sold or transferred by the licensee;

(f) The amount for which the repossessed property was sold or disposed of by the licensee;

(g) A list of any and all repairs to the property not compensated by insurance which were made or caused to be made by the licensee for the purpose of putting the property in saleable condition, including the itemized cost of each repair and the name and address of the person employed by the licensee to make repairs;

(h) All items of expense incident to the sale or disposition of the property;

(i) The amount applied to the actual amount of the loan as refund of insurance premium or premiums;

(j) The amount applied to the actual amount of the loan from the proceeds of sale or disposition of the property; and

(k) The amount, if any, remitted to the borrower.

History

• SOURCE: Section 8 of Regulations for the conduct of the business of loaning money, Commissioners' Order 275, 403/13, promulgated September 6, 1949, 5Q DCRR § 8.1, Special Edition (September 21, 1970).

26-C DCMR § 2610 TRANSACTION REGISTER

2610.1 Each licensee shall keep and maintain in his office or place of business a register, as required by § 4 of the 1913 Act, and each licensee shall enter in the register the data required by the Act.

2610.2 The register shall be maintained from day to day as each transaction is entered into between the license and the borrower.

2610.3 The register shall be a book of original entry.

2610.4 In addition, every licensee shall enter the following information in the transaction register with respect to each loan:

(a) The name and address of every person from whom any fee or commission, by whatever name designated, was paid or agreed to be paid by the licensee in connection with such loan, and the amount of such fee, or commission so paid or agreed to be paid;

(b) A description of any property accepted as collateral security for the loan and in case such property be a motor vehicle, the manufacturers' name, and the year, model and motor number thereof;

(c) The perils insured against, and the amount and conditions of the policy of insurance against each such peril, the premium on which is included in the amount of the loan;

(d) The names and addresses of the companies issuing such insurance;

(e) The names of the brokers or agents by whom such insurance was written;

(f) The premiums charged on such insurance; and

(g) The term of the loan.

2610.5 The register shall be kept numerically by numbers of loans in the order made and each entry shall have a proper column separating each item required to be shown under this chapter.

2610.6 The same number assigned under § 2610.5 shall appear on the borrower's payment or receipt book and shall also appear in all other records pertaining to the loan required to be kept by the licensee under this chapter.

History

• SOURCE: Section 9 of Regulations for the conduct of the business of loaning money, Commissioners' Order 275,403/13, promulgated September 6, 1949, 5Q DCRR §§ 9.1, 9.2 and 9.3, Special Edition (September 21, 1970).

26-C DCMR § 2611 PENALTIES AND FORFEITURES

2611.1 In addition to all other penalties and forfeitures provided by law, any person violating any provision of this chapter, upon conviction, be fined three hundred dollars ($ 300), imprisoned for not less than thirty (30) days, or more than ninety (90) days, or both. In addition, the court may order any person violating this act to make restitution for the value of property illegally obtained as a result of the violation.

2611.2 Money lender's licenses of both Class A and Class B shall be subject to revocation as provided in § 6 of the 1913 Act for any violation of this chapter.

History

• SOURCE: Section 10 of the Regulations for the conduct of the business of loaning money, Commissioners' Order 275,403/13, promulgated September 6, 1949, 5Q DCRR §§ 10.1 and 10.2, Special Edition (September 21, 1970); as amended by § 3 of the Money Lenders Licensing Amendment Act of 1986, D.C. Law 6-188, 33 DCR 7687, 7690.

26-C DCMR § 2699 DEFINITIONS

2699.1 When used in this chapter, the following terms and phrases shall have the meanings ascribed:

1901 Act - Sections 1178, 1179 and 1180 of the Act of March 1, 1901, (31 Stat. 1377, ch. 854) as amended.

1913 Act - the Act of February 4, 1913, (37 Stat. 657, ch. 26) as amended.

Actual amount of the loan - the principal amount of money owed by a borrower at any given time, exclusive of interest.

Borrower - any person whose absolute promise to repay a loan of money was affected.

Comparable evidence of an insurance policy - a statement typewritten or printed in type as large as brevier or 8- point type, setting forth all information necessary to the exercise by the borrower of every right afforded under the terms of the insurance policy, as follows:

(a) The name of the insurance company and its address;

(b) The address of the local office of the insurance company, if any;

(c) The number of the policy;

(d) The date and hour on which the policy takes effect and the date and hour on which the policy terminates;

(e) The amount of the premium;

(f) The kind or kinds of insurance included in the policy;

(g) Any limitation pertaining to the insurance;

(h) The provisions for cancellation; and

(i) The procedure to be followed by the borrower in the making of any claim under the policy.

Engaged in the business of loaning money - the holding out in the District of Columbia, by the maintenance of a place of business in the District of Columbia or in any other manner, that a loan or loans of money may be effected by or through the person so holding out, plus the performance in the District of Columbia by that person of one or more acts which result in the making or in the collection of a loan of money.

Loan of money - each transaction, whatever its form and however designated, which is in truth the borrowing and lending of money, including every transaction, the substance of which is the advance, directly or indirectly, by a lender to a borrower, of any sum of money upon an absolute promise to repay, irrespective of whether the money advanced is the property of the lender or the creditor.

Interest - shall include, in addition to any sum of money charged or paid as compensation for the use of money, all expenses, demands, and services of every character, notarial fees, recording fees, and every other fee and charge except:

(a) Premiums on insurance specifically authorized by this chapter shall be included as interest if the obtaining by the borrower of the insurance is a prerequisite for the making of the loan. Insurance, all or any part of the premium or commission on which insures directly or indirectly to the benefit of the licensee, or to the benefit of any person having any direct or indirect interest in the business of such license, shall be deemed to have been required by the licensee, unless the licensee shall satisfy the Director that the insurance in fact was not so required and that the borrower could not reasonably have believed that it was required;

(b) On a loan of money the actual amount of which is in excess of two hundred dollars ($200), notary fees authorized by law for notarization of the instrument of security and for the certificate of the licensee required by this chapter, and the charge made by the Recorder for recording the instrument of security; and

(c) Upon the foreclosure of the security for a loan of money charges for attorney's and agent's fees which do not exceed ten percent (10%) of the actual amount of the loan found due in the foreclosure proceeding, plus such fees and charges as are reasonable and necessary expenses incurred for the liquidation of the loan.

Licensee - a person to whom the government of the District of Columbia has granted a Class A or Class B Money Lender's License.

Person - shall include an individual, a firm, a partnership, a joint-stock company, a corporation, an association, an incorporated society, a statutory or common-law trust, an estate, an executor, an administrator, a receiver, a trustee, a conservator, a liquidator, a committee, an assignee, an officer, an employee, a principal or an agent.

Repossess and repossession - shall include every act, other than an act performed under authority of process issuing out of a court of competent jurisdiction, which contributes to or results in obtaining physical possession of tangible personal property which is collateral security for a loan of money for the purpose of liquidating the loan in whole or in part.

History

• SOURCE: Section 1 of Regulations for the conduct of the business of loaning money, Commissioners' Order 275,403/13, promulgated September 6, 1949, 5Q DCRR § 1, Special Edition (September 21, 1970).

26-C27 FORECLOSURE MEDIATION

26-C DCMR § 2700 SCOPE

2700.1 Unless specified otherwise, these regulations shall apply to the foreclosure mediation rights and procedures established for the exercise of power of sale of a residential mortgage as authorized in Section 539b of An Act to establish a code of law for the District of Columbia, approved March 3, 1901 (referred to in this chapter as the “Act”) (31 Stat. 1189; D.C. Official Code § 42-815.02)

2700.2 The Act requires the completion of forms or other documents for certain activities covered by the Act. Those requirements shall be satisfied solely through the use of forms prescribed or authorized by this chapter and found on the Department of Insurance, Securities and Banking’s (Department) website at http://disb.dc.gov.

2700.3 These regulations also set forth the procedures for filing an Affidavit of Non-Residential Mortgage Foreclosure in order to issue and record a Notice of Foreclosure for a non-residential mortgage, which does not require the recordation of a Final Mediation Certificate.

2700.4 These regulations shall not apply to a foreclosure by a condominium association against an owner, or housing cooperative association against a member, when the foreclosure is brought for a reason other than a default on a residential mortgage.

History

• SOURCE: Emergency and Proposed Rulemaking published at 58 DCR 2958 (April 8, 2011)[EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 58 DCR 8247 (September 23, 2011)[EXPIRED]; as amended by Final Rulemaking published at 58 DCR 11469 (December 30, 2011); as amended by Final Rulemaking published at 61 DCR 6390 (June 27, 2014). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 2700

26-C DCMR § 2701 NOTICE OF DEFAULT ON RESIDENTIAL MORTGAGE

2701.1 The requirement in the Act that a Notice of Default on Residential Mortgage (Form FM-1) be provided by a lender to each borrower as a condition of issuance of a Notice of Intention to Foreclose a Residential Mortgage shall be satisfied by:

(a) Mailing a completed copy of a Notice of Default on Residential Mortgage (Form FM-1) to the last known address and the property subject to the residential mortgage to each borrower for the real property for which the Notice of Default on Residential Mortgage (Form FM-1) is being issued; and

(b) Recording with the District of Columbia Office of the Recorder of Deeds the documents required in subsection 2701.4.

2701.2 A Notice of Default on Residential Mortgage (Form FM-1) may contain:

The Lender’s letterhead, including name and contact information;

The date;

The borrower’s name and mailing address; and

Method of delivery.

2701.3 A Notice of Intention to Foreclose a Residential Mortgage shall be null and void with respect to a foreclosure of a residential mortgage unless a Notice of Default on Residential Mortgage is mailed to each borrower, as Section 539(c) of the Act (D.C. Official Code § 42-815(c)) and this chapter require, and the lender receives a Final Mediation Certificate provided pursuant to Section 539b of the Act (D.C. Official Code § 45-815.02) and this chapter, and records the Final Mediation Certificate at the District of Columbia Office of the Recorder of Deeds, prior to or contemporaneously with recording the Notice of Intention to Foreclose a Residential Mortgage.

2701.4 The following documents shall be recorded with the District of Columbia Office of the Recorder of Deeds within ten (10) business days of the date of mailing of the Notice of Default on Residential Mortgage, unless the Mediation Administrator concludes that there was good cause for failing to record these documents within the required time period:

The Notice of Default on Residential Mortgage, and any supplement to the Notice of Default on Residential Mortgage; and

The Mediation Election Form (Form FM-2).

History

• SOURCE: Emergency and Proposed Rulemaking published at 58 DCR 2958 (April 8, 2011)[EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 58 DCR 8247 (September 23, 2011)[EXPIRED]; as amended by Final Rulemaking published at 58 DCR 11469 (December 30, 2011); as amended by Final Rulemaking published at 61 DCR 6390 (June 27, 2014). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 2701

26-C DCMR § 2702 COMPLETION OF NOTICE OF DEFAULT ON RESIDENTIAL MORTGAGE INSTRUCTIONS

2702.1 The Notice of Default on Residential Mortgage (Form FM-1) shall contain all required information as specified in the applicable form in order to satisfy the requirements of Section 539b of the Act.

2702.2 The lender or an agent of the lender shall be responsible for the completion of the Notice of Default on Residential Mortgage (Form FM-1).

2702.3 A Notice of Default on Residential Mortgage (Form FM-1), including all information required by Subsection 2703.3, shall be completed for each borrower for the property for which the Notice of Default on Residential Mortgage (Form FM-1) will be issued.

2702.4 Except as provided by Subsection 2702.5, a Notice of Default on Residential Mortgage (Form FM-1) that is not in the form prescribed by Subsection 2701.1 shall be void and shall not be in compliance with Section 539b of the Act.

2702.5 A lender may include a supplement to a Notice of Default on Residential Mortgage (Form FM-1) that provides additional information or contractual disclosures required by a mortgage to the borrower provided the supplement is a separate attachment at the end of the Notice of Default on Residential Mortgage (Form FM-1) and is entitled “Supplement” and provides the reason the information is being provided.

2702.6 In the event there is more than one (1) borrower, a Notice of Default on Residential Mortgage (Form FM-1) shall include all borrowers for the property subject to the residential mortgage.

2702.7 If the Notice of Default mailed by the lender provides the borrower with a mediation election period of more than thirty (30) days, any applicable time period set forth in the Act or in this chapter shall be tolled for the additional days granted by the lender.

History

• SOURCE: Emergency and Proposed Rulemaking published at 58 DCR 2958 (April 8, 2011)[EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 58 DCR 8247 (September 23, 2011)[EXPIRED]; as amended by Final Rulemaking published at 58 DCR 11469 (December 30, 2011). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 2702

26-C DCMR § 2703 MAILING OF NOTICE OF DEFAULT ON RESIDENTIAL MORTGAGE

2703.1 A lender issuing a Notice of Default on Residential Mortgage (Form FM-1) shall mail to the property subject to the residential mortgage and the last known address of the borrower, by certified first-class mail, postage prepaid, return receipt requested, and by first-class mail, a copy of the Notice of Default on Residential Mortgage (Form FM-1), including all information required by Subsection 2703.3, upon each borrower for which the Notice of Default on Residential Mortgage is mailed.

2703.2 In the event there is more than one (1) borrower, a copy of the Notice of Default on Residential Mortgage (Form FM-1) shall be mailed to all borrowers on the same day.

2703.3 Each copy of the Notice of Default on Residential Mortgage (Form FM-1) mailed to a borrower shall be accompanied by the following:

Borrower Assistance and Resource Information Form (Form FM -1BA), with all information to be provided by the lender as required by Form FM-1BA, which is prescribed by the Commissioner and available on the Commissioner’s website at http://disb.dc.gov;

Contact information which the borrower may use to reach the lender or an agent of the lender with authority to explain the mediation process;

(c) A description of all loss mitigation programs available from the lender and applicable to the residential mortgage for which the Notice of Default on Residential Mortgage is being issued. For each loss mitigation program, the lender shall provide a description of the eligibility requirement(s) and documentation necessary for the loss mitigation programs applicable to the residential mortgage subject to the Notice of Default on Residential Mortgage;

(d) A complete Loss Mitigation Application;

(e) Instructions for completing and mailing the Loss Mitigation Application;

(f) A Mediation Election Form (Form FM-2);

(g) An envelope for the borrower to return to the lender a copy of the Mediation Election Form (Form FM-2) and the Loss Mitigation Application. The envelope shall be preaddressed to the lender's office that will review the Loss Mitigation Application and prepare the loss mitigation analysis required by Subsection 2713.2; and,

(h) An envelope for the borrower to return the Mediation Election Form (Form FM-2) and a copy of the Loss Mitigation Application to the Mediation Administrator. The envelope shall be preaddressed as follows:

Mediation Administrator

Department of Insurance, Securities and Banking

810 First Street, NE

Suite 701

Washington, DC 20002

2703.4 Within two (2) business days of the mailing date of the Notice of Default on Residential Mortgage, the lender shall send to the Mediation Administrator by electronic mail to DISB.mediation@dc.gov a copy of the Notice of Default on Residential Mortgage that was sent to the borrower(s) pursuant to Subsection 2703.1, including all attachments required by Subsection 2703.3.

2703.5 The lender shall send to the Mediation Administrator by regular first class mail a copy of the Notice of Default on Residential Mortgage that has been submitted to the Mediation Administrator pursuant to Subsection 2703.4, accompanied by a six-hundred dollars ($600) money order, check or cashier’s check payable to the “District of Columbia Treasurer.” No other form of payment will be accepted.

2703.6 Any Notice of Default on Residential Mortgage (Form FM-1) that is submitted to the Mediation Administrator that is not in compliance with section 2703 may be cancelled, unless the Mediation Administrator determines that the noncompliance was harmless error. The Mediation Administrator shall notify each borrower that was mailed the Notice of Default on Residential Mortgage (Form FM-1) of the cancellation.

2703.7 Any costs incurred by the lender in connection with a Notice of Default on Residential Mortgage (Form FM-1) that is cancelled pursuant to Subsection 2703.6 shall not be assessed to a borrower.

2703.8 A Notice of Default on Residential Mortgage (Form FM-1) submitted to the Mediation Administrator shall be accompanied with a completed Lender Foreclosure Mediation Agent Contact Form (Form FM-1AC) which requires the lender to provide the name and contact information for the individual or business group responsible for coordinating the default and foreclosure process.

2703.9 The Lender Foreclosure Mediation Agent Contact Form (Form FM-1AC) required by Subsection 2703.8 shall be in the form as prescribed by the Commissioner and available on the Commissioner's website at http://disb.dc.gov, and shall include all information specified in Form FM-1AC.

2703.10 The following shall accompany the Notice of Default on Residential Mortgage that is submitted to the Mediation Administrator and shall be available to the borrower(s) upon request:

A recorded copy of the mortgage or deed of trust;

A true copy of the note secured by the mortgage showing a proper chain of endorsements, or an Affidavit of Acknowledgement of Note Ownership or similar document signed by the foreclosing lender or its agent stating that the foreclosing lender is the holder of the note;

A true copy of every recorded assignment of the mortgage vesting of record the beneficial interest of the foreclosing lender;

The name of the holder of the note;

The location of the note; and

A true copy of all pooling and servicing or other similar agreements affecting the residential mortgage that pertain to the loss mitigation programs offered and loss mitigation analysis.

2703.11 A lender shall provide a written explanation to the Mediation Administrator for the reason(s) that a document or information required in Subsection 2703.10 is not applicable to the residential mortgage.

2703.12 A lender shall retain all evidence of mailing of a Notice of Default on Residential Mortgage (Form FM-1) to each borrower for a period of two (2) years.

2703.13 The Affidavit of Mailing of Notice of Default, which is included with the Notice of Default on Residential Mortgage, shall have the same mailing date as the Notice of Default on Residential Mortgage unless the Mediation Administrator determines that good cause is shown for the different mailing dates.

History

• SOURCE: Emergency and Proposed Rulemaking published at 58 DCR 2958 (April 8, 2011)[EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 58 DCR 8247 (September 23, 2011)[EXPIRED]; as amended by Final Rulemaking published at 58 DCR 11469 (December 30, 2011); as amended by Final Rulemaking published at 61 DCR 6390 (June 27, 2014). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 2703

26-C DCMR § 2704 [RESERVED]

History

• SOURCE: Emergency and Proposed Rulemaking published at 58 DCR 2958 (April 8, 2011)[EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 58 DCR 8247 (September 23, 2011)[EXPIRED]; as amended by Final Rulemaking published at 58 DCR 11469 (December 30, 2011). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 2704

26-C DCMR § 2705 BORROWER ASSISTANCE AND RESOURCE INFORMATION FORM

2705.1 The Borrower Assistance and Resource Information Form (Form FM-1BA) required by Subsection 2703.3(a) shall be in the form as prescribed by the Commissioner and available on the Commissioner's website at http://disb.dc.gov, and shall include all information required in Form FM-1BA.

History

• SOURCE: Emergency and Proposed Rulemaking published at 58 DCR 2958 (April 8, 2011)[EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 58 DCR 8247 (September 23, 2011)[EXPIRED]; as amended by Final Rulemaking published at 58 DCR 11469 (December 30, 2011). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 2705

26-C DCMR § 2706 MEDIATION ELECTION FORM

2706.1 The Mediation Election Form (Form FM-2) required by Subsection 2703.3(f) shall be in the form as prescribed by the Commissioner and available on the Commissioner's website at http://disb.dc.gov.

2706.2 Each Mediation Election Form (Form FM-2) mailed to a borrower shall include all information required in the Mediation Election Form (Form FM-2).

History

• SOURCE: Emergency and Proposed Rulemaking published at 58 DCR 2958 (April 8, 2011)[EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 58 DCR 8247 (September 23, 2011)[EXPIRED]; as amended by Final Rulemaking published at 58 DCR 11469 (December 30, 2011). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 2706

26-C DCMR § 2707 LOSS MITIGATION APPLICATION

2707.1 Each Loss Mitigation Application that is mailed to a borrower(s) shall include all information required in the Loss Mitigation Application.

2701.2 [REPEALED]

History

• SOURCE: Emergency and Proposed Rulemaking published at 58 DCR 2958 (April 8, 2011)[EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 58 DCR 8247 (September 23, 2011)[EXPIRED]; as amended by Final Rulemaking published at 58 DCR 11469 (December 30, 2011); as amended by Final Rulemaking published at 61 DCR 6390 (June 27, 2014). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 2707

26-C DCMR § 2708 ELECTION TO PARTICIPATE IN MEDIATION

2708.1 A borrower to whom a Notice of Default on Residential Mortgage (Form FM-1) is mailed pursuant to Section 2703 shall be eligible for mediation prior to the issuance of a Notice of Intention to Foreclose a Residential Mortgage (Form FM-5) by making an election pursuant to Subsection 2708.2 within thirty (30) days of the date of mailing of the Notice of Default on Residential Mortgage (Form FM-1).

2708.2 To elect to participate in mediation pursuant to this chapter, a borrower shall, within thirty (30) days of the date of mailing of the Notice of Default on Residential Mortgage (Form FM-1):

Complete and mail, using the preaddressed envelope, to the lender the following:

(1) The Loss Mitigation Application included with the Notice of Default on Residential Mortgage received from the lender; and

(2) A copy of the Mediation Election Form (Form FM -2) to be sent to the Mediation Administrator pursuant to paragraph (b) of this subsection; and

(b) Complete and mail, using the preaddressed envelope, to the Mediation Administrator the following:

(1) The Mediation Election Form (Form FM -2) which was included with the Notice of Default on Residential Mortgage (Form FM-1) received from the lender;

(2) A copy of the Loss Mitigation Application submitted to the lender pursuant to paragraph (a) of this subsection; and

(3) The mediation fee in the amount of fifty dollars ($50).

2708.3 The fee required pursuant to Subsection 2708.2(b)(3) shall be in the form of a check or money order payable to the "District of Columbia Treasurer". No other form of payment will be accepted.

2708.4 Where there is more than one (1) borrower subject to the residential mortgage for which the Notice of Default on Residential Mortgage (Form FM-1) is issued, and at least one (1) of the borrowers makes an election pursuant to Subsection 2708.2 within thirty (30) days of the date of mailing of the Notice of Default on Residential Mortgage (Form FM-1), the Mediation Administrator shall schedule a mediation which shall include each borrower subject to the residential mortgage for which the Notice of Default on Residential Mortgage (Form FM-1) is mailed who makes a timely election pursuant to Subsection 2708.2.

2708.5 A borrower that does not make a timely election pursuant to subsection 2708.2 after receiving a Notice of Default on Residential Mortgage (Form FM-1) forfeits his or her right to mediate the default for which the Notice of Default on Residential Mortgage (Form FM-1) is issued as provided by the Act or this chapter unless good cause is shown to the Mediation Administrator.

2708.6 A borrower that does not make a timely election pursuant to subsection 2708.2 after receiving a Notice of Default on Residential Mortgage (Form FM-1) may participate in mediation pursuant to Subsection 2712.5(f) or Subsection 2712.6.

History

• SOURCE: Emergency and Proposed Rulemaking published at 58 DCR 2958 (April 8, 2011)[EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 58 DCR 8247 (September 23, 2011)[EXPIRED]; as amended by Final Rulemaking published at 58 DCR 11469 (December 30, 2011); as amended by Final Rulemaking published at 61 DCR 6390 (June 27, 2014). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 2708

26-C DCMR § 2709 RECEIPT OF MEDIATION ELECTION FORM AND LOSS MITIGATION APPLICATION ON BEHALF OF LENDER

2709.1 [REPEALED]

2709.2 [REPEALED]

2709.3 A copy of a Mediation Election Form (Form FM-2) delivered to the Mediation Administrator in compliance with Subsection 2708.2(b) shall constitute service upon the lender of the Mediation Election Form (Form FM-2) as required by Section 539b(c) of the Act.

2709.4 The Mediation Administrator may send to the lender's office that will review the Loss Mitigation Application and prepare the loss mitigation analysis, a copy of the Mediation Election Form (Form FM-2) and Loss Mitigation Application that were received from a borrower pursuant to Subsection 2708.2(b). The Mediation Administrator may send the information required by this subsection by electronic mail to the address listed on Lender Foreclosure Mediation Agent Contact Form (Form FM-1AC) filed pursuant to Subsection 2703.8.

History

• SOURCE: Emergency and Proposed Rulemaking published at 58 DCR 2958 (April 8, 2011)[EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 58 DCR 8247 (September 23, 2011)[EXPIRED]; as amended by Final Rulemaking published at 58 DCR 11469 (December 30, 2011); as amended by Final Rulemaking published at 61 DCR 6390 (June 27, 2014). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 2709

26-C DCMR § 2710 MEDIATION SCHEDULING

2710.1 Upon the timely delivery of the Mediation Election Form (Form FM-2) by the borrower(s), the Mediation Administrator shall schedule mediation between the borrower(s) and the lender to commence no later than ninety (90) days after the date of mailing of the Notice of Default on Residential Mortgage.

2710.2 Mediation shall be completed within one hundred eighty (180) days of the date of mailing of the Notice of Default on Residential Mortgage unless extended pursuant to Subsection 2710.15.

2710.3 The Mediation Administrator, or the Mediator with the consent of the Mediation Administrator, may reschedule a scheduled mediation upon no less than two (2) business days’ notice to each mediation party if the Mediation Administrator or Mediator determines that it is in the public’s interest to reschedule the mediation. The Mediation Administrator or Mediator shall consult with the mediation parties with respect to the new time for the rescheduled mediation.

2710.4 A mediation party who fails to attend, or send an authorized agent to a scheduled mediation without good cause shown shall be deemed to have not acted in good faith with respect to the mediation.

2710.5 A mediation party, upon good cause shown to the Mediation Administrator, or Mediator acting with the consent of the Mediation Administrator, may request the rescheduling of a mediation that has been scheduled by the Mediation Administrator or Mediator.

2710.6 The Mediation Administrator or Mediator shall approve or disapprove a request to reschedule a mediation pursuant to Subsection 2710.5 within one (1) business day of the request of the mediation party and shall inform the mediation parties of the determination and, if the request is approved, the Mediation Administrator or Mediator shall inform the mediation parties of the new time for the rescheduled mediation within two (2) business days of the approval of the request to reschedule the mediation. The Mediation Administrator or Mediator shall consult with the mediation parties with respect to the new time for the rescheduled mediation.

2710.7 The borrower(s) and the lenders shall have the right to request at least one (1) rescheduling of a mediation that has been scheduled by the Mediation Administrator or Mediator pursuant to Subsection 2710.5.

2710.8 A lender who fails to mediate in good faith with respect to mediation as provided in Section 2713 shall be subject to a penalty as provided in D.C. Official Code § 42-815.02 (e)(2).

2710.9 The Mediation Administrator may terminate the mediation if the Mediation Administrator determines that the lender has failed to participate in the mediation in good faith for more than thirty (30) consecutive days.

2710.10 [REPEALED]

2710.11 Any applicable time period set forth in the Act or in this chapter shall toll during the period in which a lender fails to act in good faith with respect to mediation.

2710.12 Each mediation party shall bring all documentation and information required by Section 2714 to all scheduled mediation sessions.

2710.13 A mediation party that fails, without good cause shown to the Mediator, to bring any required documentation or information required by Section 2714 shall be deemed to have not acted in good faith with respect to the mediation.

2710.14 Upon a showing of good cause by a mediation party or when in the public interest, a Mediator may reschedule a mediation within five (5) days to enable a mediation party to produce required documentation or information to the other mediation party or the Mediator.

2710.15 The mediation parties may agree to extend mediation for an additional thirty (30) days beyond the one hundred eighty (180) day period provided by D.C. Official Code § 42-815.02(e)(5) by mutual consent by executing a Mediation Extension Form (Form FM-3EX), as prescribed by the Commissioner and available on the Commissioner's website at http://disb.dc.gov, and shall include all information specified in Form FM-3EX.

2710.16 A borrower who fails to bring all applicable documentation and information to mediation pursuant to Subsection 2710.12 shall not be entitled to continue to participate in the mediation unless the Mediation Administrator determines that good cause has been shown for such failure.

2710.17 A mediation session may be scheduled by telephone, mail, email, or facsimile.

2710.18 A mediation scheduled by telephone shall be supplemented by notice of the mediation by mail, email, or facsimile, provided by a mediation party.

2710.19 Notice of a scheduled mediation shall be provided to all borrowers to whom the Notice of Default on Residential Mortgage (Form FM-1) was mailed.

2710.20 A mediation scheduled with a Mediator by the Mediation Administrator pursuant to Subsection 2717.3(a) shall be completed within fifteen (15) days of the referral.

2710.21 A mediation shall not exceed two (2) sessions, each lasting a maximum of three (3) hours, which may be scheduled consecutively.

2710.22 A mediation that is rescheduled, during the time of a scheduled mediation session, pursuant to Subsections 2710.14 and 2712.8 shall constitute one (1) of the two (2) mediation sessions pursuant to Subsection 2710.21.

History

• SOURCE: Emergency and Proposed Rulemaking published at 58 DCR 2958 (April 8, 2011)[EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 58 DCR 8247 (September 23, 2011)[EXPIRED]; as amended by Final Rulemaking published at 58 DCR 11469 (December 30, 2011); as amended by Final Rulemaking published at 61 DCR 6390 (June 27, 2014). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 2710

26-C DCMR § 2711 CANCELLATION OF MEDIATION

2711.1 A mediation party may cancel mediation at any time after a borrower elects to participate in mediation pursuant to Section 2708 by submitting a Cancellation of Mediation Form (Form FM-X1) prescribed by the Commissioner and available on the Commissioner's website at http://disb.dc.gov.

2711.2 In the event a mediation involves more than one (1) borrower, all borrowers who timely elected to mediate pursuant to Section 2708, must submit a Cancellation of Mediation Form (Form FM-X1) in order for a borrower to cancel the mediation.

2711.3 Upon the cancellation of mediation by a borrower who has elected to mediate pursuant to Section 2708, within ten (10) days of receiving the Cancellation of Mediation Form (Form FM-X1) the Mediation Administrator shall cancel the mediation and issue to the lender a Final Mediation Certificate.

2711.4 Upon the cancellation of mediation by a lender, the Mediation Administrator shall cancel the Notice of Default on Residential Mortgage (Form FM-1) issued by a lender and cancel the mediation.

2711.5 Upon the cancellation of mediation by a lender pursuant to Subsection 2711.4, a borrower who timely elected to mediate pursuant to Section 2708 shall not be required to pay the mediation fee required by Subsection 2708.2(b)(3) in order to elect mediation in connection with a subsequent Notice of Default on Residential Mortgage (Form FM-1) issued on the same default for which the borrower paid the mediation fee required by Subsection 2708.2(b)(3) to mediate a default.

2711.6 The Mediation Administrator shall send all mediation parties a copy of a Cancellation of Mediation Form (Form FM-X1) submitted by a mediation party along with notice that the mediation has been cancelled.

History

• SOURCE: Emergency and Proposed Rulemaking published at 58 DCR 2958 (April 8, 2011)[EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 58 DCR 8247 (September 23, 2011)[EXPIRED]; as amended by Final Rulemaking published at 58 DCR 11469 (December 30, 2011); as amended by Final Rulemaking published at 61 DCR 6390 (June 27, 2014). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 2711

26-C DCMR § 2712 ATTENDANCE AT MEDIATION

2712.1 Except as provided in Subsection 2712.2, each mediation party shall attend each scheduled mediation or other meeting required by the Mediator.

2712.2 A mediation party shall not be required to attend mediation or other meeting required by the Mediator if:

The mediation party sends a representative on behalf of the mediation party;

The representative meets the requirements of Subsection 2712.3; and

The mediation party, along with the representative, executes a Declaration of Representation and Authority (Form FM-AG) pursuant to Subsection 2712.4.

2712.3 A representative of a mediation party shall:

(a) Have authority to:

(1) Address loss mitigation programs that may be available to the borrower;

(2) Renegotiate the terms of the residential mortgage, including a loan modification; and

(3) Negotiate any other options that may be available in lieu of foreclosure; or

(b) Have access at all times during the mediation to a person with the authority listed in paragraph (a) of this subsection.

2712.4 If a mediation party sends a representative to the mediation, the mediation party and the mediation party’s representative shall execute and provide to the other mediation party or mediation party representative and the mediator a Declaration of Representation and Authority (Form FM-AG) attesting that the mediation party representative has the authority or access to the person with the authority required in Subsection 2712.3 using the Declaration of Representation and Authority (Form FM-AG) prescribed by the Commissioner and available on the Commissioner's website at http://disb.dc.gov.

2712.5 The following persons may participate in any mediation under this chapter:

A borrower who received the Notice of Default on Residential Mortgage (Form FM-1) and made a timely election pursuant to Section 2708;

The lender;

The lender's servicing agent;

The representative(s) for the lender;

The representative(s) for the borrower;

(f) A borrower who received the Notice of Default on Residential Mortgage (Form FM-1) but did not make a timely election pursuant to Subsection 2708.2 who is requested to participate by a borrower who is a mediation party; and

(g) If a borrower is deceased, a person who can produce a death certificate with respect to the deceased borrower and who has an ownership interest in the real property subject to which the residential mortgage for the Notice of Default on Residential Mortgage (Form FM-1) was issued.

2712.6 The Mediator may include in mediation or other meeting required by the Mediator any person the mediator determines would assist in the mediation unless there is a written objection by a mediation party or mediation party representative, as long as the objection is consistent with the mediation party’s or the representative of the mediation party’s obligation to participate in the mediation in good faith.

2712.7 The Mediator shall not include in mediation or other meeting required by the Mediator pursuant to Subsection 2712.6 a person that is not directly related to the mediation or the mortgage subject to the Notice of Default on Residential Mortgage (Form FM-1).

2712.8 At any time during the mediation process, the Mediator may refer a borrower to a housing counseling agency or legal service provider for mortgage assistance, provided that the mediation shall resume not later than fifteen (15) days after the referral.

2712.9 Any applicable time period set forth in the Act or in this chapter shall toll during the period of the referral in Subsection 2712.8.

History

• SOURCE: Emergency and Proposed Rulemaking published at 58 DCR 2958 (April 8, 2011)[EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 58 DCR 8247 (September 23, 2011)[EXPIRED]; as amended by Final Rulemaking published at 58 DCR 11469 (December 30, 2011); as amended by Final Rulemaking published at 61 DCR 6390 (June 27, 2014). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 2712

26-C DCMR § 2713 OBLIGATION TO MEDIATE IN GOOD FAITH

2713.1 Each mediation party or authorized representative of a mediation party shall make a good faith effort to mediate all issues.

2713.2 A good faith effort to mediate requires the lender to conduct the following loss mitigation analysis:

Evaluate the eligibility of the borrower(s) for alternatives to foreclosure including, but not limited to, reinstatement, loan modification, forbearance, short sale, and a deed in lieu of foreclosure;

In considering a loan modification, evaluate the eligibility of the borrower(s) for each loan modification program applicable to the residential mortgage in default and include an analysis pursuant to the Home Affordable Modification Program and the Federal Deposit Insurance Corporation’s Loan Modification Program;

If the lender is a Community Bank, it must evaluate all eligible loan modification programs and include an analysis pursuant to the Home Affordable Modification Program, the Federal Deposit Insurance Corporation’s Loan Modification Program, or any loan modification program that is based on accepted principles and the safety and soundness of the institution and approved by the Commissioner.

If the lender is a Credit Union, it must evaluate all eligible loan modification programs and include an analysis pursuant to the Home Affordable Modification Program, the Federal Deposit Insurance Corporation’s Loan Modification Program, or any modification program that is based on accepted principles and the safety and soundness of the institution and is recognized by the National Credit Union Administration;

Offer the borrower(s) a loan modification at the best terms available for a loan modification if the net present value of receiving payments pursuant to a modified mortgage loan is greater than the anticipated net recovery following foreclosure based on a calculation using the Federal Home Affordable Modification Base Net Present Value Model or the Federal Deposit Insurance Corporation’s Loan Modification Program;

If the lender is a Community Bank, offer the borrower(s) a loan modification at the best terms available if the net present value of receiving payments pursuant to a modified mortgage loan is greater than the anticipated net recovery following foreclosure based on any net present value model that a Community Bank uses that is based on accepted principles and the safety and soundness of the institution and approved by the Commissioner;

If the lender is a Credit Union, offer the borrower(s) a loan modification at the best terms available if the net present value of receiving payments pursuant to a modified mortgage loan is greater than the anticipated net recovery following foreclosure based on any net present value model that a Credit Union uses that is based on accepted principles and the safety and soundness of the institution and is recognized by the National Credit Union Administration.

If the loan has been sold to a third party investor and the loan servicing agreement permits, offer the borrower(s) a loan modification at the best terms available for a loan modification if the net present value of receiving payments pursuant to a modified mortgage loan is greater than the anticipated net recovery following foreclosure based on a calculation using the Federal Home Affordable Modification Base Net Present Value Model or the Federal Deposit Insurance Corporation’s Loan Modification Program.

2713.3 In the event a lender rejects a settlement involving an alternative to foreclosure that has a lower cost than foreclosure, the lender shall provide a written explanation for rejecting the settlement. The explanation shall include an analysis and supporting documentation and, where applicable, the inputs and outputs of the approved net present value model identified pursuant to Subsection 2713.2(c).

2713.4 A mediation party fails to mediate in good faith if the party:

Fails to provide information required in Section 2714;

Fails to attend a mediation or other meeting scheduled by the Mediator as required by Section 2712;

Fails to make a good faith effort to mediate all issues as required by Subsections 2713.1 through 2713.3; or

Fails to provide a written explanation as required by subsection 2713.3.

2713.5 A preliminary determination that a mediation party has failed to mediate in good faith shall be made by the Mediation Administrator in accordance with this chapter.

History

• SOURCE: Emergency and Proposed Rulemaking published at 58 DCR 2958 (April 8, 2011)[EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 58 DCR 8247 (September 23, 2011)[EXPIRED]; as amended by Final Rulemaking published at 58 DCR 11469 (December 30, 2011); as amended by Final Rulemaking published at 61 DCR 6390 (June 27, 2014). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 2713

26-C DCMR § 2714 INFORMATION REQUIRED FOR MEDIATION

2714.1 The lender shall, at least five (5) business days prior to the first mediation session scheduled by the Mediation Administrator or Mediator, provide an electronic copy at DISB.mediation@dc.gov to the Mediation Administrator, and to each borrower the following, if applicable to the residential mortgage and mediation:

An itemization of the amounts needed to cure and payoff the mortgage;

Payment history records with respect to the mortgage, including all fees and costs;

The result of the lender’s loss mitigation analysis;

A copy of the documentation and consideration of the options available in Subsection 2713.2, including the data used in and the outcome of any calculation required; and

2714.2 The lender shall bring to a scheduled mediation the documents required in Subsection 2714.1 and any other information requested by the Mediation Administrator or Mediator.

2714.3 Prior to mediation a borrower shall submit with and attach to the Loss Mitigation Application documents that demonstrate the residential mortgage borrower’s household income, including, when applicable, the residential mortgage borrower’s most recent tax return, W-2, last two (2) pay stubs, benefit statements, bank statements, and alimony or child support documents. If the requested document(s) is not applicable to the borrower, the borrower must provide a letter explaining why the document is inapplicable.

2714.4 The borrower(s) shall bring to the scheduled mediation the hard copies of all applicable documents required in Subsection 2714.3 and any other information that the Mediation Administrator or Mediator requests.

2714.5 A mediation party shall cooperate with the Mediator to produce the information required by this section in a timely manner so as to permit the mediation process to function effectively.

2714.6 In the event a party to the mediation does not cooperate with the Mediator as required by this section, the Mediation Administrator:

May determine that the party is not participating in mediation in good faith and issue a Preliminary Determination of Bad Faith;

Reschedule the mediation to enable the party to obtain information required by this section; or

Issue a Preliminary Mediation Certificate.

2714.7 A lender or borrower shall provide a written explanation to the Mediation Administrator for the reason(s) that a document or information required in Subsections 2714.1 and 2714.3 is not applicable to the residential mortgage and mediation.

History

• SOURCE: Emergency and Proposed Rulemaking published at 58 DCR 2958 (April 8, 2011)[EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 58 DCR 8247 (September 23, 2011)[EXPIRED]; as amended by Final Rulemaking published at 58 DCR 11469 (December 30, 2011); as amended by Final Rulemaking published at 61 DCR 6390 (June 27, 2014). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 2714

26-C DCMR § 2715 CONFIDENTIAL INFORMATION

2715.1 Except for the documents required to be recorded in subsection 2701.4, any other publicly available information, and financial information included on a Notice of Intention to Foreclose a Residential Mortgage (Form FM-5), any financial statement or information provided to the Mediation Administrator, Mediator, or mediation parties during the course of mediation in accordance with this chapter shall be confidential and shall not be available for public inspection.

2715.2 Any financial statement or information obtained during mediation and designated as confidential pursuant to this section shall not be used for purposes other than mediation except if the information can be obtained from sources outside of the mediation.

2715.3 Information discussed in or obtained during a mediation session shall not be used in any legal proceeding except for actions to enforce the Act or this chapter, or if the information can be obtained from sources outside of the mediation.

2715.4 A Mediator cannot be sued or subpoenaed in any legal proceeding.

History

• SOURCE: Emergency and Proposed Rulemaking published at 58 DCR 2958 (April 8, 2011)[EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 58 DCR 8247 (September 23, 2011)[EXPIRED]; as amended by Final Rulemaking published at 58 DCR 11469 (December 30, 2011). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 2715

26-C DCMR § 2716 SETTLEMENTS

2716.1 Any settlement agreement reached as a result of mediation shall be a permanent resolution of the default of the residential mortgage.

2716.2 Any settlement agreement reached as a result of mediation shall be reduced to writing and executed by the mediation parties within ten (10) business days of the date of the mediation parties’ agreement.

History

• SOURCE: Emergency and Proposed Rulemaking published at 58 DCR 2958 (April 8, 2011)[EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 58 DCR 8247 (September 23, 2011)[EXPIRED]; as amended by Final Rulemaking published at 58 DCR 11469 (December 30, 2011); as amended by Final Rulemaking published at 61 DCR 6390 (June 27, 2014). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 2716

26-C DCMR § 2717 MEDIATION REPORT

2717.1 Within ten (10) days after the completion of mediation, the Mediator shall file a Mediation Report with the Mediation Administrator and deliver a copy to the mediation parties.

2717.2 The Mediation Report required by this section shall contain all of the following items:

(a) The date(s) on which the mediation was held, including the starting and finishing dates and times;

(b) The names and addresses of all persons attending, including their role in the mediation and, specifically, identifying the representative of each party who had decision-making authority, if applicable;

(c) A summary of any substitute arrangement made regarding attendance at the mediation;

(d) All calculations and other foreclosure avoidance tool calculations performed prior to or during the mediation and all information required in Section 2714;

(e) The results of the mediation, stating whether full or partial settlement was reached and appending any agreement of the parties;

(f) A statement as to whether a mediation party or a representative of a mediation party failed to:

(1) Attend the mediation;

(2) Make a good faith effort to mediate; or

(3) Supply documentation, information, or data as required by Section 2714; and

(g) If a settlement is not reached, a summary of the discussions of the mediation parties during the mediation.

2717.3 Unless a settlement agreement is executed between the mediation parties, within ten (10) business days after receiving the Mediation Report and after reviewing and considering a Mediation Report the Mediation Administrator shall:

Schedule the matter with another Mediator for one (1) additional mediation session if there is a reasonable likelihood the mediation parties will be able to reach a settlement agreement, or issue a Preliminary Mediation Certificate if the lender participated in the mediation in good faith;

Assess any applicable penalty against the lender pursuant to the Act or this chapter, and issue a Preliminary Determination of Bad Faith if the lender did not participate in the mediation in good faith; or

Cancel the mediation and issue a Preliminary Mediation Certificate if the borrower(s) did not participate in the mediation in good faith.

History

• SOURCE: Emergency and Proposed Rulemaking published at 58 DCR 2958 (April 8, 2011)[EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 58 DCR 8247 (September 23, 2011)[EXPIRED]; as amended by Final Rulemaking published at 58 DCR 11469 (December 30, 2011); as amended by Final Rulemaking published at 61 DCR 6390 (June 27, 2014). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 2717

26-C DCMR § 2718 PRELIMINARY MEDIATION CERTIFICATE

2718.1 Once the mediation has concluded, upon determining that the lender acted in good faith the Mediation Administrator shall issue and send to all parties a Preliminary Mediation Certificate.

2718.2 The borrower(s) may appeal a Preliminary Mediation Certificate in the District of Columbia Superior Court in accordance with the appeal process.

2718.3 If the borrower(s) does not appeal within thirty (30) days and the lender documents this fact, the lender may request a Final Mediation Certificate.

History

• SOURCE: Emergency and Proposed Rulemaking published at 58 DCR 2958 (April 8, 2011)[EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 58 DCR 8247 (September 23, 2011)[EXPIRED]; as amended by Final Rulemaking published at 58 DCR 11469 (December 30, 2011); as amended by Final Rulemaking published at 61 DCR 6390 (June 27, 2014). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 2718

26-C DCMR § 2719 FINAL MEDIATION CERTIFICATE

2719.1 The lender may request on Form FM-R1 a Final Mediation Certificate and must affirm that the borrower(s) has not filed a timely appeal.

2719.2 The lender may not request a Final Mediation Certificate until thirty (30) days after the Mediation Administrator issues the Preliminary Mediation Certificate.

2719.3 A Final Mediation Certificate issued pursuant to Section 539b of the Act (D.C. Official Code § 45-815.02) shall expire one (1) year from the date of issuance unless extended for an additional year pursuant to Subsection 2719.8.

2719.4 A foreclosure sale of a property secured by a residential mortgage shall be void if a lender files a Notice of Intention to Foreclosure on a Residential Mortgage without a recorded Final Mediation Certificate.

2719.5 A borrower shall have the same rights to assert claims for defects in the documents recorded pursuant to Subsection 2701.4 as the law provides for a defective Notice of Foreclosure Sale of Real Property or Condominium Unit (Form ROD-14) and Notice of Intention to Foreclose on a Residential Mortgage.

2719.6 Except as provided in Subsections 2719.4 and 2719.5, a recorded Final Mediation Certificate shall serve as conclusive evidence that all other provisions provided by the Act and this chapter have been complied with, and the same can be relied upon by any bona fide purchaser or bona fide purchaser’s lender, including its successors or assigns.

2719.7 A borrower shall not be barred from asserting a claim for fraud or monetary damages against the borrower’s lender.

2719.8 A lender may request an extension of a Final Mediation Certificate that has not expired by filing with the Mediation Administrator a request for an extension of a Final Mediation Certificate, and sending the borrower(s) a copy of the request for an extension of a Final Mediation Certificate.

2719.9 A request for an extension of a Final Mediation Certificate filed pursuant to Subsection 2719.8 shall set forth each basis for which the lender seeks an extension and include all relevant facts and documentation, if applicable.

2719.10 The Mediation Administrator may contact the lender or borrower(s) for information regarding a request for an extension of a Final Mediation Certificate filed pursuant to this section.

History

• SOURCE: Emergency and Proposed Rulemaking published at 58 DCR 2958 (April 8, 2011)[EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 58 DCR 8247 (September 23, 2011)[EXPIRED]; as amended by Final Rulemaking published at 58 DCR 11469 (December 30, 2011); as amended by Final Rulemaking published at 61 DCR 6390 (June 27, 2014). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 2719

26-C DCMR § 2720 APPEAL PROCESS; JUDICIAL REVIEW

2720.1 Within thirty (30) days of issuance of the Preliminary Mediation Certificate a borrower may file in the District of Columbia Superior Court an appeal of the Preliminary Mediation Certificate as provided for in D.C. Official Code § 42-815.02(e)(3)(B).

2720.2 Within thirty (30) days of issuance of the Preliminary Determination of Bad Faith a lender may file in the District of Columbia Superior Court an appeal of the Mediation Administrator’s Preliminary Determination of Bad Faith as provided for in D.C. Official Code § 42-815.02(e)(3)(C).

2720.3 A copy of the filing of the appeal must be sent to the Mediation Administrator no later than thirty (30) days after issuance of the Preliminary Mediation Certificate or the Preliminary Determination of Bad Faith.

History

• SOURCE: Emergency and Proposed Rulemaking published at 58 DCR 2958 (April 8, 2011)[EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 58 DCR 8247 (September 23, 2011)[EXPIRED]; as amended by Final Rulemaking published at 58 DCR 11469 (December 30, 2011); as amended by Final Rulemaking published at 61 DCR 6390 (June 27, 2014). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 2720

26-C DCMR § 2721 APPLICATION FOR ORDER TO PERFORM DUE TO BREACH

2721.1 A borrower that alleges that a lender has breached a settlement agreement entered into pursuant to this chapter may request that the Mediation Administrator issue an Order to Perform by filing an Application for Order to Perform Due to Breach (Form FM-10B) prescribed by the Commissioner and available on the Commissioner's website at http://disb.dc.gov.

2721.2 An Application for Order to Perform Due to Breach (Form FM-10B) shall be filed with the Mediation Administrator.

2721.3 The borrower shall mail to the lender an Application for Order to Perform Due to Breach (Form FM-10B).

2721.4 A lender who receives an Application for Order to Perform Due to Breach (Form FM-10B) alleging that the lender is in breach of a settlement agreement may challenge the allegation of the borrower that the lender breached the settlement agreement by filing an objection to the Application for Order to Perform Due to Breach (Form FM-10B) with the Mediation Administrator within ten (10) days of the date of mailing of the Application for Order to Perform Due to Breach (Form-10B) pursuant to this section.

2721.5 An objection filed pursuant to Subsection 2721.4 shall set forth each basis for which the lender disputes the allegations that it has breached the settlement agreement, including all relevant facts.

2721.6 The Mediation Administrator may contact the lender or borrower(s) for information regarding an Application for Order to Perform Due to Breach (Form FM-10B) filed pursuant to this section.

History

• SOURCE: Emergency and Proposed Rulemaking published at 58 DCR 2958 (April 8, 2011)[EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 58 DCR 8247 (September 23, 2011)[EXPIRED]; as amended by Final Rulemaking published at 58 DCR 11469 (December 30, 2011); as amended by Final Rulemaking published at 61 DCR 6390 (June 27, 2014). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 2721

26-C DCMR § 2722 APPLICATION FOR FINAL MEDIATION CERTIFICATE DUE TO BREACH

2722.1 A lender that alleges that the borrower(s) has breached a settlement agreement executed between the lender and the borrower(s) may apply for a Final Mediation Certificate by filing an Application for Final Mediation Certificate Due to Breach (Form FM-10L) prescribed by the Commissioner and available on the Commissioner's website at http://disb.dc.gov.

2722.2 An Application for Final Mediation Certificate Due to Breach (Form FM-10L) shall be filed with the Mediation Administrator.

2722.3 The lender shall mail to the borrower(s) an Application for Final Mediation Certificate Due to Breach (Form FM-10L).

2722.4 A borrower who receives an Application for Final Mediation Certificate Due to Breach (Form FM-10L) alleging that the borrower(s) breached the settlement agreement may challenge the lender’s allegation that the borrower(s) breached the settlement agreement by filing with the Mediation Administrator an objection to the Application for Final Mediation Certificate Due to Breach (Form FM-10L) within ten (10) days of the date of mailing of the Application for Final Mediation Certificate Due to Breach (Form FM-10L) pursuant to this section.

2722.5 An objection filed pursuant to Subsection 2722.4 shall set forth each basis for which the borrower(s) disputes the allegations that it has breached the settlement agreement, including all relevant facts.

2722.6 The Mediation Administrator may contact the borrower(s) or lender for information regarding an Application for Final Mediation Certificate Due to Breach (Form FM-10L) filed pursuant to this section.

History

• SOURCE: Emergency and Proposed Rulemaking published at 58 DCR 2958 (April 8, 2011)[EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 58 DCR 8247 (September 23, 2011)[EXPIRED]; as amended by Final Rulemaking published at 58 DCR 11469 (December 30, 2011); as amended by Final Rulemaking published at 61 DCR 6390 (June 27, 2014). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 2722

26-C DCMR § 2723 NOTICE OF INTENTION TO FORECLOSE A RESIDENTIAL MORTGAGE FORM

2723.1 The authorized Notice of Intention to Foreclose a Residential Mortgage shall be used to comply with the requirements in Section 539(c) of the Act for a foreclosure sale pursuant to a residential mortgage. Issuance of the Notice of Intention to Foreclose a Residential Mortgage shall comply with Section 2728.

History

• SOURCE: Emergency and Proposed Rulemaking published at 58 DCR 2958 (April 8, 2011)[EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 58 DCR 8247 (September 23, 2011)[EXPIRED]; as amended by Final Rulemaking published at 58 DCR 11469 (December 30, 2011); as amended by Final Rulemaking published at 61 DCR 6390 (June 27, 2014). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 2723

26-C DCMR § 2724 MEDIATION ADMINISTRATOR

2724.1 The Commissioner shall designate an individual to serve as the Mediation Administrator.

2724.2 The Mediation Administrator may extend deadlines upon determining that there is good cause to do so.

History

• SOURCE: Emergency and Proposed Rulemaking published at 58 DCR 2958 (April 8, 2011)[EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 58 DCR 8247 (September 23, 2011)[EXPIRED]; as amended by Final Rulemaking published at 58 DCR 11469 (December 30, 2011); as amended by Final Rulemaking published at 61 DCR 6390 (June 27, 2014). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 2724

26-C DCMR § 2725 QUALIFICATION, APPOINTMENT, TRAINING, AND COMPENSATION OF MEDIATORS/ MEDIATION SERVICES

2725.1 The following persons shall be qualified to act as a Mediator under this chapter:

An Administrative Law Judge or attorney employed by the Office of Administrative Hearings, authorized by the Commissioner to provide mediation services under the Act and this chapter, and who has completed a foreclosure mediation training program approved by the Commissioner; or

An individual who is licensed to practice law in the District of Columbia, who is employed or contracted by a firm authorized by the Commissioner, and who has completed a foreclosure mediation training program approved by the Commissioner.

2725.2 The Commissioner may appoint an individual qualified under Subsection 2725.1(a) pursuant to an executed Memorandum of Understanding between the Department and the Office of Administrative Hearings.

2725.3 The Commissioner may appoint an individual qualified under Subsection 2725.1(b) pursuant to a valid contract between the Department and the Mediator or the Mediator’s employer.

2725.4 The Commissioner shall designate approved foreclosure mediation training programs required pursuant to Subsection 2725.1 and shall provide a description of the program, including the requirements for the program and the requirements for obtaining a certification under the program.

History

• SOURCE: Emergency and Proposed Rulemaking published at 58 DCR 2958 (April 8, 2011)[EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 58 DCR 8247 (September 23, 2011)[EXPIRED]; as amended by Final Rulemaking published at 58 DCR 11469 (December 30, 2011); as amended by Final Rulemaking published at 61 DCR 6390 (June 27, 2014). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 2725

26-C DCMR § 2726 VIOLATIONS

2726.1 A lender that initiates a foreclosure through the power of sale provision of a residential mortgage in violation of the Act or this chapter shall be deemed to have failed to participate in the mediation in good faith.

2726.2 Any cost incurred by a lender in a foreclosure through the power of sale provision of a residential mortgage in violation of the Act or this chapter shall not be assessed to the borrower(s).

2726.3 A lender that fails to attend mediation shall be subject to a penalty assessed by the Commissioner in the amount of five hundred dollars ($500) for each mediation session that the lender fails to attend.

2726.4 A lender that fails to send, at least five (5) business days prior to the first mediation session, an electronic version of the documents required in Subsection 2714.1, and bring to a mediation any document that the Act, this chapter, the Mediation Administrator, or Mediator requires, shall be subject to a penalty assessed by the Commissioner in the amount of five hundred dollars ($500) unless the Mediation Administrator determines that good cause is shown.

2726.5 A lender that fails to mediate in good faith shall be subject to a penalty in the amount of five hundred dollars ($500) assessed by the Commissioner.

2726.6 A lender that breaches a settlement agreement pursuant to Section 539b (e)(4)(a)(i) of the Act shall be subject to a penalty assessed by the Commissioner in the amount of one thousand dollars ($1,000), and shall be required to perform the terms of the settlement agreement.

History

• SOURCE: Emergency and Proposed Rulemaking published at 58 DCR 2958 (April 8, 2011)[EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 58 DCR 8247 (September 23, 2011)[EXPIRED]; as amended by Final Rulemaking published at 58 DCR 11469 (December 30, 2011); as amended by Final Rulemaking published at 61 DCR 6390 (June 27, 2014). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 2726

26-C DCMR § 2727 FORECLOSURE OF A SECURITY INTEREST OTHER THAN A RESIDENTIAL MORTGAGE

2727.1 A lender or trustee that initiates a foreclosure pursuant to a security interest other than a residential mortgage shall file and record with the District of Columbia Office of the Recorder of Deeds an Affidavit of Non-Residential Mortgage Foreclosure (Form FM-6) prior to, or contemporaneously with, a Notice of Foreclosure pursuant to Section 539 of the Act (D.C. Official Code § 42-815).

2727.2 The Affidavit of Non-Residential Mortgage Foreclosure (Form FM-6) shall be in the form prescribed by the Commissioner and available on the Commissioner's website at http://disb.dc.gov, and shall include all information required in Form FM-6.

History

• SOURCE: Emergency and Proposed Rulemaking published at 58 DCR 2958 (April 8, 2011)[EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 58 DCR 8247 (September 23, 2011)[EXPIRED]; as amended by Final Rulemaking published at 58 DCR 11469 (December 30, 2011); as amended by Final Rulemaking published at 61 DCR 6390 (June 27, 2014). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 2727

26-C DCMR § 2728 NOTICE OF INTENTION TO FORECLOSE A RESIDENTIAL MORTGAGE

2728.1 The holder of a note secured by a deed of trust, mortgage, or security instrument (hereinafter “holder”), or the agent of any such holder, shall at least thirty (30) days in advance of any sale of the real property encumbered by the deed of trust, mortgage, or security instrument under a power of sale provision contained therein, send to the borrower(s) of the real property encumbered by the deed of trust, mortgage, or security instrument, by first-class certified mail, postage prepaid, return receipt requested, and by first-class mail, a Notice of Intention to Foreclose a Residential Mortgage to his or her last known address.

2728.2 The lender shall provide the following information concerning the sale on the Notice of Intention to Foreclose a Residential Mortgage:

(a) The name and address of the borrower(s) of the property, and his or her telephone number, if known;

(b) The identification of the property by address;

(c) The lot and square number or the parcel number of the property;

(d) The date on which the security instrument was recorded in the District of Columbia Recorder of Deeds, and the security instrument number;

(e) The name, address, and telephone number of the maker of the note secured by the security instrument;

(f) A description of the property;

(g) The name, address, and telephone number of the holder of the note;

(h) The name, address, and telephone number of the person to call if the borrower(s) wishes to stop foreclosure;

The current balance owed on the note, the minimum amount required to cure the default obligation, and the total amount of fees and costs required to cure the default obligation as of the date of the Notice of Intention to Foreclose on a Residential Mortgage, and an estimate of other fees or costs reasonably expected to be incurred through the fifth (5th) business day prior to the date of sale to be paid in order to cure the default;

(j) The time, date and location of the sale of the real property; and

(k) Provision for a notarized certification by the note holder, his or her agent, or the preparer that the original Notice of Intention to Foreclose a Residential Mortgage has been sent to the borrower(s) by first-class certified mail, return receipt requested, and by first-class mail, and that the note holder understands that no foreclosure sale may take place until at least thirty (30) days after a copy of the notice has been recorded in the District of Columbia Recorder of Deeds.

2728.3 Any Notice of Intention to Foreclose a Residential Mortgage filed pursuant to the Act or this chapter shall be subject to the provisions set forth in 9 DCMR §§ 3100.3 – 3100.10 for a Notice of Foreclosure Sale of Real Property or Condominium Unit.

2728.4 A Final Mediation Certificate shall be recorded in the District of Columbia Recorder of Deeds prior to or contemporaneously with recording the Notice of Intention to Foreclose a Residential Mortgage.

History

• SOURCE: Emergency and Proposed Rulemaking published at 58 DCR 2958 (April 8, 2011)[EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 58 DCR 8247 (September 23, 2011)[EXPIRED]; as amended by Final Rulemaking published at 58 DCR 11469 (December 30, 2011); as amended by Final Rulemaking published at 61 DCR 6390 (June 27, 2014). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 2728

26-C DCMR § 2729 TRUSTEE LIABILITY

2729.1 The liability under the Act for a trustee who is defined as a lender shall be limited to Section 539b of the Act (D.C. Official Code § 42-815.02(e)(2)(A)(iii)) for the trustee’s exercise of a power of sale or the issuance of a Notice of Intention to Foreclose a Residential Mortgage or Notice of Foreclosure Sale of Real Property or Condominium Unit in violation of the Act or this chapter.

History

• SOURCE: Emergency and Proposed Rulemaking published at 58 DCR 2958 (April 8, 2011)[EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 58 DCR 8247 (September 23, 2011)[EXPIRED]; as amended by Final Rulemaking published at 58 DCR 11469 (December 30, 2011); as amended by Final Rulemaking published at 61 DCR 6390 (June 27, 2014). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 2729

26-C DCMR § 2799 DEFINITIONS

2799.1 When used in this chapter, the words and phrases shall have the meanings ascribed:

Act – Saving D.C. Homes from Foreclosure Amendment Act of 2010, effective March 12, 2011 (D.C. Law 18-314; D.C. Official Code §§ 42-815, et seq. (2011 Supp.)).

Borrower- a residential mortgage borrower and, if different from the residential mortgage borrower, the person who holds record title.

Commissioner - Commissioner of the Department of Insurance, Securities and Banking.

Community Bank – A depository institution with aggregate assets of less than one billion dollars.

Condominium - a single dwelling unit in a horizontal property regime.

Cooperative unit – a single dwelling unit in residential real property owned by a housing cooperative association and occupied by a member of the association which, by reason of ownership of a stock or membership certificate, a proprietary lease or other evidence of membership in the housing cooperative association.

Date of mailing - The date when a document is delivered to the United States Postal Service for mailing.

Days – Calendar days unless otherwise provided.

Department - Department of Insurance, Securities and Banking.

District - District of Columbia.

Federal Deposit Insurance Corporation Loan Modification Program – The IndyMac Loan Modification Program established by the Federal Deposit Insurance Corporation.

Lender - a residential mortgage lender or trustee.

Loss Mitigation Application – Form FM-1LM, which is available on the Commissioner's website at http://disb.dc.gov, or a functionally equivalent loss mitigation application form that has been approved by the Commissioner.

Mediation party - A borrower or a lender with respect to a residential mortgage that is subject to mediation pursuant to the Act.

Mediation services – Include, but are not limited to, the selection and employment of a mediator, foreclosure mediation training, supplies and material relating to the foreclosure mediation program.

Mediator– An individual, law firm, or other organization consisting of a group of attorneys which provides mediator services pursuant to this chapter.

Mortgage - a lien instrument, including a mortgage or deed of trust, with at least two (2) parties, in which the borrower grants a lien on residential real property to the lender as security for the repayment of a note or loan.

Notice of Default on Residential Mortgage – Form FM-1, which is available on the Commissioner's website at http://disb.dc.gov.

Notice of Intention to Foreclose a Residential Mortgage – Form FM-5, which is available on the Commissioner's website at http://disb.dc.gov.

Qualified facilitator - a person or company that provides and/or delivers mediation services in order to meet the objectives and requirements of the Act.

Residential mortgage – A loan secured by a deed of trust or mortgage used to acquire or refinance real property which is improved by four (4) or fewer units, including condominium or cooperative units but shall not include debts incurred and currently obligating a business entity exclusively, as defined by D.C. Official Code § 29-101.02(7). This term includes a security interest established in connection with the financing of a housing cooperative unit.

History

• SOURCE: Emergency and Proposed Rulemaking published at 58 DCR 2958 (April 8, 2011)[EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 58 DCR 8247 (September 23, 2011)[EXPIRED]; as amended by Final Rulemaking published at 58 DCR 11469 (December 30, 2011); as amended by Final Rulemaking published at 61 DCR 6390 (June 27, 2014). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 2799

26-C28 CAPITAL ACCESS PROGRAM

26-C DCMR § 2800 SCOPE

2800.1 Unless specified otherwise, these rules shall apply to clarify section 7(d)(2) and (d)(3) of the Capital Access Program Act of 2010 (Act), effective March 12, 2011 (D.C. Law 18-322; D.C. Official Code §§ 2-1210.01, et seq.)(Supp. 2011)

History

• Source: Notice of Emergency and Proposed Rulemaking published at 58 DCR 5343 (June 24, 2011)[EXPIRED]; as amended by Notice of Final Rulemaking published at 58 DCR 8364 (September 30, 2011).

26-C DCMR § 2801 AVAILABILITY OF DISTRICT MATCHING FUNDS

2801.1 The requirement in section 7(d)(2) of the Act that the Mayor shall deposit in the reserve account for each capital access loan made by a financial institution an amount equal to one hundred fifty percent (150%) of the total amount deposited by the financial institution and the borrower is only effective upon the availability of appropriated local funds sufficient to deposit this percentage. If sufficient funds are not available to pay one hundred fifty percent (150%), the Mayor shall deposit one hundred percent (100%) of the contributions deposited by the financial institution and the borrower under section 7(b).

2801.2 The requirement in section 7(d)(3) of the Act that the Mayor shall deposit in the reserve account for each capital access loan made by the financial institution an amount equal to two hundred percent (200%) of the total amount deposited by the financial institution and the borrower is only effective upon the availability of appropriated local funds sufficient to deposit this percentage. If sufficient funds are not available to pay two hundred percent (200%), the Mayor shall deposit one hundred percent (100%) of the contributions deposited by the financial institution and the borrower under section 7(b).

History

• Source: Notice of Emergency and Proposed Rulemaking published at 58 DCR 5343 (June 24, 2011)[EXPIRED]; as amended by Notice of Final Rulemaking published at 58 DCR 8364 (September 30, 2011).

26-C DCMR § 2802 CERTIFYING THE AVAILABILITY OF LOCAL FUNDS FOR THE IMPLEMENTATION OF THE ACT

2802.1 Prior to the acceptance of loan applications for loans under the Act, participating financial institutions shall contact the Associate Commissioner for Banking to determine the availability of District funds.

History

• Source: Notice of Emergency and Proposed Rulemaking published at 58 DCR 5343 (June 24, 2011)[EXPIRED]; as amended by Notice of Final Rulemaking published at 58 DCR 8364, 8365 (September 30, 2011).

26-C29 STATE SMALL BUSINESS CREDIT INITIATIVE

26-C DCMR § 2900 SCOPE

2900.1 Unless specified otherwise, these regulations shall apply to the Collateral Support Program, the Loan Participation Program, and the Innovation Finance Program, which are implemented pursuant to Section 105(a)(2), (3) and (12) of the 21st Century Financial Modernization Act of 2000, effective June 9, 2001 (D.C. Law 13-308; D.C. Official Code §§ 26-551.05 (a)(2), (a)(3) and (a)(12)).

2900.2 The Department of Insurance, Securities and Banking may, in its discretion, outsource the loan underwriting process to a qualified non-profit organization or financial institution.

2900.3 The Commissioner of the Department of Insurance, Securities and Banking may waive provisions of these rules upon good cause shown, provided the waiver is consistent with the State Small Business Credit Initiative (“SSBCI”) requirements from the United States Department of the Treasury.

2900.4 All forms prescribed or authorized by this chapter can be found on the Department website at https://disb.dc.gov/service/small-business-resources.

2900.5 The Collateral Support Program, the Loan Participation Program, and the Innovation Finance Program, collectively known as the District SSBCI Programs, will implement the federal SSBCI program and will only use federal monies in their implementation.

History

• SOURCE: Final Rulemaking published at 61 DCR 9181 (September 5, 2014); as amended by Final Rulemaking published at 70 DCR 015310 (November 24, 2023). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 2900

26-C DCMR § 2901 COLLATERAL SUPPORT PROGRAM

2901.1 The Collateral Support Program shall provide a cash collateral deposit to an Eligible Lender in order to enhance the collateral coverage of an Eligible Recipient that is otherwise qualified but unable to meet the Eligible Lender’s security requirements. The cash collateral deposit will then be pledged as collateral on behalf of the Eligible Recipient.

2901.2 The Department of Insurance, Securities and Banking (“DISB”) may deposit cash assets of up to fifty percent (50%) of the loan amount but no more than one million dollars ($1,000,000). The maximum term of an Enrolled Loan shall not exceed seven (7) years.

History

• SOURCE: Final Rulemaking published at 61 DCR 9181 (September 5, 2014). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 2901

26-C DCMR § 2902 ELIGIBLE LENDERS – COLLATERAL SUPPORT PROGRAM

2902.1 An Eligible Lender for the Collateral Support Program shall be:

(a) A federally insured commercial lender;

(b) A federally insured credit union; or

(c) A Community Development Financial Institution.

2902.2 An Eligible Lender shall enroll in the Collateral Support Program by providing to DISB:

(a) A signed SSBCI Participation Agreement with DISB;

(b) A certification that it is in compliance with the requirements of 31 C.F.R. § 1020.220;

(c) A certification that, consistent with OMB Circular A-129, it has at least twenty percent (20%) of its own capital at risk in any loan enrolled in the District SSBCI Programs, unless a waiver is granted;

(d) A certification that no principal of the lender has been convicted of a sex offense against a minor as such term is defined in Section 111 of the Sex Offender Registration and Notification Act (42 U.S.C. § 16911); and

(e) Any other document necessary for the administration of the District SSBCI Programs or for compliance with the U.S. Treasury’s SSBCI.

History

• SOURCE: Final Rulemaking published at 61 DCR 9181 (September 5, 2014). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 2902

26-C DCMR § 2903 ELIGIBLE RECIPIENTS – COLLATERAL SUPPORT PROGRAM

ELIGIBLE RECIPIENTS – COLLATERAL SUPPORT PROGRAM

2903.1 An Eligible Recipient under the Collateral Support Program shall:

Be a non-public company that is registered in the District and is subject to be taxed under the laws of the District, and continues as such as long as the loan is supported by the District’s collateral support;

Have at closing, or sign an agreement pledging that it will have within six (6) months after funding:

(1) Its principal offices within the District, demonstrated by a lease or a deed; and

(2) At least seventy-five percent (75%) of its employees working in the District, and who continue as such as long as the loan is supported by the District’s collateral support;

Have less than seven hundred and fifty (750) existing employees, including those of its affiliates and subsidiaries.

2903.2 To qualify for Collateral Support, an Eligible Recipient may also be subject to at least one of the following requirements:

Provide proof by the time of funding that District residents are employed in at least fifty percent (50%) of its W-2 and 1099 employee positions;

Sign an agreement by the time of funding pledging that at least fifty percent (50%) of its W-2 and 1099 employee positions will be occupied by District residents within six (6) months of funding;

Provide proof by the time of funding that the Eligible Recipient is at least fifty percent (50%) owned by District residents and provides at least twenty-five percent (25%) of its W-2 and 1099 employee positions to District residents; or

Demonstrate by the time of funding that the Eligible Recipient will, within six months of funding, create or retain at least one District resident job for every one hundred thousand dollars ($100,000) in collateral support that the District provides.

2903.3 If the funding from the District of Columbia to an Eligible Recipient that is not a Certified Business Enterprise is three hundred thousand dollars ($300,000) or more, the Eligible Recipient shall execute a First Source Agreement if District law requires.

2903.4 The Commissioner may waive the provisions in § 2903.1 and, where applicable § 2903.2, and may extend the deadlines, in whole or in part, if the Eligible Recipient demonstrates a reasonable need for waiver, the waiver will not violate the U.S. Department of the Treasury’s SSBCI Guidelines, and the waiver is in the best interest of the District.

2903.5 The Eligible Recipient, and any owner of the Eligible Recipient that has at least a twenty percent (20%) interest in the Eligible Recipient, shall execute covenants pledging to continue to comply with Collateral Support Program requirements of maintaining its principal offices within the District and maintaining the requisite number of its W-2 and 1099 employee positions occupied by District residents.

2903.6 An Eligible Recipient shall not be:

An executive officer, director, or principal shareholder of the financial institution or qualified non-profit organization enrolling the loan;

A member of the immediate family of an executive officer, director, or principal shareholder of the financial institution or qualified non-profit organization enrolling the loan;

A related interest of such an executive officer, director, principal shareholder, or member of the immediate family;

A business engaged in speculative activities that develop profits from fluctuations in price rather than through normal course of trade, such as wildcatting for oil or dealing in commodities futures, unless those activities are incidental to the regular activities of the business and part of a legitimate risk management strategy to guard against price fluctuations related to the regular activities of the business;

A business that earns more than half of its annual net revenue from lending activities, unless the business is a non-bank or non-bank holding company or Community Development Financial Institution;

A business engaged in pyramid sales, where a participant's primary incentive is based on the sales made by an ever-increasing number of participants; or

A business engaged in activities that are prohibited by federal or District of Columbia law.

2903.7 For the purpose of these Eligible Recipient restrictions, as described in § 2903.6 (a), (b) and (c) above, the terms “executive officer,” “director,” “principal shareholder,” “immediate family,” and “related interest” refer to the same relationship to a financial institution lender or qualified non-profit organization as the relationship described in 12 C.F.R. part 215, or any successor to such part.

2903.8 An Eligible Recipient under the Collateral Support Program shall certify that no principal of the Eligible Recipient has been convicted of a sex offense against a minor as such term is defined in Section 111 of the Sex Offender Registration and Notification Act (42 U.S.C. § 16911).

2903.9 For the purposes of the certifications required under § 2902.2(d) and § 2903.8, “principal” is defined as:

If a sole proprietorship, the proprietor;

If a partnership, each managing partner and each partner who holds twenty percent (20%) or more ownership interest in the partnership; or

If a corporation, limited liability company, association, or a development company, each director, each of the five (5) most highly compensated executives, officers, or employees of the entity, and each direct or indirect holder of twenty percent (20%) or more of the ownership stock or stock equivalent of the entity.

2903.10 An Eligible Recipient’s breach of the continuing eligibility requirements in § 2903.1 and, where applicable § 2903.2, may result in a penalty being assessed to the Eligible Recipient not to exceed the amount of the initial collateral support provided at funding.

2903.11 An Eligible Recipient’s breach of the continuing eligibility requirements in § 2903.1 and, where applicable § 2903.2, that occurred without the Eligible Lender’s assistance shall not impact the cash collateral account pledged to the Lender.

2903.12 An Eligible Lender shall be required to return the cash collateral provided by the District if at the time of funding the Eligible Recipient failed to meet the eligibility criteria in § 2903.1 and, where applicable § 2903.2, and the Eligible Lender knew that the Eligible Recipient failed to meet the eligibility criteria at the time of funding.

History

• SOURCE: Final Rulemaking published at 61 DCR 9181 (September 5, 2014); as amended by Final Rulemaking published at 63 DCR 11535 (September 16, 2016). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 2903

26-C DCMR § 2904 LOAN REQUIREMENTS – COLLATERAL SUPPORT PROGRAM

2904.1 Loans or investments facilitated by the Collateral Support Program shall be used for a business purpose, including working capital, inventory, expansion, renovations, start-up costs, and refinancing. The entire proceeds of the loan or investment shall be used within the District.

2904.2 The loan proceeds from the Collateral Support Program shall not be used:

To repay delinquent federal or District of Columbia income taxes unless the Eligible Recipient has a payment plan in place with the relevant taxing authority;

To repay taxes held in trust or escrow; for example, payroll or sales taxes;

To reimburse funds owed to any owner, including any equity injection or injection of capital for the business’s continuance;

To purchase any portion of the ownership interest of any owner of the business;

To acquire or hold passive investments;

For refinancing of existing debt, other than a refinancing permitted by § 2904.9;

For legal or illegal gambling; or

For evangelizing, proselytizing, or lobbying.

2904.3 Personal guarantees must be given by any individual holding twenty percent (20%) or more ownership interest in the Eligible Recipient.

2904.4 An Eligible Lender shall apply to file a loan for enrollment in the Collateral Support Program by:

Delivering to DISB a copy of the District SSBCI Program Enrollment Form executed by an authorized officer of the Eligible Lender;

Delivering to DISB documentation of the residency of the Eligible Recipient’s employees;

(c) Providing DISB with any other documentation and information related to the loan that DISB requires; and

(d) Complying with any other enrollment procedures that DISB may reasonably require in writing.

2904.5 DISB shall review the loan and related transaction documents that memorialize the terms and conditions of the loan, and DISB shall issue a final approval if the loan, Eligible Lender, Eligible Recipient, and other aspects of the transaction are determined to comply and satisfy all applicable requirements.

2904.6 If DISB issues a final approval of the loan, the Eligible Lender and Eligible Recipient shall execute all documentation requested by DISB to memorialize the terms and conditions of the loan to be enrolled in the Collateral Support Program.

2904.7 The Eligible Lender, Eligible Recipient, and all other parties to the transaction shall execute all of the documents required to close or settle the transaction. The terms, conditions, and material language of the executed documents shall be consistent with those upon which DISB issued a final approval.

2904.8 The loan shall be considered enrolled in the Collateral Support Program when DISB receives copies of all executed transaction documents that it previously approved and submits a funding request to the Office of the Chief Financial Officer.

2904.9 A loan or line of credit refinanced from a different lender may be enrolled in the Collateral Support Program. Loans or lines of credit with the same lender or its affiliate may be refinanced and enrolled in the Collateral Support Program if the loans and lines of credit meet the following conditions:

The new loan or line of credit includes the advancement of new monies to a small business borrower (excluding closing costs);

The new credit supported with Collateral Support Program funding is based on new underwriting of the small business’s ability to repay and a new approval by the Eligible Lender;

The proceeds from the new credit are only used to satisfy the outstanding balance of a loan or line of credit that has already matured or otherwise termed and the prior debt was used for an eligible business purpose, as defined above; and

The new credit has not been extended for the sole purpose of refinancing existing debt owed to the same financial institution lender.

2904.10 If the outstanding balance of a loan that is not a line of credit is reduced to zero (0), that loan shall no longer be considered an Enrolled Loan in the Collateral Support Program.

2904.11 If a loan that is a line of credit has an outstanding balance of zero (0) for twelve (12) consecutive months, it will no longer be considered an Enrolled Loan in the Collateral Support Program, unless, before the expiration of the twelve (12) month period, the Eligible Lender has reaffirmed in writing to the Eligible Recipient that the line of credit will remain open and the Eligible Recipient has acknowledged that reaffirmation in writing to the Eligible Lender and DISB.

2904.12 To renew an enrolled line of credit or extend the maturity date of an enrolled line of credit the following shall occur:

An Eligible Lender shall send notice to DISB of the renewal or extension;

The Eligible Recipient shall consent to the extension in writing;

DISB shall receive a new enrollment form; and

DISB shall approve the extension.

2904.13 If an enrolled line of credit is not renewed or extended, it shall no longer be considered enrolled in the Collateral Support Program after its maturity date has passed.

2904.14 If an enrolled line of credit has an outstanding balance of zero (0) for twelve (12) consecutive months, it shall no longer be enrolled in the Collateral Support Program, unless, before the expiration of the twelve (12) month period, the Eligible Lender has reaffirmed in writing to the Eligible Recipient that the line of credit shall remain open and the Eligible Recipient has acknowledged that reaffirmation in writing to the Eligible Lender and DISB.

History

• SOURCE: Final Rulemaking published at 61 DCR 9181 (September 5, 2014); as amended by Final Rulemaking published at 63 DCR 11535 (September 16, 2016). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 2904

26-C DCMR § 2905 CASH COLLATERAL ACCOUNTS

2905.1 All Collateral Support Program funds transferred to a cash collateral account shall be the property of, and solely controlled by, DISB. Interest or income earned on the funds shall be credited to the cash collateral account.

2905.2 DISB may withdraw at any time from a cash collateral account all interest or income that has been credited to the cash collateral account. DISB may use interest or income withdrawals for any purpose in connection with the SSBCI Programs.

2905.3 At a minimum, the cash collateral shall be reduced, proportionately with the principal reduction of the loan, on an annual basis or sooner if the loan is paid off.

2905.4 Each cash collateral account for a participating Eligible Lender shall be established in the name of DISB and maintained at that Eligible Lender or at another designated insured depository financial institution in a segregated account. This account shall be identified as “DISB SSBCI Fund - Collateral Support Program” or other name that DISB determines.

2905.5 The cash collateral accounts shall be interest bearing. Participating Eligible Lenders shall not charge DISB any fees related to the Collateral Support Program transactions, for the maintenance of a cash collateral account, or any other related fees.

2905.6 After an Eligible Lender charges off all or part of a loan enrolled in the Collateral Support Program, and after making other efforts to collect upon the Enrolled Loan, including but not limited to seeking judgment and levying against collateral, the Eligible Lender may file a claim with DISB.

2905.7 The Eligible Lender may file the claim by submitting a completed claim form, executed by an authorized officer of the Eligible Lender, along with any additional information that DISB requires.

2905.8 The Eligible Lender’s claim may include:

The amount of the enrolled principal left unpaid by Eligible Lender’s collection efforts;

Up to ninety (90) days of accrued interest; and

Fifty percent (50%) of the reasonable, documented out-of-pocket expenses incurred by the Eligible Lender, but not paid by the Eligible Recipient, in pursuing collection efforts, including the preservation of collateral.

2905.9 The total amount of the Eligible Lender’s claim may not exceed the amount of funds in the cash collateral account for that particular loan.

2905.10 Upon receipt and acceptance by DISB of a claim filed by the Eligible Lender, DISB shall promptly pay the claim as submitted solely from funds in the cash collateral account for that particular loan.

2905.11 If after DISB pays the claim, the Eligible Lender recovers from an Eligible Recipient any amount for which payment of the claim was made, the Eligible Lender shall promptly pay to DISB the amount recovered, less its reasonable, documented out-of-pocket expenses.

2905.12 The Eligible Lender shall retain documentation in its files of its out-of-pocket expenses. The Eligible Lender shall only be required to pay to DISB amounts in excess of the amount needed to fully cover the Eligible Lender’s loss on a loan under the Collateral Support Program.

2905.13 DISB may charge a closing fee of up to four percent (4%) of the balance of the cash collateral account at closing and an annual fee of up to four percent (4%) of the annual balance of the cash collateral account.

2905.14 If a participating Eligible Lender discontinues using the Collateral Support Program and no additional loans are being made under the Collateral Support Program, DISB shall make withdrawals against each cash collateral account proportionately to the outstanding balance of the loan until each loan has been repaid. At that time, DISB shall withdraw all remaining funds in the account.

History

• SOURCE: Final Rulemaking published at 61 DCR 9181 (September 5, 2014); as amended by Final Rulemaking published at 70 DCR 015310 (November 24, 2023). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 2905

26-C DCMR § 2906 REPORTING REQUIREMENTS – COLLATERAL SUPPORT PROGRAM

2906.1 Each Eligible Lender and Eligible Recipient shall make the following reports:

If an Enrolled Loan account becomes delinquent and falls sixty (60) days past due, the Eligible Lender shall notify DISB in writing within ten (10) business days of the delinquency.

The Eligible Lender shall submit to DISB annually, within thirty (30) days after the year-end, a report listing borrowers and outstanding balances of all Enrolled Loans as of the end of that preceding year.

(1) In computing the aggregate outstanding balances of all Enrolled Loans, the balance of any loan shall be no greater than the covered amount of the loan as enrolled.

(2) For lines of credit, instead of the outstanding balance on record, the line of credit limit shall be the enrolled line of credit amount.

(3) The report shall include the following information, in addition to any other information DISB reasonably requests:

Name of Eligible Recipient;

Amount of loan;

Amount of Enrolled Loan;

Type of loan (Term or Line);

Outstanding balance of loan;

If a term loan, the lesser of the outstanding balance or the Enrolled Loan amount and the enrollment date;

If a line of credit, the enrolled line of credit amount and the maturity date;

Payment history related to Enrolled Loan; and

Lender’s most recently completed internal loan review and quality rating for an Eligible Recipient.

Each Eligible Recipient shall submit the following information to DISB within sixty (60) days after the year-end and at any other time reasonably requested by DISB:

(1) The Eligible Recipient’s annual revenues in the prior fiscal year;

(2) The number of the Eligible Recipient’s full-time and part-time equivalent employees, including those who are District residents by ward, and number of jobs created and retained as a result of the loan for the Eligible Recipient; and

(3) Any additional documentation and information DISB reasonably requires.

2906.2 Failure to file a complete annual report or comply with any required covenants under § 2901 through § 2906 of this chapter may result in a fine of twenty-five dollars ($25.00) per day for each violation. This fine shall not exceed one percent (1%) of the Enrolled Loan for each violation. It shall be payable by the Eligible Recipient and any owner of the Eligible Recipient who owns at least twenty percent (20%) interest in the Eligible Recipient.

2906.3 DISB may, in its sole discretion, terminate its obligation to enroll loans under the Collateral Support Program by issuing a notice of termination to an Eligible Lender. The termination shall apply on the effective date specified in the notice of termination, except that the termination shall not apply to any Enrolled Loan that is made on or before the date on which the Eligible Lender receives the notice of termination.

History

• SOURCE: Final Rulemaking published at 61 DCR 9181 (September 5, 2014); as amended by Final Rulemaking published at 70 DCR 015310 (November 24, 2023). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 2906

26-C DCMR § 2910 LOAN PARTICIPATION PROGRAM

2910.1 The Loan Participation Program shall either: 1) purchase participation interests in loans, including principal and interest, made by an Eligible Lender, or 2) lend directly alongside private lenders to certain Eligible Recipients that exhibit short-term cash flow deficiencies or lack equity or sufficient collateral resources.

2910.2 DISB may purchase up to fifty percent (50%) of the loan amount but no more than one million dollars ($1,000,000). The maximum term of an Enrolled Loan shall not exceed seven (7) years. DISB may purchase participation interests at subsidized interest rates or may assume a subordinated lien position in the event of default.

History

• SOURCE: Final Rulemaking published at 61 DCR 9181 (September 5, 2014); as amended by Final Rulemaking published at 70 DCR 015310 (November 24, 2023). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 2910

26-C DCMR § 2911 ELIGIBLE LENDERS – LOAN PARTICIPATION PROGRAM

2911.1 An Eligible Lender for the Loan Participation Program shall be:

A federally insured commercial lender;

A federally insured credit union; or

A Community Development Financial Institution.

2911.2 An Eligible Lender shall enroll in the Loan Participation Program by providing to DISB:

A signed State Small Business Credit Initiative Participation Agreement with DISB;

A certification that it is in compliance with the requirements of 31 C.F.R. § 1020.220;

A certification that, consistent with OMB Circular A-129, it has at least twenty percent (20%) of its own capital at risk in any loan enrolled in the District SSBCI Programs, unless a waiver is granted;

A certification that no principal of the lender has been convicted of a sex offense against a minor as such term is defined in Section 111 of the Sex Offender Registration and Notification Act (42 U.S.C. § 16911); and

Any other document necessary for the administration of the District SSBCI Programs or for compliance with the U.S. Treasury’s SSBCI.

History

• SOURCE: Final Rulemaking published at 61 DCR 9181 (September 5, 2014). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 2911

26-C DCMR § 2912 ELIGIBLE RECIPIENTS – LOAN PARTICIPATION PROGRAM

2912.1 An Eligible Recipient under the Loan Participation Program shall:

Be a non-public company that is registered in the District and is subject to tax under the laws of the District and continues as such as long as the Loan Participation Program supports the loan;

Have at closing, or sign an agreement pledging that it will have within six (6) months after funding:

(1) Its principal offices within the District, demonstrated by a lease or a deed; and

(2) At least seventy-five percent (75%) of its employees working in the District and who continue as such as long as the District’s portion of the loan participation is outstanding; and

Have less than seven hundred and fifty (750) existing employees, including those of its affiliates and subsidiaries.

2912.2 To qualify for Loan Participation, an Eligible Recipient may also be subject to at least one of the following requirements:

Provide proof by the time of funding that District residents are employed in at least fifty percent (50%) of its W-2 and 1099 employee positions;

Sign an agreement by the time of funding pledging that at least fifty percent (50%) of its W-2 and 1099 employee positions will be occupied by District residents within six (6) months of funding;

Provide proof by the time of funding that the Eligible Recipient is at least fifty percent (50%) owned by District residents and provides at least twenty-five percent (25%) of its W-2 and 1099 employee positions to District residents; or

(d) Demonstrate by the time of funding that the Eligible Recipient will, within six months of funding, create or retain at least one District resident job for every $100,000 in loan participation that the District provides.

2912.3 If the funding from the District of Columbia to an Eligible Recipient that is not a Certified Business Enterprise is three hundred thousand dollars ($300,000) or more, the Eligible Recipient shall execute a First Source Agreement if District law requires.

2912.4 The Commissioner may waive the provisions of §§ 2911.1 – 2912.3 and may extend the deadlines, in whole or in part if the Eligible Recipient demonstrates a reasonable need for waiver, if such waiver will not violate the U.S. Department of the Treasury’s SSBCI Guidelines, and the waiver is in the best interest of the District.

2912.5 The Eligible Recipient and any owner of the Eligible Recipient that has at least a twenty percent (20%) interest in the Eligible Recipient shall execute covenants pledging to continue to comply with Loan Participation Program requirements of maintaining its principal offices within the District and maintaining the requisite number of its W-2 and 1099 employee positions occupied by District residents.

2912.6 An Eligible Recipient shall not be:

(a) An executive officer, director, or principal shareholder of the financial institution or qualified non-profit organization enrolling the loan;

(b) A member of the immediate family of an executive officer, director, or principal shareholder of the financial institution or qualified non-profit organization enrolling the loan;

(c) A related interest of such an executive officer, director, principal shareholder, or member of the immediate family;

(d) A business engaged in speculative activities that develop profits from fluctuations in price rather than through normal course of trade, such as wildcatting for oil or dealing in commodities futures, unless those activities are incidental to the regular activities of the business and part of a legitimate risk management strategy to guard against price fluctuations related to the regular activities of the business;

(e) A business that earns more than half of its annual net revenue from lending activities, unless the business is a non-bank or non-bank holding company or Community Development Financial Institution;

(f) A business engaged in pyramid sales, where a participant's primary incentive is based on the sales made by an ever-increasing number of participants; or

(g) A business engaged in activities that are prohibited by federal or District of Columbia law.

2912.7 For the purpose of these Eligible Recipient restrictions, as described in §§ 2912.6 (a), (b) and (c) above, the terms “executive officer,” “director,” “principal shareholder,” “immediate family,” and “related interest” refer to the same relationship to a financial institution lender or qualified non-profit organization as the relationship described in 12 C.F.R. part 215, or any successor to such part.

2912.8 Eligible Recipients under the Loan Participation Program shall certify that no principal of the Eligible Recipient has been convicted of a sex offense against a minor as such term is defined in Section 111 of the Sex Offender Registration and Notification Act (42 U.S.C. § 16911).

2912.9 For the purposes of the certification required in § 2911.2(d) and § 2912.8, “principal” is defined as:

If a sole proprietorship, the proprietor;

If a partnership, each managing partner and each partner who holds twenty percent (20%) or more ownership interest in the partnership; or

If a corporation, limited liability company, association, or a development company, each director, each of the five (5) most highly compensated executives, officers, or employees of the entity, and each direct or indirect holder of twenty percent (20%) or more of the ownership stock or stock equivalent of the entity.

2912.10 An Eligible Recipient’s breach of the continuing eligibility requirements in § 2912.1 and, where applicable § 2912.2, may result in a penalty being assessed to the Eligible Recipient not to exceed the amount of the District’s participation in the Eligible Recipient’s loan.

.

2912.11 A breach by the Eligible Recipient of the continuing eligibility requirements in § 2912.1 and, where applicable § 2912.2, that occurred without the Eligible Lender’s assistance shall not impact the District’s participation in the loan pledged to the Lender.

2912.12 An Eligible Lender shall be required to repurchase the District’s participation in the loan if at the time of funding the Eligible Recipient failed to meet the eligibility criteria in § 2912.1, and where applicable § 2912.2, and the Eligible Lender knew that the Eligible Recipient failed to meet the eligibility criteria at the time of funding.

History

• SOURCE: Final Rulemaking published at 61 DCR 9181 (September 5, 2014); as amended by Final Rulemaking published at 63 DCR 11535 (September 16, 2016). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 2912

26-C DCMR § 2913 LOAN REQUIREMENTS – LOAN PARTICIPATION PROGRAM

2913.1 Loans facilitated by the Loan Participation Program shall be used for a business purpose, including working capital, inventory, expansion, renovations, start-up costs, and refinancing. The entire proceeds of the loan or investment shall be used within the District.

2913.2 The loan proceeds from the Loan Participation Program shall not be used:

To repay delinquent federal or District of Columbia income taxes unless the Eligible Recipient has a payment plan in place with the relevant taxing authority;

To repay taxes held in trust or escrow, for example, payroll or sales taxes;

To reimburse funds owed to any owner, including any equity injection or injection of capital for the business’s continuance;

To purchase any portion of the ownership interest of any owner of the business;

To acquire or hold passive investments;

For refinancing of existing debt, other than a refinancing permitted by § 2914.13;

For legal or illegal gambling; or

For evangelizing, proselytizing, or lobbying.

2913.3 Personal guarantees are required from any individual holding twenty percent (20%) or more ownership interest in the Eligible Recipient.

2913.4 An Eligible Lender shall apply to file a loan for enrollment in the Loan Participation Program by:

Delivering to DISB, a copy of the District SSBCI Program Enrollment Form executed by an authorized officer of the Eligible Lender;

Delivering to DISB documentation of the residency of the Eligible Recipient’s employees;

Providing DISB with any other documentation or information related to the loan that DISB requires; and

(d) Complying with any other enrollment procedures that DISB may reasonably require in writing.

2913.5 DISB shall review the loan and related transaction documents that memorialize the terms and conditions of the loan, and DISB shall issue a final approval if the loan, Eligible Lender, Eligible Recipient, and other aspects of the transaction are determined to comply and satisfy all applicable requirements.

2913.6 If DISB issues a final approval of the loan, the Eligible Lender and Eligible Recipient shall execute all documentation requested by DISB to memorialize the terms and conditions of the loan to be enrolled in the Loan Participation Program.

2913.7 The Eligible Lender, Eligible Recipient, and all other parties to the transaction shall execute all of the documents required to close or settle the transaction. The terms, conditions, and material language of the executed documents shall be consistent with those upon which DISB issued a final approval.

2913.8 The loan shall be considered enrolled in the Loan Participation Program when DISB receives copies of all executed transaction documents that it previously approved and submits a funding request to the Office of the Chief Financial Officer.

History

• SOURCE: Final Rulemaking published at 61 DCR 9181 (September 5, 2014); as amended by Final Rulemaking published at 63 DCR 11535 (September 16, 2016). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 2913

26-C DCMR § 2914 PARTICIPATION REQUIREMENTS – LOAN PARTICIPATION PROGRAM

2914.1 To enroll a loan in the Loan Participation Program, the Eligible Lender shall elect on the prescribed District SSBCI Enrollment Form, or such other form required by DISB, the applicable Loan Participation Program category.

2914.2 Under the Standard Loan Participation category, DISB acquires a percentage participation of the Enrolled Loan from the Eligible Lender to an Eligible Recipient in consideration for DISB receiving interest accruing at a rate equal to the rate at which an Eligible Recipient pays an Eligible Lender pursuant to the terms of the Loan Participation Program documents.

2914.3 If the Eligible Recipient defaults in payment to the Eligible Lender, or to DISB pursuant to the terms of the Loan Participation Program documents for a Standard Loan Participation, DISB shall receive the proportional benefit of all amounts received from the Eligible Recipient or realized from the Eligible Recipient’s collateral following the default.

2914.4 To qualify for a Standard Loan Participation category, an Eligible Recipient need not meet any of the five (5) additional enrollment criteria described in § 2914.8.

2914.5 A loan may also be enrolled under the Enhanced Loan Participation category, whereby DISB acquires a percentage participation of the Enrolled Loan from an Eligible Lender to an Eligible Recipient in consideration for DISB receiving interest accruing at a rate not to exceed half of the percentage per annum charged by the Eligible Lender on the Enrolled Loan to the Eligible Recipient.

(a) The interest subsidy shall be determined based on the term of the loan and as follows: under 12 months (1% interest rate per annum); 12 to 36 months (1.5% interest rate per annum); 36 to 84 months (2% interest rate per annum).

(b) The interest rate percentage shall not exceed 2% per annum.

2914.6 If the Eligible Recipient defaults in payment to the Eligible Lender, or to DISB pursuant to the terms of the Loan Participation Program documents for an Enhanced Loan Participation, the amounts owed by the Eligible Recipient to DISB with respect to a loan participation may be subordinated to amounts owed by the Eligible Recipient to the Eligible Lender.

2914.7 To qualify for an Enhanced Loan Participation, an Eligible Recipient shall meet at least two (2) and up to five (5) of the additional enrollment criteria described in § 2914.8. Qualification under this category may be subject to additional criteria, as determined by the Commissioner, and may include:

A minimum equity contribution of ten percent (10%), which may not be borrowed;

(b) A debt service coverage ratio of one and two-tenths (1.2) (a lower minimum debt service coverage ratio may be allowed with reasonable explanation);

(c) Financial statements for the three (3) immediately preceding fiscal years, demonstrating at least one (1) year of profitability; and

(d) A credit score of six hundred and forty (640) or higher (lower credit scores may be allowed with a reasonable explanation).

2914.8 Additional enrollment criteria for qualification under the enrollment categories described in §§ 2914.1 – 2914.7 above are as follows:

An Eligible Recipient shall sign an agreement to allocate at least ten percent (10%) of all new and future hires to be targeted new hires as defined by the Federal Work Opportunities Tax Credit, 26 U.S.C. § 51(d). The agreement shall endure for the duration of the Enrolled Loan.

An Eligible Recipient shall be a Certified Business Enterprise or pledge to become a Certified Business Enterprise within six (6) months of funding;

An Eligible Recipient shall be a business enterprise that is more than 50% woman or minority owned.

An Eligible Recipient shall have its principal office located in a census tract where the poverty rate exceeds twenty percent (20%).

A loan will be made to an Eligible Recipient that has its principal office located in a retail priority area as identified under D.C. Official Code § 2-1217.73.

2914.9 The Eligible Recipient and any owner of the Eligible Recipient that has at least a twenty percent (20%) interest in the Eligible Recipient shall execute covenants, pledging to continue to comply with each additional enrollment criteria as described under § 2914.8 for the enrollment option chosen by the Eligible Recipient.

2914.10 A loan or line of credit refinanced from a different lender may be enrolled in the Loan Participation Program provided that the original use of proceeds was for an eligible business purpose. Loans or lines of credit with the same lender or its affiliate may be refinanced and enrolled in the Loan Participation Program if such loans and lines of credit meet the following conditions:

The new loan or line of credit includes the advancement of new monies to a small business borrower (excluding closing costs);

The new credit supported with Loan Participation Program funding is based on new underwriting of the small business’s ability to repay and a new approval by the Eligible Lender;

The proceeds from the new credit is only to be used to satisfy the outstanding balance of a loan or line of credit that has already matured or otherwise termed and the prior debt was used for an eligible business purpose, as defined by above; and

The new credit has not been extended for the sole purpose of refinancing existing debt owed to the same financial institution lender.

2914.11 If the loan is not a line of credit and has no outstanding balance, that loan will no longer be considered an Enrolled Loan in the Loan Participation Program.

2914.12 To renew an enrolled line of credit or extend the maturity date of an enrolled line of credit the following shall occur:

An Eligible Lender shall send notice to DISB of the renewal or extension;

The Eligible Recipient shall consent to the extension in writing;

DISB shall receive a new enrollment form; and

DISB shall approve the extension

2914.13 If an enrolled line of credit is not renewed or extended it shall no longer be considered enrolled in the Loan Participation Program after its maturity date has passed.

2914.14 If an enrolled line of credit has no outstanding balance for twelve (12) consecutive months, it will no longer be enrolled in the Loan Participation Program unless, before the expiration of the twelve (12) month period, the Eligible Lender has reaffirmed in writing to the Eligible Recipient that the line of credit will remain open and the Eligible Recipient has acknowledged that reaffirmation in writing to the Eligible Lender and DISB.

2914.15 DISB shall be the legal and equitable owner of the DISB share of a loan enrolled in the Loan Participation Program and all security and documents related to the DISB share of the loan.

2914.16 The enrollment of a loan by the Eligible Lender in the Loan Participation Program constitutes a sale by the Eligible Lender to DISB of the DISB share in the Enrolled Loan and security and related documents. This sale is not, however, an extension of credit by DISB to the Eligible Lender.

2914.17 DISB shall not disburse monies related to its purchase of a portion of a loan enrolled in the Loan Participation Program at or prior to the closing of the loan by an Eligible Lender and Eligible Recipient. Monies DISB pays to the Eligible Lender shall not be disbursed by the Eligible Lender to an Eligible Recipient without the Eligible Recipient’s full execution of all of the Loan Participation Program documents.

2914.18 For each Enrolled Loan for which DISB owns a participation share the Eligible Lender shall:

Negotiate, control, manage and service the Enrolled Loan;

Enforce or refrain from enforcing the loan documents;

Give consents, approvals or waivers in connection with the loan documents;

Acquire additional security for the Enrolled Loan; and

Take or refrain from taking any action and make any determination provided for in the loan documents.

2914.19 The Eligible Lender and DISB shall share all principal and interest payments and other collections under any loan enrolled by the Eligible Lender in the Loan Participation Program in proportion to their respective percentage interests in the loan, with appropriate provisions made for any differences in interest rates and payment schedules of the Eligible Lender and DISB.

2914.20 The Eligible Lender shall collect all payments made under any loan enrolled by the Eligible Lender in the Loan Participation Program and remit the principal and interest amounts due to DISB within ten (10) business days following the Eligible Lender’s receipt of such payments from the Eligible Recipient.

2914.21 The remittance shall be paid by certified check or money order payable by the Eligible Lender to DISB. The Eligible Lender shall provide all detail reasonably requested by DISB regarding the breakdown of individual payments, including itemization of the principal and interest.

History

• SOURCE: Final Rulemaking published at 61 DCR 9181 (September 5, 2014); as amended by Final Rulemaking published at 63 DCR 11535 (September 16, 2016); as amended by Final Rulemaking published at 70 DCR 015310 (November 24, 2023). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 2914

26-C DCMR § 2915 REPORTING REQUIREMENTS – LOAN PARTICIPATION PROGRAM

2915.1 Each Eligible Lender and Eligible Recipient shall make the following reports:

If an Enrolled Loan account becomes delinquent and falls sixty (60) days past its due date, the Eligible Lender shall notify DISB in writing within ten (10) business days of the delinquency.

The Eligible Lender shall submit to DISB annually, within thirty (30) days after the year-end, a report listing borrowers and outstanding balances of all Enrolled Loans as of the end of that preceding year.

In computing the aggregate outstanding balances of all Enrolled Loans, the balance of any loan shall be no greater than the covered amount of the loan as enrolled.

For lines of credit, instead of the outstanding balance on record, the line of credit limit shall be the enrolled line of credit amount.

The report shall include the following information, in addition to any other information DISB reasonably requests:

(A) Name of Eligible Recipient;

(B) Amount of loan;

(C) Amount of Enrolled Loan;

(D) Type of loan (Term or Line);

(E) Outstanding balance of loan;

(F) If a term loan, the enrollment date and the lesser of the outstanding balance or the Enrolled Loan amount;

(G) If a line of credit, the enrolled line of credit amount and the maturity date;

(H) Payment history related to Enrolled Loan; and

(I) Lender’s most recently completed internal loan review and quality rating for an Eligible Recipient.

(c) Each Eligible Recipient shall submit the following information to DISB within sixty (60) days after the year-end and at any other time DISB reasonably requests:

(1) The Eligible Recipient’s annual revenues in the prior fiscal year;

(2) The number of the Eligible Recipient’s full-time and part-time equivalent employees, including those who are District residents by ward, and number of jobs created and retained as a result of the loan for the Eligible Recipient; and

(3) Any additional documentation and information DISB reasonably requires.

2915.2 Failure to file a complete annual report or comply with any required covenants under §§ 2910 – 2915 of this chapter may result in a fine of twenty-five dollars ($25.00) per day for each violation. This fine shall not exceed one percent (1%) of the Enrolled Loan for each violation. It shall be payable by the Eligible Recipient and any owner of the Eligible Recipient who owns at least twenty percent (20%) interest in the Eligible Recipient.

2915.3 DISB may terminate its obligation to enroll loans under the Loan Participation Program. The termination shall apply on the effective date specified in the notice of termination, except that the termination shall not apply to any Enrolled Loan that is made on or before the date on which the Eligible Lender receives the notice of termination.

History

• SOURCE: Final Rulemaking published at 61 DCR 9181 (September 5, 2014); as amended by Final Rulemaking published at 70 DCR 015310 (November 24, 2023). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 2915

26-C DCMR § 2920 INNOVATION FINANCE PROGRAM

2920.1 The Innovation Finance Program shall provide capital to Eligible Recipients either (1) through a co-investment with an Innovation Finance Company into an Eligible Recipient; or (2) by investing as a Limited Partner in an Innovation Finance Company that shall then make an investment into an Eligible Recipient.

2920.2 A co-investment with an Innovation Finance Company shall not exceed fifty percent (50%) of the total investment in the Eligible Recipient and no more than five hundred thousand dollars ($500,000).

2920.3 The District may fully or partially subordinate its investment to the co-investment by the Innovation Finance Company.

2920.4 An investment as a Limited Partner in a Limited Partnership managed by an Innovation Finance Company shall not exceed the amount allocated to the Innovation Finance Program by the U.S. Department of the Treasury, and the resulting total investment in the Eligible Recipient shall be comprised of fifty percent (50%) or less in capital from the Innovation Finance Program and no more than five hundred thousand dollars ($500,000).

2920.5 The District may fully or partially subordinate its investment to the investment of the other Limited Partners in the Limited Partnership managed by the Innovation Finance Company.

2920.6 Where applicable, principal and interest repayments on an investment in an Innovation Finance Company and an Eligible Recipient may be deferred until the occurrence of a liquidity event, as described in §§ 2920.7 – 2920.9.

2920.7 A liquidity event shall occur in any transaction in which the Innovation Finance Company receives: cash or equity securities having a “readily determinable fair value,” as defined by the Financial Accounting Standards Board Accounting Standards Codification, as amended (“marketable securities”), in exchange for securities of the Eligible Recipient (or any securities into which the securities are converted or for which the securities are exchanged).

2920.8 Any payment to an Innovation Finance Company, including dividends and payments of principal or interest, shall be considered a liquidity event.

2920.9 Share exchanges and other similar transactions shall not be considered liquidity events to the extent that DISB’s interest in the Eligible Recipient is not tendered for cash or a marketable security. The liquidity horizon shall not exceed ten (10) years.

2920.10 An Innovation Finance Company’s failure to liquidate its investment in an Eligible Recipient and to pay the District its pro-rata share of the initial investment and return on investment shall be included in the loan documents or limited partnership agreement between DISB and the Innovation Finance Company as an event of default. The investment documents shall set forth the remedy or penalty for the default. The remedy or penalty for a default may include, without limitation, payment of additional interest by the Innovation Finance Company to the District. Where the failure continues for more than thirty (30) days beyond the date that the payment was to be made, forfeiture or recoupment of all or a portion of the amount allowed to the Innovation Finance Company may be required pursuant to § 2922.6 or § 2922.12.

History

• SOURCE: Final Rulemaking published at 61 DCR 9181 (September 5, 2014); as amended by Final rulemaking published at 63 DCR 11535 (September 16, 2016). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 2920

26-C DCMR § 2921 INNOVATION FINANCE COMPANY - INNOVATION FINANCE PROGRAM

2921.1 An Innovation Finance Company shall demonstrate to the Commissioner that it has a track record of positive return on investment and be an entity in one of the following categories:

Certified by the U.S. Department of the Treasury’s CDFI Fund as a Community Development Financial Institution;

Registered as a Business Development Company, as defined under the Investment Company Act of 1940;

Certified by the U.S. Small Business Administration as a Small Business Investment Company (SBIC), New Market Venture Capital Company, or Rural Business Investment Company; or

Any other entity that has at least five million dollars ($5,000,000) of assets under management or an Accredited Investor within the meaning of the Federal Securities laws, both of which must demonstrate to the Commissioner that it has qualified management and staff.

2921.2 An Innovation Finance Company may also include Angel Investor Networks, which shall be defined as: (1) a group of investors where all members meet all requirements as “Accredited Investors” within the meaning of the Federal securities laws; and (2) a group of investors that has been operating as a group for a minimum of five (5) years and has made cumulative yearly investments as a network of no less than five hundred thousand dollars ($500,000) per year and average investment of no less than one hundred twenty-five thousand dollars ($125,000) per investee company. All members of the Angel Investor Networks shall meet the certification requirements of the SSBCI program, including but not limited to the Sex Offender Certifications.

2921.3 An Innovation Finance Company shall enroll in the Innovation Finance Program by providing to DISB:

An application for enrollment;

A signed Innovation Finance Program Participation Agreement with DISB which, after DISB’s execution, may be used by the Innovation Finance Company for subsequent investments in subsequent Eligible Recipients provided that (1) DISB has not amended or otherwise revised the form of Participation Agreement and (2) the Innovation Finance Company has been re-certified as set forth in § 2921.2;

A certification that it is in compliance with the requirements of the District of Columbia and federal securities laws;

A certification that, consistent with OMB Circular A-129, it has or will have at the time DISB makes any investment, at least twenty percent (20%) of its own capital at risk in any investment enrolled in the Innovation Finance Program, unless a waiver is granted;

A certification that no principal of the Innovation Finance Company has been convicted of a sex offense against a minor as the term is defined in Section 111 of the Sex Offender Registration and Notification Act (42 U.S.C. § 16911);

(f) A certification in the form to be provided to the Innovation Finance Company by DISB providing that the Innovation Finance Company has complied with the Conflicts of Interests for Venture Capital Programs set forth in the current SSBCI National Standards;

(g) A certification from the proposed Eligible Recipient in the form to be provided by DISB regarding certification of the Use of Proceeds and that the proceeds are for a permitted Business Purpose within the meaning of the SSBCI Guidelines and the Small Business Jobs Act of 2010 (the “Act”);

(h) A certification from the proposed Eligible Recipient in the form to be provided by DISB regarding the SSBCI Sex Offender Rules and the Act; and

(i) Any other document DISB determines is necessary for the administration of the District SSBCI Programs or for compliance with the U.S. Department of the Treasury’s SSBCI.

2921.4 Once enrolled and certified as an Innovation Finance Company, the Company may present subsequent Eligible Recipients to the Innovation Finance Company using the following procedure:

The Innovation Finance Company shall re-certify it meets the requirements in § 2921.1; and

The Innovation Finance Company and the Eligible Recipient as the case may be, shall each submit the relevant Certifications set forth in §§ 2921.3 (a) – (i).

History

• SOURCE: Final Rulemaking published at 61 DCR 9181 (September 5, 2014); as amended by Final rulemaking published at 63 DCR 11535 (September 16, 2016). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 2921

26-C DCMR § 2922 ELIGIBLE RECIPIENTS AND INVESTMENT

REQUIREMENTS – INNOVATION FINANCE PROGRAM

2922.1 To qualify for an Investment, an Eligible Recipient shall:

(a) Be a non-public company that is registered in the District and is subject to tax under the laws of the District;

(b) Have at closing, or sign an agreement pledging that it will have within six (6) months after funding:

(1) Its principal offices within the District, demonstrated by a lease or a deed; and

At least seventy-five percent (75%) of its employees working in the District; and

Have less than seven hundred and fifty (750) existing employees, including those of its affiliates and subsidiaries

2922.2 To qualify for an Investment, an Eligible Recipient may also be subject to at least one of the following requirements:

Provide proof by the time of funding that District residents are employed in at least fifty percent (50%) of its W-2 and 1099 employee positions;

Sign an agreement by the time of funding pledging that at least fifty percent (50%) of its W-2 and 1099 employee positions will be occupied by District residents within six (6) months of funding;

Provide proof by the time of funding that the Eligible Recipient is at least fifty percent (50%) owned by District residents and provides at least twenty-five percent (25%) of its W-2 and 1099 employee positions to District residents; or

Demonstrate by the time of funding that the Eligible Recipient will, within six months of funding, create or retain at least one District resident job for every one hundred thousand dollars ($100,000) in investment support that the District provides.

2922.3 If the funding from the District of Columbia to an Eligible Recipient that is not a Certified Business Enterprise is three hundred thousand dollars ($300,000) or more, the Eligible Recipient shall execute a First Source Agreement if District law requires.

2922.4 The provisions of § 2922.1 and, where applicable § 2922.2, may be waived, and the deadlines extended, in whole or in part, by the Commissioner if the Eligible Recipient demonstrates a reasonable need for waiver, if the waiver will not violate the SSBCI Guidelines of the U.S. Department of the Treasury, and if the waiver is in the best interest of the District.

2922.5 The Eligible Recipient and any owner of the Eligible Recipient that has at least a twenty percent (20%) interest in the Eligible Recipient shall execute covenants, pledging to continue to comply with the Program requirements from § 2922.1 and, where applicable § 2922.2, for the later of (i) a Liquidation Event or (ii) ten (10) years.

2922.6 In addition to its own pro rata share in the total return on investment (ROI) on a performing investment, the Innovation Finance Company may receive a maximum of twenty-five percent (25%) carried interest of DISB’s pro rata share of the total ROI. The Parties agree that the twenty-five percent (25%) share of DISB’s pro rata share as set forth in this section is specifically in lieu of the payment of any Innovation Finance management fees or administrative fees that may be assessed to DISB pro rata with other investors, if any, in respect of an investment in an Eligible Recipient.

2922.7 If the District’s investment involves a Limited Partnership interest in a Fund where at least two thirds of the capital is from the private sector, the DISB may agree to pay a maximum annual management fee of two percent (2%) of assets under management in addition to a maximum of twenty percent (20%) carried interest on DISB’s pro rata share of the total ROI provided the carried interest and management fee are deferred and only paid from the total ROI.

2922.8 Under the Enhanced Investment category, an Eligible Recipient of an Enhanced Investment shall also sign an agreement to comply with at least one (1) of the following additional enrollment criteria for which an enhanced investment return of five percent (5%) shall be provided to the Eligible Recipient for each:

The Eligible Recipient shall sign an agreement to allocate at least ten percent (10%) of all new and future hires to be targeted new hires as defined by the Federal Work Opportunities Tax Credit Act, 26 U.S.C. § 51(d) for the duration of the Enrolled Investment;

The Eligible Recipient shall meet at least one (1) of the following:

(1) Be a Certified Business Enterprise or pledge to become a Certified Business Enterprise within six (6) months of funding; or

(2) Be a business enterprise more than fifty percent (50%) woman or minority owned.

(c) The Eligible Recipient shall have its principal office located in a census tract where the poverty rate exceeds twenty percent (20%); and

(d) The Eligible Recipient shall have its principal office located on retail priority areas as identified under D.C. Official Code § 2-1217.73.

2922.9 The Eligible Recipient of an Enhanced Investment, and any owner of the Eligible Recipient that has at least a twenty percent (20%) interest in the Eligible Recipient shall execute covenants pledging to continue to comply with the additional enrollment criteria as described under § 2922.8 for the enrollment category chosen by the Eligible Recipient.

2922.10 The Eligible Recipient of an Enhanced Investment may receive five percent (5%) of DISB’s pro rata share of the total ROI for meeting each of the economic development goals stated in § 2922.8, up to a total of fifteen percent (15%).

2922.11 In both categories of enrollment, DISB shall receive the proportional benefit of all amounts received from the Eligible Recipient or realized from the Eligible Recipient’s collateral following default or loss.

2922.12 An Enrolled Investment may be used to refinance a loan or line of credit from a different lender under the Innovation Finance Program.

2922.13 An Eligible Recipient shall not be:

An executive officer, director, or principal shareholder of the Innovation Finance Company enrolling the investment;

A member of the immediate family of an executive officer, director, or principal shareholder of the Innovation Finance Company enrolling the investment;

A related interest of an executive officer, director, principal shareholder, or member of the immediate family;

A business engaged in speculative activities that develop profits from fluctuations in price rather than through the normal course of trade, such as wildcatting for oil or dealing in commodities futures, unless those activities are incidental to the regular activities of the business and part of a legitimate risk management strategy to guard against price fluctuations related to the regular activities of the business;

A business that earns more than half of its annual net revenue from lending activities, unless the business is a non-bank or non-bank holding company or community development financial institution;

A business engaged in pyramid sales, where a participant's primary incentive is based on the sales made by an ever-increasing number of participants; or

A business engaged in activities that are prohibited by federal or District of Columbia law.

2922.14 For the purpose of these Eligible Recipient restrictions, as described in § 2922.13(a), (b), and (c) above, the terms “executive officer,” “director,” “principal shareholder,” “immediate family,” and “related interest” refer to the same relationship to an Innovation Finance Company as the relationship described in 12 C.F. R. part 215 or any successor to such part.

2922.15 An Eligible Recipient under the Innovation Finance Program shall certify that no principal of the Eligible Recipient has been convicted of a sex offense against a minor as such term is defined in Section 111 of the Sex Offender Registration and Notification Act (42 U.S.C. § 16911).

2922.16 For the purposes of the certification required under § 2921.3(e) and § 2922.15, “principal” is defined as:

(a) If a sole proprietorship, the proprietor;

(b) If a partnership, each managing partner and each partner who holds twenty percent (20%) or more ownership interest in the partnership; or

(c) If a corporation, limited liability company, association or a development company, each director, each of the five (5) most highly compensated executives, officers, or employees of the entity, and each direct or indirect holder of twenty percent (20%) or more of the ownership stock or stock equivalent of the entity.

2922.17 An Eligible Recipient shall use the investments facilitated by the Innovation Finance Program for a business purpose, including working capital, inventory, expansion, renovations, start-up costs, and refinancing. The entire proceeds of the investment shall be used within the District.

2922.18 The investment from the Innovation Finance Program shall not be used:

To repay delinquent federal or District of Columbia income taxes unless the Eligible Recipient has a payment plan in place with the relevant taxing authority;

To repay taxes held in trust or escrow, for example, payroll or sales taxes;

To reimburse funds owed to any owner, including any equity injection or injection of capital for the business’s continuance;

To purchase any portion of the ownership interest of any owner of the business;

To acquire or hold passive investments;

For legal or illegal gambling; or

For evangelizing, proselytizing, or lobbying.

2922.19 An Innovation Finance Company shall file an investment for enrollment in the Innovation Finance Program by:

Delivering to DISB a copy of the District SSBCI Program Enrollment Form executed by an authorized officer of the Innovation Finance Company;

Providing DISB with any other documentation and information related to the investment that DISB requires; and

Complying with any other enrollment procedures that DISB may reasonably require in writing.

2922.20 The filing of an investment for enrollment shall be considered to occur on the date on which the Innovation Finance Company submits to DISB the documentation requested by DISB in § 2922.21 and, where applicable, § 2922.22.

2922.21 DISB shall review the investment and related transaction documents that memorialize the terms and conditions of the investment, and DISB shall issue a final approval if the investment, Innovation Finance Company, Eligible Recipient, and other aspects of the transaction, are determined to comply and satisfy all applicable requirements.

2922.22 The Innovation Finance Company and Eligible Recipient shall execute all documentation requested by DISB to memorialize the terms and conditions of the investment to be enrolled in the Innovation Finance Program.

2922.23 The Innovation Finance Company, Eligible Recipient, and all other parties to the transaction, shall execute all of the documents required to close or settle the transaction. The terms, conditions, and material language of the executed documents shall be consistent with those upon which DISB issued a final approval.

2922.24 The investment shall be considered enrolled in the Finance Innovation Program when DISB receives copies of all executed transaction documents that it previously approved and submits a funding request to the Office of the Chief Financial Officer.

2922.25 DISB shall not commit capital from SSBCI Program Funds to an Innovation Finance Company until the Innovation Finance Company has met all requirements set forth in § 2922.1 and, where applicable, § 2922.22.

History

• SOURCE: Final Rulemaking published at 61 DCR 9181 (September 5, 2014); as amended by Final Rulemaking published at 63 DCR 11535 (September 16, 2016). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 2922

26-C DCMR § 2923 REPORTING REQUIREMENTS – INNOVATION FINANCE PROGRAM

2923.1 Each Eligible Recipient under the Innovation Finance Program shall annually submit the following information to DISB within sixty (60) days after the year-end and at any other time DISB reasonably requests:

The Eligible Recipient’s annual revenues, if any, in the prior fiscal year;

The number of the Eligible Recipient’s full-time and part-time equivalent employees, including those who are District residents by ward, and the number of jobs created and retained as a result of the investment for the Eligible Recipient; and

Any additional documentation and information DISB reasonably requires.

2923.2 Failure to file a complete annual report may result in a fine of twenty-five dollars ($25.00) per day for each violation. This fine shall not exceed one percent (1%) of the Enrolled Investment for each violation. It shall be payable by the Eligible Recipient and any owner of the Eligible Recipient, that has at least a twenty percent (20%) interest in the Eligible Recipient.

2923.3 Failure to comply with any required covenants under §§ 2920.1 – 2923 of this chapter may result in a fine not to exceed the amount invested by DISB in the Eligible Recipient. This fine shall be payable by the Eligible Recipient and any owner of the Eligible Recipient, who has at least twenty percent (20%) interest in the Eligible Recipient.

History

• SOURCE: Final Rulemaking published at 61 DCR 9181 (September 5, 2014); as amended by Final Rulemaking published at 63 DCR 11535 (September 16, 2016). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 2923

26-C DCMR § 2924 TERMINATION OF INVESTMENT – INNOVATION FINANCE PROGRAM

2924.1 DISB may terminate its obligation to enroll investments under the Innovation Finance Program by issuing a notice of termination to an Innovation Finance Company. The termination shall apply on the effective date specified in the notice of termination.

2924.2 The termination shall not apply to any Enrolled Loan or Enrolled Investment that is made on or before the date on which the notice of termination is received by the Innovation Finance Company.

History

• SOURCE: Final Rulemaking published at 63 DCR 11535 (September 16, 2016). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 2924

26-C DCMR § 2999 DEFINITIONS

Capital: A loan, line of credit, any credit facility, or investment made in exchange for an interest in the ownership of the entity receiving the investment.

Certified Business Enterprise: A local business enterprise as defined in D.C. Official Code § 2-218.02 (1D).

Community Development Financial Institution: A financial institution certified by the U.S. Department of the Treasury as a Community Development Financial Institution.

Eligible Lender: Any federally insured commercial lender, federally insured credit union, or Community Development Financial Institution.

Enrolled Investment: An investment enrolled in one (1) or more SSBCI Programs.

Enrolled Loan: A loan, line of credit, or other facility enrolled in one (1) or more SSBCI Programs.

First Source Agreement: An agreement with the District governing certain obligations of the Eligible Recipient, pursuant to Section 4 of the First Source Employment Agreement Act of 1984, effective June 29, 1984 (D.C. Law 5-93; D.C. Official Code § 2-219.03), and Mayor's Order 83-265, dated November 9, 1983, regarding job creation and employment generated as a result of the District’s investment.

Full-Time Equivalent: Employee count based on a two thousand (2000) hour year. This count includes seasonal and part-time employees based on the proportion of a two thousand (2000) hour year worked.

Innovation Finance Company: Any Community Development Financial Institution, Business Development Company, Small Business Investment Company, New Market Venture Capital Company, Rural Business Investment Company, private sector venture capital fund, angel investor network, seed capital fund, or entity that has five million dollars ($5,000,000) of assets under management and can demonstrate qualified management and staff.

Liquidity Horizon: The time required to exit the investment.

History

• SOURCE: Final Rulemaking published at 61 DCR 9181 (September 5, 2014); as amended by Final Rulemaking published at 63 DCR 11535 (September 16, 2016). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 2999

26-C30 STUDENT LOAN SERVICERS

26-C DCMR § 3000 SCOPE AND APPLICABILITY

3000.1 This chapter shall apply to any person or entity that operates as a student loan servicer in the District of Columbia (“District”).

History

• SOURCE: Final Rulemaking published at 65 DCR 8395 (August 10, 2018). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 3000

26-C DCMR § 3001 EXEMPTIONS

3001.1 This chapter shall not apply to any bank, trust company, loan company, savings bank, savings and loan association, credit union, or financial institution that accepts deposits and is incorporated or chartered under the laws of the District, the United States, or any state or territory of the United States.

3001.2 This chapter shall not apply to a public postsecondary educational institution or private non-profit postsecondary educational institution servicing a student loan it extended to a borrower.

History

• SOURCE: Final Rulemaking published at 65 DCR 8395 (August 10, 2018). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 3001

26-C DCMR § 3002 LICENSE APPLICATION CONTENT, FEES, AND QUALIFICATIONS

3002.1 A license application shall be filed on a form prescribed by the Commissioner, using the National Multistate Licensing System (“NMLS”).

3002.2 The application shall include at a minimum:

(a) Statements under oath that the applicant has never had an educational or student loan-related license, or other financial services related license, revoked by any governmental agency in any jurisdiction;

(b) Statements under oath that the applicant and each of its officers, directors, partners, and owners of a controlling interest have not been convicted of, or pled guilty or nolo contendere to, a felony in a domestic, foreign, or military court:

(1) During the seven (7) year period preceding the date of the application for licensure; or

(2) At any time preceding the date of application, if the felony involved an act of fraud, dishonesty, a breach of trust, or money laundering;

(c) Evidence of the applicant’s financial responsibility, character and general fitness that warrants a determination that the applicant will operate honestly, fairly, and efficiently within the purposes of the Act. For the purposes of this paragraph, an applicant shall not be found financially responsible if the applicant has:

(1) Current outstanding judgments; or

(2) Current outstanding tax liens or other government liens or filings.

(d) Evidence demonstrating that the applicant has met the applicable net worth and surety bond requirements pursuant to D.C. Official Code §§ 31-106.02(c)(1)(C) and (D), and §§ 3003 and 3004;

(e) Payment of applicable fees as described in § 3023 and any outstanding fees due to the Department or to the District, including compliance with the Clean Hands Before Receiving a License or Permit Act of 1996, effective May 11, 1996 (D.C. Law 11-118; D.C. Official Code §§ 47-2861 et seq.);

(f) The legal name, trade name, and business address of the applicant and, if the applicant is a partnership, association, company, or corporation, of every partner, member, officer, and director thereof;

(g) All names, including but not limited to, website domain names, under which the applicant will conduct business in the District;

(h) The complete name and address of the applicant’s registered agent and registered office for service of process in the District;

(i) Information to demonstrate the applicant’s current qualifications to service student education loans in the District;

(j) The general plan and description of the applicant’s business, including policies and procedures for receiving and processing consumer inquiries, complaints, and grievances promptly and fairly;

(k) The address of the applicant’s principal place of business and any branch or branch offices from which the applicant proposes to operate as a student loan servicer; and

(l) Other data, financial statements, and information as the Commissioner may require with respect to the applicant, its partners, members, officers, directors, trustees, or agents.

3002.3 The applicant shall label any confidential information submitted pursuant this section as “confidential information.” Confidential information shall be exempt from disclosure pursuant to the Freedom of Information Act of 1976, effective March 29, 1977 (D.C. Law 1-96; D.C. Official Code §§ 2-531 et seq.).

History

• SOURCE: Final Rulemaking published at 65 DCR 8395 (August 10, 2018). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 3002

26-C DCMR § 3003 FINANCIAL STATEMENTS AND NET WORTH REQUIREMENT

3003.1 An applicant for a student loan servicer license shall submit its audited financial statements for the immediately preceding three (3) years, or for the period the applicant has been in business if less than three (3) years. Financial statements shall be prepared in accordance with generally accepted accounting principles.

3003.2 The financial statements shall include:

(a) A balance sheet;

(b) An income statement;

(c) A statement of cash flows; and

(d) All relevant notes included with the documents listed in §§ 3003.2 (a) through (c).

3003.3 A student loan servicer shall demonstrate and continuously maintain a net worth of not less than two hundred fifty thousand dollars ($250,000).

History

• SOURCE: Final Rulemaking published at 65 DCR 8395 (August 10, 2018). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 3003

26-C DCMR § 3004 SURETY BOND REQUIREMENT

3004.1 An applicant for a student loan servicer license shall file a surety bond in a form prescribed by the Commissioner with each original application and any renewal application.

3004.2 The surety bond shall:

(a) Run to the Commissioner for the benefit of:

(1) The District and any person or entity who has been damaged by a licensee as a result of violating the Act, these regulations, or any order governing the activities of a student loan servicer as determined by the Commissioner; or

(2) The recovery of fines, fees, or expenses levied against a licensee pursuant to the Act;

(b) Be issued by an insurer authorized to do business in the District;

(c) Be conditioned upon the applicant:

(1) Complying with all District and federal laws regulating the activities of student loan servicers;

(2) Performing all written agreements with student loan borrowers; and

(3) Accounting for all funds received by the licensee in conformity with a standard system of accounting;

(d) Be continuously maintained thereafter for as long as any license issued under the Act and this chapter remains in force; and

(e) Be issued in the applicant’s legal name and include any trade names, if applicable.

3004.3 Each student loan servicer licensee shall maintain a continuous surety bond in the amount of fifty thousand dollars ($50,000) at all times as a condition of licensure.

3004.4 When an action is commenced on a licensee’s bond, the Commissioner may require the filing of a new bond pursuant to the requirements of this section.

3004.5 Immediately upon recovery or upon any action on the bond, the licensee shall file a new bond pursuant to the requirements of this section.

3004.6 Any person or entity who may be damaged by the noncompliance of a licensee with any condition of the bond may proceed on the bond against the principal or surety, or both, to recover damages.

3004.7 Regardless of the number of years the bond remains in effect, the number of premiums paid, the number of renewals of the license, or the number of claims made, the aggregate liability under each bond shall not exceed the penal sum of the bond.

History

• SOURCE: Final Rulemaking published at 65 DCR 8395 (August 10, 2018). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 3004

26-C DCMR § 3005 INCOMPLETE AND ABANDONED APPLICATIONS

3005.1 An application shall be deemed incomplete if it omits required information, documents, or material facts.

3005.2 If the Commissioner determines that an application is incomplete, the Commissioner shall notify the applicant of the deficiencies through the NMLS. The applicant shall correct a deficiency associated with an application within forty-five (45) days of being notified through the NMLS that the application is deficient.

3005.3 If the applicant fails to complete the application or respond to deficiencies within the forty-five (45) day period, the application will be considered abandoned.

3005.4 Abandonment of an application pursuant to this chapter shall not preclude the applicant from submitting a new application and appropriate fees for a license.

History

• SOURCE: Final Rulemaking published at 65 DCR 8395 (August 10, 2018). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 3005

26-C DCMR § 3006 WITHDRAWAL OF AN INITIAL APPLICATION

3006.1 An applicant may request withdrawal of an application and any fees prior to a determination on the application, by filing the request through the NMLS.

3006.2 No withdrawal shall be effective until accepted by the Commissioner.

History

• SOURCE: Final Rulemaking published at 65 DCR 8395 (August 10, 2018). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 3006

26-C DCMR § 3007 ISSUANCE AND TRANSFERABILITY OF A LICENSE

3007.1 The Commissioner shall approve an initial license application that meets the requirements of this chapter not later than sixty (60) days from the date the Commissioner determines that the application is complete.

3007.2 A licensee shall continuously maintain its license and qualifications to do business in the District for as long as the student loan servicer license is in effect.

3007.3 The Commissioner may restrict or impose conditions on any license in conjunction with a violation of the Act, these regulations, or any orders issued by the Commissioner.

3007.4 Licensees are under a continuing obligation to update information on file with the Commissioner. If any information filed with the Commissioner becomes inaccurate, the licensee shall within ten (10) business days submit to the Commissioner an amendment to its record that will correct the information on file with the Commissioner.

3007.5 A licensee shall not operate as a student loan servicer under any other name or at any other place of business other than that named in the license, unless the licensee has taken action pursuant to § 3007.4.

3007.6 A license shall remain in force until it has expired or has been surrendered, revoked, or suspended in accordance with the provisions of this chapter. The expiration, surrender, revocation, or suspension of a license shall not affect any pre-existing legal right or obligation of the licensee, including any civil or criminal liability of a licensee for acts committed before the license expired or was surrendered, revoked, or suspended.

3007.7 A license granted pursuant to this chapter shall not be transferable or assignable.

3007.8 Not more than one (1) place of business shall be maintained under the same license, but the Commissioner may issue more than one (1) license to the same student loan servicer licensee upon compliance with all applicable provisions of this chapter governing the original issuance of a license.

History

• SOURCE: Final Rulemaking published at 65 DCR 8395 (August 10, 2018). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 3007

26-C DCMR § 3008 INFORMATION CHALLENGE PROCESS

3008.1 A licensee may challenge information entered into the NMLS by the Commissioner. Any such challenge must be in writing and include the specific information being challenged and supporting information to evidence that the information being challenged is incorrect or invalid.

3008.2 The grounds for the challenge shall be limited to the factual accuracy of the information pertaining to the licensee’s own license record that the Commissioner has entered into the NMLS.

3008.3 A challenge pursuant to § 3008.1 shall be filed with the Commissioner within forty-five (45) business days from the date the information is entered into the NMLS.

3008.4 The Commissioner shall respond to the challenge within twenty-one (21) business days by:

(a) Granting the challenge and entering the requested change;

(b) Granting the challenge and allowing the licensee to submit information to be entered into the system; or

(c) Denying the challenge.

3008.5 Information submitted by a licensee pursuant to § 3008.4(b) shall be limited in scope to correcting factual errors identified by the licensee and submitted to the Commissioner pursuant to §§ 3008.1 and 3008.2.

History

• SOURCE: Final Rulemaking published at 65 DCR 8395 (August 10, 2018). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 3008

26-C DCMR § 3009 EXPIRATION AND RENEWAL OF LICENSE

3009.1 A student loan servicer license shall expire on December 31st of each year.

3009.2 In order to renew a license, a licensee shall:

(a) File a license renewal application with the NMLS on a form prescribed by the Commissioner at least thirty (30) days before the expiration date of the licensee’s current license;

(b) Pay the required fees prescribed in § 3023 and supply the Commissioner with any other required information; and

(c) Demonstrate that the licensee continues to meet the standards for licensure under the Act and this chapter.

History

• SOURCE: Final Rulemaking published at 65 DCR 8395 (August 10, 2018). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 3009

26-C DCMR § 3010 LICENSE REINSTATEMENT

3010.1 A renewal license application filed after the license expiration deadline set forth in § 3009.1 but before the last day of February of any year shall be subject to, and accompanied by, a reinstatement fee as prescribed in § 3023.

3010.2 A license that remains expired after the last day of February of any year, cannot be renewed.

History

• SOURCE: Final Rulemaking published at 65 DCR 8395 (August 10, 2018). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 3010

26-C DCMR § 3011 DENIAL OF APPLICATION

3011.1 The Commissioner shall approve or deny a license or renewal application not later than sixty (60) days from the date the Commissioner determines that the application is complete.

3011.2 If a license or renewal application is denied, the Commissioner shall notify the applicant and set forth reasons for the denial. The applicant may appeal the Commissioner’s decision in accordance with the District of Columbia Administrative Procedure Act, approved October 21, 1968 (82 Stat. 1203; D.C. Official Code §§ 2-501 et seq.).

History

• SOURCE: Final Rulemaking published at 65 DCR 8395 (August 10, 2018). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 3011

26-C DCMR § 3012 CHANGE OF LOCATION

3012.1 A licensee shall notify the Commissioner, in the form prescribed by the Commissioner, of a change of location of the business.

History

• SOURCE: Final Rulemaking published at 65 DCR 8395 (August 10, 2018). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 3012

26-C DCMR § 3013 SURRENDER OF LICENSE

3013.1 A licensee who intends to permanently cease operating as a student loan servicer during a license period shall file a request to surrender the license for each office at which the licensee intends to cease operations on a form prescribed by the Commissioner.

3013.2 The Commissioner may request the reason for the cessation of business in the District.

3013.3 No surrender shall be effective until approved by the Commissioner.

3013.4 The surrender of a license does not affect any legal right or obligation described in § 3007.6.

History

• SOURCE: Final Rulemaking published at 65 DCR 8395 (August 10, 2018). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 3013

26-C DCMR § 3014 ANNUAL REPORT AND REPORTING REQUIREMENTS

3014.1 A student loan servicer licensee shall, on or before January 30, submit an annual report for the preceding calendar year to the Commissioner in a form prescribed by the Commissioner.

3014.2 The annual report shall include the following information:

(a) The number of student education loans sold, assigned, or transferred during the preceding calendar year; and

(b) Any other relevant information related to business operations required by the Commissioner by bulletin or notice.

3014.3 A licensee that fails to file an annual report at the time prescribed by the Act, shall be assessed a late penalty of up to fifty dollars ($50) per day following the date the annual report is due until the annual report is filed with the Commissioner.

History

• SOURCE: Final Rulemaking published at 65 DCR 8395 (August 10, 2018). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 3014

26-C DCMR § 3015 ANNUAL ASSESSMENTS

3015.1 Beginning with the calendar year starting on January 1, 2017, each licensed student loan servicer who held a license during the calendar year shall be subject to an annual assessment fee as prescribed in § 3023. The Commissioner shall assess this fee at the end of each annual licensing period.

3015.2 The annual assessment fee shall be determined to be a variable amount based on the number of student loan borrowers serviced in the annual license period as prescribed in § 3023.

3015.3 The annual assessment fees for a licensee shall be invoiced through the NMLS and payment of the fees is due on or before November 15th of the calendar year following the licensing period.

3015.4 In the case of a licensee surrendering a license, the licensee shall pay any unpaid annual assessment for the preceding calendar year and an assessment for the current calendar year through date of surrender, which shall be due no later than thirty (30) days after receipt of a surrender request in the NMLS.

History

• SOURCE: Final Rulemaking published at 65 DCR 8395 (August 10, 2018). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 3015

26-C DCMR § 3016 NOTIFICATION OF SIGNIFICANT EVENTS BY LICENSEE

3016.1 A licensee shall notify the Commissioner, in writing, within ten (10) business days, of the occurrence of any of the following events:

(a) The filing for bankruptcy or reorganization by the licensee;

(b) The existence of any material fact or condition if that fact or condition:

(1) Has a significant negative impact on the licensee’s financial condition and ability to maintain the financial requirements prescribed in this chapter;

(2) Precludes the licensee from fulfilling its contractual obligations; or

(3) Prevents the licensee from operating in a manner consistent with the Act, these regulations, and in the best interests of District consumers;

(c) Settlement or resolution of any civil action or proceeding against the licensee involving fraud, misrepresentation, or wrongful taking of property;

(d) Receipt of notification of the initiation of any action against the licensee by the District of Columbia Office of the Attorney General or of any other state or federal agency, and the reasons therefor;

(e) Receipt of notification of license denial, cease and desist order, initiation of suspension or revocation proceedings, issuance of formal orders of suspension or revocation or other imposed disciplinary action, or other formal or informal regulatory action, from any state or federal agency against the licensee, and the reasons therefor; or

(f) A charge of or conviction of the licensee or a person who exercises control over a licensee of any criminal offense involving financial services or financial services related to the business; or any charge involving fraud, false statements or omissions, theft or wrongful taking of property, bribery, perjury, forgery, counterfeiting, or extortion.

History

• SOURCE: Final Rulemaking published at 65 DCR 8395 (August 10, 2018). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 3016

26-C DCMR § 3017 SPECIAL REPORTS

3017.1 The Commissioner may require a licensee to submit a report of a condition, which must be in the form and contain the information prescribed by the Commissioner by bulletin or notice.

History

• SOURCE: Final Rulemaking published at 65 DCR 8395 (August 10, 2018). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 3017

26-C DCMR § 3018 RECORD KEEPING

3018.1 Except to the extent prohibited by federal law, for each student education loan sold, assigned, transferred or serviced, a licensee shall retain records of each transaction for at least three (3) years after final payment is made on the student educational loan, or after the assignment or transfer of the student education loan, whichever first occurs.

3018.2 Each licensee shall make applicable books and records available to the Commissioner or send such records to the Commissioner by registered or certified mail, return receipt requested, or by any express delivery carrier that provides dated delivery receipt, no later than fifteen (15) business days after the Commissioner’s official request. Upon request, the Commissioner may grant a licensee additional time to make such books and records available.

3018.3 The records in §§ 3018.1 and 3018.2 shall not be subject to public disclosure under the Freedom of Information Act of 1976, effective March 29, 1977 (D.C. Law 1-96; D.C. Official Code §§ 2-531 et seq.).

3018.4 The Commissioner may waive or reduce requirements in this section if the Commissioner determines that compliance would require the licensee to violate federal law.

History

• SOURCE: Final Rulemaking published at 65 DCR 8395 (August 10, 2018). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 3018

26-C DCMR § 3019 SUSPENSION AND REVOCATION OF LICENSE

3019.1 The Commissioner may suspend or revoke a license issued under this chapter, or take any other action provided for in this chapter, if the Commissioner finds that:

(a) The licensee has violated materially any provision of this chapter or any regulation or order lawfully made pursuant to and within the authority of this chapter, or failed to correct any non-material violation within the period prescribed by the Commissioner;

(b) Any fact or condition exists which, if it had existed at the time of the original application for the license, would have warranted a denial of the license; or

(c) The licensee refuses to permit the Commissioner to make an examination or investigation authorized under this chapter.

History

• SOURCE: Final Rulemaking published at 65 DCR 8395 (August 10, 2018). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 3019

26-C DCMR § 3020 ORDER OF REVOCATION AND NOTICE OF SUSPENSION

3020.1 An order issued pursuant to D.C. Official Code § 31-106.02(h)(2) shall include:

(a) The date the order was entered;

(b) The basis for the proposed action;

(c) The date by which the person or entity must file a written request for reconsideration; and

(d) The date by which the Commissioner shall consider the order to be final.

3020.2 A notice of suspension under D.C. Official Code § 31-106.02(i) shall include:

(a) The date the notice was issued;

(b) A statement determining that suspension is in the public interest;

(c) The grounds for the suspension;

(d) The date by which the person or entity must file a written request for a hearing; and

(e) Notice that the failure of the person or entity to file a written request for a hearing with the Commissioner within the specified time period shall constitute a waiver of a hearing.

3020.3 Unless otherwise required by the Act, a final order, temporary order, or any other type of enforcement action taken by the Commissioner shall be issued or conducted in accordance with D.C. Official Code §§ 31-106.02(h) and (i).

3020.4 The Commissioner may make public a final order, temporary order, or any other type of enforcement action taken by the Commissioner.

3020.5 All hearings held pursuant to this section shall be conducted pursuant to the Rules of Practice and Procedure for Hearings set out in Chapter 38 of Title 26-A of the District of Columbia Municipal Regulations.

3020.6 Any order issued by the Commissioner pursuant to D.C. Official Code § 31-106.02(h) shall remain in full force and effect until and unless later modified or vacated by the Commissioner.

History

• SOURCE: Final Rulemaking published at 65 DCR 8395 (August 10, 2018). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 3020

26-C DCMR § 3021 EXAMINATIONS AND INVESTIGATIONS

3021.1 The Commissioner shall examine the affairs, business premises, and records of each licensee at least once every three (3) years and at any other time the Commissioner considers necessary. The Commissioner may require the licensee to provide any information the Commissioner determines is necessary for a complete examination, including policies and procedures, consumer complaints, financial statements, and any other reasonable information.

3021.2 The Commissioner, on the basis of a written complaint or on his or her own initiative, may conduct an investigation into the transactions, business, and records of any licensee or unlicensed person or entity who the Commissioner has reason to believe is engaging in any business subject to the Act or this chapter.

3021.3 The investigation by the Commissioner, or the Commissioner’s designee, under this section may include an examination. Examinations may be conducted in conjunction with examinations to be performed by representatives of federal or state governmental agencies.

3021.4 The Commissioner may, at his or her discretion, consider reports prepared by other federal or state agencies in conducting his or her own examination or investigation.

3021.5 To defray the costs of a special examination or investigation of a licensee, the licensee shall be subject to an examination/investigation fee as prescribed in § 3023.

3021.6 The Commissioner may examine a licensee located outside the District of Columbia and charge the licensee the fee prescribed in § 3023. When it becomes necessary to examine or investigate the affairs, books, and records of a licensee required to be licensed under this chapter at a location outside the Washington, D.C. metropolitan region, the licensee shall pay the Commissioner the actual travel costs incurred on account of its examination or investigation and a reasonable per diem rate approved by the Commissioner within thirty (30) days after the conclusion of the examination or investigation.

History

• SOURCE: Final Rulemaking published at 65 DCR 8395 (August 10, 2018). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 3021

26-C DCMR § 3022 COMPLAINTS

3022.1 A complaint against a licensee shall be filed with the Commissioner, on a form prescribed by the Commissioner, and in accordance with the procedures or processes prescribed by the Commissioner by bulletin or notice.

3022.2 The Commissioner may provide information on consumer complaints to other state and federal regulatory agencies, using the NMLS or another information management system, provided that the other state and federal regulatory agencies have agreed to maintain and protect all confidential consumer information.

History

• SOURCE: Final Rulemaking published at 65 DCR 8395 (August 10, 2018). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 3022

26-C DCMR § 3023 LICENSING FEES

3023.1 The following Student Loan Servicer Licensing Fees shall be applicable to an applicant or a licensee.

Student Loan Servicer License

Fees

DISB Initial Application Fee

$1,100 + NMLS Fee

DISB Renewal Application Fee

$900 + NMLS Fee

DISB Amendment Fee

$100

DISB Reinstatement Fee

$900

DISB Annual Assessment Fee

$.50 per borrower

DISB Examination Fee

$400 per examiner day

History

• SOURCE: Final Rulemaking published at 65 DCR 8395 (August 10, 2018). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 3023

26-C DCMR § 3099 DEFINITIONS

3099.1 For the purpose of this chapter, the following terms have the meaning ascribed:

Act – The Department of Securities Regulation Establishment Act of 1996, effective May 21, 1997 (D.C. Law 11-268; D.C. Official Code §§ 31-101 et seq.), as amended by the Student Loan Ombudsman Establishment and Servicing Regulation Amendment Act of 2016, effective February 18, 2017 (D.C. Law 21-214; D.C. Official Code §§ 31-106.01-.03).

Applicant - a person or entity filing an initial or renewal application for licensure under this chapter.

Application – an initial or renewal application for licensure under this chapter processed as required by the Commissioner, through the Department, the NMLS, or any other third-party processor prescribed by the Commissioner.

Branch – an office or location of a student loan servicer that is separate and distinct from the student loan servicer’s principal office and from which it operates as a student loan servicer.

Commissioner - the Commissioner of the Department of Insurance, Securities and Banking.

Department - the Department of Insurance, Securities and Banking.

Licensee – any person or entity duly licensed by the Commissioner pursuant to this chapter.

Material – including the term “materially”, means relevant, significant or important.

Owner of a controlling interest – any person or entity (1) that, directly or indirectly, has the right to vote ten percent (10%) or more of a class of a voting security or has the power to sell or direct the sale of ten percent (10%) or more or a class of voting securities (in the case of a partnership, a person or entity that has the right to receive upon dissolution or has contributed ten percent (10%) or more of the capital); or (2) who, regardless of title, directly or indirectly, exercises control over, or has the power to direct, the management or policies of an applicant or licensee. This includes members of the board of directors (including non-employee directors), general partners, executive officers and individuals occupying similar positions.

Student Education Loan – a loan obtained for personal use to finance education or other school-related expenses.

Student Loan Borrower – a resident of the District of Columbia who has received or agreed to pay a student education loan, or a person who shares legal responsibility with such a resident for the repayment of a student education loan.

Student Loan Servicer - a person or entity, whether located within or outside the District, responsible for the servicing of a District student education loan of a student loan borrower.

Nationwide Multistate Licensing System and Registry (“NMLS”) - the licensing system developed and maintained by the Conference of State Banking Supervisors and the American Association of Residential Mortgage Regulators, or their successors for the licensing and registration of persons engaged in the state-regulated financial service industries.

Washington, D.C. metropolitan region – means the District of Columbia, the counties of Montgomery and Prince Georges in the State of Maryland, the counties of Arlington and Fairfax, and the cities of Alexandria and Falls Church in the Commonwealth of Virginia.

History

• SOURCE: Final Rulemaking published at 65 DCR 8395 (August 10, 2018). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 3099

26-C31 APPRAISAL MANAGEMENT COMPANIES

26-C DCMR § 3100 PURPOSE

The purpose of these rules shall be as follows:

To provide for the registration and regulation of appraisal management companies doing business in the District of Columbia pursuant to Section 102(a) the Appraisal Management Company Regulation Emergency Act of 2019 (“the Act”) and Section 1124 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010; and

To establish guidelines in order to ensure that all appraisal management companies subject to the Commissioner’s authority provide services consistent with the standards and requirements applicable under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, approved July 21, 2010.

History

• SOURCE: Final Rulemaking published at 68 DCR 5678 (May 28, 2021). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 3100

26-C DCMR § 3101 SCOPE

3101.1 This chapter shall apply to any person or entity that acts as an appraisal management company (AMC) as defined in Section 101(4) of the Act regardless of the title used to describe the person or entity.

History

• SOURCE: Final Rulemaking published at 68 DCR 5678 (May 28, 2021). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 3101

26-C DCMR § 3102 REGISTRATION REQUIREMENT; APPLICATION CONTENT AND AMC QUALIFICATIONS

3102.1 No person or entity shall directly or indirectly engage or attempt to engage in business as an appraisal management company in the District of Columbia (“District”), or perform or attempt to perform appraisal management services in the District without first obtaining a registration from the Commissioner.

3102.2 To register, an AMC shall file with the Department of Insurance, Securities and Banking (“Department”) a registration application on a form prescribed by the Commissioner that includes all information required under the Act, and the following:

The application fee set forth in Section 3109 of this rulemaking;

All trade names and fictitious names used by the AMC;

Identification of whether the AMC is a single state or multistate AMC;

A designated controlling person that will be the principal point of contact for all communication between the AMC and the Department;

(e) A Certificate of Clean Hands from the District of Columbia Office of Tax and Revenue pursuant to D.C. Official Code §§ 47-2861-2866;

A Certificate of Good Standing or a Certificate of Registration from the District of Columbia Department of Consumer and Regulatory Affairs pursuant to D.C. Official Code § 29-102.08;

(g) A signed biographical affidavit from each person that owns ten percent (10%) or more of the AMC;

(h) Consent to service of process and identification of a registered agent for service of process in the District;

A certification that the AMC has systems in place to comply with the

requirements of the Act;

(j) A completed taxpayer status affidavit; and

The names and addresses of the independent fee appraisers on the AMC’s appraisal panel that performed an appraisal for the AMC in connection with a covered transaction in the District during the previous year due no later than September 1st of a given year.

3102.3 An AMC that fails to file by the deadline in Subsection 3102.2(k) shall be subject to the covered transaction report late fee in Section 3109. The Department also may refuse to renew the registration.

3102.4 An applicant shall notify the Department of any confidential information submitted pursuant to this section. Confidential information shall be exempt from disclosure pursuant to the Freedom of Information Act of 1976, effective March 25, 1977 (D.C. Law 1-96; D.C. Official Code § 2-531 et seq.).

History

• SOURCE: Final Rulemaking published at 68 DCR 5678 (May 28, 2021). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 3102

26-C DCMR § 3103 ISSUANCE AND TRANSFERABILITY OF A REGISTRATION

3103.1 The registration of an AMC shall remain in force until it has expired or has been surrendered, revoked, or suspended in accordance with the provisions of the Act and this chapter. The surrender, revocation, or suspension of a registration shall not affect any existing legal right or obligation of the registrant, including any civil or criminal liability for acts committed before the registration was surrendered, revoked, or suspended.

3103.2 A registration approved pursuant to this chapter shall not be transferable or assignable.

History

• SOURCE: Final Rulemaking published at 68 DCR 5678 (May 28, 2021). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 3103

26-C DCMR § 3104 EXPIRATION AND RENEWAL OF REGISTRATION

3104.1 The registration of an AMC shall expire on December 31st of each year, except for AMCs that obtain a registration during the Department’s initial AMC registration period, which shall expire December 31, 2020.

3104.2 To renew a registration, a registrant shall:

(a) File a registration renewal application on a form prescribed by the Commissioner beginning on November 1st but no later than December 31st; and

(b) Pay the required renewal fee and provide the Commissioner with any other required information.

3104.3 An AMC that fails to renew its registration before December 31st shall have sixty (60) days from the date of expiration to reinstate its registration, upon payment of the renewal fee and any reinstatement fee. A registration that is not reinstated before such date shall be cancelled. An AMC whose registration has been cancelled shall apply for a new registration to act as an AMC and conduct business in the District.

History

• SOURCE: Final Rulemaking published at 68 DCR 5678 (May 28, 2021). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 3104

26-C DCMR § 3105 SUSPENSION AND REVOCATION OF REGISTRATION

3105.1 The Commissioner may suspend or revoke a registration issued under this chapter, or take any other action provided for in this chapter, if the

Commissioner finds, after a hearing, that the provider has:

(a) Violated any provision of the Act, this chapter or any order lawfully issued by the Commissioner;

(b) Made a material misstatement in an initial or renewal application;

Engaged in fraudulent or dishonest practices;

Demonstrates incompetency or untrustworthiness; or

(e) The registered AMC refuses to permit the Commissioner to make an examination or investigation authorized under the Act or this chapter.

3105.2 Hearings under this chapter shall be conducted pursuant to 26-C DCMR § 404.

History

• SOURCE: Final Rulemaking published at 68 DCR 5678 (May 28, 2021). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 3105

26-C DCMR § 3106 RECORD KEEPING

3106.1 All registered AMCs shall make available their books and records to the

Commissioner for examination no later than fifteen (15) business days after a written request has been made. The Commissioner may grant a registered AMC additional time if necessary.

3106.2 An AMC shall ensure that a detailed record is maintained of each service request that the AMC receives for appraisals of real property located in the District.

3106.3 An AMC shall retain all records required under the Act and these regulations for the period expiring later between:

(a) No less than five (5) years after submission of the file to the AMC; or

(b) No less than two (2) years after final disposition of any related judicial proceeding of which the AMC is provided notice.

History

• SOURCE: Final Rulemaking published at 68 DCR 5678 (May 28, 2021). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 3106

26-C DCMR § 3107 COMPLAINTS

3107.1 Any complaint against an AMC shall be filed with the Department on a form prescribed by the Commissioner.

3107.2 The Commissioner may provide information on consumer complaints to other state and federal regulatory agencies, provided that the other state and federal regulatory agencies have agreed to maintain and protect all confidential consumer information.

History

• SOURCE: Final Rulemaking published at 68 DCR 5678 (May 28, 2021). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 3107

26-C DCMR § 3108 SPECIFIC PROVISIONS FOR FEDERALLY REGULATED APPRAISAL MANAGEMENT COMPANIES

3108.1 A federally regulated AMC, as defined in Section 101(17) of the Act, operating in the District shall provide the Department with information required to be submitted to the Appraisal Subcommittee, pursuant to the Subcommittee’s policies regarding the determination of the AMC National Registry Fee.

3108.2 Reporting requirements pursuant to § 3108.1 shall include:

(a) A report to the Commissioner of the federally regulated AMC’s intent to operate in the District; and

(b) Information regarding whether the federally regulated AMC is owned, in whole or in part, directly or indirectly, by a person who has had an appraiser license or certificate refused, denied, canceled, surrendered in lieu of revocation, or revoked in the District or any state for a substantive cause as determined by the Appraisal Subcommittee, and whether the license or certificate has been reinstated.

History

• SOURCE: Final Rulemaking published at 68 DCR 5678 (May 28, 2021). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 3108

26-C DCMR § 3109 REGISTRATION FEES

3109.1 The following AMC registration fees shall be applicable to an applicant or a registered AMC.

AMC Registration Category

Fees

DISB Initial Application Fee

$1,000 + NMLS Fee

DISB Renewal Application Fee

$1,000 + NMLS Fee

DISB Reinstatement Fee

$400 + Renewal Application Fee

DISB Covered Transaction Report Late Fee

$500

AMC Federal Registry Fee

For AMCs in existence for more than 1 year

$25 multiplied by the number of appraisers who have performed an appraisal for the AMC in connection with a covered transaction in the District during the previous year.

For AMCs in existence for less than 1 year

$25 multiplied by the number of appraisers who have performed an appraisal for the AMC in connection with a covered transaction in the District since the AMC commenced doing business.

DISB Examination Fee

$400 per examiner per day

3109.2 The Department shall collect the AMC Federal Registry Fee and transmit it to the Federal Registry in accordance with 12 C.F.R. § 1102.403.

History

• SOURCE: Final Rulemaking published at 68 DCR 5678 (May 28, 2021). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 3109

26-C DCMR § 3199 DEFINITIONS

3199.1 For the purpose of this chapter, the following terms have the meaning ascribed:

AMC – an appraisal management company as defined by Section 101(4) of the Act.

Applicant - a person or entity filing an initial application for registration under this chapter.

Application - an initial or renewal application for registration as an appraisal management company in the District.

Commissioner - the Commissioner of the Department of Insurance, Securities and Banking.

Previous year – the interval period between July 1st and June 30th.

History

• SOURCE: Final Rulemaking published at 68 DCR 5678 (May 28, 2021). District of Columbia Municipal Regulations Banking and Financial Institutions 26-C DCMR § 3199

26-D HEALTH BENEFIT EXCHANGE

26-D1 HEALTH CARRIER ASSESSMENT

26-D DCMR § 110 HEALTH CARRIER ASSESSMENT GENERAL PROVISIONS

110.1 Pursuant to Section 4(f) of the Act (D.C. Official Code § 31-3171.03(f)), the Health Benefit Exchange Authority (HBX) shall annually assess each health carrier defined in Section 2(6) of the Act (D.C. Official Code § 31-3171.01(6)).

110.2 For purposes of this chapter and under D.C. Official Code § 31-3171.01(6), an accident and sickness insurance company includes companies offering certain insurance products, including but not limited to:

Major medical; and

Excepted benefits as set forth in 45 C.F.R. § 146.145 and 45 C.F.R. § 148.220 unless otherwise specified in Subsection 110.3.

110.3 For purposes of this chapter and under D.C. Official Code § 31-3171.01(3A), health insurance carrier risks do not include each of the following:

Coverage for on-site medical clinics;

Coverage issued as a supplement to liability insurance;

Credit-only insurance (including mortgage insurance);

Federal Employees Dental and Vision Insurance Program, as set forth at 5 C.F.R. §§ 894.101 et seq.;

Federal Employees Health Benefits Program, as set forth at 5 C.F.R §§ 890.101 et seq.;

Fraternal benefit societies, as set forth in Section 1202 of the Fraternal Benefit Societies Act of 1998, effective April 29, 1998 (D.C. Law 12-86; D.C. Official Code § 31-5301);

Liability insurance, including general liability and auto liability insurance;

Medicare Part D, as set forth at 42 U.S.C. §§ 1395w-101 et seq.;

Stop-loss insurance; and

Workers’ compensation or similar insurance.

History

• SOURCE: Final Rulemaking published at 63 DCR 9668 (July 22, 2016). District of Columbia Municipal Regulations Health Benefit Exchange 26-D DCMR § 110

26-D DCMR § 120 HEALTH CARRIER ASSESSMENT ADMINISTRATIVE APPEAL

120.1 An entity assessed pursuant to D.C. Official Code § 31-3171.03(f) may file a request for reconsideration under this section to contest the assessment in the Notice of Assessment. An entity may request reconsideration of its classification under section 2(6) of the Act (D.C. Official Code § 31-3171.01(6)), a processing error, the incorrect application of relevant methodology, mathematical error with respect to the assessment, or the amount of the assessment.

120.2 An entity must file a request for reconsideration within forty-five (45) calendar days after the date of the Notice of Assessment. Submission of a request for reconsideration does not toll the due date for submitting payment of the assessment.

120.3 A contesting entity must specify the basis for the reconsideration in the request, as specified in Subsection 120.1. Such entity may provide, only at the time the reconsideration is requested or to rebut additional information provided to the entity by the Executive Director of the Authority or his or her designee consistent with Subsection 120.4, additional documentation supporting the request for reconsideration by the Authority. An entity may not submit documentation or data that was previously submitted to the Department of Insurance, Securities and Banking, but may provide evidence of timely submission.

120.4 The Executive Director of the Authority or his or her designee will review evidence and findings upon which the assessment was based and any additional documentation provided by the contesting entity. The Executive Director or designee may review any additional information believed to be relevant to the request for reconsideration. The Executive Director or designee will provide any additional information used in the review to the contesting entity and provide such entity with a reasonable time to review and rebut the additional information. The contesting entity must prove its case by a preponderance of the evidence with respect to the issues of fact.

120.5 The Executive Director or designee will inform the contesting entity of their decision in writing within forty-five (45) calendar days of receipt of the request for reconsideration. The Executive Director’s or designee’s decision on the request for reconsideration is final and binding. Nothing in this section limits a contesting entity’s right to judicial review.

History

• SOURCE: Final Rulemaking published at 63 DCR 9668 (July 22, 2016). District of Columbia Municipal Regulations Health Benefit Exchange 26-D DCMR § 120

26-D2 AFFORDABILITY AND HARDSHIP EXEMPTIONS

26-D DCMR § 200 GENERAL

200.1 This chapter shall apply with respect to taxable years commencing after December 31, 2018.

200.2 The purpose of this chapter is to establish the procedures and criteria for District residents to apply for and be determined eligible for an exemption prospectively or retrospectively from the requirement to maintain minimum essential coverage as described in D.C. Official Code § 47-5102.

200.3 District residents may apply for:

(a) An affordability or hardship exemption for the current tax year;

(b) An affordability or hardship exemption for a prior tax year, up to three (3) years prior to the year of application; or

(c) An affordability or hardship exemption for the next tax year, if the application is submitted in the months of October, November, or December preceding the tax year for which an affordability or hardship exemption is sought.

200.4 An individual is eligible for an exemption for any month for which the Authority determines that the individual meets the requirements for an affordability or hardship exemption described in this chapter for at least one (1) day of the month.

200.5 The Authority shall issue an exemption determination certificate to an individual granted an exemption. The certificate shall have a unique exemption determination certificate number.

200.6 If an individual receives an exemption based on hardship and the information used to make the determination changes prior to the termination of the exemption, the individual shall report the new information to the Authority.

(a) An individual shall report a change in circumstances, within thirty (30) days of the change occurring, via any method listed as a permissible method for submitting an application in § 230.3.

(b) The Authority shall verify reported changes in accordance with § 240 and shall notify the individual of any redetermination in eligibility.

200.7 The Authority shall implement a change resulting from a redetermination under this section for the month or months after the month in which the redetermination occurs, such that an original exemption determination certificate remains effective for the month in which the redetermination occurs, the month following the month that the redetermination occurs, and for prior months.

History

• SOURCE: Final Rulemaking published at 67 DCR 1234 (February 7, 2020). District of Columbia Municipal Regulations Health Benefit Exchange 26-D DCMR § 200

26-D DCMR § 201 AFFORDABILITY EXEMPTIONS

201.1 An individual is an exempt individual for a month that includes a day with respect to which the individual lacks affordable coverage. For purposes of this section, an individual lacks affordable coverage in a month if the individual's required contribution (determined on an annual basis) for minimum essential coverage for the month exceeds the required contribution percentage of the individual's household income.

201.2 An individual’s required contribution percentage shall be determined as follows:

(a) The required contribution percentage for tax year 2019 is eight and three tenths percent (8.3%).

(b) For tax years after 2019, the required contribution percentage shall be equal to the amount under 26 USC § 5000A(a)(1).

(c) The Authority shall annually publish on its website the required contribution percentage before September 30 of the applicable tax year.

201.3 Affordability exemption determinations for individuals or related individuals who are eligible for coverage through a plan offered by an employer shall be determined as follows:

(a) An individual’s eligibility for coverage through an employer-sponsored plan shall be determined as follows:

(1) Except as provided in paragraph (a)(2), an employee or related individual shall be treated as eligible for coverage under an employer-sponsored plan for a month during a plan year if the employee could have enrolled in the plan for any day in that month during an open or special enrollment period, regardless of whether the employee or related individual is eligible for any other type of minimum essential coverage. An employer-sponsored plan shall only be considered eligible if it meets the minimum value standard described in 42 CFR § 156.145.

(2) An employee eligible for coverage both under an eligible employer-sponsored plan offered by their own employer’s plan and as a related individual on another eligible employer-sponsored plan (for example, an eligible employer-sponsored plan offered by the employer of the employee's spouse) for any month, shall be treated only as eligible under their own employer’s plan and not as an eligible related individual for that month.

(3) A former employee or an individual related to a former employee, who may enroll in continuation coverage required under federal law or a District or state law that provides comparable continuation coverage, or in retiree coverage under an eligible employer-sponsored plan, shall be treated as eligible for coverage under an eligible employer-sponsored plan only if the individual enrolls in the coverage.

(b) The required contribution for individuals eligible for employer-sponsored coverage shall be as follows:

(1) Annual Enrollment

(A) For employees eligible for enrollment in an employer-sponsored plan, the required contribution shall be the portion of the annual premium that the employee would pay, whether through salary reduction or otherwise, for the lowest cost self-only coverage.

(B) For related individuals who are eligible for coverage under an eligible employer-sponsored plan because of a relationship to an employee, and for whom a personal exemption deduction under § 151 of the Internal Revenue Code is claimed, or considered under this paragraph to have been claimed, on the employee's Federal income tax return, the required contribution shall be the portion of the annual premium that the employee would pay, whether through salary reduction or otherwise, for the lowest cost family coverage that would cover the employee and all related individuals who are included in the employee's nonexempt family but not an exempt individual under 9 DCMR § 3903.

(i) An employee shall be considered to have claimed a personal exemption deduction for himself or herself for a taxable year if the employee files an income tax return for the year and does not qualify as a dependent of another taxpayer under § 152 of the Internal Revenue Code for the year; or

(ii) A employee shall be considered to have claimed a personal exemption deduction for an individual other than the employee if the employee is allowed a personal exemption deduction for the employee (taking into account § 151(d)(5)(B) of the Internal Revenue Code) and lists the individual’s name and Tax Identification Number on Form 1040, U.S. Individual Income Tax Return, or Form 1040NR, U.S. Nonresident Alien Income Tax Return, the taxpayer files for the year.

(2) Partial Year Enrollment

(A) The affordability of an employer-sponsored plan shall be determined separately for each employment period that is less than a full calendar year or for the portions of a year that fall in different taxable years of the individual.

(B) Coverage under an eligible employer-sponsored plan shall be considered affordable for a part-year period if the annualized required contribution for self-only coverage (in the case of the employee) or family coverage (in the case of a related individual) under the plan for the part-year period does not exceed the required contribution percentage of the individual's household income for the taxable year.

(C) The annualized required contribution shall be the required contribution determined under paragraph (b) for the part-year period times a fraction, the numerator of which is twelve (12) and the denominator of which is the number of months in the part-year period during the individual's taxable year. Only full calendar months are included in the computation under this paragraph.

(3) Employer Contributions to Health Reimbursement Arrangements

(A) Amounts newly made available for the current plan year under a health reimbursement arrangement that an employee may use to pay premiums, or cost-sharing or benefits not covered by the primary plan in addition to premiums, shall be counted toward the employee's required contribution if the health reimbursement arrangement would be integrated, as that term is used in Internal Revenue Service Notice 2013-54 (2013-40 IRB 287), with an eligible employer-sponsored plan for an employee enrolled in the plan.

(B) The eligible employer-sponsored plan and the health reimbursement arrangement must be offered by the same employer.

(C) Employer contributions to a health reimbursement arrangement shall count toward an employee's required contribution only to the extent the amount of the annual contribution is required under the terms of the plan or otherwise determinable within a reasonable time before the employee must decide whether to enroll in the eligible employer-sponsored plan.

(4) Employer Contributions to Cafeteria Plans

Amounts made available for the current plan year under a cafeteria plan, within the meaning of Internal Revenue Code § 125, are counted as reducing an employee's or a related individual's required contribution if:

(A) The employee may not opt to receive the amount as a taxable benefit;

(B) The employee may use the amount to pay for minimum essential coverage; and

(C) The employee may use the amount exclusively to pay for medical care, within the meaning of Internal Revenue Code § 213.

(5) Wellness Program Incentives

(A) Nondiscriminatory wellness program incentives, within the meaning of 26 CFR § 54.9802-1(f), offered by an eligible employer-sponsored plan that affect premiums shall be treated as earned in determining an employee's required contribution for purposes of affordability of an eligible employer-sponsored plan to the extent the incentives relate exclusively to tobacco use.

(B) Wellness program incentives that do not relate to tobacco use or that include a component unrelated to tobacco use shall be treated as not earned for this purpose. For the purposes of this section, the term wellness program incentive has the same meaning as the term reward in 26 CFR § 54.9802-1(f)(1)(i).

201.4 Affordability exemption eligibility for individuals or related individuals who are not eligible for coverage through a plan offered by an employer shall be determined as follows.

(a) The required contribution shall be the annual premium for the applicable qualified health plan, reduced by the maximum amount of any credit allowable under Internal Revenue Code § 36B for the taxable year, determined as if the individual was covered for the entire taxable year by a qualified health plan offered through the Exchange established pursuant to D.C. Official Code § 31–3171.04(a)(1).

(b) For each individual who applies for an exemption for a period of less than twelve (12) months, eligibility shall be determined separately for each period. Coverage under a plan shall be considered affordable for a part-year period if the annualized required contribution for coverage under the plan for the part-year period does not exceed the required contribution percentage of the individual's household income for the taxable year.

(c) The annualized required contribution shall be the required contribution determined under paragraph (a) for the part-year period times a fraction, the numerator of which is twelve (12) and the denominator of which is the number of months in the part-year period during the individual's taxable year. Only full calendar months are included in the computation under this paragraph.

History

• SOURCE: Final Rulemaking published at 67 DCR 1234 (February 7, 2020). District of Columbia Municipal Regulations Health Benefit Exchange 26-D DCMR § 201

26-D DCMR § 202 HARDSHIP EXEMPTIONS

202.1 An individual shall be exempt from the District shared responsibility payment for a month in which the Authority determines that individual has suffered a hardship with respect to the ability to obtain coverage under a qualified health plan.

202.2 The Authority shall grant a hardship exemption if it determines any of the following based on the information submitted on the hardship application published by the Authority:

(a) The applicant has experienced financial or domestic circumstances, including an unexpected natural or human-caused event, resulting in a significant, unexpected increase in essential expenses that prevented the applicant from obtaining coverage under a qualified health plan;

(b) The expense of purchasing a qualified health plan would have caused the applicant to experience serious deprivation of food, shelter, clothing or other necessities; or

(c) Another circumstance prevented the applicant from obtaining coverage under a qualified health plan.

202.3 Each hardship exemption shall be granted for at least the month before, the month or months during, and the month after a specific event or circumstances that qualified the individual for the exemption. A single approval shall not span more than one taxable year. Instead, an individual may submit separate applications for separate taxable years pursuant to § 230.2.

History

• SOURCE: Final Rulemaking published at 67 DCR 1234 (February 7, 2020). District of Columbia Municipal Regulations Health Benefit Exchange 26-D DCMR § 202

26-D DCMR § 203 APPLICATION PROCESS

203.1 Individuals shall apply for an affordability or hardship exemption using the designated applications published by the Authority.

203.2 The individual shall submit a separate application for each taxable year for which the individual is seeking an exemption.

203.3 The application shall be filed through one of the following methods:

(a) By electronic mail, using the procedure described on the application.

(b) By mail, to the address listed on the application.

(c) Another method described on the application.

203.4 Individuals shall adhere to all instructions contained in the application. This includes:

(a) Submitting all documents required for each hardship category;

(b) Signing the application, attesting that that the answers and documents provided are an accurate representation of the information that should be used to determine their eligibility for an exemption; and

(c) For individuals applying for an affordability exemption, accurately completing an Insurance Affordability Program application through the online platform maintained by the Authority.

203.5 If an individual submits an application that does not include sufficient information for the Authority to conduct an eligibility determination for an affordability or hardship exemption:

(a) The Authority shall send a notice to the applicant indicating that information necessary to complete an eligibility determination is missing, specifying the missing information, and providing instructions on how to provide the missing information.

(b) The notice shall provide the applicant with a period of no less than thirty (30) and no more than ninety (90) days, in the sole discretion of the Authority, from the date the notice is sent to the applicant to provide the information needed to complete the application. During this time, the Authority shall not proceed with the applicant's eligibility determination.

(c) If the Exchange does not receive the requested information within the time allotted in paragraph (b), the Authority shall send a notice to the applicant denying the application. That notice shall inform the applicant of the right to appeal pursuant to § 260.

History

• SOURCE: Final Rulemaking published at 67 DCR 1234 (February 7, 2020). District of Columbia Municipal Regulations Health Benefit Exchange 26-D DCMR § 203

26-D DCMR § 204 ELIGIBILITY VERIFICATION

204.1 The Authority shall use the information attested to by the individual on the application, documents provided by the individual, and other information known to the Authority to determine the individual’s eligibility for an exemption.

204.2 The Authority shall review income documentation using the procedures related to eligibility for advance payments of the premium tax credit, as specified in 45 CFR, Part 155, Subpart D, except that:

(a) The Authority shall accept an individual’s attestation on the application regarding eligibility for minimum essential coverage other than through an eligible employer-sponsored plan, instead of following the procedures specified in 45 CFR § 155.320(b);

(b) The Authority shall use federal and local electronic data sources together with other information provided by the applicant and other information in the records of the Authority to verify income information. This information shall be considered reasonably compatible with an applicant's attestation if any difference or discrepancy does not impact the eligibility of the applicant for the exemption or exemptions for which he or she applied; and

(c) If information the Authority obtains is not reasonably compatible with the information on the application, the Authority shall send the individual a notice following the procedure outlined in § 230.5. If documentation needed to resolve the inconsistency does not exist or is not reasonably available to the applicant, and the Authority is unable to otherwise resolve the inconsistency, the Authority on a case-by-case basis may accept an applicant’s attestation to the information which cannot otherwise be verified along with an explanation of circumstances as to why the applicant does not have the documentation.

History

• SOURCE: Final Rulemaking published at 67 DCR 1234 (February 7, 2020). District of Columbia Municipal Regulations Health Benefit Exchange 26-D DCMR § 204

26-D DCMR § 205 REPORTING

205.1 If the Authority grants an exemption determination certificate in accordance with this chapter, the Authority shall periodically transmit to the Chief Financial Officer:

(a) The individual's name, Social Security number or Tax Identification Number and exemption determination certificate number; and

(b) Other information based on consultation between the Authority and the Chief Financial Officer.

History

• SOURCE: Final Rulemaking published at 67 DCR 1234 (February 7, 2020). District of Columbia Municipal Regulations Health Benefit Exchange 26-D DCMR § 205

26-D DCMR § 206 APPEALS

206.1 All eligibility determinations or redeterminations under this chapter shall include notice of the right to appeal and instructions regarding how to file an appeal.

206.2 An individual has the right to appeal an eligibility determination for an exemption made in accordance with this chapter, including:

Initial eligibility determinations;

Redeterminations based on reported changes under § 200.6; and

In the case of a hardship exemption approval, the duration of the approval under § 220.3.

206.3 An appeal of an eligibility determination for an exemption under this section shall be treated as other exchange eligibility determination appeals pursuant to 45 CFR, Part 155, Subpart F, except that the decision of the exchange appeals entity may not be further appealed under 45 CFR § 155.520(c).

History

• SOURCE: Final Rulemaking published at 67 DCR 1234 (February 7, 2020). District of Columbia Municipal Regulations Health Benefit Exchange 26-D DCMR § 206

26-D99 DEFINITIONS

26-D DCMR § 9900 DEFINITIONS

9900.1 When used in this chapter, the following terms shall have the meanings ascribed:

“Authority” means the District of Columbia Health Benefit Exchange Authority established pursuant to Section 3 of the Act (D.C. Official Code § 31-3171.02).

“Health carrier” has the same meaning as provided in Section 2(6) of the Act (D.C. Official Code § 31-3171.01(6)).

History

• SOURCE: Final Rulemaking published at 63 DCR 9668 (July 22, 2016). District of Columbia Municipal Regulations Health Benefit Exchange 26-D DCMR § 9900