Ohio Adm.Code 3901 | Ohio Administrative Code 3901 — Department of Insurance

Chapter 3901-1 General Provisions

Ohio Adm.Code 3901-1-01 Public notice by publication.

(A) Purpose

The purpose of this rule is to outline notice by publication under Chapter 1731., 1739., 1751., 1761., or Title XXXIX of the Revised Code, or when otherwise determined by the superintendent of insurance.

(B) Authority

This rule is promulgated pursuant to the authority vested in the superintendent under section 3901.041 of the Revised Code.

Whenever Chapter 1731., 1739., 1751., 1761., or Title XXXIX of the Revised Code directs public notice to be given by the superintendent of insurance, or the superintendent otherwise determines to provide public notice, and the method and content of notice is not otherwise set forth in rule or statute, notice may be given by publication to the departments web site in paragraph (D) of this rule.

(D) Public notice by insurance industry

(1) Except in cases where the method and content of notice is otherwise specified in statute or rule, an insurance company or any connected individual or firm subject to the regulation and jurisdiction of the department of insurance, may provide notice in accord with paragraph (C) of this rule when directed to provide notice by any section of the Revised Code.

(2) Such public notice includes:

(a) A synopsis or general statement of the subject matter involved.

(b) An indication of the company's position, or action to be taken, regarding the subject of notice.

(E) Discretion to vary publication

Whenever the superintendent of insurance determines that the subject matter of public notice is of an unusual nature and appropriate for more widespread publication, the superintendent may direct that such notice be also made by publication to the departments web site. In any case, the superintendent of insurance may direct that publication be made more than once, as frequently as may be appropriate. In addition to the public notice provided by this rule, the superintendent of insurance may give, or order, such other means of notice as the superintendent deems necessary or appropriate.

(F) Severability

If any portion of this rule or the application thereof to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the rule or related rules which can be given effect without the invalid portion or application, and to this end the provisions of this rule are severable.

Last updated February 13, 2025 at 8:09 AM

History

Effective: February 13, 2025
Promulgated Under: 119.03

Ohio Adm.Code 3901-1-02 Access to confidential personal information.

(A) Purpose

The purpose of this rule is to standardize employee access to the confidential personal information that the department of insurance (department) keeps. This rule applies to both electronic records and records kept on paper.

(B) Authority

This rule is promulgated pursuant to the authority vested in the superintendent under section 3901.041 of the Revised Code and division (B) of section 1347.15 of the Revised Code that requires each state agency to adopt rules under Chapter 119. of the Revised Code to standardize access to confidential personal information.

For the purpose of this rule promulgated in accordance with section 1347.15 of the Revised Code, the following definitions, as set out by the department of administrative services in rule 123:3-2-01 of the Administrative Code, apply:

(1) "Access" as a noun means an instance of copying, viewing, or otherwise perceiving whereas "access" as a verb means to copy, view, or otherwise perceive.

(2) "Acquisition of a new computer system" means the purchase of a "computer system," as defined in this rule, that is not a computer system currently in place nor one for which the acquisition process has been initiated as of the effective date of the agency rule addressing requirements in section 1347.15 of the Revised Code.

(3) "Computer system" means a "system," as defined by section 1347.01 of the Revised Code, that stores, maintains, or retrieves personal information using electronic data processing equipment.

(4) "Confidential personal information" (CPI) has the meaning as defined by division (A)(1) of section 1347.15 of the Revised Code and identified by rules promulgated by the agency in accordance with division (B)(3) of section 1347.15 of the Revised Code that reference the federal or state statutes or administrative rules that make personal information maintained by the agency confidential.

(5) "Employee of the state agency" means each employee of a state agency regardless of whether he or she holds an elected or appointed office or position within the state agency. "Employee of the state agency" is limited to the specific employing state agency.

(6) "Incidental contact" means contact with the information that is secondary or tangential to the primary purpose of the activity that resulted in the contact.

(7) "Individual" means a natural person or the natural person's authorized representative, legal counsel, legal custodian, or legal guardian.

(8) "Information owner" means the individual appointed in accordance with division (A) of section 1347.05 of the Revised Code to be directly responsible for a system.

(9) "Person" means a natural person.

(10) "Personal information" has the same meaning as defined in division (E) of section 1347.01 of the Revised Code.

(11) "Personal information system" means a "system" that "maintains" "personal information" as those terms are defined in section 1347.01 of the Revised Code. "System" includes manual and computer systems.

(12) "Research" means a methodical investigation into a subject.

(13) "Routine" means commonplace, regular, habitual, or ordinary.

(14) "Routine information that is maintained for the purpose of internal office administration, the use of which would not adversely affect a person" as that phrase is used in division (F) of section 1347.01 of the Revised Code means personal information relating to employees and maintained by the agency for internal administrative and human resource purposes.

(15) "System" has the same meaning as defined by division (F) of section 1347.01 of the Revised Code.

(16) "Upgrade" means a substantial redesign of an existing computer system for the purpose of providing a substantial amount of new application functionality, or application modifications that would involve substantial administrative or fiscal resources to implement, but would not include maintenance, minor updates and patches, or modifications that entail a limited addition of functionality due to changes in business or legal requirements.

(D) Procedures for accessing confidential personal information (as required by divisions (B)(1) and (B)(5) to (B)(8) of section 1347.15 of the Revised Code).

For personal information systems, whether manual or computer systems, which contain confidential personal information, the department shall do the following:

(1) Criteria for accessing confidential personal information

Personal information systems of the department are managed on a "need-to-know" basis whereby the information owner determines the level of access required for an employee of the department to fulfill his or her job duties. The determination of access to confidential personal information shall be approved by the employee's supervisor and the information owner prior to providing the employee with access to confidential personal information within a personal information system. The department shall establish procedures for determining a revision to an employee's access to confidential personal information upon a change to that employee's job duties including, but not limited to, transfer or termination. Whenever an employee's job duties no longer require access to confidential personal information in a personal information system, the employee's access to confidential personal information shall be removed.

(2) Individual's request for a list of confidential personal information

Upon the signed written request of any individual for a list of confidential personal information about the individual maintained by the department, the department shall do all of the following:

(a) Verify the identity of the individual by a method that provides safeguards commensurate with the risk associated with the confidential personal information;

(b) Provide to the individual the list of confidential personal information that does not relate to an investigation about the individual or is otherwise not excluded from the scope of Chapter 1347. of the Revised Code; and

(c) If all information relates to an investigation about that individual, inform the individual that the agency has no confidential personal information about the individual that is responsive to the individual's request.

(3) Notice of invalid access

(a) Upon discovery or notification that confidential personal information of a person has been accessed by an employee for an invalid reason, the department shall notify the person whose information was invalidly accessed as soon as practical and to the extent known at the time. However, the department shall delay notification for a period of time necessary to ensure that the notification would not delay or impede an investigation or jeopardize homeland or national security. Additionally, the department may delay the notification consistent with any measures necessary to determine the scope of the invalid access, including which individuals' confidential personal information invalidly was accessed, and to restore the reasonable integrity of the system.

"Investigation" as used in this paragraph means the investigation of the circumstances and involvement of an employee surrounding the invalid access of the confidential personal information. Once the department determines that notification would not delay or impede an investigation, the department shall disclose the access to confidential personal information made for an invalid reason to the person.

(b) Notification provided by the department shall inform the person of the type of confidential personal information accessed and the date(s) of the invalid access.

(c) Notification may be made by any method reasonably designed to accurately inform the person of the invalid access, including written, electronic or telephone notice.

(4) Appointment of a data privacy point of contact

The superintendent shall designate an employee of the department to serve as the data privacy point of contact. The data privacy point of contact shall work with the chief privacy officer within the office of information technology to assist the department with both the implementation of privacy protections for the confidential personal information that the department maintains and compliance with section 1347.15 of the Revised Code and the rules adopted pursuant to the authority provided by that chapter.

(5) Completion of a privacy impact assessment

The superintendent shall designate an employee of the department to serve as the data privacy point of contact who shall timely complete the privacy impact assessment form developed by the office of information technology.

(E) Valid reasons for accessing confidential personal information

Pursuant to the requirements of division (B)(2) of section 1347.15 of the Revised Code, this rule contains a list of valid reasons, directly related to the department's exercise of its powers or duties, for which only employees of the department may access confidential personal information regardless of whether the personal information system is a manual system or computer system.

Performing the following functions constitute valid reasons for authorized employees of the department to access confidential personal information:

(1) Responding to a public records request;

(2) Responding to a request from an individual for the list of confidential personal information the department maintains on that individual;

(3) Administering a constitutional provision or duty;

(4) Administering a statutory provision or duty;

(5) Administering an administrative rule provision or duty;

(6) Complying with any state or federal program requirements;

(7) Processing or payment of claims or otherwise administering a program with individual participants or beneficiaries;

(8) Auditing purposes;

(9) Licensure processes;

(10) Investigation or law enforcement purposes;

(11) Administrative hearings;

(12) Litigation, complying with an order of the court, or subpoena;

(13) Human resource matters (e.g., hiring, promotion, demotion, discharge, salary and compensation issues, leave requests and issues, time card approvals and issues);

(14) Complying with an executive order or policy;

(15) Complying with a department policy or a state administrative policy issued by the department of administrative services, the office of budget and management or other similar state agency; or

(16) Complying with a collective bargaining agreement provision.

(F) Confidentiality statutes (as required by division (B)(3) of section 1347.15 of the Revised Code)

The following federal statutes or regulations or state statutes and administrative rules make personal information maintained by the department confidential and identify the confidential personal information within the scope of rules promulgated by the department in accordance with section 1347.15 of the Revised Code:

(1) Social security numbers: 5 U.S.C. section 552a; division (A) of section 149.45 of the Revised Code; "State ex rel. Beacon Journal Publishing Co. v. City of Akron, 70 Ohio St.3d 605 (1994)."

(2) Consumer credit reporting information: limits the use that can be made of consumer credit reports: 15 U.S.C. section 1681b.

(3) Federal tax returns and return information: 26 U.S.C. section 6103(a).

(4) Medical records pertaining to an eligible person under the American with Disabilities Act: 42 U.S.C. section 12112(d)(3)(B).

(5) Bureau of criminal identification and investigation records: division (H) of section 109.57 of the Revised Code and section 4776.04 of the Revised Code.

(6) Public employees retirement system (PERS) information (the individual's statement of previous service, amount of a monthly allowance or benefit paid to an individual and the individual's personal history record that includes address, telephone number, social security number, record of contributions, correspondence with the public employees retirement system or other information determined by the public employees retirement board to be confidential): division (A) of section 145.27 of the Revised Code.

(7) Medical reports and recommendations required by the public employees retirement system: division (B) of section 145.27 of the Revised Code.

(8) Deferred compensation program participant information: divisions (A) and (B) of section 148.05 of the Revised Code.

(9) Medical records: division (A)(1)(a) of section 149.43 of the Revised Code.

(10) Confidential law enforcement investigatory records: division (A)(1)(h) of section 149.43 of the Revised Code.

(11) Security and infrastructure records: section 149.433 of the Revised Code.

(12) Health insuring corporation complaint and response documents and information that contain medical records provided to the superintendent: division (C) of section 1751.19 of the Revised Code.

(13) Any data or information pertaining to the diagnosis, treatment, or health of any enrollee or applicant for enrollment that is obtained by the health insuring corporation from the enrollee or applicant, or from any health care facility or provider: division (B) of section 1751.52 of the Revised Code.

(14) Peer review committee records: sections 1751.21 and 2305.252 of the Revised Code.

(15) Medical records; doctor patient communications: division (B) of section 2317.02 of the Revised Code; "TBC Westlake, Inc. v. Hamilton Cty. Bd. of Revision, 81 Ohio St.3d 58, 62 (1998)."

(16) Identity of an individual on whom an HIV test is performed, the results of the test and the identity of any individual diagnosed as having AIDS or an AIDS-related condition: section 3701.243 of the Revised Code.

(17) Records pertaining to an insurance fraud investigation are confidential law enforcement investigatory records (CLEIR) and are protected to the extent of the CLEIR exemption from section 149.43 of the Revised Code until the expiration of all applicable federal and state statutes of limitation: section 3901.44 of the Revised Code.

(18) Applicant HIV test results required by insurers when underwriting fraternal policies: section 3901.46 of the Revised Code.

(19) Records and information pertaining to an investigation of a license applicant or of an agent, solicitor, broker or a person licensed under the code sections covering public insurance adjusters and third party administrators until notice and opportunity for hearing is given or until three years have passed since the close of the investigation: section 3905.24 of the Revised Code.

(20) All medical information solicited or obtained by any viatical settlement licensee: division (G) of section 3916.07 of the Revised Code.

(21) Names and individual identification data for all viators: division (D)(1) of section 3916.11 of the Revised Code.

(22) All proprietary information of a viatical settlement licensee, all individual transaction data regarding the business of viatical settlements and data that could compromise the privacy of personal, financial and health information of the viator or insured: division (E) of section 3916.12 of the Revised Code.

(23) With certain specified exceptions, identity as a viator or a viatical settlement insured, including the viator's or the insured's name and individual identification data, or the viator or the insured's financial or medical information: section 3916.13 of the Revised Code.

(24) Documents and evidence provided to or obtained by the superintendent in an investigation of any suspected or actual fraudulent viatical settlement acts or fraudulent insurance acts: division (E)(1) of section 3916.18 of the Revised Code.

(25) Records containing information pertaining to the medical history, diagnosis, prognosis or medical condition of a covered person pursuant to the external review laws under Chapter 3922. of the Revised Code and sections 1751.77 to 1751.87 of the Revised Code: section 3922.21 of the Revised Code.

(26) Medical claims data required to be reported to the superintendent: division (G) of section 3929.302 of the Revised Code.

(27) Driver's license number or state identification card number: section 4501.27 of the Revised Code and 18 U.S.C. sections 2721 and 2725.

(28) Law enforcement automated data system (LEADS) information: section 5503.10 of the Revised Code and rule 4501:2-10-03 of the Administrative Code.

(29) Any information gained as the result of returns, investigations, hearings, or verifications required or authorized by Chapter 5747. of the Revised Code on income tax: section 5747.18 of the Revised Code.

(30) Personal information: division (A)(1)(dd) of section 149.43 of the Revised Code, based on the definitions in division (A)(1) of section 149.45 of the Revised Code.

(31) Records and documents relating to certifications, recertifications or medical histories of employees' family members, created for purposes of the Family and Medical Leave Act: 29 C.F.R. section 825.500(g).

As statutes are enacted or amended and rules are promulgated or revised, the list of confidentiality provisions provided in this rule may be subject to change. Any changes that occur before the time of the five-year rule review process for this rule shall be available to any requester by making a request to the department's office of legal services.

(G) Restricting and logging access to confidential personal information in computerized personal information systems (as required by divisions (B)(4) and (B)(9) of section 1347.15 of the Revised Code)

For personal information systems that are computer systems and contain confidential personal information, the department shall do the following:

(1) Access restrictions

Access to confidential personal information that is kept electronically shall require a password or other authentication measure.

(2) Acquisition of a new computer system

When the department acquires a new computer system that stores, manages or contains confidential personal information, the department shall include a mechanism for recording specific access by employees of the department to confidential personal information in the system.

(3) Upgrading existing computer systems

When the department modifies an existing computer system that stores, manages or contains confidential personal information, the department shall make a determination whether the modification constitutes an upgrade. Any upgrades to a computer system shall include a mechanism for recording specific access by employees of the department to confidential personal information in the system.

(4) Logging requirements regarding confidential personal information in existing computer systems

(a) The department shall require employees of the department who access confidential personal information within computer systems to maintain a log that records that access.

(b) Access to confidential personal information is not required to be entered into the log under the following circumstances:

(i) The employee of the department is accessing confidential personal information for official department purposes, including research, and the access is not specifically directed toward a specifically named individual or a group of specifically named individuals.

(ii) The employee of the department is accessing confidential personal information for routine office procedures and the access is not specifically directed toward a specifically named individual or a group of specifically named individuals.

(iii) The employee of the department comes into incidental contact with confidential personal information and the access of the information is not specifically directed toward a specifically named individual or a group of specifically named individuals.

(iv) The employee of the department accesses confidential personal information about an individual based upon a request made under either of the following circumstances:

(a) The individual requests confidential personal information about himself or herself.

(b) The individual makes a request that the department takes some action on that individual's behalf and accessing the confidential personal information is required in order to consider or process that request.

(c) For purposes of this paragraph, the department may choose the form or forms of logging, whether in electronic or paper formats.

(5) Log management

The department shall issue a policy that specifies the following:

(a) Who shall maintain the log;

(b) What information shall be captured in the log;

(d) How long information kept in the log is to be retained.

Nothing in this rule limits the department from requiring logging in any circumstance that the department deems necessary.

(H) Severability

Last updated March 2, 2026 at 8:33 AM

History

Effective: February 28, 2026
Promulgated Under: 119.03

Ohio Adm.Code 123:3-2-01

For the purposes of state agency administrative rules promulgated in accordance with section 1347.15 of the Revised Code, the following definitions apply:

(A) "Access" as a noun means an instance of copying, viewing, or otherwise perceiving whereas "access" as a verb means to copy, view, or otherwise perceive.

(B) "Acquisition of a new computer system" means the purchase of a "computer system", as defined in this rule, that is not a computer system currently in place nor one for which the acquisition process has been initiated as of the effective date of the agency rule addressing requirements in section 1347.15 of the Revised Code.

(C) "Computer system" means a "system" as defined by section 1347.01 of the Revised Code, that stores, maintains, or retrieves personal information using electronic data processing equipment.

(D) "Confidential personal information" (CPI) has the meaning as defined in division (A)(1) of section 1347.15 of the Revised Code and identified by rules promulgated by the agency in accordance with division (B)(3) of section 1347.15 of the Revised Code that reference the federal or state statutes or administrative rules that make personal information maintained by the agency confidential.

(E) "Employee of the state agency" means each employee of a state agency regardless of whether he or she holds an elected or appointed office or position within the state agency. "Employee of the state agency" is limited to the specific employing state agency.

(F) "Incidental contact" means contact with the information that is secondary or tangential to the primary purpose of the activity that resulted in the contact.

(G) "Individual" means a natural person or the natural person's authorized representative, legal counsel, legal custodian, or legal guardian.

(H) "Information owner" means the individual appointed in accordance with division (A) of section 1347.05 of the Revised Code to be directly responsible for a system.

(I) "Person" means a natural person.

(J) "Personal information" has the same meaning as defined in division (E) of section 1347.01 of the Revised Code.

(K) "Personal information system" means a "system" that "maintains" "personal information" as those terms are defined in section 1347.01 of the Revised Code. "System" includes manual and computer systems.

(L) "Research" means a methodical investigation into a subject.

(M) "Routine" means commonplace, regular, habitual, or ordinary.

(N) "Routine information that is maintained for the purpose of internal office administration, the use of which would not adversely affect a person" as that phrase is used in division (F) of section 1347.01 of the Revised Code means personal information relating to employees and maintained by the agency for internal administrative and human resources purposes.

(O) "System" has the same meaning as defined by division (F) of section 1347.01 of the Revised Code.

(P) "Upgrade" means a substantial redesign of an existing computer system for the purpose of providing a substantial amount of new application functionality, or application modifications that would involve substantial administrative or fiscal resources to implement, but would not include maintenance, minor updates and patches, or modifications that entail a limited addition of functionality due to changes in business or legal requirements.

Last updated September 14, 2023 at 9:49 AM

History

Effective: June 28, 2010
Promulgated Under: 119.03

Ohio Adm.Code 4501:2-10-03

[Comment: For dates and availability of material incorporated by reference in this rule, see rule 4501:2-10-13 of the Administrative Code.]

(A) Participation in LEADS and the assignment of a full access or limited access originating agency identifier requires application and documentation the requester meets criteria set forth in the NCIC operating manual - ORI file section.

Access to bureau of motor vehicles records may be granted if the requester is a governmental, noncriminal justice agency, or subunit thereof, created by federal, state or local code, whose mission is to enforce or assist in enforcing federal, state or local laws or ordinances may access Ohio and other state bureau of motor vehicle data as available.

(B) Agencies approved to participate in LEADS shall be granted access subject to the following:

(1) Direct access (entry, inquiry, and message switching capabilities):

(a) A criminal justice agency that qualifies for an ORI.

(b) Entering agencies must must staff twenty-four hours a day, seven days a week, every day of the year or include instructions for after-hour hit confirmation in the miscellaneous field of applicable entries.

(c) Intrastate regional systems under criminal justice management control whose central computer system is staffed twenty-four hours a day, seven days a week, every day of the year or includes instructions for after-hour hit confirmation in the miscellaneous field of applicable entries.

(2) Indirect access:

(a) An agency which qualifies for an ORI may enter into an agreement with LEADS and separately with a terminal agency to receive service.

(b) Agencies authorized to indirectly access LEADS data are certified as such in a database prepared/maintained by LEADS, which is accessible to all terminal agencies.

(1) Messages and/or throughput of any kind accessed through LEADS shall be restricted to the use of duly authorized law enforcement and/or criminal justice agencies for the administration of criminal justice. Access to and dissemination of LEADS throughput is governed by the CJIS security policy, LEADS manual, NCIC operating manual, III manual, N-DEx policy, NICS policy and Nlets policy.

(2) Direct access to LEADS shall be limited to certified operators. Each operator is accountable for all transactions occurring while their assigned account is logged on to a terminal accessing LEADS.

(3) Remit payment of all monetary obligations as invoiced by the Ohio state highway patrol. The following monthly fees have been established for participation in LEADS and will be reviewed annually by the superintendent or designee.

(a) Direct access is two hundred fifty dollars;

(b) Secure network connectivity is the direct access fee plus three hundred fifty dollars per router;

(d) Identity management and multi-factor authentication is five dollars per user;

(e) Indirect access is fifty dollars.

(4) Assume responsibility for, and enforce, system security and integrity.

(5) Adhere to policies and guidelines published in the NCIC operating manual, CJIS security policy, LEADS operating manual, III manual, N-DEx policy, NICS policy, Nlets policy, newsletters, and administrative messages from LEADS, all of which are either available on the LEADS intranet or disseminated to LEADS agencies.

(6) Execute all required agreements and forms. These agreements and forms must be kept current and on file for review and updated as part of the agency audit. The completed agreements and forms will be filed with LEADS and the user agency.

(7) Appoint a LEADS terminal agency coordinator (TAC) and organizational personnel with security responsibilities. Each participating non-terminal agency must have a non-terminal agency coordinator (NTAC). Agencies accessing N-DEx must appoint a N-DEx agency coordinator (NAC).

(8) Train all personnel of the agency having access to LEADS data with the capabilities, services offered and rules of LEADS. Compliance with this rule shall include, but is not limited to, completion of the LEADS provided training.

(9) All records must be kept accurate and up-to-date. Invalid records or data must be removed from the files immediately. Records not validated in accordance with LEADS and NCIC manuals are subject to removal. Failure to properly validate records as required will subject the agency to sanctions.

(10) Enter protection orders and warrants, which meet state or federal firearm prohibition criteria, within seventy-two hours of receipt to ensure all disqualifying records are accessible by the "National Instant Background Check System."

Last updated August 6, 2026 at 3:15 AM

History

Effective: October 1, 2024
Promulgated Under: 119.03

Ohio Adm.Code 3901-1-05 Insider trading -- instructions and forms.

(A) Purpose

The purpose of this rule is to promulgate procedures and forms to be adhered to in filing initial statements of changes in beneficial ownership of any equity security. Effective April 4, 1985, division (A) of section 3901.31 of the Revised Code was amended to exclude from application of this filing obligation domestic stock insurance companies which are wholly owned subsidiaries of an insurance holding company system.

(B) Authority

This rule is promulgated pursuant to the authority vested in the superintendent under division (H) of section 3901.31 of the Revised Code, which empowers the superintendent to adopt, amend, and rescind rules, pursuant to Chapter 119. of the Revised Code, which will enable the superintendent to carry out the duties imposed by section 3901.31 of the Revised Code. Division (A) of section 3901.31 of the Revised Code obligates every person who is directly or indirectly the beneficial owner of more than ten per cent of any class of any equity security of a domestic stock insurance company or who is a director or officer of such company to file with the superintendent of insurance on or before January 31, 1966, or within ten days after the person becomes such beneficial owner, director, or officer, a statement in such form as the superintendent of insurance may prescribe of the amount of all equity securities of such company of which the person is the beneficial owner, and within ten days after the close of each calendar month thereafter, if there has been a change in such ownership during such month, to file with the superintendent of insurance a statement, in such form as the superintendent of insurance may prescribe, indicating the person's ownership at the close of the calendar month and such changes in the person's ownership as have occurred during such calendar month.

(1) Initial statements of beneficial ownership of equity securities needs to be filed on form I.S.S., as set forth in paragraph (D)(9) of this rule. Statements of changes in such beneficial ownership needs to be filed on form C.S.S., as set forth in paragraph (E)(11) of this rule. All such statements needs to be prepared in accordance with the obligations of the applicable form and filed as obligated.

(2) Form I.S.S.

(a) A statement on form I.S.S. needs to be filed by every person who is directly or indirectly the beneficial owner of more than ten per cent of any class of equity security of a domestic stock insurance company or who is a director or officer of such company.

(b) When section 3901.31 of the Revised Code became law, persons who held any of the relationships specified in paragraph (C)(2) of this rule were obligated to file a statement on form I.S.S. on or before January 31, 1966. Persons who subsequently assume any of the specified relationships are obligated to file a statement within ten days after assuming such relationship.

(3) Form C.S.S.

(a) A statement on form C.S.S. needs to be filed by every person who is directly or indirectly the beneficial owner of more than ten per cent of any class of equity security of a domestic stock insurance company or who is a director or officer of such company, who has filed a Form I.S.S. with the department, and who has during any month had any change in their beneficial ownership of any class of equity security of such company. Any beneficial owner, director, or officer who is obligated to file a statement on form C.S.S. with respect to any change in their beneficial ownership of equity securities which occurs within six months after they became a beneficial owner, director, or officer of such company needs to include in the first such statement the information called for by form C.S.S. with respect to all changes in their beneficial ownership of equity securities of such company which occurred within six months prior to the filing of such statement.

(b) A statement on form C.S.S. shall be filed by any person who has ceased to be such beneficial owner, director, or officer of a domestic stock insurance company with respect to any change in his beneficial ownership of equity securities of such company which occurs on or after the date on which he ceased to be such beneficial owner, director, or officer if such change occurs within six months after any change in his beneficial ownership of such securities prior to such date.

(c) Statements on form C.S.S. which are obligated to be filed needs to be filed on or before the tenth day after the end of each month in which any change in beneficial ownership has occurred. A separate statement needs to be filed with respect to the securities of each domestic stock insurance company.

(4) Any person who has ceased to be a beneficial owner, director, or officer of a domestic stock insurance company needs to give written notice to the superintendent of insurance of the date on which they ceased to be such beneficial owner, director, or officer within thirty days after said date.

(D) Instructions - form I.S.S.: initial statement of beneficial ownership of equity securities

(1) Where statements are to be filed

(a) One signed, sworn to copy of each statement needs to be filed with the Ohio department of insurance.

(b) A statement is not deemed to have been filed in the office of the superintendent of insurance until it has actually been received by the department.

(2) 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 ten per cent of the company's common stock," etc.

(3) Dates as of which beneficial ownership is to be given.

The information as to beneficial ownership of securities needs to be given as of the date on which the event occurred obligating the filing of a statement on this form; for example, when the person whose ownership is reported became a director or officer of the company or a beneficial owner of more than ten per cent of the company's equity securities.

(4) Title of security

The statement of the title of a security needs to be such as clearly to identify the security even though there may be only one class; for example, "Class A Common," "5% Debentures Due 1965," etc.

(5) Nature of ownership.

Under "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 need to be reported on separate lines from those owned directly and also from those owned through a different type of indirect ownership.

(6) 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, needs to be stated. The person whose ownership is reported may, if they so desire, also indicate in a footnote, or other appropriate manner, the extent of their interest in the partnership, corporation, trust or other entity.

(7) Inclusion of additional information.

A statement may include any additional information or explanation deemed relevant by the person filing statement.

(8) Signature.

(a) If the statement is filed for a corporation, partnership, trust, etc., the name of the organization needs to appear over the signature of the officer or other person authorized to sign the statement. If the statement is filed for an individual, it needs to be signed by them or specifically on their behalf by a person authorized to sign for them.

(b) In those cases where the statement is signed by someone other than the person whose ownership is being reported, documentary evidence of the signing authority needs to be filed with the statement.

(9) Form I.S.S.

| "STATE OF OHIO | | | --- | --- | | DEPARTMENT OF INSURANCE | | | Form I.S.S. | | | INITIAL STATEMENT OF BENEFICIAL OWNERSHIP OF EQUITY SECURITIES | | | Filed Pursuant to Section 3901.31, Ohio Revised Code | | | Name of insurer ___________________________________________________ | | | Name of person whose Ownership is reported ____________________________ | | | Business address of such person ______________________________________ | | | | (Street, City, State, Zip Code) | | Relationship of such person to company named above ______________________ | | | Date of event which obligates the filing of this statement ______________________ | |

| SECURITIES BENEFICIALLY OWNED | | | | --- | --- | --- | | Title of Security | Nature of Ownership | Amount Owned Beneficially | | | | | | | | | | Remarks: (For Additional Space - Use Reverse Side) | | |

| | I affirm under the penalty of perjury that the foregoing is full, true and correct. | | --- | --- | | | ________________________________ | | | Signature | | ________________________________ | | | Date of Statement | | | | | | Subscribed and sworn to before me this_________day of _________ ,20________ | | | | | | ________________________________ | | | Notary Public" | |

(E) Instruction - Form C.S.S.: Statement of changes in beneficial ownership of equity securities

(1) Where statements are to be filed.

(a) One signed, sworn to copy of each statement needs to be filed with the Ohio department of insurance.

(b) A statement is not deemed to have been filed in the office of the superintendent of insurance until it has actually been received by the department.

(2) Relationship of reporting person to company.

(3) Transactions and holdings to be reported.

Every transaction needs to be reported even though purchases and sales during the month are equal or the change involves only the nature of ownership; for example, from direct or indirect ownership. Beneficial ownership at the end of the month of all classes of securities obligated to be reported needs to be shown even though there has been no change during the month in the ownership of securities of one or more classes.

(4) Title of security.

The statement of the title of the security needs to be such as to clearly identify the security even though there may be only one class; for example, "Class A Common," "5% Debentures Due 1965," etc.

(5) Date of transaction.

The exact date (month, day and year) of each transaction needs to be stated opposite the amount involved in the transactions.

(6) Statement of amounts of securities.

In stating the amount of the securities acquired, disposed of, or beneficially owned, give the face stated. The person whose ownership is reported may, if they so desire, also indicate in a footnote, or other appropriate manner, the extent of their interest in the transaction or holdings of the partnership, corporation, trust or other entity.

(7) Nature of ownership.

Under "nature of ownership," state whether ownership of the securities is "direct" or "indirect." If the ownership is indirectly, 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 the broker or other nominee does not, of itself, constitute indirect ownership. Securities owned indirectly need to be reported on separate lines from securities owned directly and from securities owned through a different type of indirect ownership.

(8) Character of transaction.

If the transaction was with 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 was effected otherwise than in the open market, the fact needs to be indicated. If the transaction was not a purchase or sale, indicate its character; for example, gift, 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.

(9) Inclusion of additional information.

A statement may include any additional information or explanation deemed relevant by the person filing the statement.

(10) Signature.

(b) In those cases where the statement is signed by someone other than the person whose partnership is being reported, documentary evidence of the signing authority needs to be filed with the statement.

(11) Form C.S.S.

| "STATE OF OHIO | | | --- | --- | | DEPARTMENT OF INSURANCE | | | Form C.S.S. | | | STATEMENT OF CHANGES IN BENEFICIAL OWNERSHIP OF EQUITY SECURITIES | | | Filed Pursuant to Section 3901.31, Ohio Revised Code | | | Name of insurer ___________________________________________________ | | | Name of person whose Ownership is reported ____________________________ | | | Business address of such person ______________________________________ | | | | (Street, City, State, Zip Code) | | Relationship of such person to company named above ______________________ | |

| Statement for Calendar Month of ___________, 20 | | | | | | | --- | --- | --- | --- | --- | --- | | Changes During Month and Month-End Ownership | | | | | | | Title of Security | Date of Transaction | Amount Bought or Otherwise Acquired | Amount Sold or Otherwise Disposed of | Nature of Ownership | Amount Owned Beneficially at end of Month | | | | | | | | | | | | | | | | Remarks: (For Additional Space - Use Reverse Side) | | | | | |

(F) Failure to file

Division (B) of section 3901.99 of the Revised Code provides that "Whoever violates any law relating to the superintendent of insurance, or any law of this state, relating to insurance as defined in division (A)(1) of section 3901.04 of the Revised Code for the violation of which no penalty is otherwise provided in the Revised Code, shall be fined not more than twenty-five thousand dollars, imprisoned not more than six months, or both."

(G) Severability

Last updated February 13, 2025 at 8:09 AM

History

Effective: February 13, 2025
Promulgated Under: 119.03

Ohio Adm.Code 3901-1-07 Unfair trade practices.

(A) Purpose

The purpose of this rule is to define certain additional unfair trade practices and to set forth required procedures in connection therewith. Sections 3901.20 and 3901.21 of the Revised Code respectively prohibit unfair or deceptive practices in the business of insurance and define certain acts or practices as unfair or deceptive. Section 3901.21 of the Revised Code also provides that the enumeration of specific unfair or deceptive acts or practices in the business of insurance is not exclusive or restrictive or intended to limit the powers of the superintendent of insurance to adopt rules to implement that section.

(B) Authority

This rule is promulgated pursuant to the authority vested in the superintendent under section 3901.041 of the Revised Code. Section 3901.041 of the Revised Code provides that the superintendent of insurance shall adopt, amend, and rescind rules and make adjudications necessary to discharge the superintendent's duties and exercise that person's powers under Title 39 of the Revised Code.

It shall be deemed an unfair or deceptive practice to commit or perform with such frequency as to indicate a general business practice any of the following:

(1) Knowingly misrepresenting to claimants pertinent facts or policy provisions relating to coverage at issue;

(a) Misrepresenting a pertinent policy provision by making any payment, settlement, or offer of first party benefits, which, without explanation, does not include all amounts which should be included according to the claim filed by the first party claimant and investigated by the insurer;

(b) Denying a claim on the grounds of a specific policy provision, condition, or exclusion without reference to such provision, condition, or exclusion;

(2) Failing to acknowledge pertinent communications with respect to claims arising under insurance policies in writing, or by other means so long as an appropriate notation is made in the claim file of the insurer, within fifteen days of receiving notice of a claim in writing or otherwise;

(3) Failing to make an appropriate reply within twenty-one days of all other pertinent communications and/or any inquiries of the department of insurance respecting a claim;

(4) Failing to adopt and implement reasonable procedures to commence an investigation of any claim filed by either a first party or third party claimant, or by such claimant's authorized representative, within twenty-one days of receipt of notice of claim;

(5) Failing to mail or furnish claimant or the claimant's authorized representative, a notification of all items, statements and forms, if any, which the insurer reasonably believes will be required of such claimant, within fifteen days of receiving notice of claim, unless the insurer, based on the information then in its possession does not yet know all such requirements, then such notification shall be sent, within a reasonable time;

(6) Not offering first party or third party claimants, or their authorized representatives who have made claims which are fair and reasonable and in which liability has become reasonably clear, amounts which are fair and reasonable as shown by the insurer's investigation of the claim, providing the amounts so offered are within policy limits and in accordance with the policy provisions;

(7) Compelling insureds to institute suits to recover amounts due under its policies by offering substantially less than the amounts ultimately recovered in suits brought by them when such insureds have made claims for amounts reasonably similar to the amounts ultimately recovered;

(8) Making known to insureds or claimants a policy of appealing from arbitration awards in favor of insureds or claimants for the purpose of compelling them to accept settlements or compromises less than the amount awarded in arbitration;

(9) Attempting settlement or compromise of claims on the basis of applications which were altered without notice to, or knowledge, or consent of insureds;

(10) Attempting to settle or compromise claims for less than the amount which the insureds had been led reasonably to believe they were entitled to, by written or printed advertising material accompanying or made part of an application;

(11) Attempting to delay the investigation or payment of claims by requiring an insured and his physician to submit a preliminary claim report and then requiring the subsequent submission of formal proof of loss forms, both of which submissions contain substantially the same information;

(12) Failing to advise the first party claimant or the claimant's authorized representative, in writing or by other means so long as an appropriate notation is made in the claim file of the insurer, of the acceptance or rejection of the claim, within twenty-one days after receipt by the insurer of a properly executed proof of loss;

(a) Failing to notify such claimant or the claimant's authorized representative, within twenty-one days after receipt of such proof of loss, that the insurer needs more time to determine whether the claim should be accepted or rejected;

(b) Failing to send a letter to such claimant or, the claimant's authorized representative, stating the need for further time to investigate the claim, if such claim remains unsettled ninety days from the date of the initial letter setting forth the need for further time to investigate;

(c) Failing to send to such claimant or authorized representative every ninety days after the first ninety-day claim investigation period, a letter setting forth the reasons additional time is needed for investigation, unless the delay is caused by factors beyond the insurer's control;

(13) Failing to advise such claimant or claimant's authorized representative, of the amount offered, if such claim is accepted in whole or in part;

(14) Refusing payments of claims solely on the basis of the insured's request to do so without making an independent evaluation of the insured's liability based upon all available information;

(15) Failing to adopt and implement reasonable standards for the proper handling of written communications, primarily expressing grievances, received by the insurer from insureds or claimants;

(16) Failing to pay any amount finally agreed upon in settlement of all or part of any claim or authorized repairs to be made upon final agreement not later than five days from the receipt of such agreement by the insurer at the place from which the payment or authorization is to be made or from the date of the performance by the claimant of any condition set by such agreement, whichever is later.

(17) For purposes of this rule, the following definitions shall apply;

(a) "Investigation" shall mean all activities of the company related directly or indirectly to the determining of liabilities under the coverages afforded by the policy. This shall include, but not be limited to, a bona fide effort to contact all insureds and claimants within a reasonable period after notification of loss. Evidence of a bona fide effort must be maintained in the file. The investigation shall be deemed concluded upon the company's affirmation or denial of liability.

(b) "Notice of Claim" as applied to an insurer shall include notification given to an agent of an insurer.

(c) "Settlement of claims" shall mean all activities of the company related directly or indirectly to the determination of the extent of damages due under coverages afforded by the policy. This shall include, but not be limited to, the requiring or preparing of repair estimates.

(d) "Days" means calendar days. However, when the last day of a time limit stated in this rule falls on a Saturday, Sunday or holiday, the time limit is extended to the next immediate following day that is not a Saturday, Sunday or holiday.

(D) Severability

If any paragraph, term, or provision of this rule be adjudged invalid for any reason, such judgment shall not affect, impair, or invalidate any other paragraph, term, or provision of this rule, but the remaining paragraphs, terms, and provisions shall be in and continue in full force and effect.

Last updated February 14, 2022 at 8:54 AM

History

Effective: February 14, 2022
Promulgated Under: 119.03

Ohio Adm.Code 3901-1-08 Unfair and deceptive military sales practices.

(A) Purpose

The purpose of this rule is to further define unfair trade practices to include dishonest and predatory practices involving the sale of certain life insurance products to active duty members of the United States armed forces and their families and to set acceptable standards for such sales. Sections 3901.20 and 3901.21 of the Revised Code, respectively, prohibit unfair or deceptive trade practices in the business of insurance and define certain acts or practices as unfair or deceptive. Section 3901.21 of the Revised Code also provides that the enumeration of specific unfair or deceptive acts or practices in the business of insurance is not exclusive or restrictive or intended to limit the powers of the superintendent of insurance to adopt rules to implement that section.

(B) Authority

This rule is promulgated pursuant to the authority vested in the superintendent under section 3901.041 of the Revised Code.

Nothing herein shall be construed to create or imply a private cause of action for a violation of this rule.

(D) Application

This rule applies to the solicitations and sales of life insurance and annuity products by insurers and insurance agents to active duty members of the United States armed forces and their families. This rule applies in addition to other statutes and rules governing the sale and solicitations of life insurance and annuity products.

(E) Exemptions

(1) This rule 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 agent 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 superintendent; or, when a term conversion privilege is exercised among corporate affiliates;

(d) Individual stand-alone health policies, including disability income policies;

(e) Contracts offered by "Servicemembers' Group Life Insurance" (SGLI) or "Veterans' Group Life Insurance" (VGLI), as authorized by 38 U.S.C. sections 1965 to 1979;

(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 section 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.

(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 Installations" or successor directive.

(3) For purposes of this rule, 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. However, nothing in this subdivision shall be construed to exempt an insurer or insurance agent from this rule in any in-person, face-to-face meeting established as a result of the "solicitation" exemptions identified in this subdivision.

(F) Definitions

(1) "Active duty" means 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 and all service in the uniformed services under the "Uniformed Services Employment and Reemployment Rights Act" (USERRA). 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 fewer than thirty-one calendar days.

(2) "Department of Defense (DoD) Personnel" means all active duty service members and all civilian employees, including nonappropriated fund employees and special government employees, of the "Department of Defense."

(3) "Door to door" means a solicitation or sales method whereby an insurance agent proceeds randomly or selectively from household to household without prior specific appointment.

(4) "General advertisement" means 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 agent.

(5) "Insurer" means an insurance company required to be licensed under the laws of this state to provide life insurance products, including annuities.

(6) "Insurance agent" means a person required to be licensed under the laws of this state to sell, solicit or negotiate life insurance, including annuities.

(7) "Known" or "Knowingly" means, depending on its use herein, the insurance agent 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:

(a) Is a service member; or

(b) Is a service member with a pay grade of E-4 or below.

(8) "Life insurance" means 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.

(9) "Military installation" means any state or 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.

(10) "MyPay" is 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.

(11) "Service in the uniformed services" and "uniformed services" have the same meanings as in the "Uniformed Services Employment and Reemployment Rights Act of 1994," 108 Stat. 3149, 38 U.S.C. 4303, as amended, June 5, 2001.

(12) "Service member" means any active duty officer (commissioned and warrant) or enlisted member of the United States armed forces.

(13) "Side fund" means 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:

(a) Accumulated value or cash value or secondary guarantees provided by a universal life policy;

(b) Cash values provided by a whole life policy which are subject to standard nonforfeiture laws for life insurance; or

(i) Contains only premiums paid in advance that accumulate at interest;

(ii) Imposes no penalty for withdrawal;

(iii) Does not permit funding beyond future required premiums;

(iv) Is not marketed or intended as an investment; and

(v) Does not carry a commission, either paid or calculated.

(14) "Specific appointment" means a prearranged appointment agreed upon by both parties and definite as to place and time.

(15) "United States Armed Forces" means all components of the army, navy, air force, marine corps, and coast guard.

(G) Practices declared false, misleading, deceptive or unfair on a military installation

(1) The following acts or practices, when committed on a military installation by an insurer or insurance agent 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" or 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.

(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 rules or directives of the "DoD" or the rules or directives of any branch of the armed forces.

(2) The following acts or practices when committed on a military installation by an insurer or insurance agent 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 agent to participate in any United States armed forces sponsored education or orientation program.

(H) Practices declared false, misleading, deceptive or unfair regardless of location

(1) The following acts or practices by an insurer or insurance agent 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 member's "MyPay" account or other similar internet or electronic medium for such purposes. This paragraph 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 rule, a "formal banking relationship" is established when the depository institution:

(i) 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. sections 4301 to 4313 (1992) and the rules promulgated thereunder; and

(ii) 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 paragraph (H)(1)(b) of this rule.

(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 as defined in paragraph (H)(1)(b) of this rule.

(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.

(2) The following acts or practices by an insurer or insurance agent 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 agent 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 agent 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 higher learning. Such designations include, but are not limited to, "Chartered Life Underwriter" (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 agent 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.

(3) The following acts or practices by an insurer or insurance agent 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."

(4) The following acts or practices by an insurer or insurance agent 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.

(5) The following acts or practices by an insurer and or insurance agent 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 agent, 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 or as amended.

(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:

(i) An explanation of any free look period with instructions on how to cancel if a policy is issued; and

(ii) 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 rule 3901-6-04 of the Administrative Code shall be deemed sufficient to meet this requirement for a written disclosure.

(6) The following acts or practices by an insurer or insurance agent 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.

(i) "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.

(ii) "Other military survivor benefits" include, but are not limited to: the "Death Gratuity," "Funeral Reimbursement," "Transition Assistance," "Survivor and Dependents' Educational 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:

(i) Unless interest credited accrues from the date of deposit to the date of withdrawal and permits withdrawals without limit or penalty;

(ii) 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 to ten and for every fifth policy year thereafter, ending at age one hundred, policy maturity or final expiration; and

(iii) 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 for 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.

(I) Severability

If any paragraph, term or provision of this rule is adjudged invalid for any reason, the judgment shall not affect, impair or invalidate any other paragraph, term or provision of this rule, but the remaining paragraphs, terms and provisions shall be and continue in full force and effect.

Last updated October 11, 2023 at 1:47 PM

History

Effective: November 3, 2016
Promulgated Under: 119.03

Ohio Adm.Code 3901-6-04

(A) Purpose

The purpose of this rule is to provide rules for life insurance policy illustrations that will protect consumers and foster consumer education. The rule provides illustration formats, prescribes standards to be followed when illustrations are used, and specifies the disclosures that are required in connection with illustrations. The goals of this rule are to ensure that illustrations do not mislead purchasers of life insurance and to make illustrations more understandable. Insurers will, as far as possible, eliminate the use of footnotes and caveats and define terms used in the illustration in language that would be understood by a typical person within the segment of the public to which the illustration is directed.

(B) Authority

This rule is promulgated pursuant to the authority vested in the superintendent under sections 3901.041 and 3901.21 of the Revised Code.

This rule applies to all group and individual life insurance policies and certificates except:

(1) Variable life insurance;

(2) Individual and group annuity contracts;

(3) Credit life insurance; or

(4) Life insurance policies with illustrated death benefits on any individual not exceeding ten thousand dollars.

(D) Definitions

(1) "Actuarial Standards Board" means the board established by the American academy of actuaries to develop and promulgate standards of actuarial practice.

(2) "Contract premium" means the gross premium that is required to be paid under a fixed premium policy, including the premium for a rider for which benefits are shown in the illustration.

(3) "Currently payable scale" means a scale of non-guaranteed elements in effect for a policy form as of the preparation date of the illustration or declared to become effective within the next ninety-five days.

(4) "Disciplined current scale" means a scale of non-guaranteed elements constituting a limit on illustrations currently being illustrated by an insurer that is reasonably based on actual recent historical experience, as certified annually by an illustration actuary designated by the insurer. Further guidance in determining the disciplined current scale as contained in standards established by the actuarial standards board may be relied upon if the standards:

(a) Are consistent with all provisions of this rule;

(b) Limit a disciplined current scale to reflect only actions that have already been taken or events that have already occurred;

(c) Do not permit a disciplined current scale to include any projected trends of improvements in experience or any assumed improvements in experience beyond the illustration date; and

(d) Do not permit assumed expenses to be less than minimum assumed expenses.

(5) "Generic name" means a short title descriptive of the policy being illustrated such as "whole life," "term life," or "flexible premium adjustable life."

(6) "Guaranteed elements" and "non-guaranteed elements".

(a) "Guaranteed elements" means the premiums, benefits, values, credits or charges under a policy of life insurance that are guaranteed and determined at issue.

(b) "Non-guaranteed elements" means the premiums, benefits, values, credits or charges under a policy of life insurance that are not guaranteed or not determined at issue.

(7) "Illustrated scale" means a scale of non-guaranteed elements currently being illustrated that is not more favorable to the policy owner than the lesser of:

(a) The disciplined current scale; or

(b) The currently payable scale.

(8) "Illustration" means a presentation or depiction that includes non-guaranteed elements of a policy of life insurance over a period of years and that is one of the three types defined as followed:

(a) "Basic illustration" means a ledger of proposal used in the sale of a life insurance policy that shows both guaranteed and non-guaranteed elements.

(b) "Supplemental illustration" means an illustration furnished in addition to a basic illustration that meets the applicable requirements of this rule, and that may be presented in a format differing from the basic illustration, but may only depict a scale of non-guaranteed elements that is permitted in a basic illustration.

(c) "In force illustration" means an illustration furnished at any time after the policy that it depicts has been in force for one year or more.

(9) "Illustration actuary" means an actuary meeting the requirements of paragraph (K) of this rule who certifies to illustrations based on the standard of practice promulgated by the actuarial standards board.

(10) "Lapse-supported illustration" means an illustration of a policy form failing the test of self-supporting as defined in this rule, under a modified persistency rate assumption using persistency rates underlying the disciplined current scale for the first five years and one hundred per cent policy persistency thereafter.

(11)

(a) "Minimum assumed expenses" means the minimum expenses that may be used in the calculation of the disciplined current scale for a policy form. The insurer may choose to designate each year the method of determining assumed expenses for all policy forms from the following:

(i) Fully allocated expenses;

(ii) Marginal expenses; and

(iii) A generally recognized expense table based on fully allocated expenses representing a significant portion of insurance companies and approved by the national association of insurance commissioners (NAIC) or by the superintendent.

(b) Marginal expenses may be used only if greater than a generally recognized expense table. If no generally recognized expense table is approved, fully allocated expenses must be used.

(12) "Non-term group life" means a group policy or individual policies of life insurance issued to members of an employer group or other permitted group where:

(a) Every plan of coverage was selected by the employer or other group representative;

(b) Some portion of the premium is paid by the group or through payroll deduction; and

(13) "Policy owner" means the owner named in the policy or the certificate holder in the case of a group policy.

(14) "Premium outlay" means the amount of premium assumed to be paid out-of-pocket by the policy owner or other premium payer.

(15) "Self-supporting illustration" means an illustration of a policy form for which it can be demonstrated that, when using experience assumptions underlying the disciplined current scale, for all illustrated points in time on or after the fifteenth policy anniversary or the twentieth policy anniversary for second-or-later-to-die policies (or upon policy expiration if sooner), the accumulated value of all policy cash flows equals or exceeds the total policy owner value available. For this purpose, policy owner value will include cash surrender values and any other illustrated benefit amounts available at the policy owner's election.

(E) Policies to be illustrated

(1) Each insurer marketing policies to which this rule is applicable shall notify the superintendent whether a policy form is to be marketed with or without an illustration. For all policy forms being actively marketed on the effective date of this rule, the insurer shall identify in writing those forms and whether or not an illustration will be used with them. For policy forms filed after the effective date of this regulation, the identification shall be made at the time of filing. Any previous identification may be changed by notice to the superintendent.

(2) If the insurer identifies a policy form as one to be marketed without an illustration, any use of an illustration for any policy using that form prior to the first policy anniversary is prohibited.

(3) If a policy form is identified by the insurer as one to be marketed with an illustration, a basic illustration prepared and delivered in accordance with this regulation is required, except that a basic illustration need not be provided to individual members of a group or to individuals insured under multiple lives coverage issued to a single applicant unless the coverage is marketed to these individuals. The illustration furnished to an applicant for a group life insurance policy or policies issued to a single applicant on multiple lives may be either an individual or composite illustration representative of the coverage on the lives of members of the group or the multiple lives covered.

(4) Potential enrollees of non-term group life subject to this rule shall be furnished a quotation with the enrollment materials. The quotation shall show potential policy values for sample ages and policy years on a guaranteed and non-guaranteed basis appropriate to the group and the coverage. This quotation shall not be considered an illustration for purposes of this rule, but all information provided shall be consistent with the illustrated scale. A basic illustration shall be provided at delivery of the certificate to enrollees for non-term group life who enroll for more than the minimum premium necessary to provide pure death benefit protection. The insurer shall make a basic illustration available to any non-term group life enrollee who requests it.

(F) General rules and prohibitions

(1) An illustration used in the sale of a life insurance policy shall satisfy the applicable requirements of this rule, be clearly labeled "life insurance illustration" and contain the following basic information:

(a) Name of insurer;

(b) Name and business address of agent or insurer's authorized representative, if any;

(d) Underwriting or rating classification upon which the illustration is based;

(e) Generic name of policy, the company product name, if different, and form number;

(f) Initial death benefit; and

(g) Dividend option election or application of non-guaranteed elements, if applicable.

(2) When using an illustration in the sale of a life insurance policy, an insurer or its agents or other authorized representatives shall not:

(a) Represent the policy as anything other than a life insurance policy;

(b) Use or describe non-guaranteed elements in a manner that is misleading or has the capacity or tendency to mislead;

(d) Use an illustration that does not comply with the requirements of this rule;

(e) Use an illustration that at any policy duration depicts policy performance more favorable to the policy owner than that produced by the illustrated scale of the insurer whose policy is being illustrated;

(f) Provide an applicant with an incomplete illustration;

(g) Represent in any way that premium payments will not be required for each year of the policy in order to maintain the illustrated death benefits, unless that is the fact;

(h) Use the term "vanish" of "vanishing premium," or a similar term that implies the policy becomes paid up, to describe a plan for using non-guaranteed elements to pay a portion of future premiums;

(i) Except for policies that can never develop nonforfeiture values, use an illustration that is "lapse-supported"; or

(j) Use an illustration that is not "self-supporting."

(3) If an interest rate used to determine the illustrated non-guaranteed elements is shown, it shall not be greater than the earned interest rate underlying the disciplined current scale.

(G) Standards for basic illustrations

(1) Format. A basic illustration shall conform with the following requirements:

(a) The illustration shall be labeled with the date on which it was prepared.

(b) Each page, including any explanatory notes or pages, shall be numbered and show its relationship to the total number of pages in the illustration (e.g., the fourth page of a seven-page illustration shall be labeled "page 4 of 7 pages").

(d) If the age of the proposed insured is shown as a component of the tabular detail, it shall be issue age plus the number of years the policy is assumed to have been in force.

(e) The assumed payments on which the illustrated benefits and values are based shall be identified as premium outlay or contract premium, as applicable. For policies that do not require a specific contract premium, the illustrated payments shall be identified as premium outlay.

(f) Guaranteed death benefits and values available upon surrender, if any, for the illustrated premium outlay or contract premium shall be shown and clearly labeled guaranteed.

(g) If the illustration shows any non-guaranteed elements, they cannot be based on a scale more favorable to the policy owner than the insurer's illustrated scale at any duration. These elements shall be clearly labeled non-guaranteed.

(h) The guaranteed elements, if any, shall be shown before corresponding non-guaranteed elements and shall be specifically referred to on any page of an illustration that shows or describes only the non-guaranteed elements (e.g., "see page one for guaranteed elements.")

(i) The account or accumulation value of a policy, if shown, shall be identified by the name this value is given in the policy being illustrated and shown in close proximity to the corresponding value available upon surrender.

(j) The value available upon surrender shall be identified by the name this value is given in the policy being illustrated and shall be the amount available to the policy owner in a lump sum after deduction of surrender charges, policy loans and policy loan interest, as applicable.

(k) Illustrations may show policy benefits and values in graphic or chart form in addition to the tabular form.

(l) Any illustration of non-guaranteed elements shall be accompanied by a statement indicating that:

(i) The benefits and values are not guaranteed;

(ii) The assumptions on which they are based are subject to change by the insurer; and

(iii) Actual results may be more or less favorable.

(m) If the illustration shows that the premium payer may have the option to allow policy charges to be paid using non-guaranteed values, the illustration must clearly disclose that a charge continues to be required and that, depending on actual results, the premium payer may need to continue or resume premium outlays. Similar disclosure shall be made for premium outlay of lesser amounts or shorter durations than the contract premium. If a contract premium is due, the premium outlay display shall not be left blank or show zero unless accompanied by an asterisk or similar mark with an explanation that the policy is not paid up.

(n) If the applicant plans to use dividends or policy values, guaranteed or non-guaranteed, to pay all or a portion of the contract premium or policy charges, or for any other purpose, the illustration may reflect those plans and the impact on future policy benefits and values.

(2) Narrative summary. A basic illustration shall include the following:

(a) A brief description of the policy being illustrated, including a statement that it is a life insurance policy;

(b) A brief description of the premium outlay or contract premium, as applicable, for the policy. For a policy that does not require payment of a specific contract premium, the illustration shall show the premium outlay that must be paid to guarantee coverage for the term of the contract, subject to maximum premiums allowable to qualify as a life insurance policy under the applicable provisions of the Internal Revenue Code;

(c) A brief description of any policy features, riders, or options, guaranteed or non-guaranteed, shown in the basic illustration and the impact they may have on the benefits and values of the policy;

(d) Identification and a brief definition of column headings and key terms used in the illustration; and

(e) A statement containing the following: "this illustration assumes that the currently illustrated non-guaranteed elements used will not change for all years shown. This is not likely to occur, and actual results may be more or less favorable than those shown."

(3) Numeric summary.

(a) Following the narrative summary, a basic illustration shall include a numeric summary of the death benefits and values and the premium outlay and contract premium, as applicable. For a policy that provides for a contract premium, the guaranteed death benefits and values shall be based on the contract premium. This summary shall be shown for at least policy years five, ten and twenty, and at age seventy, if applicable, on the three bases shown in this paragraph. For multiple life policies the summary shall show policy years five, ten, twenty and thirty.

(i) Policy guarantees;

(ii) Insurer's illustrated scale;

(iii) Insurer's illustrated scale used but with the non-guaranteed elements reduced as follows:

(a) Dividends at fifty per cent of the dividends contained in the illustrated scale used;

(b) Non-guaranteed credited interest at rates that are the average of the guaranteed rates and the rates contained in the illustrated scale used; and

(c) All non-guaranteed charges, including but not limited to, term insurance charges, mortality and expense charges, at rates that are the average of the guaranteed rates and the rates contained in the illustrated scale used.

(b) In addition, if coverage would cease prior to policy maturity or age one hundred, the year in which coverage ceases shall be identified for each of the three bases.

(4) Statements. Statements substantially similar to the following shall be included on the same page as the numeric summary and signed by the applicant, or the policy owner in the case of an illustration provided at time of delivery, as required in this rule.

(a) A statement to be signed and dated by the applicant or policy owner reading as follows: "I have received a copy of this illustration and understand that any non-guaranteed elements illustrated are subject to change and could be either higher or lower. The agent has told me they are not guaranteed."

(b) A statement to be signed and dated by the insurance agent or other authorized representative of the insurer reading as follows: "I certify that this illustration has been presented to the applicant and that I have explained that any non-guaranteed elements illustrated are subject to change. I have made no statements that are inconsistent with the illustration."

(5) Tabular detail.

(a) A basic illustration shall include the following for at least each policy year from one to ten and for every fifth policy year thereafter ending at age one hundred, policy maturity or final expiration; and except for term insurance beyond the twentieth year, for any year in which the premium outlay and contract premium, if applicable, is to change:

(i) The premium outlay and mode the applicant plans to pay and the contract premium, as applicable;

(ii) The corresponding guaranteed death benefit, as provided in the policy; and

(iii) The corresponding guaranteed value available upon surrender, as provided in the policy.

(b) For a policy that provides for a contract premium, the guaranteed death benefit and value available upon surrender, shall correspond to the period of time (policy year) for which the contract premium has been paid.

(c) Non-guaranteed elements may be shown if described in the contract. In the case of an illustration for a policy on which the insurer intends to credit terminal dividends, they may be shown if the insurer's current practice is to pay terminal dividends. If any non-guaranteed elements are shown they must be shown at the same durations as the corresponding guaranteed elements, if any. If no guaranteed benefit or value is available at any duration for which a non-guaranteed benefit or value is shown, a zero shall be displayed in the guaranteed column.

(H) Standards for supplemental illustrations

(1) A supplemental illustration may be provided so long as:

(a) It is appended to, accompanied by or preceded by a basic illustration that complies with this rule;

(b) The non-guaranteed elements shown are not more favorable to the policy owner than the corresponding elements based on the scale used in the basic illustration;

(d) For a policy that has a contract premium, the contract premium underlying the supplemental illustration is equal to the contract premium shown in the basic illustration. For policies that do not require a contract premium, the premium outlay underlying the supplemental illustration shall be equal to the premium outlay shown in the basic illustration.

(2) The supplemental illustration shall include a notice referring to the basic illustration for guaranteed elements and other important information.

(I) Delivery of illustration and record retention

(1)

(a) If a basic illustration is used by an insurance agent or other authorized representative of the insurer in the sale of a life insurance policy and the policy is applied for as illustrated, a copy of that illustration, signed in accordance with this rule, shall be submitted to the insurer at the time of policy application. A copy also shall be provided to the applicant.

(b) If the policy is issued other than as applied for, a revised basic illustration conforming to the policy as issued shall be sent with the policy. The revised illustration shall conform to the requirements of this rule, shall be labeled "Revised Illustration" and shall be signed and dated by the applicant or policy owner and agent or other authorized representative of the insurer no later than the time the policy is delivered. A copy shall be provided to the insurer and the policy owner.

(2)

(a) If no illustration is used by an insurance agent or other authorized representative of the insurer in the sale of a life insurance policy or if the policy is applied for other than as illustrated, the agent or representative shall certify to that effect in writing on a form provided by the insurer. On the same form the applicant shall acknowledge that no illustration conforming to the policy applied for was provided and shall further acknowledge an understanding that an illustration conforming to the policy as issued will be provided no later than at the time of policy delivery. This form shall be submitted to the insurer at the time of policy application.

(b) If the policy is issued, a basic illustration conforming to the policy as issued shall be sent with the policy and signed no later than the time the policy is delivered. A copy shall be provided to the insurer and the policy owner.

(3) If the basic illustration or revised illustration is sent to the applicant or policy owner by mail from the insurer, it shall include instructions for the applicant or policy owner to sign the duplicate copy of the numeric summary page of the illustration for the policy issued and return the signed copy to the insurer. The insurer's obligation under this paragraph shall be satisfied if it can demonstrate that it has made a diligent effort to secure a signed copy of the numeric summary page. The requirement to make a diligent effort shall be deemed satisfied if the insurer includes in the mailing a self-addressed postage prepaid envelope with instructions for the return of the signed numeric summary page.

(4) A copy of the basic illustration and a revised basic illustration, if any, signed as applicable, along with any certification that either no illustration was used or that the policy was applied for other than as illustrated, shall be retained by the insurer until three years after the policy is no longer in force. A copy need not be retained if no policy is issued.

(J) Annual report; notice to policy owners

(1) In the case of a policy designated as one for which illustrations will be used, the insurer shall provide each policy owner with an annual report on the status of the policy that shall contain at least the following information;

(a) For universal life policies, the report shall include the following:

(i) The beginning and end date of the current report period;

(ii) The policy value at the end of the previous report period and at the end of the current report period;

(iii) The total amounts that have been credited or debited to the policy value during the current report period, identifying each by type (e.g., interest, mortality, expense and riders);

(iv) The current death benefit at the end of the current report period on each life covered by the policy;

(v) The net cash surrender value of the policy as of the end of the current report period;

(vi) The amount of outstanding loans, if any, as of the end of the current report period; and

(vii) For fixed premium policies:

If, assuming guaranteed interest, mortality and expense loads and continued scheduled premium payments, the policy's net cash surrender value is such that it would not maintain insurance in force until the end of the next reporting period, a notice to this effect shall be included in the report; or

(viii) For flexible premium policies:

If, assuming guaranteed interest, mortality and expense loads, the policy's net cash surrender value will not maintain insurance in force until the end of the next reporting period unless further premium payments are made, a notice to this effect shall be included in the report.

(b) For all other policies, where applicable:

(i) Current death benefit;

(ii) Annual contract premium;

(iii) Current cash surrender value;

(iv) Current dividend;

(v) Application of current dividend; and

(vi) Amount of outstanding loan.

(c) Insurers writing life insurance policies that do not build nonforfeiture values shall only be required to provide an annual report with respect to these policies for those years when a change has been made to non-guaranteed policy elements by the insurer.

(2) If the annual report does not include an in force illustration, it shall contain the following notice displayed prominently: "IMPORTANT POLICY OWNER NOTICE: you should consider requesting more detailed information about your policy to understand how it may perform in the future. You should not consider replacement of your policy or make changes in your coverage without requesting a current illustration. You may annually request, without charge, such an illustration by calling [insurer's phone number], writing to [insurer's name] at [insurer's address] or contacting your agent. If you do not receive a current illustration of your policy within thirty days from your request, you should contact your state insurance department." The insurer may vary the sequential order of the methods for obtaining an in force illustration.

(3) Upon the request of the policy owner, the insurer shall furnish an in force illustration of current and future benefits and values based on the insurer's present illustrated scale. This illustration shall comply with the requirements of paragraphs (F)(1), (F)(2), (G)(1) and (G)(5) of this rule. No signature or other acknowledgment of receipt of this illustration shall be required.

(4) If an adverse change in non-guaranteed elements that could affect the policy has been made by the insurer since the last annual report, the annual report shall contain a notice of that fact and the nature of the change prominently displayed.

(K) Annual certifications

(1) The board of directors of each insurer shall appoint one or more illustration actuaries.

(2) The illustration actuary shall certify that the disciplined current scale used in illustrations is in conformity with actuarial standard of practice no. 24, compliance with the NAIC life insurance illustrations model regulation, promulgated by the actuarial standards board in December 2016, and that the illustrated scales used in insurer-authorized illustrations meet the requirements of this rule.

(3) The illustration actuary shall:

(a) Be a member of the American academy of actuaries and qualified to provide such certifications as described in the U.S. qualifications standards promulgated by the American academy of actuaries pursuant to the code of professional conduct;

(b) Be familiar with the standard of practice regarding life insurance policy illustrations;

(i) Violated any provision of, or any obligation imposed by, the insurance law or other law in the course of actuary's dealings as an illustration actuary;

(ii) Been found guilty of fraudulent or dishonest practices;

(iii) Demonstrated the actuary's incompetence, lack of cooperation, or untrustworthiness to act as an illustration actuary; or

(iv) Resigned or been removed as an illustration actuary within the past five years as a result of acts or omissions indicated in any adverse report on examination or as a result of a failure to adhere to generally acceptable actuarial standards;

(d) Not fail to notify the superintendent of any action taken by a commissioner of another state similar to that under paragraph (K)(3)(c) of this rule;

(e) Disclose in the annual certification whether, since the last certification, a currently payable scale applicable for business issued within the previous five years and within the scope of the certification has been reduced for reasons other than changes in the experience factors underlying the disciplined current scale. If non-guaranteed elements illustrated for new policies are not consistent with those illustrated for similar in force policies, this must be disclosed in the annual certification. If non-guaranteed elements illustrated for both new and in force policies are not consistent with the non-guaranteed elements actually being paid, charged or credited to the same or similar forms, this must be disclosed in the annual certification; and

(f) Disclose in the annual certification the method used to allocate overhead expenses for all illustrations:

(i) Fully allocated expenses;

(ii) Marginal expenses; or

(iii) A generally recognized expense table based on fully allocated expenses representing a significant portion of insurance companies and approved by the NAIC or by the superintendent.

(4)

(a) The illustration actuary shall file a certification with the board and with the superintendent:

(i) Annually for all policy forms for which illustrations are used; and

(ii) Before a new policy form is illustrated.

(b) If an error in a previous certification is discovered, the illustration actuary shall promptly notify the board of directors of the insurer and the superintendent.

(5) If an illustration actuary is unable to certify the scale for any policy form illustration the insurer intends to use, the actuary shall promptly notify the board of directors of the insurer and the superintendent of the actuary's inability to certify.

(6) A responsible officer of the insurer, other than the illustration actuary, shall certify annually:

(a) That the illustration formats meet the requirements of this rule and that the scales used in the insurer-authorized illustrations are those scales certified by the illustration actuary; and

(b) That the company has provided its agents with information about the expense allocation method used by the company in its illustrations and disclosed as required in paragraph (K)(3)(f) of this rule.

(7) The annual certifications shall be provided to the superintendent each year by a date determined by the insurer.

(8) If an insurer changes the illustration actuary responsible for all or a portion of the company's policy forms, the insurer shall promptly notify the superintendent of that fact and disclose the reason for the change.

(L) Penalties

In addition to any other penalties provided by the laws of this state, an insurer, agent, or authorized representative of the insurer that violates a requirement of this rule shall be guilty of a violation of section 3901.21 of the Revised Code.

(M) Severability

(N) Effective date

This rule shall apply to policies illustrated or written with an application date on or after the effective date.

Last updated November 17, 2022 at 8:53 AM

History

Effective: November 17, 2022
Promulgated Under: 119.03

Ohio Adm.Code 3901-1-13 Mortgage guaranty insurance.

(A) Purpose

The purpose of this rule is to implement division (A)(24) of section 3929.01 of the Revised Code, as it pertains to the writing and servicing of that kind of insurance known as mortgage guaranty insurance as hereinafter defined.

(B) Authority

This rule is promulgated pursuant to the authority vested in the superintendent under section 3901.041 of the Revised Code.

The definitions set forth in this rule shall govern the construction of the terms used in this rule:

(1) "Mortgage guaranty insurance" is:

(a) Insurance against financial loss by reason of nonpayment of principal, interest or other sums agreed to be paid under the terms of any note or bond or other evidence of indebtedness secured by a mortgage, deed of trust, or other instrument constituting a lien or charge on real estate, provided the improvement on such real estate is a residential building or a condominium unit or buildings designed for occupancy by not more than four families; or

(b) Insurance against financial loss by reason of nonpayment of principal, interest or other sums agreed to be paid under the terms of any note or bond or other evidence of indebtedness secured by a mortgage, deed of trust or other instrument constituting a lien or charge on real estate, providing the improvement on such real estate is a building or buildings designed for occupancy by five or more families or designed to be occupied for industrial or commercial purposes; or

(c) Insurance against financial loss by reason of nonpayment of rent or other sums agreed to be paid under the terms of a written lease for the possession, use or occupancy of real estate, provided the improvement on such real estate is a building or buildings designed to be occupied for industrial or commercial purposes.

(2) "Authorized real estate security" for the purpose of this rule means a note, bond or other evidence of indebtedness, not exceeding one-hundred and three per cent of the lower of the fair value as fixed by appraisal or purchase price of the real estate, secured by a mortgage, deed of trust, or other instrument which constitutes, or is equivalent to, a first lien or charge on real estate, provided:

(a) Any percentage in excess of one-hundred per cent is used only for closing costs.

(b) The real estate loan secured in such manner is one of a type which:

(i) A bank,

(ii) A building and loan association, federal savings and loan, or a service corporation of either, or

(iii) An insurance company, which is supervised and regulated by a department of the state of Ohio or an agency of the federal government, is authorized to make, or would be authorized to make, disregarding any requirement applicable to such an institution that the amount of the loan not to exceed a certain percentage of the value of the real estate.

(c) The improvement on such real estate is a building or buildings designed for occupancy as specified by paragraphs (C)(1)(a) and (C)(1)(b) of this rule.

(d) The lien on such real estate may be subject to and subordinate to the following:

(i) The lien on any public bond, assessment or tax, when no installment, call or payment of or under such bond, assessment or tax is delinquent.

(ii) Outstanding mineral, oil, water or timber rights, rights-of-way, easements or rights-of-way of support, sewer rights, building restrictions or other restrictions or covenants, conditions or regulations of use, or outstanding leases upon such real property under which rents or profits are reserved to the owner thereof.

(3) "Contingency reserve" means an additional premium reserve established to protect policyholders against the effect of adverse economic cycles.

(D) Capital and surplus

A mortgage guaranty insurance company shall not transact the business of mortgage guaranty insurance in the state of Ohio unless: if a stock insurance company, it has capital and surplus in the aggregate amount of not less than two million five hundred thousand dollars, which aggregate shall include paid-in capital of not less than one million and contributed surplus of not less than one million or if a mutual insurance company, a minimum surplus of two million five hundred thousand dollars.

(E) Limitations and restrictions on transacting business

(1) Mortgage guaranty insurance may be transacted in this state by insurers fulfilling the requirements of paragraph (E)(6) of this rule and holding a certificate of authority for the transaction of such insurance pursuant to Title XXXIX of the Revised Code and shall be written only to insure loans secured by authorized real estate securities as defined in paragraph (C)(2) of this rule.

(2) Geographic concentration

(a) A mortgage guaranty insurance company shall not insure loans secured by a single risk in excess of ten per cent of the company's aggregate capital, surplus and contingency reserve.

(b) No mortgage guaranty insurance company shall have more than twenty per cent of its total insurance in force in any one metropolitan statistical area ("MSA") as defined by the United States office of management and budget.

(3) Advertising

No mortgage guaranty insurance company or any agent or representative of a mortgage guaranty insurance company shall prepare or distribute or assist in preparing or distributing any brochure, pamphlet, report or any form of advertising to the effect that the real estate investments of any financial institution are "insured investments," unless the brochure, pamphlet, report or advertising clearly states that the loans are insured by mortgage guaranty insurance companies authorized to transact the business of mortgage guaranty insurance in the state of Ohio or are insured by an agency of the federal government, as the case may be.

(4) Investment limitation

A mortgage guaranty insurance company shall not invest in notes or other evidences of indebtedness secured by a mortgage or other lien upon real property. This section shall not apply to obligations secured by real property or contracts for the sale of real property, which obligations or contracts of sale are acquired in the course of the good faith settlement of claims under policies of insurance issued by the mortgage guaranty insurance company, or in the good faith disposition of real property so acquired.

(5) Coverage limitation

(a) A mortgage guaranty insurance company shall limit its coverage, with respect to any one authorized real estate security, net of reinsurance, ceded to a reinsurer unaffiliated with the company or an affiliated reinsurer which does not own, and is not owned by, in whole or in part, the ceding mortgage guaranty insurer, to a maximum of twenty-five per cent of the entire indebtedness to the insured under that authorized real estate security. In lieu thereof, a mortgage guaranty insurance company may elect to pay the entire indebtedness to the insured and acquire title to the authorized real estate security.

(b) The coverage limits set out in paragraph (E)(5)(a) of this rule shall not apply to a mortgage guaranty insurance company that possesses capital and surplus in excess of twenty-five million dollars.

(6) Mortgage guaranty insurance as monoline

(a) A mortgage guaranty insurance company which anywhere transacts any class of insurance other than mortgage guaranty insurance is not eligible to transact mortgage guaranty insurance in the state of Ohio.

(b) A mortgage guaranty insurance company which anywhere transacts the classes of insurance defined in paragraph (C)(1)(b) or (C)(1)(c) of this rule may not transact in the state of Ohio the class of mortgage guaranty insurance defined in paragraph (C)(1)(a) of this rule, provided, however, a mortgage guaranty insurance company which transacts a class of insurance defined in paragraph (C)(1)(a) of this rule may write up to five per cent of its insurance in force on residential property designed for occupancy by five or more families.

(7) Underwriting discrimination

(a) Nothing in this rule shall be construed as limiting the right of any mortgage guaranty insurance company to impose reasonable requirements upon the lender with regard to the terms of any note or bond or other evidence of indebtedness secured by a mortgage or deed of trust, such as requiring a stipulated down payment by the borrower.

(b) No mortgage guaranty insurance company may discriminate in the issuance or extension of mortgage guaranty insurance on the basis of sex, marital status, race, color, creed, national origin, physical handicap or mental handicap.

(c) No policy of mortgage guaranty insurance, excluding policies of reinsurance, shall be written unless and until the insurer itself or the lender, in compliance with underwriting directives from the insurer and subject to periodic underwriting audits by the insurer, shall have conducted a reasonable and thorough examination of the evidence supporting credit worthiness of the borrower and the appraisal report reflecting market evaluation of the property and shall have determined that prudent underwriting standards have been met.

(8) Policy forms and premium rates filed

(a) All policy forms and endorsements, and rates to be charged and the premium including all modifications of rates and premiums to be paid by the policyholder shall be filed with and subject to the provisions of sections 3937.01 to 3937.18 of the Revised Code. With respect to owner-occupied, single-family dwellings or owner-occupied two family dwellings, the mortgage guaranty insurance policy shall provide that the borrower shall not be liable to the insurance company for any deficiency arising from a foreclosure sale.

(b) Every mortgage guaranty insurance company shall adopt, print and make available a schedule of premium charges for mortgage guaranty insurance policies. Premium charges made in conformity with the provisions of this rule shall not be deemed to be of interest or other charges under any other provision of law limiting interest or other charges in connection with mortgage loans. The schedule shall show the entire amount of premium charge for each type of mortgage guaranty insurance policy issued by the insurance company.

(9) Outstanding total liability

(a) A mortgage guaranty insurance company shall not at any time have outstanding a total liability, net of reinsurance, under its aggregate mortgage guaranty insurance policies exceeding twenty-five times its capital, surplus and contingency reserve. In the event that any mortgage guaranty insurance company has outstanding total liability exceeding twenty-five times its capital, surplus and contingency reserve, it shall cease transacting new mortgage guaranty business until such time as its total liability no longer exceeds twenty-five times its capital, surplus and contingency reserve.

(b) The superintendent, in the superintendent's sole discretion, may permit a temporary exception to the requirement set out in paragraph (E)(9)(a) of this rule at the written request of a mortgage guaranty insurer upon a finding that the mortgage guaranty insurer's policyholders position is reasonable in relationship to the mortgage guaranty insurer's aggregate insured risk and adequate to its financial needs. The request must be made in writing at least ninety days in advance of the date that the mortgage guaranty insurer expects to exceed the requirements of paragraph (E)(9)(a) of this rule and shall, at a minimum, address the factors specified in paragraph (E)(9)(c) of this rule, provided, however, that a mortgage guaranty insurance company may submit a request for such exception within ten days after the effective date of this rule as amended and shall be deemed to have complied with the ninety day requirement in paragraph (E)(9)(b) of this rule.

(c) In determining whether a mortgage guaranty insurer's policyholders position is reasonable in relation to the mortgage guaranty insurer's aggregate insured risk and adequate to its financial needs, the superintendent shall consider all of the following:

(i) The size of the mortgage guaranty insurer as measured by its assets, capital and surplus, reserves, premium writings, insurance in force and other criteria as deemed appropriate by the superintendent.

(ii) The extent to which the mortgage guaranty insurer's business is diversified across time, geography, credit quality, origination, and distribution channels.

(iii) The nature and extent of the mortgage guaranty insurer's reinsurance program.

(iv) The quality, diversification, and liquidity of the mortgage guaranty insurer's assets and its investment portfolio.

(v) The historical and forecasted trend in the size of the mortgage guaranty insurer's policyholder's position.

(vi) The policyholder's position maintained by other comparable mortgage guaranty insurers in relation to the nature of their respective insured risks.

(vii) The adequacy of the mortgage guaranty insurer's reserves.

(viii) The quality and liquidity of investments in affiliates. The superintendent may treat any such investment as a non-admitted asset for purposes of determining the adequacy of surplus as regards policyholders.

(ix) The quality of the mortgage guaranty insurer's earnings and the extent to which the reported earnings of the mortgage guaranty insurer include extraordinary items.

(x) An independent actuary's opinion as to the reasonableness and adequacy of the mortgage guaranty insurer's historical and projected policyholder position.

(xi) The capital contributions which have been infused or are available for future infusion into the mortgage guaranty insurer.

(xii) The historical and projected trends in the components of the mortgage guaranty insurer's aggregate insured risk, including, but not limited to, the quality and type of the risks included in the aggregate insured risk.

(d) The superintendent may retain accountants, actuaries, or other experts to assist the superintendent in the review of the mortgage guaranty insurer's request submitted pursuant to paragraph (E)(9)(b) of this rule. The mortgage guaranty insurer shall bear the cost of retaining such experts.

(e) Any waiver shall be for a specified time, not to exceed two years and shall be subject to any terms and conditions imposed by the superintendent, in the superintendent's sole discretion.

(10) High risk underwriting

Any mortgage guaranty insurance company which receives five per cent or more of its net annual premium from policies written to insure loans secured by authorized real estate securities having a greater than ninety-five per cent loan-to-value ratio shall notify the superintendent within thirty days. The superintendent may, if the superintendent finds that further underwriting of loans having a greater than ninety-five per cent loan-to-value ratio would have an adverse impact on the solvency of the company, prohibit the company from further underwriting such loans.

(F) Rebates, commissions, charges and conflict of interest

(1) Rebates, commissions and charges

(a) A mortgage guaranty insurance company shall not pay or cause to be paid either directly or indirectly, to any owner, purchaser, lessor, lessee, mortgagee or prospective mortgagee of the real property which secures the authorized real estate security or which is the fee of an insured lease, or any interest therein, or any person who is acting as an agent, representative, attorney or employee of such owner, purchaser or mortgagee, any commission, or any part of its premium charges or any other consideration as an inducement for or as compensation on any mortgage guaranty insurance business.

(b) In connection with the placement of any mortgage guaranty insurance, a mortgage guaranty insurance company shall not cause or permit any commission, fee, remuneration, or other compensation to be paid to, or received by, any insured lender or lessor; any subsidiary or affiliate of any insured; any officer, director or employee of any insured or any member of their immediate family; any corporation, partnership, trust, trade association in which any insured or any such officer, director, or employee or member of their immediate family has a financial interest; or any designee, trust, nominee, or other agent or representative of any of the foregoing.

(c) No mortgage guaranty insurance company shall make any rebate of any portion of the premium charge shown by the schedule required by paragraph (E)(8)(b) of this rule. No mortgage guaranty insurance company shall quote any rate or premium charge to any person which is different than that currently available to others for the same type of coverage. The amount by which any premium charge is less than that called for by the current schedule of premium charges is an unlawful rebate.

(2) Conflict of interest

(a) If a member of a holding company system, a mortgage guaranty insurance company licensed to transact business in this state shall not knowingly underwrite mortgage guaranty insurance on mortgages originated by the holding company system or an affiliate or on mortgages originated by any mortgage lender to which credit is extended, directly or indirectly, by the holding company system or any affiliate unless such insurance is underwritten on the same basis, for the same consideration and subject to the same insurability requirements as insurance provided to nonaffiliated lenders.

(i) Any mortgage guaranty insurance company which receives, in the aggregate, twenty per cent of more of its net annual premium from policies written to insure mortgages originated by affiliates in the holding company system shall, concurrent with the filing of its annual statement, notify the superintendent of that fact.

(ii) The superintendent may, if the superintendent finds that further underwriting of policies issued on said loans would have an adverse impact on the solvency of the company, prohibit the mortgage guaranty insurance company for further underwriting such loans.

(b) A mortgage guaranty insurance company, the holding company system of which it is a part or any affiliate shall not pay any commission, remuneration, rebates or engage in activities proscribed in paragraph (F)(1) of this rule.

(G) Reserves

(1) Unearned premium reserves

A mortgage guaranty insurance company shall compute and maintain an unearned premium reserve as required by the superintendent of insurance.

(2) Loss reserve

A mortgage guaranty insurance company shall compute and maintain adequate case basis and other loss reserves which accurately reflect loss frequency and loss severity and shall include components for claims reported and unpaid, and for claims incurred but not reported, including estimated losses on:

(a) Insured loans which have resulted in the conveyance of property which remains unsold;

(b) Insured loans in the process of foreclosure;

(c) Insured loans in default for four months or for any lesser period which is defined as default for such purposes in the policy provisions; and

(d) Insured leases in default for four months or for any lesser period which is defined as default for such purposes in policy provisions.

(3) Contingency reserve

Each mortgage guaranty insurance company shall establish a contingency reserve out of net premiums remaining (gross premiums less premiums returned to policyholders net of reinsurance) after establishment of the unearned premium reserve. The mortgage guaranty insurance company shall contribute to the contingency reserve an amount equal to fifty per cent of such remaining earned premiums. Contributions to the contingency reserve made during each calendar year shall be maintained for a period of one hundred twenty months, except that withdrawals may be made by the company in any year in which the actual incurred losses exceed thirty-five per cent of the corresponding earned premiums, and no such releases shall be made without prior approval by the superintendent of the insurance company's state of domicile. If the coverage provided in this rule exceeds the limitations set forth herein, the superintendent of insurance shall establish a rate formula factor that will produce a contingency reserve adequate for the added risk assumed. The face amount of an insured mortgage shall be computed before any reduction by the mortgage guaranty insurance company's election to limit its coverage to a portion of the entire indebtedness.

(H) Reinsurance

Whenever a mortgage guaranty insurance company obtains reinsurance from an insurance company which is properly licensed to provide such reinsurance or from an appropriate governmental agency, the mortgage guaranty insurer and the reinsurer shall establish and maintain the reserves required in this rule in appropriate proportions in relation to the risk retained by the original insurer and ceded to the assuming reinsurer so that the total reserves established shall not be less than the reserves required by this rule.

(I) Miscellaneous

(1) Whenever the laws of any other jurisdiction in which a mortgage guaranty insurance company subject to the requirement of this rule is also licensed to transact mortgage guaranty insurance require a larger unearned premium reserve or contingency reserve in the aggregate than that set forth herein, the establishment of such larger unearned premium reserve or contingency reserve in the aggregate shall be deemed to be in compliance with this rule.

(2) Unearned premium reserves and contingency reserves shall be computed and maintained on risks insured after the effective date of this rule as required by paragraphs (G)(1) and (G)(3) of this rule. Unearned premium reserves and contingency reserves on risks insured before the effective date of this rule may be computed and maintained as required previously.

(J) Severability

Last updated February 14, 2022 at 8:54 AM

History

Effective: February 14, 2022
Promulgated Under: 119.03

Ohio Adm.Code 3901-1-14 Credit life and credit accident health insurance.

(A) Purpose

The purpose of this rule is to protect the interests of debtors and the public in Ohio by providing a framework for the transaction of credit life and credit accident and health insurance that ensures a complicated product is carefully and thoughtfully constructed and administered.

(B) Authority

This rule is promulgated pursuant to the authority vested in the superintendent under section 3901.041 of the Revised Code.

This rule is issued pursuant to Chapter 3918. of the Revised Code regulating credit life insurance and credit accident and health insurance and is applicable to all policies, riders, applications for insurance, notices of proposed insurance, certificates of insurance and endorsements providing credit life insurance and credit accident and health insurance issued or renewed on or after November 1, 1983 in the state of Ohio.

Certificates, notices of proposed insurance and premium rates applicable in connection with existing group policies of credit insurance are to be conformed to the requirements of this rule not later than the anniversary date of the group policy next following the effective date of this rule.

No existing group credit life or group credit accident and health policy presently in force in Ohio will be rewritten or redated so as to delay or avoid the effect of this rule.

Any policy issued to replace an existing policy of credit insurance or any amendment to any existing policy of credit insurance is to be ignored for the purpose of determining the anniversary if such change is made after July 1, 1983.

(D) Filing and approval, disclosure

Section 3918.07 of the Revised Code provides that all policies, certificates of insurance, notices of proposed insurance, applications for insurance, endorsements and riders providing coverage on residents of Ohio are to be filed with the superintendent of insurance and that the superintendent may disapprove any such form.

(1) No individual or group policy of credit life insurance or credit accident and health insurance including no application, binder, endorsement, rider, certificate of group insurance, notice of proposed insurance, or other form pertaining to credit life insurance or credit accident and health insurance under such policy are to be issued for delivery or used in this state, on or after the effective date of this rule unless such forms and the premium rates and refund formulas therefore have been filed with the superintendent of insurance and approved prior to such issuance or use and have not been subsequently disapproved in accordance with division (B) of section 3918.07 of the Revised Code.

(2) If a group policy of credit life insurance or credit accident and health insurance:

(a) Has been delivered in this state before the effective date of this rule, or

(b) Delivered in another state before or after the effective date of this rule-

The insurer is required to file only the group certificate and notice of proposed insurance as specified in divisions (B) and (D) of section 3918.06 of the Revised Code and such forms are to be approved by the superintendent if they conform with the requirements of Chapter 3918. of the Revised Code and this rule, and if the schedules of premium rates applicable to the insurance evidenced by such certificate or notice are not in excess of the standards set forth in this rule. Provided, however, the premium rate in effect on existing group policies may be continued until the first policy anniversary date following the effective date of this rule.

(3) Division (D) of section 3918.06 of the Revised Code provides that the copy of the application for, or notice of, proposed insurance is separate and apart from the credit instrument unless the information required "is prominently set forth therein." The copy of the application for, or notice of, proposed insurance is deemed to be prominently set forth in the credit instrument if set forth in a separate provision on the face or reverse in type at least equal in size and prominence to the type used for the other provisions; provided that if the same is set forth on the reverse of the credit instrument, reference is to be made on the face of the instrument and provided further that the name of the debtor proposed for insurance, any figures relating to the amount and term of coverage, and the rate of amount of payment for insurance by the debtor need not be contained in a separate provision of the instrument, but may be set forth elsewhere in the instrument.

(4)

(a) The disclosure required by paragraph (D)(3) of this rule is to be made to the debtor at the time of the debtor's application for credit life or credit accident and health insurance (excluding non-contributory insurance) in connection with a credit transaction, and before the debtor becomes obligated to purchase such insurance.

(b) The form(s) containing the disclosure are to be filed with the superintendent of insurance and the disclosure language is subject to disapproval pursuant to section 3918.07 of the Revised Code.

(5) If a creditor makes available to the debtors, more than one plan of credit life insurance or more than one plan of credit accident and health insurance, all debtors must be informed of all such plans applicable to the type of loan.

(E) Premium rate and coverage standards

Where rate filings are made in accordance with the premium rate standards outlined in this paragraph of this rule, the filed rates equivalent to prima facie are deemed not to be excessive in relation to the benefits provided.

(1) Standards for premium rates for credit life insurance

(a) Monthly premium rate:

It is presumed that the premium rate for credit life insurance, for which premiums are paid monthly on outstanding balances, is not excessive in relation to the benefits provided if the monthly premium rate for such coverage does not exceed 0.846 dollars per one thousand dollars of outstanding balance of insured indebtedness.

(b) Prima facie single premium rate for decreasing term credit life insurance:

It is presumed that the single premium rate for decreasing term credit life insurance for which premiums are paid in one sum for the entire duration of indebtedness, is not excessive in relation to the benefits provided if the single premium rate for such insurance does not exceed a rate of fifty-five cents per one hundred dollars repayable in twelve substantially equal monthly installments and, for other repayment periods, the equivalent single premium rates calculated according to the formula SPn = (n + 1)/20 times the monthly outstanding balance premium rate standard from paragraph (E)(1)(a) of this rule, where "n" is equal to the number of monthly payments, and "SPn" is the single premium rate per one hundred dollars repayable in "n" monthly installments.

(c) As an alternative to the standards set forth above, an insurer may, where age data applicable to the insured persons are available, determine premium rates based on such age data and computed in a manner consistent herewith, subject to approval pursuant to section 3918.07 of the Revised Code.

(d) Standards for premium rates for indebtedness repayable in installments other than as indicated in paragraph (E)(1) of this rule are to be the equivalent of these standards.

(e) Other additional benefits to policyholders and their debtors, (i.e. dismemberment, partial disability, total and permanent disability, and suicide) may be provided by the insurance carriers if they so desire, but in no event may the charge for such coverage be passed on to the debtor so as to increase the total rate to exceed the rate established by this rule. If a suicide exclusion is utilized, such exclusion cannot be effective for more than six months following the effective date of coverage for that insured person.

(f) The foregoing rate standards may be used for credit life insurance with or without age limitations. If an age limitation is provided, it may not be more restrictive than to exclude from coverage any debtor who has attained age sixty-five at incurral of indebtedness, or who will have attained age sixty-six at maturity of the indebtedness.

(g) A policy provision that restricts coverage based on age in accordance with paragraph (E)(1)(c) or (E)(1)(f) of this rule, in the absence of misstatement, is valid only for the first sixty days of coverage. During the first sixty days of coverage the insurer has the right to cancel or restructure coverage that would otherwise provide benefits in excess of policy age restrictions.

(h) These standards are applicable to the type of decreasing term credit life insurance contract customarily offered for sale protecting credit obligations repayable in substantially equal installments. Standards for premium rates in the case of forms which vary in any material respect from this standard type of credit insurance contract may reflect such variations to the extent that there is a measurable difference in the claims cost of the coverage provided and must receive approval pursuant to section 3918.07 of the Revised Code on a case basis.

(i) Premium rates for joint credit life insurance are not to exceed one and three-quarters times the applicable single credit life rate.

(j) Amount of credit life insurance:

(i) In connection with loans or other credit transactions of sixty months or less, the amount of credit life insurance is not to exceed the scheduled or actual amount of indebtedness, whichever is greater.

(ii) For loans or other credit transactions exceeding sixty months the amount of credit life insurance is not to exceed the net indebtedness, exclusive of unearned finance charges.

(k) The foregoing standards for premium rates are those to become effective November 1, 1983. Effective May 1, 1985, the monthly outstanding balance premium rate is not to exceed eighty cents per one thousand dollars outstanding balance of insured indebtedness and the single premium rate for decreasing term credit life insurance for which premiums are paid in one sum for the entire duration of indebtedness is not to exceed fifty-two cents per one hundred dollars repayable in twelve substantially equal monthly installments. The superintendent is to use the experience data reported on the national association of insurance commissioners (NAIC) annual statement credit insurance experience exhibit to adjust the prima facie rates for credit life insurance on an industry-wide basis as necessary to establish and maintain a fifty per cent loss ratio. Prima facie rates are first to be adjusted in like manner effective November 1, 1986, based on the data reported the previous year, and adjusted in like manner effective November first of every year after 1986. However, after the November 1, 2013 adjustment, prima facie rates are to be adjusted in like manner effective January 1, 2017, based on the data reported for the previous three years, and be adjusted in like manner effective January first of every third year after two-thousand fourteen.

(2) Standards for premium rates for credit accident and health insurance

(a) If premiums are paid in one sum for the entire duration of the indebtedness the following rates per one hundred dollars of initial indebtedness repayable in the indicated number of equal monthly installments are applicable:

| Duration | Prima facie single premium rate/$100 14-day retroactive plan | Prima facie single premium rate/$100 14-day nonretroactive plan | | --- | --- | --- | | 6 | $1.87 | $1.50 | | 12 | 2.40 | 2.10 | | 18 | 2.76 | 2.44 | | 24 | 3.03 | 2.71 | | 30 | 3.25 | 2.95 | | 36 | 3.46 | 3.16 | | 42 | 3.65 | 3.34 | | 48 | 3.82 | 3.51 | | 54 | 3.98 | 3.67 | | 60 | 4.14 | 3.82 | | 66 | 4.31 | 3.97 | | 72 | 4.45 | 4.11 | | 78 | 4.58 | 4.24 | | 84 | 4.71 | 4.37 | | 90 | 4.84 | 4.50 | | 96 | 4.95 | 4.62 | | 102 | 5.07 | 4.74 | | 108 | 5.18 | 4.85 | | 114 | 5.23 | 4.96 | | 120 | 5.41 | 5.07 |

| Duration | 30-day retroactive plan | 30-day nonretroactive plan | | --- | --- | --- | | 6 | $1.28 | $ .74 | | 12 | 1.81 | 1.27 | | 18 | 2.04 | 1.62 | | 24 | 2.20 | 1.82 | | 30 | 2.34 | 1.96 | | 36 | 2.47 | 2.08 | | 42 | 2.57 | 2.19 | | 48 | 2.67 | 2.28 | | 54 | 2.77 | 2.38 | | 60 | 2.85 | 2.47 | | 66 | 2.95 | 2.55 | | 72 | 3.04 | 2.63 | | 78 | 3.11 | 2.70 | | 84 | 3.19 | 2.78 | | 90 | 3.26 | 2.85 | | 96 | 3.33 | 2.92 | | 102 | 3.39 | 2.98 | | 108 | 3.46 | 3.06 | | 114 | 3.52 | 3.11 | | 120 | 3.59 | 3.18 |

Effective May 1, 1985, the one sum premium per one hundred dollars of initial indebtedness is to be one hundred three per cent of the rates listed in this paragraph of this rule. The superintendent is to use the experience data reported on the national association of insurance commissioners (NAIC) annual statement credit insurance experience exhibit to adjust the prima facie rates for credit accident and health insurance on an industry-wide basis as necessary to establish and maintain a sixty per cent loss ratio. Prima facie rates are to first be adjusted in like manner effective November 1, 1986, based on data reported the previous year, and are to be adjusted in like manner effective November first, of every year after 1986. However, after the November 1, 2013 adjustment, prima facie rates are to be adjusted in like manner effective January 1, 2017, based on the data reported for the previous three years, and adjusted in like manner effective January first of every third year after two-thousand fourteen.

The above shows rates only for credit transactions repayable in a total number of installments which is a multiple of six. For transactions repayable in numbers of installments not set forth above; either the actuarial equivalent or straight-line interpolation may be utilized. The rate standards set forth above are to be applicable for such contracts which contain a provision excluding or denying claim for disability resulting from pre-existing illness, disease or physical condition (whether or not by name or specific description) which totally disabled the debtor at any time during the six-month period immediately preceding the effective date of the debtor's coverage, or provisions which exclude coverage for pre-existing conditions for which the insured debtor received medical advice, diagnosis, or treatment within six months preceding the effective date of the debtor's coverage, and which caused loss within the six months following the effective date of coverage, but contain no other provision which excludes or restricts liability in the event of disability. The rate standards set forth herein may be increased ten per cent for such contracts that do not contain a provision excluding or denying a claim for disability resulting from pre-existing conditions.

Any contract to which the above rates apply may contain provisions excluding or restricting coverage in the event of pregnancy, intentionally self-inflicted injuries, foreign travel or residence, or flight in non-scheduled aircraft, war or military service.

Any contract may also provide an age limitation, which limitation may not be more restrictive than to exclude from coverage any debtor who has attained age sixty-five at incurral of indebtedness, or who will have attained age sixty-six at maturity of the indebtedness.

No contract is to provide for an actively-at-work test that requires the debtor to be employed more than thirty hours per week.

(b) Standards for premium rates for indebtedness repayable in installments other than as indicated in paragraph (E)(2)(a) of this rule are to be the equivalent of the standards.

(c) If premium rates are payable other than in one sum, an insurer may determine such rates on a basis consistent with the rates set forth in paragraph (E)(2)(a) of this rule.

(d) The standard for premium rates set forth in paragraph (E)(2)(a) of this rule is applicable to the form of credit accident and health insurance described which is illustrative of the kind of coverage that may be issued. This rule, however, does not preclude an insurer from filing other forms of credit accident and health insurance for consideration by the superintendent.

(e) Standards for premium rates for contracts providing benefits on a basis different from those illustrated above are to be the equivalent of the standard.

(f) A policy provision that restricts coverage based on age in accordance with paragraph (E)(2)(a) of this rule, in the absence of misstatement, is to be valid only for the first sixty days of coverage. During the first sixty days of coverage the insurer has the right to cancel or restructure coverage that would otherwise provide benefits in excess of policy restrictions.

(3) Combination coverage

Standards for premium rates for contracts combining credit life and credit accident and health coverage in one policy are to be consistent with the standards set forth in paragraphs (E)(1) and (E)(2) of this rule, however, such contracts must provide for a refund of the unearned credit accident and health premium, in the event of the debtor's death. Refunds are computed from the date of death. These refunds are also to be provided when the insured debtor is covered by separate contracts providing credit life and credit accident and health coverage.

(4) Loss ratio adjustments

Notwithstanding any other provision or paragraph of this rule to the contrary, the superintendent of insurance may, after November 1, 1986, establish minimum loss ratio percentage requirements, based upon claim experience and expense factors, that differ from the fifty per cent standard for credit life and sixty per cent standard for credit accident and health coverage set forth in paragraphs (E)(1), (E)(2), and (E)(8) of this rule.

After November 1, 1986, any insurer desiring to show cause why its premium rates for a case or class of business should not be reduced, as set forth in paragraphs (E)(1) and (E)(8) of this rule, must agree to an examination and audit of it's claim experience and expense factors. The examination and audit will be performed by qualified actuaries and accountants selected by the superintendent of insurance. The expense of the examination and audit will be paid for by the insurer and the insurer must agree to accept the findings of the superintendent of insurance which will be based upon the results of the examination and audit.

(5) Definitions

As used in connection with credit life or accident and health insurance, the following terms mean:

(a) "Claims" means benefits payable on death or disability and does not include loss adjustment expense, claim settlement expense or any other expense, charge, cost or payment.

(b) "Claims incurred" means claims actually paid during the year, plus any estimated reserves at the end of the year for reported claims in the process of settlement, and reserves for unreported claims, and less any estimated reserves at the end of the preceding year for reported claims in the process of settlement and for unreported claims.

Where premiums are payable monthly based on the outstanding balance of insured indebtedness, "premiums earned" means the total premiums paid the insurer during the reporting year plus premiums due the insurer but unpaid at the end of the preceding year, less the premiums due the insurer but unpaid at the end of the current year.

Where premiums are payable in one sum for the entire duration of indebtedness, "premiums earned" means the one-sum premiums which become due the insurer during the reporting year, plus the reserve at the beginning of the reporting year minus the reserve at the end of the reporting year.

The premiums as defined under either system of premium payments are without reduction of any kind except for premiums refunded or adjusted on account of termination of coverage.

(d) "Class of business" means a grouping of businesses under the following categories, each category being referred to as a class of business:

(i) Credit unions;

(ii) Commercial banks, societies for savings, and savings and loan associations;

(iii) Finance companies (including second mortgage lenders);

(iv) Motor vehicle dealers under retail installment sale contracts;

(v) All other sales finance companies (including dealers under retail installment sale contracts);

(vi) Production credit associations;

(vii) All others.

(6) Life premium rate deviations

Credit life insurance premium rates exceeding the standards in paragraph (E)(1) of this rule may be approved, as not being excessive in relation to the benefits provided, for the insurance covering the debtors of a creditor or a class of business hereinafter called the "case," if the credible loss ratio for the case is more than sixty per cent. For such cases, the permissible premium rate is to be computed as follows, unless otherwise determined by the superintendent.

(a) Determine the credible monthly claim cost by multiplying the monthly outstanding balance prima facie premium rate of 0.846 dollars per one thousand dollars by the case credible loss ratio obtained in paragraph (E)(6)(e)(iii) of this rule.

(b) The permissible deviated outstanding balance rate is equal to the credible monthly claim cost plus 0.338 dollars per one thousand dollars.

(c) If the case is on the single premium basis, the permissible schedule of single premium rates is obtained using the formula SPn = (n + 1)/20 times the deviated monthly outstanding balance rate from paragraph (E)(6)(b) of this rule, where:

"n" = the number of equal monthly payments.

"SPn" = the single premium rate per one hundred dollars for "n" monthly payments.

(d) The monthly outstanding balance prima facie premium rate of 0.846 dollars per one thousand dollars indicated in paragraph (E)(6)(a) of this rule, will reduce to eighty cents per one thousand dollars on May 1, 1985. The 0.338 dollars per one thousand dollars loading factor indicated in paragraph (E)(6)(b) of this rule, will reduce to thirty-two cents on May 1, 1985. On November 1, 1986 the monthly outstanding balance prima facie premium rate in paragraph (E)(6)(a) of this rule will be the rate required by paragraph (E)(1)(k) of this rule and the loading factor in paragraph (E)(6)(b) of this rule will be forty per cent of the outstanding balance rate.

(e) The credible loss ratio is computed as follows:

(i) Case size and credibility

Credibility of experience depends upon the case size. Case size is measured according to three premium size brackets to reflect the greater credibility of experience resulting from greater size. The premiums in the brackets are the premiums based on the prima facie premium rate standard. The size brackets are:

| Case size | Earned premium | | --- | --- | | 1 | $ 50,000 - 200,000 | | 2 | 200,000 - 500,000 | | 3 | 500,000 - and over |

(ii) Credible experience period

The credible experience period is three years if the case aggregate earned premium based on the prima facie rate, developed during the most recent three-year period is less than five hundred thousand dollars. If the case aggregate earned premium during the most recent three-year period based on the prima facie rate is equal to or greater than five hundred thousand dollars, then the credible experience period is the most recent number of years needed to accumulate five hundred thousand dollars of premium on the prima facie rate. For example, if a case were of sufficient size to generate at least five hundred thousand dollars in one year, the credible experience period would be one year.

The experience used in determining the permissible rate is the experience during the credible experience period, as follows:

(iii) Credible loss ratio

The credible loss ratio is based on the experience of the credible experience period. It is a composite of the case's actual loss ratio (ALR) during the credible experience period and the basic loss ratio (BLR) contemplated by the prima facie rate standards which is fifty per cent for credit life insurance.

The actual loss ratio is the ratio of the incurred claims of the credible experience period divided by the earned premium based on the prima facie rate during the credible experience period.

The compositing of the actual and basic loss ratios takes account of fluctuations about expected experience, and dampens the effect of non-credible fluctuations. The factors used in compositing the loss ratios depend upon case size in accordance with the three size brackets in paragraph (E)(6)(e)(i) of this rule, as follows:

| Case size | Credible loss ratio | | --- | --- | | 1 | 50% of ALR plus 50% of BLR | | 2 | 75% of ALR plus 25% of BLR | | 3 | 100% of ALR plus 0% of BLR |

(7) Accident and health premium rate deviations

Credit accident and health insurance premium rates exceeding the standards in paragraph (E)(2) of this rule may be approved, as not being excessive in relation to the benefits provided, for the insurance covering the debtors of a creditor or a class of business hereinafter called the "case," if the credible loss ratio for the case is more than sixty per cent. For such cases, the permissible premium rate is to be computed as follows, unless otherwise determined by the superintendent.

(a) Determine the credible claim cost by multiplying the prima facie premium rate, by the case credible loss ratio, obtained in paragraph (E)(7)(c)(iii) of this rule.

(b) The permissible deviated outstanding balance rate is equal to the credible monthly claim cost plus the loading factor. The loading factor is computed as a percentage of the prima facie rate as adjusted in accordance with the following table:

(i) Effective November 1, 1983 - thirty-five per cent times the prima facie rate set forth in paragraph (E)(2)(a) of this rule;

(ii) Effective May 1, 1985 - thirty-seven per cent times the prima facie rate set forth in paragraph (E)(2)(a) of this rule;

(iii) Effective November 1, 1986 - forty per cent times the prima facie rate set forth in paragraph (E)(2)(a) of this rule.

(i) Case size and credibility

| Case size | Earned premium | | --- | --- | | 1 | $ 50,000 - 200,000 | | 2 | 200,000 - 500,000 | | 3 | 500,000 - and over |

(ii) Credible experience period

The credible experience period is three years if the case aggregate earned premium based on the prima facie rate, developed during the most recent three-year period is less than five hundred thousand dollars. If the case aggregate earned premium during the most recent three-year period based on the prima facie rate is equal to or greater than five hundred thousand dollars then the credible experience period is the most recent number of years needed to accumulate five hundred thousand dollars of premium on the prima facie rate. For example, if a case were of sufficient size to generate at least five hundred thousand dollars in one year, the credible experience period would be one year.

(iii) Credible loss ratio

The actual loss ratio is the ratio of the incurred claims of the credible experience period divided by the earned premium based on the prima facie rate during the credible experience period.

| Case size | Credible loss ratio | | --- | --- | | 1 | 50% of ALR plus 50% of BLR | | 2 | 75% of ALR plus 25% of BLR | | 3 | 100% of ALR plus 0% of BLR |

(8) Required downward rate deviations

After November 1, 1986, any insurer which produces, for a case or class of business, as determined by the insurer, a credible loss ratio of less than fifty per cent for life and sixty per cent for accident and health, is required to make appropriate rate reductions or show cause why its premium rates for such case or class of business should not be reduced. When the rate for any case is required to be reduced, such reduction is to continue whether the case remains with the insurer or is transferred to another insurer, until the loss experience demonstrates that the reduction is no longer appropriate.

(9) Cases with no identifiable charge

Where no debtor of a case is paying directly or indirectly any part of the premium, the case rates are such reasonable rates as are approved by the superintendent.

(10) Approved rates

No insurer, commencing with the policy anniversary date on or after the effective date of this rule, is to charge a premium rate for credit life or credit health and accident insurance insuring a debtor under an existing group policy of credit life or accident and health insurance at a rate greater than that approved for the insurer under this rule, or a premium rate under a group policy of credit life or credit accident and health insurance for any renewal year greater than the rate approved pursuant to this rule.

(11) Time limit on deviations

Premium rate deviations as outlined in paragraph (E)(6) of this rule may be utilized for a period of time not to exceed the credible experience period or two years, whichever is less.

All rates in excess of those outlined in this rule are withdrawn as of the effective date of this rule except that any rate provided under a policy of group credit life insurance or group credit accident and health insurance heretofore approved by the department of insurance in excess of those prescribed herein may be continued until the first anniversary date of such group policy after the effective date of this rule. Such rate may be thereafter continued only if an application for increase in premium rates is approved with respect thereto.

(12) Charges for credit insurance

It will be considered that the debtor is charged a specific amount for insurance if, among other things:

(a) An identifiable amount for insurance is disclosed in the credit or other instrument furnished the debtor which sets out the financial elements of the credit transaction, or

(b) There is a differential in finance, interest, service or other similar charge rates charged to debtors who, except for their insurance status (insured vs. non-insured), are in like circumstances.

(F) Termination of coverage and refunds

(1) If a debtor is covered by a group credit insurance policy providing for the payment of single premiums to the insurer, then provision is to be made by the insurer that in the event of termination of the master policy for any reason, insurance coverage with respect to any debtor insured under such master policy shall be continued for the entire period for which the single premium has been paid, subject to the debtor's right to cancel the insurance at any time by express action.

(2) If a debtor is covered by a group credit insurance policy providing for payment of premiums to the insurer on a monthly outstanding balance basis, then the group policy is to provide that, in the event of termination of the policy for whatever reason, the insured debtor is to be notified that coverage will continue for thirty days from the date of notice, except where replacement of the coverage by the same or another insurer in the same or greater amount takes place without lapse of coverage. The notice required in this paragraph is to be given by the insurer or, at the option of the insurer, by the creditor.

(3) Refunds.

(a) Section 3918.08 of the Revised Code requires refund formulas to be filed and approved by the superintendent. This requirement will be considered satisfied if the refund formula to be applied by the insurer is set forth in either the policy if the coverage is written on an individual policy basis, or the certificate if the coverage is written on a group basis pursuant to a master policy; provided further that such forms of policies and certificates have not been disapproved by the superintendent. In the event that the refund formula to be used is the "sum of digits" also commonly known as the "rule of 78" it will be sufficient to state either descriptive name without further explanation in the provisions of the policy or certificate.

(b) The refund of premiums in case of reducing term credit life insurance or credit health and accident insurance on which premiums are payable other than by a single premium and of level-term credit life insurance is to be equal to the pro rata unearned gross premium, and in the case of reducing term credit life insurance paid by a single premium and of credit accident and health insurance is to be equal to the amount computed by the "sum of digits" formula commonly known as the "rule of 78."

(c) The refund of the amount charged to or collected from the debtor for insurance in the case of reducing term credit life insurance or credit accident and health insurance where said amount, if payable other than in a single sum and of level-term credit life insurance, is to be equal to the pro rata unearned gross amount to be collected, and in the case of reducing term credit life insurance where the whole amount thereof is charged to or collected from the debtor in a single sum and of credit accident and health insurance shall be equal to the amount computed by the "sum of digits" formula commonly known as the "rule of 78."

(d) Notwithstanding paragraph (F)(3)(a), (F)(3)(b), or (F)(3)(c) of this rule, the refund of premiums for credit accident and health insurance where the premiums are payable in a single sum, and for credit life insurance where the premiums are payable in a single sum and the amount of life insurance does not exceed the net indebtedness, is to be equal to the single premium that would be charged for the remaining term of the debt for the balance outstanding at the date of refund. This formula is commonly known as the "rule of anticipation."

(e) No refund or credit need be made if the amount is less than one dollar.

(f) In the event of termination, no charge for coverage may be made for the first fifteen days of a loan month, and a full month may be charged for sixteen days or more of a loan month.

(G) Maintenance of statistics

(1) Each insurer writing credit life insurance and credit accident and health insurance is to maintain statistics, on a policy-year basis for group policies, and on a calendar-year basis for individual policies with respect to each plan or type of coverage showing, on an accrual basis, separately for credit life insurance and separately for direct business and reinsurance assumed with respect to the following:

(a) Gross premiums received.

(b) Refunds of premiums on terminated insurance.

(d) Earned premiums.

(e) Claims paid.

(f) Increase in claim reserve.

(g) Claims incurred.

(h) Reserve increases other than set forth in paragraphs (G)(1)(c) and (G)(1)(f) of this rule.

(i) Commissions.

(j) Fees and other allowances.

(k) Dividends and experience rating refunds.

(l) Mean amount of life insurance in force.

(m) Mean number of individual policies and certificates in force during the calendar year.

(2) With respect to credit accident and health insurance, each insurer is to keep a record for each plan or type of coverage which, in addition to the above statistics, shows the nature of the benefits payable, the applicable waiting period, and the rate at which premiums are charged therefor.

(3) Credit insurance data and statistics are to be submitted from time to time as requested by the superintendent of insurance.

(H) Responsibility of insurers with respect to creditors

(1) Each insurer transacting credit insurance is responsible to conduct a thorough review of each creditor with respect to the first year of business with such creditor. The insurer thereafter is to conduct such reviews as reasonably may be necessary to assure compliance with applicable statutes and rules.

(2) Such reviews are to include, but not by way of limitation, verification that:

(a) Premiums and charges to debtors are properly calculated and transmitted to the insurer, based on rates permitted under statutes and the superintendent's rules and on the amounts of indebtedness actually insured; and

(b) Claims are refunds are properly calculated and paid;

(3) An insurer's responsibilities are not discharged or avoided by the delegation of premium collection or refund calculation or check or draft drawing, and the actions of such delegatee will be considered as the acts of the insurer.

The insurer is to maintain records of such reviews for three years, and such records will be subject to call and review by the superintendent at his discretion.

(I) Reserve basis

(1) Life

(a) For credit insurance written prior to January 1, 2009, in the state of Ohio, all insurers will be required to maintain reserves not less than 1958 "CET Table of Mortality" at four and one-half per cent interest.

(b) For credit insurance written on or after January 1, 2009, in the state of Ohio, all insurers will be required to maintain reserves not less than "2001 Male Composite Ultimate CSO Mortality" at the maximum valuation interest rate for life insurance as defined in section 3903.721 of the Revised Code.

(c) When the credit life insurance policy or certificate insures two lives, the minimum standard is to be twice the mortality in the "2001 CSO Male Composite Ultimate Mortality" table based on the age of the older insured.

(d) In addition to the mortality reserve, the extra liability for refunds is to be established and maintained as part of the total reserve. Any reserve basis which in the aggregate equals or produces a greater reserve not less than this basis will be acceptable to the superintendent. Also, proper rate credit and similar reserves approved by the superintendent are to be carried by the companies on such risks.

(2) Accident and health

(a) For credit insurance written prior to January 1, 2009, the reserve must not be less than a reserve based on the 1964 "Commissioner's disability table" at three per cent annual interest. However, should an insurer, after establishing a credit disability reserve on the 1964 "Commissioner's disability table", develop a disability reserve for such disability policies that is less than the premium that would have been charged for the remaining benefits for the balance of the term, then an additional reserve must be established so that such aggregate total is not less than the premium that would have been charged for the remaining benefits for the balance of the term, for such disability policies. The mean of the gross unearned premiums calculated on a "rule of 78" and a pro rata basis is deemed to meet the requirements of this provision.

(b) For credit insurance written on or after January 1, 2009, the reserve must not be less than a reserve based on the morbidity assumption as described in paragraph (I)(2)(c) of this rule at the maximum valuation interest rate for ordinary life insurance as defined in section 3903.721 of the Revised Code. However, should an insurer, after establishing a credit disability reserve on the 1985 "CIDA Table", develop a disability reserve for such disability policies that is less than the premium that would have been charged for the remaining benefits for the balance of the term, then an additional reserve must be established so that such aggregate total is not less than the premium that would have been charged for the remaining benefits for the balance of the term, for such disability policies. The mean of the gross unearned premiums calculated on the "rule of 78" and a pro rata basis is deemed to meet the requirements of this provision.

(c) The morbidity assumption for use in determining the minimum standard for valuation of single premium credit disability insurance contract reserves are:

(i) For plans having fewer than a fifteen day elimination period, the "1985 Commissioners Individual Disability Table A" (85CIDA) with claim incidence rates increased by twelve per cent; or

(ii) For plans having greater than a fourteen day elimination period, the 85CIDA for a fourteen-day elimination period with claim incidence rates increased by twelve per cent.

(J) Severability

View Appendix

Last updated November 16, 2023 at 8:29 AM

History

Effective: November 16, 2023
Promulgated Under: 119.03

Ohio Adm.Code 3901-1-18 Ohio fair plan - plan of operation.

(A) Purpose

The purpose of this rule is for adoption by the superintendent of a plan of operation submitted by the board of governors of the "Ohio Fair Plan Underwriting Association". The plan of operation has been formulated for the purpose of making basic property and homeowners' insurance coverage, as identified in section 3929.42 of the Revised Code, available for qualified property owned by persons who have been unable to secure such insurance in the normal insurance market.

(B) Authority

This rule is promulgated pursuant to the authority vested in the superintendent under section 3901.041 of the Revised Code. This plan of operation is adopted pursuant to section 3929.43 of the Revised Code and implements sections 3929.41 to 3929.49 of the Revised Code.

(1) "Association" means the "Ohio Fair Plan Underwriting Association" created under section 3929.43 of the Revised Code.

(2) "Basic property insurance" means insurance against direct loss to property as defined and limited in standard fire policies and extended coverage endorsements thereon, as approved by the superintendent, and insurance for such types, classes and locations of property against the perils of vandalism, malicious mischief, burglary, theft or liability, as the superintendent designates. The association is also authorized to provide insurance against the perils of burglary, robbery, and theft for properties. Basic property insurance does not include automobile insurance or insurance on manufacturing risks.

(3) "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.

(4) "Insurable risks" means property that meets the reasonable underwriting standards of the association.

(5) "Underwriting standards" means the underwriting standards for basic property insurance and homeowners' insurance which have been filed with the superintendent.

(6) "Homeowners' insurance" means insurance on owner-occupied dwellings providing personal multi-peril property and liability coverages, commonly known as homeowners' insurance, subject to underwriting standards, exclusions, deductibles, rates and conditions as are customarily used by member insurers for similar coverages.

(7) "Location" means real and personal property consisting of and contained in a single building or in contiguous buildings under one ownership.

(8) "Superintendent" means the superintendent of insurance of the state of Ohio.

(9) "Member insurer" means an insurer required to be a member of the association by section 3929.43 of the Revised Code.

(10) "Licensed agent" means any person licensed by the superintendent pursuant to section 3905.01 of the Revised Code.

(11) "Board" means the board of governors of the association authorized pursuant to section 3929.43 of the Revised Code.

(12) "Applicant" means any person applying for insurance from the association.

(D) Notice of cancellation by members

Member insurers shall provide written notice of cancellation or nonrenewal for any risk eligible for insurance through the association, (except for non-payment of premium, evidence of incendiarism, or misrepresentation) not less than thirty days prior to cancellation or nonrenewal. The notice shall explain to the insured the procedures for making application to the association. This thirty-day notice does not apply to binders of thirty days duration or less.

(E) Insurance agents

(1) Upon request, a licensed agent shall assist any owner of property in completing an application for insurance with the association.

(2) No licensed agent, although licensed to represent one or more member insurers of the association, shall hold themselves out as an agent of the association or have any authority to bind any risk for the association.

(F) Maximum liability, limitations and special coverage

(1) The maximum limits of liability for real and personal property coverage contained within basic property insurance and homeowners' insurance per location through the association is two million dollars. The maximum limit of liability is the total aggregation of underlying coverage limits per location for the building and contents or dwelling and personal property.

(2) The association may require that vandalism and malicious mischief coverage be written in conjunction with extended coverage.

(3) The association is authorized to issue mine subsidence insurance coverage to its policyholders pursuant to sections 3929.50 to 3929.61 of the Revised Code and as provided for in the plan of operations of the "Mine Subsidence Insurance Underwriting Association."

(4) The association is not authorized to provide insurance coverage for automobiles or manufacturing risks.

(G) Inspections

(1) Any person having an insurable interest in real or tangible personal property, or both, at a fixed location in Ohio, who has been unable to obtain basic property insurance or homeowners' insurance, may apply for coverage to the association. The association may choose to inspect the property or obtain necessary underwriting information to assist in determining eligibility for fair plan coverage.

(2) All inspection reports shall be in writing.

(3) If an interior inspection is requested by the association:

(a) The inspector or inspection company shall contact the applicant and arrange for the applicant or the person designated by the applicant to be present during the inspection. The inspector shall not recommend correction of physical deficiencies or advise the applicant whether the association will provide coverage. The inspection report shall provide information necessary for underwriting but shall not refer to environmental hazards.

(b) The inspection report shall contain information describing the occupancy, physical deficiencies, and other observations of the risk.

(4) The association shall indicate to the applicant any condition charges which have been applied by the association.

(5) After an inspection report has been completed, a copy of the completed inspection report is sent to the association within ten business days.

(6) The association shall, within ten business days after receipt of the inspection report, or necessary underwriting information, advise the applicant and the licensed agent in writing that:

(a) The risk is acceptable, and if condition charges have been imposed, the improvements necessary to remove the condition charges; or

(b) The risk will be acceptable if the improvements noted are made by the applicant; or

(7) The association shall not refuse to insure any risk because of an environmental hazard.

(8) The association may, for cause upon information or well-founded belief without notice to the insured at any time during the policy term, cause a property insured by it to be inspected for the purpose of determining whether the property meets the association's underwriting standards. Reinspections may also be made upon material change, or upon a reasonable periodic schedule. The association may refuse to renew or may cancel a policy in accordance with its terms and this plan of operation. Any person aggrieved by such decision may appeal, in accordance with paragraph (J) of this rule. The association need not afford an insured the opportunity to be present during a reinspection nor furnish the insured with a copy of a reinspection report unless a copy of the reinspection report is requested.

(9) If a property is in violation of any building, housing, air pollution, sanitation, health, fire or safety code, ordinance or rule, or if an applicant otherwise has received written notice of any violation of such a code, ordinance of rule, the applicant shall also submit to the association a detailed plan that indicates the manner and estimated period of time in which violation will be corrected. If the association is satisfied that the violations are subject to correction within a reasonable period of time and that the applicant otherwise meets the requirements of section 3929.44 of the Revised Code, it may issue a policy or binder to the applicant on the condition that the plan be implemented and completed on schedule and that the property may be reinspected.

(H) Application and issuance of policy

(1) Every policy written by the association shall include an additional policy condition representing that:

(a) At least two insurance companies authorized to do business in Ohio have declined to grant the coverage requested in the application; and

(b) There are no outstanding taxes, assessments, penalties or charges with respect to the property to be insured; and

(c) The applicant has not received written notice from an authorized public entity stating that their property is in violation of any building, housing, air pollution, sanitation, health, fire or safety code, ordinance or rule.

(2) If the property is in violation of any such code, ordinance or rule, and if the applicant has received such written notice of any such violation, the applicant will submit to the association a detailed plan that indicates the manner and estimated period of time in which such violations will be corrected. If the association is satisfied that the violations are subject to correction within a reasonable period of time and that the applicant otherwise meets the requirements of section 3929.44 of the Revised Code, it may cause a policy or binder of basic property insurance to be issued to the applicant on the condition that the plan be implemented on schedule and that the property may be reinspected.

(3) The association is under no obligation to issue basic property insurance or homeowners insurance to any person, unless that person and his or her property would constitute an insurable risk in accordance with reasonable underwriting standards. The association, in determining whether the property is insurable, shall give no consideration to the condition of surrounding property or properties, where such condition is not within the control of the applicant.

(4) If a risk is accepted by the association, it will deliver a policy or binder to the applicant and if applicable, the licensed insurance agent, upon payment of the premium to the association. The association shall pay the authorized commission to the licensed agent as designated by the applicant. The association shall not pay commission to a nonresident agent. The association may pay commission to a licensed nonresident business entity agent for assistance provided by an individual resident agent affiliated with that nonresident business entity agent.

(5) The association, upon receipt of the applicable premium from the applicant, shall issue the policy to be effective the day following receipt of the premium unless a future effective date is requested by the applicant. The policy shall be issued in the name of the association as provided in section 3929.481 of the Revised Code.

(6) The policy shall be issued for a term of one year.

(7) If the property is found to be an insurable risk but there are one or more unsatisfactory conditions, a deficiency notice detailing needed corrections will be sent to applicant or, if applicable, charges will be imposed in conformity with the rating plans on file with the superintendent. If the unsatisfactory conditions are corrected, and such corrections are verified, the charges shall be revised.

(8) If the association determines that the property is not an acceptable risk, the association shall, within ten days, send the applicant a written statement setting forth in reasonable detail the features of the property or conditions which prevent it from constituting an acceptable risk and the corrections to be made in order to make the property an acceptable risk.

(9) Documentation detailing completion of the required corrections by the applicant, shall be submitted to the association, within an acceptable time frame. The association may inspect, if necessary to determine eligibility.

(I) Binders

(1) Each application shall clearly indicate the availability of a binder to an applicant.

(2) A binder shall be issued to the applicant upon payment to the association of the minimum binder deposit premium and provided the application indicates that the risk preliminarily meets the association's underwriting standards. The earliest a binder can be effective is at one minute after twelve a.m. the day following receipt of the premium and completed application by the association.

(3) If the association is unable to obtain the necessary underwriting information from the applicant, the association may decline to offer coverage until such time as the applicant can provide or assist in obtaining the information.

(4) The binder shall remain in effect until the risk is accepted by the association or until cancelled and the reasons for cancellation given to the applicant.

(5) Binders may only be issued for a definite period, not to exceed one year.

(6)

(a) If an insurance policy is to be issued, the policy will commence on the effective date of the binder. Policies so issued are not subject to flat cancellation.

(b) If an insurance policy will not be issued, the full earned premium will be charged subject to the rules governing cancellation of policies.

(c) A binder shall be void upon the acceptance of a risk by the association and the payment of premium or upon the cancellation of a risk and notice of reasons for the cancellation given to the applicant.

(7)

(a) The association cannot cancel a policy or binder issued by it, except:

(i) For cause, which would have been grounds for nonacceptance of the risk had such cause been known to the association at the time of acceptance; or

(ii) For nonpayment; or

(iii) At the request of an insured.

(b) Notice of cancellation, together with the reasons therefore, shall be sent to the insured.

(c) Any cancellation notice to an insured shall be accompanied by a statement that the insured has a right to appeal as provided in paragraph (J) of this rule.

(8) If a property meets the underwriting requirements, the association will compute the actual annual premium from rates approved by the superintendent of insurance pursuant to Chapter 3935. or accepted pursuant to Chapter 3937. of the Revised Code. A return premium will be forwarded to the applicant if the provisional binder premium exceeds the actual annual premium. The association may only request additional premium if the actual annual premium exceeds the estimated provisional binder premium.

(9) If a property does not meet the underwriting requirements, the association will cancel the binder on a pro rata basis. If an applicant requests cancellation of a binder, the association may only cancel in accordance with cancellation provisions of the coverage forms approved by the superintendent.

(J) Right to appeal

(1) Any applicant or insured shall have the right to appeal any action or decision of the association to the board of the association. Such appeal to the board must be made in writing within thirty days after receipt of notice of the action or decision of the association. Within forty-five days from receipt of an appeal, the board, upon no less than ten days notice to the insured, shall hold a hearing on the appeal. For good cause shown, by the insured or the association, the hearing may be continued for not more than sixty days. The board shall render its decision on the appeal and notify the applicant or insured of its decision no later than ten days after the hearing. Each denial of insurance to an applicant shall be accompanied by a statement to the applicant and the licensed agent that the applicant has the right to appeal.

(2) Any applicant, insured, or member insurer shall have the right to appeal to the superintendent any action or decision of the board. An appeal shall be made within thirty days of the board's action or decision. The decision of the superintendent of an appeal is a final order and is subject to judicial review as provided in Chapter 119. of the Revised Code.

(K) Indemnification

Each member of any association committee, each association officer, employee, or member insurer, and each member of the board shall be indemnified against liability incurred in connection with the affairs of the association. The conditions and limits of such indemnification are provided in "Article IX of the Constitution," "Articles of Agreement" and "Bylaws of the Association."

(L) Fidelity coverage

The association shall obtain fidelity coverage to reimburse the association for any pecuniary loss it may sustain by any act or acts of fraud or dishonesty on the part of members of the board, association officers or employees in the discharge of their duties.

(M) Board of governors

(1) The association shall be governed by a board.

(2) The board shall meet as often as may be required to perform the general duties of administration of the association or on the call of the superintendent. Seven members of the board constitutes a quorum.

(3) The board shall appoint a general manager as administrator who serves at the pleasure of the board and perform such duties as the board designates.

(4) The board may promulgate guidelines consistent with state law and the plan of operation to govern such internal operations as investments, personnel, underwriting standards and claims practices. The guidelines shall be in writing and filed with the superintendent.

(5) The board shall undertake a public education program to assure that the services of the association receive adequate public attention. In accordance with division (I) of section 3929.43 of the Revised Code, the board shall adopt a written program for decreasing the overall utilization of the association as a source of insurance.

(N) Standing committees

The board may appoint committees as it deems necessary to carry out the purpose and operations of the association.

(O) Relationship with member insurers

(1) The association shall operate as a joint underwriting association insuring one hundred per cent of the risk on behalf of its member insurers. It may cede or purchase reinsurance in the name of the association or on behalf of member insurers on eligible risks written through the association.

(2) Each member insurer participates in the writings, expenses, assessments, profits and losses of the association in the same proportion as a member insurer's premiums written bear to the aggregate premiums written by all member insurers as determined by the board.

(3) There shall be an annual meeting of the association and its member insurers at a time and place fixed by the superintendent. Representatives of member insurers on the board serve for a period of one year or until successors are elected or designated.

(4) A special meeting may be called at such time and place designated by the superintendent or upon the written request to the superintendent.

(5) Twenty days notice of an annual or special meeting shall be given in writing by the board to member insurers. A majority of member insurers present at a meeting constitutes a quorum. Voting by proxy is permitted. Notice of any meeting will be accompanied by an agenda for the meeting.

(6) Any matter may be proposed and voted upon by regular mail, email or other electronic means provided such procedure is unanimously authorized by the members of the board present and voting at any meeting of the board. If so approved by the board, notice of any proposal will be sent to member insurers not less than twenty days prior to the final date fixed by the board for voting thereon.

(7) At any regular or special meeting at which the vote of member insurers is or may be required on any proposal, or any vote of member insurers which may be taken by regular mail, email or other electronic means on any proposal, votes will be cast and counted on a weighted basis in accordance with each member insurer's respective habitational or commercial premiums written, as the case may be.

(P) Member insolvency

(1) In the event any member insurer fails to pay the assessment for its proportionate part of any loss or expense because the member insurer is insolvent, and the board determines that the assessment cannot be collected within a reasonable period of time, the unpaid assessment shall be paid by the remaining member insurers, each contributing in the manner provided by division (E) of section 3929.43 of the Revised Code, but without regard to the premium writings of the insolvent member insurer. The insolvent member insurer shall remain liable to the association for the full amount of the assessment and any collection made by the association against the assessment shall be credited and paid back to the other member insurers in the same proportions that have been utilized in calculating each member insurer's contribution toward the unpaid assessment.

(2) No refund which would otherwise be paid under the plan of operation shall be paid to a member when its membership has been terminated, or to the liquidator, receiver, conservator, or statutory successor of a member insurer until the assessment of the member insurer has been paid. A refund shall be applied as a set-off against an assessment. Any balance remaining shall be paid to the member insurer or to the liquidator, receiver, conservator, or statutory successor of the member insurer.

(Q) Advance assessments and recoupments

(1) At such times as may be determined by the board and approved by the superintendent, the board shall establish an annual rate of assessment needed to cover any deficit arising out of the operation of the association. The rate of assessment shall be based upon a reasonable estimate of a deficit expected to occur. The association may levy advance assessments at that rate against member insurers, payable in periodic installments, subject to approval by the superintendent.

(2) The board may at any time levy an assessment against member insurers to provide necessary operating funds.

(3) Each member insurer may recoup assessments levied against it by adjusting its premiums for basic property insurance and homeowner's insurance by the addition of a rating factor computed periodically by the board and approved by the superintendent. The board shall notify all member insurers of the amount of the rating factor and any changes to it.

(4) Any member insurer implementing a change in rates pursuant to division (D)(2) of section 3929.43 of the Revised Code, shall file the change with the superintendent. The change shall not increase rates more than the amount authorized by the association and approved by the superintendent pursuant to the plan.

(R) Reinsurance

No reinsurance plan or proposal of the association shall be implemented prior to being filed with the superintendent.

(S) Statistics

(1) Every insurance policy issued by the association shall be separately coded for statistical purposes.

(2) The association shall comply with any reporting requirements of the superintendent in respect of its underwriting operations and experience. The reports shall be made at least annually in such form and detail as may be required by the superintendent under section 3935.03 of the Revised Code.

(3) The association shall report its loss and expense experience to a statistical organization approved by the superintendent. Its loss and expense experience shall be reported in a form and according to a plan filed by the statistical organization with the superintendent.

(4) The association shall submit to the superintendent periodic reports concerning the number of risks inspected, the number of risks accepted, the number of risks conditionally accepted, the number of reinspections made and the number of risks declined.

(T) Distribution of associated funds

At least ten days prior to the distribution to its member insurers of any funds held by the association, notification shall be given to the superintendent.

(U) Filing of policies and other documents

All policies, endorsements, forms, manual rates or rating plans, minimum class rates, rating schedules, rating rules, and every modification of the same shall be those filed with the superintendent. The association may file special notice endorsements for review by the superintendent. In the event that the superintendent approves a rating factor under paragraph (Q)(3) of this rule, such increment shall be applicable to all policies issued by the association.

(V) Annual and quarterly financial statements

The association shall file annual and quarterly financial statements with the superintendent in the form prescribed by the superintendent. Annual financial statements shall be prepared and furnished to the superintendent on or before March first of the following year.

(W) Examination of books and records

The superintendent or any person designated by the superintendent may examine the operation of the association in accordance with section 3929.45 of the Revised Code. The expenses of the examination shall be paid by the association.

(X) Investments

The association invests its funds in accordance with section 3925.08 of the Revised Code.

(Y) General powers of superintendent

(1) The plan of operation and any amendment thereto shall be subject to the approval of the superintendent and adopted pursuant to Chapter 119. of the Revised Code.

(2) The plan of operation shall be administered under the supervision of the superintendent.

(3) The association shall submit to the superintendent periodic reports as the superintendent deems necessary.

(Z) Severability

Last updated April 1, 2025 at 7:59 AM

History

Effective: April 1, 2025
Promulgated Under: 119.03

Ohio Adm.Code 3901-1-22 Risk modification plans.

(A) Purpose

The purpose of this rule is to set forth the requirements of risk modification plans that are permitted for non-personal lines insurance to recognize variation in hazard and characteristics of risk.

(B) Authority

This rule is promulgated pursuant to the authority vested in the superintendent under section 3901.041 of the Revised Code, which requires the superintendent to adopt, amend, and rescind rules and make adjudications necessary to discharge duties and exercise powers provided to the superintendent under Title XXXIX of the Revised Code, subject to sections 119.01 to 119.13 of the Revised Code. This rule is issued to implement sections 3935.03, 3935.04, 3937.02 and 3937.03 of the Revised Code.

(1) "Risk modification plan" (commonly called a schedule rating plan or an individual risk premium modification plan) means the application of judgment debits or credits to the otherwise applicable premium, which are based upon the individual risk's variation in hazard and characteristics of the risk otherwise not reflected.

(2) "Experience modification plan" means any rating plan or procedure, including a retrospective rating plan wherein a manual rate for insurance is modified based upon the past loss experience of the insured.

(3) "Expense modification plan" means any rating plan or procedure where the variation of the premium for a particular risk corresponds to the variation in the expenses of this particular risk from those contemplated in the manual rate for insurance.

(4) "Personal lines" means a policy of property and casualty insurance issued to a natural person primarily for personal or family protection, such as a personal automobile, homeowners, non-commercial dwelling fire or personal umbrella policy.

(D) Specifications

Every filing for a risk modification plan must contain satisfactory specifications of factors or elements to be applied. The risk modification plan shall not duplicate any factor or element already fully reflected in the basic premium or rates.

(E) Eligibility criteria

Every filing for a risk modification plan shall indicate any eligibility criteria, including, but not limited to, any minimum premium criteria that the insurer utilizes to determine if the risk modification plan should be applied to a particular risk. A risk modification plan must be applied to all eligible risks.

(F) Maximum debit and credit

A limit of twenty-five per cent maximum debit and credit shall be applied to the premium or rate based on the application of a risk modification plan. This limitation does not apply to any debit or credit applied to the premium or rate based on the application of an experience modification plan or an expense modification plan.

(G) Documentation

Each company shall obtain all information necessary to determine the proper application of the risk modification plan to any particular risk. Each company shall maintain adequate supporting information for inspection by the superintendent of insurance, upon request, for a period of not less than three years.

(H) Applicability

This rule is not applicable to any risk written by an insurer in accordance with divisions (F) and (G) of section 3935.04 of the Revised Code. This rule is not applicable for any risk written by an insurer in accordance with divisions (E), (F), and (G) of section 3937.03 of the Revised Code.

(I) Severability

If any paragraph, term or provision of this rule is adjudged invalid for any reason, the judgment shall not affect, impair or invalidate any other paragraph, term or provision of this rule, but the remaining paragraphs, terms or provisions shall be and continue in full force and effect.

Last updated November 17, 2022 at 8:52 AM

History

Effective: November 17, 2022
Promulgated Under: 119.03

Ohio Adm.Code 3901-1-23 Inland marine risks.

(A) Purpose

The purpose of this rule is to define what constitutes an inland marine risk.

(B) Authority

This rule is promulgated pursuant to the authority vested in the superintendent under section 3901.041 of the Revised Code.

(1) Inland marine risks shall be established by the nation-wide inland marine definition, approved and recommended by the "National Association of Insurance Commissioners" on December 9, 1976.

(2) Any company wishing to deviate from the nation-wide inland marine definition shall make a formal filing and obtain approval of the superintendent of insurance before using such deviation.

(D) Severability

Last updated October 11, 2023 at 1:47 PM

History

Effective: November 16, 2017
Promulgated Under: 119.03

Ohio Adm.Code 3901-1-24 Public insurance adjusters.

(A) Purpose

The purpose of this rule is to safeguard the interest of the public by regulating the conduct of public insurance adjusters.

(B) Authority

This rule is promulgated pursuant to the authority vested in the superintendent under Chapter 3951. and section 3901.041 of the Revised Code.

No public insurance adjuster or public insurance adjuster agent shall:

(1) Engage in any manner or degree, for compensation of any kind, in the business of repairing, remodeling, or replacing damaged or destroyed property, real or personal, which damage or destruction is covered by a policy of insurance; nor have any direct or indirect interest in, nor receive compensation of any kind from any person, firm, association, partnership, or corporation which is engaged in such business;

(2) Attempt in any manner to solicit a loss during the progress of a fire or while the fire department or any of its representatives are in any manner engaged at the damaged premises; nor in any way interfere with the performance of the duties of an investigator of the state fire marshal's office, an investigator of any fire department, or a law enforcement official of this state or of any political subdivision thereof;

(3) Give or offer to give to an insured or that person's representative any portion of the adjuster's fee or anticipated settlement of the claim for loss or damage as an inducement to secure a contract for the adjustment of a loss;

(4) Represent that public insurance adjuster to be an adjuster for or a representative of any insurance company, a fire investigator, or a person connected with any fire department or law enforcement agency;

(5) Compensate any person to act on that person's behalf in the solicitation, negotiation, or settlement of a claim unless such person is licensed as a public insurance adjuster or a public insurance adjuster agent;

(6) Make an inventory or estimate of loss or damage other than that which is fair and honest; and

(7) Own or acquire any direct or indirect financial interest in any property, real or personal, which is the subject of a loss adjusted by that public insurance adjuster; nor have any direct or indirect financial interest in the sale of any salvage of any property which is the subject of a loss adjusted by that public insurance adjuster.

(D) Records of adjuster

Every public insurance adjuster shall keep a full record of that perons's transactions as an adjuster for the previous three years and such records shall be open at all times to the inspection of the superintendent of insurance or the superintendent's representative. Such records shall show for each loss adjusted by the public insurance adjuster:

(1) The name of the insured;

(2) The date, location, and the public insurance adjuster's estimate of the amount of loss;

(3) The name of the insurer or insurers which issued any policy covering the loss which was the subject of the adjustment;

(4) The amount of coverage, the expiration date, and the number of each policy of insurance covering such loss;

(5) An itemized statement of all recoveries by the insured from all sources with regard to such loss;

(6) The names and addresses of any person or persons soliciting the adjustment on behalf of the public insurance adjuster and the date and time when solicited;

(7) The total compensation received by the public insurance adjuster for the adjustment of the loss;

(8) Copies of any agreements between the public insurance adjuster and the insured; and

(9) Names and addresses of all contractors who performed or contracted to perform work of any kind on the damaged or destroyed property prior to settlement of the claim.

(E) Contract requirements

(1) No public insurance adjuster shall use in that person's business as a public insurance adjuster a contract whereby an insured engages or employs the public insurance adjuster to perform the functions specified in division (A) of section 3951.01 of the Revised Code until thirty days after the form of such contract has been filed with the superintendent of insurance, unless within such time the superintendent gives the public insurance adjuster written approval for the use of such form. If the superintendent finds within such thirty-day period that the form filed contains any language which is prohibited by any law of this state, including any rule of the superintendent, or that it is inconsistent, ambiguous, misleading, deceptive, or likely to mislead an insured, the superintendent will give written notice of such finding to the public insurance adjuster who filed the form, and the public insurance adjuster shall thereafter not use such form.

(2) Every such contract must conspicuously set out the fee of the public insurance adjuster for the adjustment services to be rendered the insured pursuant to the contract.

(F) Restriction on insurers

(1) No insurer authorized to issue the types of insurance policies set forth in division (B) of section 3951.01 of the Revised Code shall:

(a) Recognize a public insurance adjuster as a party interested in the proceeds of any insurance settlements arising from such policies or negotiate an insurance settlement with a public insurance adjuster representing an insured unless such public insurance adjuster has been duly licensed as a public insurance adjuster by the department of insurance.

(b) Negotiate an insurance settlement with a representative of an insured, other than a licensed public insurance adjuster, unless such representative has been duly appointed as such by a court of law or is one of those persons enumerated in division (E) of section 3951.01 of the Revised Code.

(2) Each insurance company referred to in paragraph (F)(1) of this rule shall keep a record of each insurance loss and/or settlement wherein the insured was represented by a public insurance adjuster. Such record shall include a copy of the public insurance adjuster's certificate of authority.

(G) Suspension or revocation

The superintendent of insurance may suspend, revoke, or refuse to renew the license of a public insurance adjuster or public insurance adjuster agent found to be in violation of this rule. Such suspension, revocation, or refusal to renew shall be in addition to, not a substitution for, the penalties provided in section 3951.99 of the Revised Code.

(H) Severability

Last updated February 14, 2022 at 8:54 AM

History

Effective: February 14, 2022
Promulgated Under: 119.03

Ohio Adm.Code 3901-1-31 Group insurance regulations.

(A) Purpose

The purpose of this rule is to provide for the writing of policies of group insurance, on a limited basis as hereinafter outlined, by an insurance company having a certificate of authority pursuant to the second paragraph of section 3941.02 of the Revised Code and to ensure that residents of Ohio are not precluded from having group insurance where advantageous tax attributes may be applicable.

(B) Authority

This rule is promulgated pursuant to the authority vested in the superintendent under section 3901.041 of the Revised Code.

No insurance company shall issue any group policy with respect to any kind of insurance subject to either Chapter 3935. or 3937. of the Revised Code unless:

(1) It is a kind of insurance which, if issued to an employer, would permit the employer's contributions, if any, to be deductible by the employer and to be excluded from the gross income of the employees, their spouses, and dependents under the applicable provisions of the Internal Revenue Code of 1986; and

(2) It is a kind of insurance which the insurance company is authorized to transact pursuant to its certificate of authority.

(D) Eligible groups

Any kind of insurance which meets the requirements of paragraph (C) of this rule may be written by issuing a group policy to:

(1) Any employer; or

(2) Any association, including a labor union, which has a constitution and by-laws and which has been organized and is maintained in good faith for purposes other than that of obtaining insurance; or

(3) Any other substantially similar group which, in the discretion of the superintendent of insurance, may be subject to the issuance of a group policy.

Such group policy shall be for the benefit of the employees or members of the insured group, including their dependents or members of their immediate families if they are included in the coverage.

(E) Filings

Any filing made by an insurance company pertaining to a group policy authorized by this rule shall comply with and be subject to the provisions of either Chapter 3935. or 3937. of the Revised Code, whichever is applicable to the kind of insurance being written, and shall include an individual certificate, to be delivered to each employee or member of the insured group, setting forth in summary form a statement of the essential features of the insurance coverage of such employees or members, the insurance coverage of their dependents or members of their immediate families if they are included in the coverage, and to whom benefits thereunder are payable. Rates shall not be deemed to be unfairly discriminatory because different premiums result from differences in either or both loss exposures and expense factors, so long as the rates reflect the differences with reasonable accuracy.

(F) Agents

No person shall act as an insurance agent in the solicitation or issuance of a group policy authorized by this rule unless such person is duly licensed as an agent for that kind of insurance under the applicable sections of the Revised Code.

(G) Inland marine risks

This rule shall not be applicable to the writing of inland marine insurance.

(H) Severability

Last updated October 11, 2023 at 1:48 PM

History

Effective: November 16, 2017
Promulgated Under: 119.03

Ohio Adm.Code 3901-1-48 "Ohio mine subsidence insurance underwriting association" and "mine subsidence insurance fund" plan of operation.

(A) Purpose

The purpose of this rule is to implement sections 3929.50 to 3929.53 and 3929.55 to 3929.56 and 3929.58 to 3929.61 of the Revised Code which:

(1) Establishes the "Ohio Mine Subsidence Underwriting Association,"

(2) Provides for the transfer of risk from member insurers to the association, and

(3) Creates the "Mine Subsidence Insurance Fund."

(B) Authority

This rule is promulgated pursuant to the authority vested in the superintendent under section 3901.041 of the Revised Code.

(1) "Basic property insurance" means insurance against direct loss to property as defined and limited in dwelling fire, homeowners, and farm policies and extended coverage endorsements thereon, and insurance for such types, classes and locations of property against the perils of vandalism, malicious mischief, burglary or theft, as the superintendent of insurance shall designate.

(2) "Board" means the four-member board of governors, empowered by division (C) of section 3929.51 of the Revised Code to govern the "Ohio Mine Subsidence Insurance Underwriting Association" and the "Ohio Mine Subsidence Insurance Fund."

(3) "Homeowners insurance" means insurance on owner-occupied dwellings providing personal multi-peril property and liability coverages, commonly known as "homeowners insurance."

(4) "Farm insurance" means insurance providing property coverage on farm dwelling buildings.

(5) "Dwelling fire insurance" means a policy providing property coverage on residential buildings for the perils of fire and lightning and additional coverages.

(6) "Member" means all insurers authorized to write and engaged in writing within the state, on a direct basis, basic property insurance or any component thereof in multi-peril and policies.

(7) "Mine subsidence" means loss caused by the collapse or lateral or vertical movement of structures resulting from the caving in of underground mines, including coal mines, clay mines, limestone mines, and salt mines. Mine subsidence does not include loss caused by earthquakes, landslide, volcanic eruption, or collapse of strip mines, storm and sewer drains or rapid transit tunnels.

(8) "Mine subsidence coverage" means the limits and type of coverage as defined by the mine subsidence insurance governing board in the coverage form and approved by the superintendent.

(9) "Mine Subsidence Insurance Underwriting Association," hereinafter referred to as "association" means the association of members formed pursuant to section 3929.51 of the Revised Code.

(10) "Mine Subsidence Insurance Fund," hereinafter referred to as "fund," means the fund formed pursuant to section 3929.52 of the Revised Code which is administered by the board for the purpose of making available insurance coverage against mine subsidence. The state treasurer is the custodian of the fund.

(11) "Plan of operation," hereinafter referred to as "plan," means the plan of operation approved by the superintendent for the economical, fair and nondiscriminatory administration of the requirements identified in sections 3929.50 to 3929.53 and 3929.55 to 3929.56 and 3929.58 to 3929.61 of the Revised Code.

(12) "Strip mines" means any surface mine.

(13) "Structure" means any one to four-family dwelling as defined and limited in dwelling fire, homeowners, and farm policies and other structures as described, defined, or limited in the mine subsidence insurance form.

(14) "Superintendent" means the superintendent of insurance of the state of Ohio.

(15) "Treasurer" means the treasurer of the state of Ohio.

(16) "Auditor" means the auditor of the state of Ohio.

(D) Board of governors

(1) The association and fund shall be administered by the board consisting of the director of natural resources or the director's designee, as chairperson, the treasurer of the state or the treasurer of state's designee, and one representative from member companies. The representative from the member companies shall be an Ohio-domiciled member of the association.

(2) The board shall approve all actions of the association, have the responsibility of administering the association and fund.

(3) The board shall meet as often as is required to perform the duties of administration, and shall meet upon the request of any single member of the board. In no event shall the board meet less than two times per year.

(E) Meeting of members

(1) Members shall elect their authorized representative every three years. The member company representative elected to the board shall be an Ohio-domiciled company.

(2) The members may hold meetings as needed and during any such meeting, a quorum shall consist of a simple majority of members present.

(3) Each member shall be entitled to one vote. Members in the same group of insurers shall be entitled to one vote only.

(F) Liability

Every policy of mine subsidence insurance written hereunder shall provide that such policy does not create any liability on the part of the member issuing such policy, the association, or any organization with which it may contract for administrative or claims services, beyond the net premium on such policies paid into the fund. Such policies shall create no liability beyond the amounts in the fund, on the part of the state of Ohio, the "Ohio Insurance Guaranty Association" and its member companies or any other person or organization.

(G) Notice of availability of mine subsidence insurance

(1) Every insurer that offers basic property and homeowners insurance insuring on a direct basis a structure located in the counties of Athens, Belmont, Carroll, Columbiana, Coshocton, Gallia, Guernsey, Harrison, Hocking, Holmes, Jackson, Jefferson, Lawrence, Mahoning, Meigs, Monroe, Morgan, Muskingum, Noble, Perry, Scioto, Stark, Trumbull, Tuscarawas, Vinton and Washington shall include mine subsidence coverage provided by the Ohio mine subsidence insurance underwriting association in each policy of basic property and homeowners insurance that is delivered, issued for delivery or renewed in any of such counties.

(2) The mine subsidence insurance governing board herein designates Delaware, Erie, Geauga, Lake, Licking, Medina, Ottawa, Portage, Preble, Summit and Wayne counties as counties in which mine subsidence coverage must be offered, on an optional basis, by an insurer.

(a) Every insurer that offers basic property and homeowners insurance insuring on a direct basis to a structure located in any county designated in paragraph (G)(2) of this rule shall offer to include, on an optional basis, mine subsidence coverage provided by the association in each policy of basic property insurance that is delivered, issued for delivery, or renewed in any such designated county.

(b) This offer shall contain language and be in a form approved by the superintendent which includes a description of mine subsidence coverage, a statement that the purchase of the coverage is optional, and the premium charged for the coverage.

(H) Application for coverage

A member insurer who receives a request from a named insured or applicant for mine subsidence shall forward to that named insured or applicant an application for mine subsidence coverage. Such application may be included, at the insurer's option, with the offer described in paragraph (G)(2)(a) of this rule. The form of the application shall be approved by the superintendent.

(I) Administration and claims processing

The board may retain a contractor to provide administrative and claims processing. When a contractor is retained, the board may from time to time review:

(1) The performance of the contractor;

(2) The procedures and standards used by the contractor for administration and claims processing; and

(3) The application of those procedures and standards to applicants for insurance and to claims of insureds.

(J) Underwriting

(1) Mine subsidence coverage will be available on eligible property. Eligible property must be:

(a) A structure as defined in this rule;

(b) Covered by a valid basic property or homeowners insurance policy.

(2) The member may refuse to provide mine subsidence coverage on an otherwise eligible property where:

(a) The structure evidences un-repaired subsidence damage; or

(b) The structure evidences any mine subsidence damage in progress.

(3) The limit of liability for direct loss caused by mine subsidence under this plan of operation shall not exceed an amount equal to the coverage on the dwelling provided by a basic property or homeowners policy, or three hundred thousand dollars, whichever is less, and shall not exceed the amount expressed in the mine subsidence coverage form as approved by the mine subsidence insurance governing board and approved by the superintendent of insurance.

(4) All coverage provided pursuant to this plan of operation is subject to a deductible as expressed in the mine subsidence coverage form as approved by the mine subsidence insurance governing board and approved by the superintendent of insurance, but at no time shall the deductible be less than two hundred fifty dollars, or more than five hundred dollars.

(K) Rates and forms

(1) Rates. The board shall periodically review the premium level and experience data and recommend to the superintendent a rate or schedule of rates sufficient to satisfy:

(a) All foreseeable claims;

(b) Normal cost of operation; and

However, the premium level for mine subsidence coverage in a county designated for optional coverage shall not exceed an annual rate that is greater than twenty dollars. The premium level for mine subsidence coverage in a county as designated in paragraph (G)(1) of this rule shall not exceed an annual rate that is greater than five dollars.

(2) Forms. The policy forms and language shall be approved by the superintendent.

(L) Audits

The auditor shall audit the affairs of the fund in accordance with section 3929.55 of the Revised Code at least once each year. The auditor shall ascertain the expenses incurred in making any such audit and shall certify the amount to the board for payment from the fund.

(M) Reporting and statistics

(1) Claim reports. Members shall, upon receipt of notice of claims from policyholder(s), confirm coverage and provide formal notice of claim to the association.

(2) Financial reports:

(a) The fiscal period shall be the calendar year.

(b) Members reports are required quarterly and shall be due on the forty-fifth day following the close of the quarter.

(i) Gross written premium on a per county basis.

(ii) Premium cancelled/returned on a per county basis.

(iii) Ceding commission withheld (for optional counties only).

(d) Members reports shall be accompanied by the appropriate remittance which shall be full premium collected for mine subsidence coverage in the counties denoted in paragraph (G)(1) of this rule and the net premium (gross premium written, less ceding commission) in the counties denoted in paragraph (G)(2) of this rule less any cancellation/returns. In the event a balance is due to the insurer, that balance shall be carried forward as a credit against future written premiums. An insurer may apply for a refund only if it ceases to issue basic property or homeowner insurance coverage.

(e) Members shall report and pay premium taxes as required.

(f) The association shall review, verify and reconcile members' reports and research, and rectify any inconsistencies.

(g) The association shall remit receipts to the fund, said remittance to be supported by a summary report of premium written, cancelled/non-renewed, net premium written and commission taken.

(3) Statistical reports. Members shall compile and file, on a quarterly basis with the financial reports, a summary report of statistics in a form approved by the board. Such reports shall, at minimum, contain:

(a) Quarter and year-to-date policy count by county and in total;

(b) Quarter and year-to-date premium written by county.

(N) "Mine Subsidence Insurance Fund"

The fund shall receive all revenues, appropriations and investment earnings pursuant to this plan of operation. Premiums collected will be considered program income in accordance with the uniform administrative requirements for grants to state and local governments and be used:

(1) To enable the fund to be self-sustaining, with the fund invested by the treasurer of state under guidelines established by the board;

(2) To provide a reserve for payment of claims for verified claims from all types of mine subsidence, including non-coal mining, post-1977 underground mines and active underground mines;

(O) Investment of custodial funds

With the approval of the board, the treasurer of state may invest any monies in the fund that are in excess of the amounts required to meet the immediate cash needs and operating expenses of the fund. The board shall not provide guidelines for the investment of excess funds that are broader or more liberal than the investment provisions for property casualty insurance companies set forth in Chapter 3925. of the Revised Code.

(P) Reinsurance agreement

(1) Every insurer authorized and engaged in writing on a direct basis any property coverages in the state of Ohio shall execute a reinsurance agreement with the association. The form of the reinsurance agreement shall be in a form approved by the board.

(2) An insurer may request exemption from the requirements of paragraph (P) of this rule by filing the exemption form with the superintendent. The exemption shall be effective after review and approved by the superintendent of insurance.

(3) Any insurer who has received an exemption shall notify the association of any change in any circumstances that would be reason to revoke the exemption.

(Q) Effective date of the plan

This plan of operation shall be effective upon the effective date of this rule.

(R) Amendments

Amendments to the plan may be requested by the board or superintendent of insurance in accordance with the provisions of section 3929.53 of the Revised Code.

(S) Meeting notice

(1) The board and each of its committees and subcommittees shall provide notice of regular, special, and emergency meetings as the same are scheduled by posting the dates, times, locations, and agendas (if applicable) on the board's official web site.

(2) The board maintains a list of individuals who have requested individual notice of each meeting. Individual notice may be given via mail, electronic mail, or facsimile.

(a) Any person who desires individual mail notice of the meetings described in paragraph (S)(1) of this rule shall make the request in writing to the board at its business address. The board may refuse to honor a request for individual mail notice unless the person requesting such notice has first supplied the board with a self-addressed, stamped envelope for the transmission of each requested notice.

(b) Any person who desires individual electronic mail notice of the meetings described in paragraph (S)(1) of this rule shall make a request in writing to the board at its business address. The board shall maintain a list of all persons who have requested individual electronic mail notice in this manner. The board may purge the list of all entries as it deems appropriate provided, however, that the board shall first provide notice to any individual whose contact information will be purged at least thirty days in advance.

(c) Any person who desires individual facsimile mail notice of the meetings described in paragraph (S)(1) of this rule shall make a request in writing to the board at its business address. The board shall maintain a list of all persons who have requested individual facsimile notice in this manner. The board may purge the list of all entries as it deems appropriate provided, however, that the board shall first provide notice to any individual whose contact information will be purged at least thirty days in advance.

(d) The board may, at its sole option, provide for an electronic means of requesting individual electronic mail of facsimile notice of the meetings described in paragraph (S)(1) of this rule.

(3) A representative of the news media may obtain notice of all special or emergency meetings of the council, its committees or its subcommittees by requesting such in writing to the "Ohio Mine Subsidence Insurance Governing Board" at its business address.

(a) The request must provide the name of the person to be contacted, the agency whom the person represents, and shall state whether the person wishes to be notified of regular, special, or emergency meetings, or any combination thereof. Additionally, the request shall specify whether the person wishes to be notified by mail, electronic mail, or facsimile, and shall include the appropriate contact information.

(b) The board shall maintain a list of all news media representatives requesting notice of special meetings. The board may purge the list of all entries as it deems appropriate provided, however, that the board shall first provide notice to an individual whose contact information will be purged at least thirty days in advance.

(c) Notice of special meetings shall be provided to news media representatives at least twenty-four hours prior to the special meeting. Notice of emergency meetings shall be provided to news media representatives by telephone or electronic means as soon as practicable.

(4) Notice given by mail is effective upon mailing. Notice given by telephone is effective upon providing actual notice, leaving a message containing the meeting information with any individual who answers the number provided by the requestor or leaving a recorded message, or, if the board makes three unsuccessful attempts to contact the requestor directly or to leave a voice message. Notice given by electronic means shall be complete upon transmission.

(T) Severability

Last updated February 14, 2022 at 8:55 AM

History

Effective: February 14, 2022
Promulgated Under: 119.03

Ohio Adm.Code 3901-1-50 Annual financial reports.

(A) Purpose

(1) The purpose of this rule is to facilitate the department's surveillance of the financial condition of insurers by requiring (a) an annual audit of financial statements reporting the financial position and results of operation of insurers by independent certified public accountants, (b) communication of internal control related matters noted in an audit, and (c) management's report of internal control over financial reporting. This rule shall apply to all insurers, except those insurers having direct premiums written of less than one million dollars and having less than one thousand policyholders nationwide at the end of any year. Those insurers will be exempt from this rule for the year they do not meet this threshold unless the superintendent makes a specific finding that compliance by the insurer is necessary for the superintendent to carry out the superintendent's statutory responsibilities. Insurers having assumed premiums to contracts and/or treaties of reinsurance of one million dollars or more will not be exempt. Insurers filing audited financial reports in another state, pursuant to such other state's requirement of audited financial reports, which are found by the superintendent to be substantially similar to the requirements herein, are exempt from this rule if:

(a) A copy of the audited financial report, communication of internal control related matters noted in audit, and the accountant's letter of qualifications, which are filed with such other states are filed with the superintendent in accordance with the filing dates specified in paragraphs (D), (K) and (L) of this rule. (Canadian insurers may submit accountants' reports as filed with the office of the superintendent of financial institutions, Canada); and

(b) A copy of any notification or report of adverse financial condition filed with such other state is filed with the superintendent within the time specified in paragraph (J) of this rule. Foreign or alien insurers required to file management's report of internal control over financial reporting in another state are exempt from filing the report in this state provided the other state has substantially similar reporting requirements and the report is filed with the superintendent of the other state within the time specified.

(2) This rule shall not prohibit, preclude or in any way limit the superintendent from ordering, conducting and performing examinations of insurers under the rules and regulations and the practice and procedures of the department.

(B) Authority

This rule is promulgated pursuant to the authority vested in the superintendent under section 3901.041 of the Revised Code which requires the superintendent to adopt, amend, and rescind rules and make adjudications necessary to discharge the superintendent's duties and exercise the superintendent's powers under Title XXXIX of the Revised Code, subject to sections 119.01 to 119.13 of the Revised Code. This rule is issued to implement sections 3901.04, 3901.07 and 3901.77 of the Revised Code.

(1) "Audited Financial Report" means the annual report defined in the items specified in paragraph (E) of this rule.

(2) "Accountant" and "Independent Certified Public Accountant" mean an independent certified public accountant or accounting firm, as defined by the general standards of the "American Institute of Certified Public Accountants," in good standing with the "American Institute of Certified Public Accountants" and in all states in which the certified public accountant is licensed to practice; for Canadian and British companies, it means a Canadian-chartered or British-chartered accountant.

(3) An "affiliate" of, or person "affiliated" with, a specific person, is a person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the person specified.

(4) "Audit committee" means a committee (or equivalent body) established by the board of directors of an entity for the purpose of overseeing the accounting and financial reporting process of an insurer or group of insurers, the internal audit function of an insurer or group of insurers (if applicable), and external audits of financial statements of the insurer or group of insurers. The audit committee of any entity that controls a group of insurers may be deemed to be the audit committee for one or more of these controlled insurers solely for the purposes of this rule at the election of the controlling person. Refer to paragraph (N) of this rule for exercising this election. If an audit committee is not designated by the insurer, the insurer's entire board of directors shall constitute the audit committee.

(5) "Department" means the Ohio department of insurance.

(6) "Indemnification" means an agreement of indemnity or a release from liability where the intent or effect is to shift or limit in any manner the potential liability of the person or firm for failure to adhere to applicable auditing or professional standards, whether resulting in part from knowing of other misrepresentations made by the insurer or its representatives.

(7) "Independent board member" has the same meaning as described in paragraph (N) of this rule.

(8) "Internal audit function" means a person or persons who provide independent, objective and reasonable assurance designed to add value and improve an organization's operations and accomplish its objectives by bringing a systematic disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes.

(9) "Internal control over financial reporting" means a process effected by an entity's board of directors, management and other personnel designed to provide reasonable assurance regarding the reliability of the financial statements, i.e., those items specified in paragraphs (E)(2) to (E)(7) of this rule, and includes those policies and procedures that:

(a) Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets;

(b) Provide reasonable assurance that transactions are recorded as necessary to permit preparation of the financial statements, i.e., these items specified in paragraphs (E)(2) to (E)(7) of this rule, and that receipts and expenditures are being made only in accordance with authorizations of management and directors; and

(c) Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of assets that could have a material effect on the financial statements, i.e., these items specified in paragraphs (E)(2) to (E)(7) of this rule.

(10) "SEC" means the United States securities and exchange commission.

(11) "Section 404" means section 404 of the Sarbanes-Oxley Act of 2002 and the SEC's rules and regulations promulgated thereunder.

(12) "Section 404 Report" means management's report on "internal control over financial reporting" as defined by the SEC and the related attestation report of the independent certified public accountant as described in paragraph (C)(2) of this rule.

(13) "SOX Compliant Entity" means an entity that either is required to be compliant with, all of the following provisions of the Sarbanes-Oxley Act of 2002: (i) the preapproval requirements of section 201 (section 10A(i) of the Securities Exchange Act of 1934); (ii) the audit committee independence requirements of section 301 (section 10A(m)(3) of the Securities Exchange Act of 1934); and (iii) the internal control over financial reporting requirements of section 404 (item 308 of SEC regulation S-K0).

(14) "Insurer" means an entity licensed pursuant to Chapter 1739., 1751., 3907., 3909., 3911., 3925., 3929., 3931. or 3953. of the Revised Code.

(15) "Group of Insurers" means those entities included in the reporting requirements of sections 3901.32 to 3901.37 of the Revised Code, or a set of insurers as identified by management, for the purpose of assessing the effectiveness of internal controls over financial reporting.

(16) "Statutory accounting practices" has the meaning defined in the current editions of "Annual Statement Instructions" and the "Accounting Practices and Procedures Manual" published by the "National Association of Insurance Commissioners," or as otherwise prescribed by the insurance department of the insurer's state of domicile.

(17) "Superintendent" means the superintendent of the Ohio department of insurance.

(18) "Workpapers" means the records kept by an independent certified public accountant of the procedures followed, the tests performed, the information obtained, and the conclusions reached pertinent to the accountant's audit of the financial statements of an insurer. Workpapers may include audit planning documentation, work programs, analyses, memoranda, letters of confirmation and representation, abstracts of company documents, and schedules of commentaries prepared or obtained by the independent certified public accountant in the course of the accountant's audit of the financial statements of an insurer and, which support the accountant's opinion thereof.

(D) General requirements related to filing and extensions for filing of audited financial reports and audit committee appointment

All insurers shall have an annual audit by an independent certified public accountant and shall file an audited financial report as a supplement to the annual statement with the superintendent on or before June first for the immediately preceding year ended December thirty-first. Extensions of the June first filing date may be granted in writing by the superintendent for thirty day periods upon showing by the insurer and its independent certified public accountant the reasons for requesting such extension and determination by the superintendent of good cause for an extension. The request for an extension must be submitted in writing not less than ten days prior to the due date in sufficient detail to permit the superintendent to make an informed decision with respect to the requested extension.

If an extension is granted, a similar extension of thirty days is granted to the filing of management's report of internal control over financial reporting.

Every insurer required to file an annual audited financial report pursuant to this rule shall designate a group of individuals as constituting its audit committee, as defined in paragraph (C)(4) of this rule. The audit committee of any entity that controls an insurer may be deemed to be the insurer's audit committee for purposes of this rule at the election of the controlling person.

The superintendent may require an insurer to file an audited financial report earlier than June first with ninety days advance notice to the insurer.

(E) Contents of audited financial report

The audited financial report shall report the financial condition of the insurer as of the end of the most recent calendar year and the results of its operations, cash flows, and changes in capital and surplus for the year then ended in conformity with statutory accounting practices. The audited financial report shall include the following items:

(1) Report of independent certified public accountant;

(2) Balance sheet reporting admitted assets, liabilities, capital, and surplus;

(3) Statement of operations;

(4) Statement of cash flows;

(5) Statement of changes in capital and surplus;

(6) Notes to financial statements. These notes shall be those appropriate to a CPA audited financial report, based on applicability, materiality, and significance, taking into account the subjects covered in the instructions to and illustrations of how to report information in the notes to financial statements section of the "NAIC" annual statement instructions and any other notes required by the "NAIC Accounting Practices and Procedures Manual" and shall include:

(a) A reconciliation of differences, if any, between the audited statutory financial statements and the annual financial statement filed with the superintendent including a written description of the nature of these differences;

(b) A narrative explanation of all significant intercompany transactions and balances; and

(7) The financial statements included in the audited financial report shall be prepared in a form and using language and groupings substantially the same as the relevant sections of the annual financial statement of the insurer filed with the superintendent and:

(a) The financial statements shall be comparative, presenting the amounts as of December thirty-first of the current year and amounts as of the immediately preceding year ending December thirty-first. (However, in the first year in which an insurer is required to file an audited financial report, the comparative data may be omitted); and

(b) Amounts may be rounded to the nearest thousand dollars.

(F) Designation of independent certified public accountant

(1) Each insurer required by this rule to file an audited financial report must, within sixty days after becoming subject to such requirement, register with the superintendent, in writing, the name and address of the independent certified public accountant retained to conduct the annual audit required in this rule. Insurers not previously retaining an independent certified public accountant shall register the name and address of their retained independent certified public accountant not less than six months before the date when the first audited financial report is to be filed.

(2) The insurer shall obtain a letter from such accountant, and file a copy of such letter with the superintendent, stating that the accountant is aware of the provisions of the insurance code and the rules and regulations of the insurance department of its state of domicile that relate to accounting and financial matters and affirming that the accountant will express the accountant's opinion on the financial statements of the insurer in the terms of their conformity to the statutory accounting practices prescribed or otherwise permitted by such insurance department, specifying such exceptions as the accountant may believe appropriate. If an accountant, who was not the accountant for the insurer's most recently filed audited financial report, is engaged to audit the insurer's financial statements, the insurer shall, within thirty days of the date the accountant is engaged, notify the department of this event.

(3) If an accountant who was the accountant for the immediately preceding filed audited financial report is dismissed or resigns, the insurer shall within five business days notify the department of insurance of this event. The insurer shall also furnish the superintendent with a separate letter within ten business days of the above notification stating whether in the twenty four months preceding such engagement there were any disagreements with the former accountant on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of the former accountant, would have caused the former accountant to make reference to the subject matter of the disagreement in connection with the former accountant's opinion. Disagreements contemplated by this paragraph are those that occur at the decision-making level, i.e., between personnel of the insurer responsible for presentation of its financial statements and personnel of the accounting firm responsible for rendering its report. The insurer shall also request, in writing, such former accountant to furnish a letter, addressed to the insurer, stating whether the accountant agrees with the statements contained in the insurer's letter and, if not, stating the reasons for which the accountant does not agree; and the insurer shall furnish such responsive letter from the former accountant to the superintendent, together with its own letter.

(G) Qualifications of independent certified public accountant

An insurer may not use any person or firm as an independent certified public accountant if such person or firm: (1) is not in good standing with the "American Institute of Certified Public Accountants" in all states in which the person or firm is licensed to practice or, for a Canadian or British company, that is not a chartered accountant; or (2) has either directly or indirectly entered into an agreement of indemnity or release from liability (collectively referred to as "indemnification") with respect to the audit of the insurer. Except as otherwise provided herein, an insurer may use a certified public accountant as its independent certified public accountant only if and for as long as such accountant conforms to the standards of the accountant's profession, as contained in the "Code of Professional Conduct" of the "American Institute of Certified Public Accountants" and "Rules of Professional Conduct" of the "Accountancy Board of Ohio," or similar code.

The lead (or coordinating) audit partner (having primary responsibility for the audit) may not act in that capacity for more than five consecutive years. The person shall be disqualified from acting in that or a similar capacity for the same company or its insurance subsidiaries or affiliates for a period of five consecutive years. An insurer may make application to the superintendent of insurance for relief from the above rotation requirement on the basis of unusual circumstances. This application should be made at least thirty days before the end of the calendar year. The superintendent may consider the following factors in determining if the relief should be granted: (a) number of partners, expertise of the partners, or the number of insurance clients in the currently registered firm; (b) premium volume of the insurer; or (c) number of jurisdictions in which the insurer transacts business. The insurers shall file, with its annual statement filing, the proof of relief from the five-year limitation with the states that it is licensed in or doing business in and with the "National Association of Insurance Commissioners." If the nondomestic state accepts electronic files with the NAIC, the insurer shall file the approval in an electronic format acceptable to the "National Association of Insurance Commissioners."

The superintendent shall not recognize as a qualified independent certified public accountant, nor accept any annual audited financial report, prepared in whole or in part by, any natural person who (1) has been convicted of fraud, bribery, a violation of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. sections 1961-1968, or any dishonest conduct or practices under federal or state law; (2) has been found to have violated the insurance laws of this state with respect to any previous reports submitted under this rule; or (3) has demonstrated a pattern or practice of failing to detect or disclose material information in previous reports filed under the provisions of this requirement.

The superintendent may hold a hearing to determine whether a certified public accountant is qualified and, considering the evidence presented, may rule that the accountant is not qualified for purposes of expressing his or her opinion on the financial statements in the annual audited financial report made pursuant to this requirement and require the insurer to replace the accountant with another whose relationship with the insurer is qualified within the meaning of this requirement.

(1) The superintendent shall not recognize as a qualified independent certified public accountant, nor accept an annual audited financial report, prepared in whole or in part by an accountant who provides to an insurer, contemporaneously with the audit, the following non-audit services:

(a) Bookkeeping or other services related to the accounting records or financial statements of the insurer;

(b) Financial information systems design and implementation;

(d) Actuarial-oriented advisory services involving the determination of amounts recorded in the financial statements. The accountant may assist an insurer in understanding the methods, assumptions, and inputs used in the determination of amounts recorded in the financial statement only if it is reasonable to conclude that the services provided will not be subject to audit procedures during an audit of the insurer's financial statements. An accountant's actuary may also issue an actuarial opinion or certification ("opinion") on an insurer's reserves if the following conditions have been met:

(i) Neither the accountant nor the accountant's actuary has performed any management functions or made any management decisions;

(ii) The insurer has competent personnel (or engages a third party actuary) to estimate the reserves for which management takes responsibility; and

(iii) The accountant's actuary tests the reasonableness of the reserves after the insurer's management has determined the amount of the reserves:

(e) Internal audit outsourcing services;

(f) Management functions or human resources;

(g) Broker or dealer, investment advisor, or investment banking services;

(h) Legal services or expert services unrelated to the audit; or

(i) Any other services that the superintendent determines, by rule, are impermissible.

(2) In general, the principles of independence with respect to services provided by the qualified independent certified public accountant are largely predicted on three basic principles, violations of which would impair the accountant's independence. The principles are that the accountant cannot function in the role of management, cannot audit his or her own work, and cannot serve in an advocacy role for the insurer.

Insurers having direct written and assumed premiums of less than one hundred million dollars in any calendar year may request an exemption from this paragraph. The insurer shall file with the superintendent a written statement discussing the reasons why the insurer should be exempt from these provisions. If the superintendent finds, upon review of this statement, that compliance with this rule would constitute a financial or organizational hardship upon the insurer, an exemption may be granted.

(3) A qualified independent certified public accountant who performs the audit may engage in other non-audit services for an insurer, including tax services, that are not described in paragraph (G)(1) of this rule or that do not conflict with paragraph (G)(2) of this rule, only if the activity is approved in advance by the audit committee for the insurer, in accordance with paragraph (G)(4) of this rule.

(4) All auditing services and non-audit services provided to an insurer by the qualified independent certified public accountant of the insurer shall be preapproved by the audit committee of the insurer. The preapproval requirement is waived with respect to non-audit services if the insurer is a "SOX" compliant entity or a direct or indirect wholly-owned subsidiary of a "SOX" compliant entity; or

(a) The aggregate amount of all such non-audit services provided to the insurer constitutes not more than five per cent of the total amount of fees paid by the insurer to its qualified independent certified public account during the fiscal year in which the non-audit services are provided;

(b) The services were not recognized by the insurer at the time of the engagement to be non-audit services; and

(c) The services are promptly brought to the attention of the audit committee and approved prior to the completion of the audit by the audit committee or by one or more members of the audit committee who are members of the board of directors to whom authority to grant such approvals has been delegated by the audit committee.

(5) The audit committee of an insurer may delegate to one or more designated members of the audit committee the authority to grant the preapprovals required by paragraph (G)(4) of this rule. The decisions of any member to whom this authority is delegated shall be presented to the full audit committee at each of its scheduled meetings.

(6) The superintendent shall not recognize an independent certified public accountant as qualified for particular insurer if a member of the board, president, chief executive officer, controller, chief financial officer, chief accounting officer, or any person serving in an equivalent position for that insurer, was employed by the independent certified public accountant and participated in the audit of that insurer during the one year period preceding the date that the most current statutory opinion is due. This section shall only apply to partners and senior managers involved in the insurer's preceding audit. An insurer may make an application to the superintendent for relief from the requirement on the basis of unusual circumstances.

(7) The insurer shall file, with its annual statement filing, the approval for relief from paragraph (G)(6) of this rule with the states that it is licensed in or doing business in and with the NAIC. If the nondomestic state accepts electronic filing with the NAIC, the insurer shall file the approval in an electronic format acceptable to the NAIC.

(H) Consolidated or combined audits

An insurer may make an annual written application to the superintendent for approval to file audited consolidated or combined financial statements in lieu of separate annual audited financial statements if the insurer is part of a group of insurance companies which uses a pooling or one hundred per cent reinsurance agreement that affects the solvency and integrity of the insurer's reserves and such insurer cedes all of its direct and assumed business to the pool. In such cases, a columnar consolidating or combining worksheet shall be filed with the report, as follows:

(1) Amounts shown on the consolidated or combined audited financial report shall be shown on the worksheet;

(2) Amounts for each insurer subject to this rule shall be stated separately;

(3) Non-insurance operations may be shown on the worksheet on a combined or individual basis;

(4) Explanations of consolidating and eliminating entries shall be included; and

(5) A reconciliation shall be included of any differences between the amounts shown in the individual insurer columns of the worksheet and comparable amounts shown on the financial statements of the insurers.

(I) Scope of audit and report of independent certified public accountant

Financial statements furnished pursuant to paragraph (E) of this rule shall be examined by an independent certified public accountant. The audit of the insurer's financial statements shall be conducted in accordance with generally accepted auditing standards. In accordance with AU section 319 of the professional standards of the accountants "American Institute of Certified Public Accountants," consideration of internal control in a financial statement audit, the independent certified public accountant should obtain an understanding of internal control sufficient to plan the audit. To the extent required by AU section 319, for those insurers required to file a management's report of internal control over financial reporting pursuant to paragraph (Q) of this rule, the independent certified public accountant should consider (as that term is defined in Statement on Auditing Standards (SAS) No. 102, defining professional requirements in statements on auditing standards or its replacement) the most recently available report in planning and performing the audit of the statutory financial statements. Consideration should be given to such other standards illustrated in the "Financial Condition Examiner's Handbook" promulgated by the "National Association of Insurance Commissioners" as the independent certified public accountant deems necessary.

(J) Notification of adverse financial condition

(1) The insurer required to furnish the annual audited financial report shall require the independent certified public accountant to report in writing within five business days to the board of directors or its audit committee any determination by the independent certified public accountant that the insurer has materially misstated its financial condition as reported to the superintendent as of the balance sheet date currently under audit or that the insurer does not meet the minimum capital and surplus requirement of the Revised Code as of that date. An insurer who has received a report pursuant to this paragraph shall forward a copy of the report to the superintendent within five business days of receipt of such report and shall provide the independent certified public accountant making the report with evidence of the report being furnished to the superintendent. If the independent certified public accountant fails to receive such evidence within the required five business day period, the independent certified public accountant shall furnish to the superintendent a copy of the certified public accountant's report within the next five business days.

(2) No independent certified public accountant shall be liable in any manner to any person for any statement made in connection with the above paragraph if such statement is made in good faith in compliance with the above paragraph.

(3) If the accountant, after the date of the audited financial report filed pursuant to this rule, becomes aware of facts which might have affected the accountant's report, the department shall note the obligation of the accountant to take such action as prescribed in volume one, section AU five hundred sixty one of the "Professional Standards of the American Institute of Certified Public Accountants," as amended.

(K) Communication of internal control related matters noted in an audit

In addition to the annual audited financial report, each insurer shall furnish the superintendent with a written communication as to any unremediated material weakness in its internal controls over financial reporting noted during the audit. Such communication shall be prepared by the accountant within sixty days after the filing of the annual audited financial report, and shall contain:

(1) A description of any unremediated material weakness (as the term material weakness is defined by statement on auditing standard sixty, communication of internal control related matters noted in an audit, or its replacement) as of December thirty-first immediately preceding (so as to coincide with the audited financial report discussed in paragraph (D) of this rule) in the insurer's internal control over financial reporting noted by the accountant during the course of the accountant's audit of the financial statements. If no unremediated material weaknesses are noted, the communication should so state.

(2) The insurer is required to provide a description of remedial action taken or proposed to correct unremediated material weaknesses, if the actions are not described in the accountant's communications.

(L) Accountant's letter of qualifications

The accountant shall furnish the insurer in connection with, and for inclusion in, the filing of the annual audited financial report, a letter stating the following:

(1) That the accountant is independent with respect to the insurer and conforms to the standards of the accountant's profession as contained in the "Code of Professional Ethics," the pronouncements of the "American Institute of Certified Public Accountants," and the "Rules of Professional Conduct" of the "Accountancy Board of Ohio," or other state board of public accountancy that performs the same licensing function.

(2) The background and experience in general, and the experience in audits of insurers of the staff assigned to the engagement and whether each is an independent certified public accountant. Nothing within this requirement shall be construed as prohibiting the accountant from using such staff as the accountant deems appropriate where such use is consistent with the standards prescribed by generally accepted auditing standards.

(3) That the accountant understands the annual audited financial report and the accountant's opinion thereon will be filed in compliance with this requirement and that the superintendent will be relying on this information in the monitoring and regulation of the financial position of insurers.

(4) That the accountant consents to the requirements of paragraph (M) of this rule and that the accountant consents and agrees to make available for review by the superintendent, the superintendent's designee or appointed agent, the workpapers, as defined in paragraph (C)(18) of this rule.

(5) A representation that the accountant is properly licensed by an appropriate state licensing authority and is a member in good standing in the "American Institute of Certified Public Accountants."

(6) A representation that the accountant is in compliance with the requirements of paragraph (G) of this rule.

(M) Availability and maintenance of independent certified public accountant workpapers

Every insurer required to file an audited financial report pursuant to this rule shall require the accountant to make available for review by department examiners the workpapers prepared in the conduct of the accountant's audit and any communications related to the audit between the accountant and the insurer, at the offices of the insurer, at the department, or at any other reasonable place designated by the superintendent. The insurer shall require that the accountant retain the workpapers and communications until the domiciliary department has filed a report on examination covering the period of the audit, but for no longer than seven years from the date of the audit report.

When domiciliary department examiners conduct periodic reviews, it shall be agreed that photocopies of pertinent audit workpapers may be made and retained by the domiciliary department. Such reviews by the domiciliary department examiners shall be considered investigations and all workpapers and communications obtained during the course of such investigations shall be afforded the same confidentiality as other examination workpapers generated by the domiciliary department.

(N) Requirements for audit committees

This section shall not apply to foreign or alien insurers licensed in this state or an insurer that is a "SOX" compliant entity or a direct or indirect wholly-owned subsidiary of a "SOX" compliant entity.

The audit committee shall be directly responsible for the appointment, compensation, and oversight of the work of any accountant (including resolution of disagreements between management and the accountant regarding financial reporting) for the purpose of preparing or issuing audited financial reports or related work pursuant to this regulation. Each accountant shall report directly to the audit committee.

The audit committee of an insurer or group of insurers shall be responsible for overseeing the insurer's internal audit function and granting the person or persons performing the function suitable authority and resources to fulfill the person's responsibilities if required by paragraph (O) of this rule.

Each member of the audit committee shall be a member of the board of directors of the insurer or a member of the board of directors of an entity elected pursuant to this paragraph and paragraph (C)(4) of this rule.

To be considered independent for purposes of this rule, a member of the audit committee may not, other than in that person's capacity as a member of the audit committee, the board of directors, or any other board committee, accept any consulting, advisory or other compensatory fee from the entity or be an affiliated person of the entity or any subsidiary thereof. However, if law requires the board participation by otherwise non-independent members, that law shall prevail and such members may participate in the audit committee and be designated as independent for audit committee purposes, unless they are an officer or employee of the insurer or one of its affiliates.

If a member of the audit committee ceases to be independent for reasons outside the member's reasonable control, that person, with notice by the responsible entity to the domiciliary state, may remain an audit committee member of the responsible entity until the earlier of the next annual meeting of the responsible entity or one year from the occurrence of the event that caused the member to no longer be independent.

To exercise the election of the controlling person to designate the audit committee for purposes of this rule, the ultimate controlling person shall provide written notice to the domiciliary commissioners of the affected insurers. Notification shall be made timely prior to the issuance of the statutory audit report and include a description of the basis for the election. The election can be changed through notice to the domiciliary commissioner by the insurer, which shall include a description of the basis for the change. The election shall remain in effect for perpetuity, until rescinded.

The audit committee shall require the accountant who performs for an insurer any audit required by this regulation to timely report to the audit committee in accordance with the requirements of "SAS" No. 61, "Communication with Audit Committees," or its replacement, including: all significant accounting policies and material permitted practices; all material alternative treatments of financial information within statutory accounting principles that have been discussed with management officials of the insurer, ramifications of the use of the alternative disclosures and treatments, and the treatment preferred by the accountant; and other material written communications between the accountant and the management of the insurer, such as any management letter or schedule of unadjusted differences.

If an insurer is a member of an insurance holding company system, the reports required above may be provided to the audit committee on an aggregate basis for insurers in the holding company system, provided that any substantial differences among insurers in the system are identified to the audit committee.

The portion of independent audit committee members shall meet or exceed the following criteria:

Prior Calendar Year Direct Written and Assumed Premiums

| $0- $300,000,000 | $300,000,000- $500,000,000 | Over $500,000,000 | | --- | --- | --- | | No minimum requirements. See also note A and B. | Majority (50% or more) of members shall be independent. See also note A and B. | Supermajority of members (75% or more) shall be independent. See also Note A and B. |

Note A: The superintendent has authority afforded by state law to require the entity's board to enact improvements to the independence of the audit committee membership if the insurer is in a "RBC" action level event, meets one or more of the standards of an insurer deemed to be in hazardous financial condition, or otherwise exhibits qualities of a troubled insurer.

Note B: All insurers with less than five hundred million dollars in prior year direct written and assumed premiums are encouraged to structure their audit committees with at least a supermajority of independent audit committee members.

Note C: Prior calendar year direct written and assumed premiums shall be the combined total of direct premiums and assumed premiums from non-affiliates for the reporting entities.

An insurer with direct written and assumed premium, excluding premiums reinsured with the federal crop insurance corporation and federal flood program, less than five hundred million dollars may make application to the superintendent for a waiver from these requirements based upon hardship. The insurer shall file, with its annual statement filing, the approval for relief from paragraph (N) of this rule with the states that it is licensed in or doing business in and the NAIC. If the non-domestic state accepts electronic filing with the NAIC, the insurer shall file the approval in an electronic format acceptable to the NAIC.

(O) Internal audit function requirements

(1) An insurer is exempt from the requirements of paragraph (O) of this rule if:

(a) The insurer has annual direct written and unaffiliated assumed premium, including international direct and assumed premium but excluding premiums reinsured with the "Federal Crop Insurance Corporation" and "National Flood Insurance Program," less than five hundred million dollars; and

(b) If the insurer is a member of a group of insurers that has an annual direct written and unaffiliated assumed premium including international direct and assumed premium, but excluding premiums reinsured with the "Federal Crop Insurance Corporation" and "National Flood Insurance Program," less than one billion dollars.

(2) The insurer or group of insurers shall establish an internal audit function providing independent, objective and reasonable assurance to the audit committee and insurer management regarding the insurer's governance, risk management and internal controls. This assurance shall be provided by performing general and specific audits, reviews and tests and by employing other techniques deemed necessary to protect assets, evaluate control effectiveness and efficiency, and evaluate compliance with policies and regulations.

(3) To ensure that internal auditors remain objective, the internal audit function must be organizationally independent. Specifically, the internal audit function will not defer ultimate judgment on audit matters to others, and shall appoint an individual to head the internal audit function who will have direct and unrestricted access to the board of directors. Organizational independence does not preclude dual-reporting relationships.

(4) The head of internal audit function shall report to the audit committee regularly, but no less than annually, on the periodic audit plan, factors that may adversely impact the internal audit function's independence or effectiveness, material findings from completed audits and the appropriateness of corrective actions implemented by management as a result of audit findings.

(5) If an insurer is a member of an insurance holding company system or included in a group of insurers, the insurer may satisfy the internal audit function requirements set forth in paragraph (O) of this rule at the ultimate controlling parent level, an intermediate holding company level or the individual legal entity level.

(P) Conduct of insurer in connection with the preparation of required reports and documents

No director or officer of an insurer shall, directly or indirectly:

(1) Make or cause to be made a materially false or misleading statement to an accountant in connection with any audit, review or communication required under this rule; or

(2) Omit to state or cause another person to omit to state, any material fact necessary to make a statement made, in light of the circumstances under which the statement was made, not misleading to an accountant in connection with any audit, review, or communication required under this rule.

No officer or director of an insurer, or any other person acting under the direction thereof, shall directly or indirectly take any action to coerce, manipulate, mislead or fraudulently influence any accountant engaged in the performance of an audit pursuant to this rule if that person knew or should have known that the action, if successful, could result in rendering the insurer's financial statements materially misleading.

Actions that, "if successful, could result in rendering the insurer's financial statements materially misleading" include, but are not limited to, actions taken at any time with respect to the professional engagement period to coerce, manipulate, mislead or fraudulently influence an accountant:

(a) To issue or reissue a report on an insurer's financial statements that is not warranted in the circumstances (due to material violations of statutory accounting principles prescribed by the commissioner, generally accepted auditing standards, or other professional or regulatory standards):

(b) Not to perform audit, review or other procedures required by generally accepted auditing standards or other professional standards;

(d) Not to communicate matters to an insurer's audit committee.

(Q) Management's report of internal control over financial reporting

Every insurer required to file an audited financial report pursuant to this rule that has annual direct written and assumed premiums, excluding premiums reinsured with the "Federal Crop Insurance Corporation" and "National Flood Insurance Program," of five hundred million dollars or more shall prepare a report of the insurer's or group of insurer's internal control over financial reporting as these terms are defined in paragraph (C) of this rule. The report shall be filed with the superintendent along with the communication of internal control related matters noted in an audit described in paragraph (K) of this rule. Management's report of internal control over financial reporting shall be as of December thirty-first immediately preceding.

Notwithstanding the premium threshold, as stated above, the superintendent may require an insurer to file management's report of internal control over financial reporting if the insurer is in any "RBC" level event, or meets any one or more of the standards of an insurer deemed to be in hazardous financial condition as defined in sections 3903.09 and 3903.71 of the Revised Code and rule 3901-3-04 of the Administrative Code.

An insurer or a group of insurers that is,

(1) Directly subject to "Section 404";

(2) Part of a holding company system whose parent is directly subject to "Section 404";

(3) Not directly subject to "Section 404" but is a "SOX" compliant entity; or

(4) A member of a holding company system whose parent is not directly subject to "Section 404" but is a "SOX" compliant entity, may file its or its parents' "Section 404" report on internal control and an addendum in satisfaction of this paragraph's requirement provided that those internal controls of the insurer or group of insurers having a material impact on the preparation of the insurer or group of insurers' its audited statutory financial statements were included in the scope of the "Section 404" reports. The addendum shall be a positive statement by management that there are no material processes with respect to the preparation of the insurer's or group of insurers' audited statutory financial statements excluded from the "Section 404" report. If there are internal controls of the insurer or group of insurers that have a material impact on the preparation of the insurer's or group of insurers' audited statutory financial statements and those internal controls were not included in the scope of the "Section 404" report, the insurer or group of insurers may either file (a) a report as required by paragraph (Q) of this rule, or (b) the "Section 404" report and a report as required by paragraph (Q) of this rule for those internal controls that have a material impact on the insurer's or group of insurers' audited statutory financial statements not covered by the "Section 404" report.

Management's report of internal control over financial reporting shall include:

(a) A statement that management is responsible for establishing and maintaining adequate control over financial reporting;

(b) A statement that management has established internal control over financial reporting and an assertion to the best of management's knowledge and belief, after diligent inquiry, as to whether its internal control over financial reporting is effective to provide reasonable assurance regarding the reliability of financial statements in accordance with statutory accounting principles;

(c) A statement that briefly describes the approach or process by which management evaluated the effectiveness of its internal control over financial reporting;

(d) A statement that briefly describes the scope of work that is included and whether any internal controls were excluded;

(e) Disclosure of any unremediated material weaknesses in internal control over financial reporting identified by management as of December thirty-first immediately preceding. Management is not permitted to conclude that the internal control over financial reporting is effective to provide reasonable assurance regarding the reliability of financial statements in accordance with statutory accounting principles if there is one or more unremediated material weakness in its internal controls over financial reporting;

(f) A statement regarding the inherent limitations of internal control systems; and

(g) Signatures of the chief executive officer and the chief financial officer (or equivalent position/title).

Management shall document and make available upon financial condition examination the basis upon which its assertions, required in above, are made. Management may base its assertions, in part, upon its review, monitoring and testing of internal controls undertaken in the normal course of its activities.

(i) Management shall have discretion as to the nature of the internal control framework used, and the nature and extent of documentation, to make its assertion in a cost-effective manner, as such, may include assembly of or reference to existing documentation.

(ii) Management's report on internal control over financial reporting, required above, and any documentation provided in support thereof during the course of a financial condition examination, shall be kept confidential by the superintendent.

(R) Exemptions and effective dates

(1) Upon written application of any insurer, the superintendent may grant an exemption from compliance with any and all provisions this rule if the superintendent finds, upon review of the application, that compliance with this rule would constitute a financial or organizational hardship upon the insurer. An exemption may be granted at any time and from time to time for any specified period.

(2) Foreign insurers shall comply with this rule for the year ending December 31, 2009, and each year thereafter, unless the superintendent gives his or her written permission otherwise.

(3) An insurer or group of insurers that is not required to have independent audit committee members or only a majority of independent audit committee members (as opposed to a supermajority) because the total written and assumed premium is below the threshold and subsequently becomes subject to one of the independence requirements due to changes in premium shall have one year following the year threshold is exceeded to comply with the independence requirements. Likewise, an insurer that becomes subject to one of the independence requirements as a result of a business combination shall have one calendar year following the date of acquisition or combination to comply with the independence requirements.

(4) If an insurer or group of insurers that is exempt from paragraph (O) of this rule requirements no longer qualifies for the exemption, it shall have one year after the threshold is exceeded to comply with the requirements of paragraph (O) of this rule.

(5) An insurer or group of insurers that is not required to file a report because the total written premium is below the threshold and subsequently becomes subject to the reporting requirements shall have two years following the year the threshold is exceeded to file a report. Likewise, an insurer acquired in a business combination shall have two calendar years following the date of acquisition or combination to comply with the reporting requirements.

(S) Canadian and British companies

In the case of Canadian and British insurers, the audited financial report shall be defined as the annual statement of total business on the form filed by such companies with their domiciliary supervision authority duly audited by an independent chartered accountant. For such insurers, the letter required in paragraph (F)(2) of this rule shall state that the accountant is aware of the requirements relating to the audited financial report filed with the superintendent pursuant to paragraph (Q) of this rule and shall affirm that the opinion expressed is in conformity with such requirements.

(T) Severability

Last updated March 2, 2026 at 8:33 AM

History

Effective: February 28, 2026
Promulgated Under: 119.03

Ohio Adm.Code 3901-3-04

(A) Purpose

The purpose of this rule is to facilitate the department of insurance's surveillance of the financial condition of insurers by setting out standards which the superintendent may use for identifying insurers whose condition is such as to render the continuance of their business hazardous to their policyholders, creditors, or the general public. This rule shall not be interpreted to limit the powers granted the superintendent by any laws of this state.

(B) Authority

This rule is promulgated pursuant to the authority vested in the superintendent under sections 3901.041, 3903.09 and 3903.71 of the Revised Code.

(1) The following standards, either singly or a combination of two or more, may be considered by the superintendent to determine whether the continued operation of any insurer might be deemed to be hazardous to their policyholders, creditors, or the general public. The superintendent may consider:

(a) Adverse findings reported in financial condition or market conduct examination reports, statutory audit reports, and actuarial opinions, reports or summaries;

(b) The "National Association of Insurance Commissioners (NAIC) Insurance Regulatory Information System" and its other financial analysis solvency tools and reports;

(c) Whether the insurer has made adequate provision, according to presently accepted actuarial standards of practice, for the anticipated cash flows required by the contracted obligations and related expenses of the insurer, when considered in light of the assets held by the insurer with respect to such reserves and related actuarial items including, but not limited to, the investment earnings on such assets, and the considerations anticipated to be received and retained under such policies and contracts;

(d) The ability of an assuming reinsurer to perform and whether the insurer's reinsurance program provides sufficient protection for the insurer's remaining surplus after taking into account the insurer's cash flow and the classes of business written as well as the financial condition of the assuming reinsurer;

(e) As reported in the most recent quarterly or annual statutory financial statement filing, the insurer's net loss or negative net income in the last twelve month period or any shorter period of time, including but not limited to net unrealized capital gains or losses, change in non-admitted assets, and the payment of cash dividends to shareholders which are greater than fifty per cent of such insurer's remaining capital and surplus as regards policyholders in excess of the minimum amount required and/or;

(f) As reported in the most recent quarterly or annual statutory financial statement filing, the insurer's net decrease in capital and policyholders surplus, in the last twelve month period or any shorter period of time, is greater than fifty per cent of such insurer's remaining capital and policyholders surplus in excess of the minimum required;

(g) As reported in the most recent quarterly or annual statutory financial statement filing, whether the insurer's net loss or negative net income in the last twelve month period or any shorter period of time, excluding net realized capital gains and losses, is greater than twenty per cent of the insurer's remaining surplus as regards policyholders in excess of the minimum required;

(h) Whether a reinsurer, obligor, or any entity within the insurer's insurance holding company system is insolvent, threatened with insolvency, or delinquent in payment of its monetary or other obligation and which in the opinion of the superintendent may affect the solvency of the insurer;

(i) Contingent liabilities, pledges or guarantees which either individually or collectively involve a total amount which in the opinion of the superintendent may affect the solvency of the insurer;

(j) Whether any person, exercising control of an insurer as defined in division (C) of section 3905.61 of the Revised Code is delinquent in the transmitting to, or payment of, net premiums to such insurer;

(k) The age and collectability of receivables;

(l) Whether the management of an insurer, including officers, directors, or any other person who directly or indirectly controls the operation of such insurer, fails to possess and demonstrate the competence, fitness and reputation deemed necessary to serve the insurer in such position;

(m) Whether management of an insurer has failed to respond to inquiries relative to the condition of the insurer or has furnished false and misleading information concerning an inquiry;

(n) Whether the insurer has failed to meet financial and holding company filing requirements in the absence of a reason satisfactory to the superintendent;

(o) Whether management of an insurer has filed any false or misleading sworn financial statement, or has released false or misleading financial statements to lending institutions or to the general public, or has made a false or misleading entry, or has omitted an entry of material amount in the books of the insurer;

(p) Whether the insurer has grown so rapidly and to such an extent that it lacks adequate financial and administrative capacity to meet its obligations in a timely manner;

(q) Whether the insurer has experienced or will experience in the foreseeable future cash flow and/or liquidity problems;

(r) Whether an insurer has failed to comply with paragraph (J) of rule 3901-1-50 of the Administrative Code;

(s) Whether the insurer meets measures of capital adequacy adopted by statute or rule;

(t) Whether management has established reserves that do not comply with state insurance laws, regulations, statutory accounting standards, sound actuarial principles, and standards of practice;

(u) Whether management engages in reporting inadequate reserve levels that result in material adverse development;

(v) Whether a material change during the year to the insurer's financial condition, including, but not limited to, changes in assets, liabilities, surplus, premium growth, mix of business, reinsurance, or operating performance that may adversely impact the result of the next year-end risk based capital calculation to a level that would require regulatory action;

(w) Whether transactions among affiliates, subsidiaries, or controlling persons for which the insurer receives assets or capital gains, or both, do not provide sufficient value, liquidity or diversity to assure the insurer's ability to meet its outstanding obligations as they mature;

(x) Any other finding determined by the superintendent to be hazardous to the insurer's policyholders, creditors, or general public.

(2) For the purposes of making a determination of an insurer's financial condition under this rule the superintendent may:

(a) Disregard any credit or amount receivable resulting from transactions with a reinsurer which is insolvent, impaired or otherwise subject to a delinquency proceeding;

(b) Make appropriate adjustments including disallowance to asset values attributable to investments in or transactions with parents, subsidiaries, or affiliates, consistent with the NAIC accounting practices and procedures manual, state laws and regulations;

(c) Refuse to recognize the stated value of accounts receivable if the ability to collect receivables is highly speculative in view of the age of the account or the financial condition of the debtor;

(d) Refuse to recognize the stated value of assets pledged or in any way hypothecated to secure a liability to the extent that they are in excess of the specific recorded liability of the insurer;

(e) Increase the insurer's liability in an amount equal to any contingent liability, pledge, or guarantee not otherwise included if there is a substantial risk that the insurer will be called upon to meet the obligation undertaken within the next twelve-month period.

(D) If the superintendent determines that the continued operation of an insurer licensed to transact business in this state may be hazardous to its policyholders, creditors or the general public, the superintendent, in lieu of placing a domestic insurer into supervision, rehabilitation or liquidation pursuant to Ohio's insurers supervision, rehabilitation or liquidation act, or suspending the license of a foreign insurer pursuant to section 3903.71 of the Revised Code, may take other action to correct the hazard, including, but not limited to, either entering into a memorandum of understanding with the insurer or issuing an order requiring the insurer to:

(1) Reduce the total amount of present and potential liability for policy benefits by reinsurance;

(2) Reduce, suspend or limit the volumes of business being accepted or renewed;

(3) Reduce general insurance and commission expenses by specified methods;

(4) Increase the insurer's capital and surplus;

(5) Suspend or limit the declaration and payment of dividend by an insurer to its stockholders or its policyholders;

(6) File reports in a form acceptable to the superintendent concerning the market value of an insurer's assets;

(7) Limit or withdraw from certain investments or discontinue certain investment practices to the extent the superintendent deems necessary;

(8) Document the adequacy of premium rates in relation to the risks insured;

(9) File, in addition to regular annual statements, interim financial reports on the form adopted by the NAIC or in such format as promulgated by the superintendent;

(10) Correct corporate governance practice deficiencies, and adopt and utilize governance practices acceptable to the superintendent;

(11) Provide a business plan to the superintendent in order to continue to transact business in the state; and

(12) Take any other action necessary to cure the conditions which resulted in the finding that the insurer's continued operation may be hazardous to its policyholders, creditors, or the general public.

(E) Severability

Last updated December 16, 2025 at 11:14 AM

History

Effective: October 29, 2015
Promulgated Under: 119.03

Ohio Adm.Code 3901-1-52 Life and health insurance guaranty association disclaimer and not covered form.

(A) Purpose

The purpose of this rule is to establish the form and content of the summary document and disclaimer describing the general purposes and current limitations of the Ohio life and health insurance guaranty association and the notice that the policy or contract, or portion thereof, may not be covered by the association.

(B) Authority

This rule is issued pursuant to the authority vested in the superintendent under section 3956.18 of the Revised Code.

This rule applies to all insurers, health insuring corporations, and agents providing, soliciting or negotiating coverage for direct, non-group life insurance, health insurance, including sickness and accident insurance policies and contracts, and health insuring corporation subscriber policies, contracts, certificates and agreements, annuities, certificates under direct group policies and contracts, for supplemental contracts to any of the preceding and for unallocated annuity contracts issued by member insurers.

(D) Delivery of summary document

Division (B)(2) of section 3956.18 of the Revised Code provides that no member insurer shall deliver a policy or contract to a policy owner, contract owner, certificate holder, or enrollee unless the summary document is delivered to the policy or contract holder prior to or at the time of delivery of the policy or contract. The document also shall be available upon request by a policy owner, contract owner, certificate holder or enrollee.

(E) Disclaimer

Division (C) of section 3956.18 of the Revised Code provides that the summary document shall contain a clear and conspicuous disclaimer on its face.

(F) Form

In providing the summary document and disclaimer described in divisions (B)(2) and (C) of section 3956.18 of the Revised Code, the insurer must use the exact form set forth in appendix I to this rule.

(G) Severability

View Appendix

Last updated November 16, 2023 at 8:29 AM

History

Effective: November 16, 2023
Promulgated Under: 119.03

Ohio Adm.Code 3901-1-54 Unfair property/casualty claims settlement practices.

(A) Purpose

The purpose of this rule is to set forth uniform minimum standards for the investigation and disposition of property and casualty claims arising under insurance contracts or certificates issued to residents of Ohio. It is not intended to cover claims involving workers' compensation, or fidelity, suretyship, and boiler and machinery insurance. The provisions of this rule are intended to define procedures and practices which constitute unfair claims practices. Nothing in this rule shall be construed to create or imply a private cause of action for violation of this rule.

(B) Authority

This rule is promulgated pursuant to the authority vested in the superintendent under sections 3901.041 and 3901.19 to 3901.26 of the Revised Code.

As used in this rule:

(1) "Agent" means any individual, corporation, association, partnership or other legal entity authorized to represent an insurer with respect to a claim.

(2) "Claim file" means any retrievable electronic file, paper file, combination of both, or any other media.

(3) "Claimant" means a first party claimant, a third party claimant.

(4) "Contract" means any insurance policy or document containing the terms of the agreement wherein one party, the insurer, assumes certain obligations including financial obligations that arise as a result of a loss sustained by another party, the insured, or to any other party that has rights under the agreement.

(5) "Days" means calendar days. However, when the last day of a time limit stated in this rule falls on a Saturday, Sunday, or holiday, the time limit is extended to the next immediate following day that is not a Saturday, Sunday, or holiday.

(6) "Department" means the Ohio department of insurance.

(7) "Documentation" includes, but is not limited to, all communications, transactions, notes, work papers, claim forms, bills and explanation of benefits forms pertaining to the claim.

(8) "First party claimant" means any individual, corporation, association, partnership or other legal entity asserting a right to payment under an insurance policy or insurance contract arising out of the occurrence of the contingency or loss covered by the policy or contract.

(9) "Insurer" shall be defined as set forth in division (F) of section 3901.32 of the Revised Code.

(10) "Investigation" means all activities of an insurer directly or indirectly related to the determination of liability under an insurance contract which is in effect or alleged to be in effect.

(11) "Like kind and quality part" means a salvage motor vehicle part equal to or better than the replaced part that is acquired from a licensed salvage motor dealer.

(12) "Notification of claim" means any notification, under the terms of an insurance contract, to an insurer or its agent, by a claimant, which reasonably apprises the insurer of the facts pertinent to a claim.

(13) "Person" shall be defined as set forth in section 3901.19 of the Revised Code.

(14) "Practice" means a type of activity or conduct engaged in by an insurer with such frequency as to constitute a customary procedure or policy routinely followed in the settlement of insurance claims. A single act is not a business practice. However, an act that is malicious, deliberate, conscious and knowing may be the basis for corrective action ordered only by the superintendent without a showing that the conduct is a practice.

(15) "Superintendent" means the superintendent of insurance.

(16) "Third party claimant" means any individual, corporation, association, partnership or other legal entity asserting a claim against any other individual, corporation, association, partnership or legal entity.

(17) "Proof of loss" means a document from the claimant that provides sufficient information from which the insurer can determine the existence and the amount of the claim.

(D) File and record documentation

An insurer's claim files are subject to examination by the superintendent of insurance or by the superintendent's duly appointed designees. To aid in such examination:

(1) An insurer shall maintain claim data that is accessible and retrievable for examination. Such data shall include number, line of coverage, date of loss and date of payment or date of denial or date when claim is closed without payment. The data for closed claims shall be kept for no less than three years or until the completion of the next financial examination conducted by the state of domicile, whichever is greater. Data for claims where the claims payment is less than one thousand dollars, or for towing, labor, glass or rental reimbursement may be kept in summary form.

(2) An insurer must be able to reconstruct its activities in regard to any claim, by documentation appropriate for the type and size of the claim. If the claim is closed, the time period for retention is set forth in paragraph (D)(1) of this rule.

(3) If an insurer does not maintain hard copy files, claim files shall be accessible and be capable of duplication to hard copy.

(E) Misrepresentation of policy provisions

(1) An insurer shall fully disclose to first party claimants all pertinent benefits, coverages or other provisions of an insurance contract under which a claim is presented.

(2) No agent shall willfully conceal from first party claimants benefits, coverages or other provisions of any insurance contract when such benefits, coverages or other provisions are pertinent to a claim.

(3) No insurer shall deny a claim based on the first party claimant's failure to make available for inspection the property which is the subject of the claim unless there is documentation of breach of the policy provisions in the claim file.

(4) No insurer shall deny a claim based upon the failure of a first party claimant to give written notice of loss within a specified time limit unless the notice is required by a policy condition, or a first party claimant's failure to give written notice after being requested to do so by the insurer is so unreasonable as to constitute a breach of the claimant's duty to cooperate with the insurer.

(5) No insurer shall indicate to a first party claimant on a payment draft, check or in any accompanying letter that the payment is final or a release of any claim unless the policy limit has been paid or the first party claimant and the insurer have agreed to a compromise settlement regarding coverage and the amount payable under the insurance contract.

(6) No insurer shall issue checks or drafts in partial settlement of a loss or claim under a specific coverage that contains language purporting to release the insurer or its insured from total liability.

(F) Response to acknowledge receipt of pertinent communications

(1) Notification of a claim given to an agent of an insurer shall be notification to the insurer.

(2) An insurer shall acknowledge the receipt of a claim within fifteen days of receiving such notification. An insurer may satisfy this requirement by making payment within this fifteen day period. An insurer may also satisfy this requirement by providing necessary claim forms and complete instructions to the claimant within this fifteen day period.

(3) An insurer shall respond within fifteen days to any communication from a claimant, when that communication suggests a response is appropriate. In the event that a complaint has been filed by a claimant in any court, an insurer is not obligated to respond within this time period and any communication between the claimant and the insurer will be subject to the appropriate rule of procedure for the court in which the lawsuit was filed.

(4) An insurer shall, within twenty-one days of receipt of an inquiry from the department regarding a claim, furnish the department with a reasonable response to the inquiry.

(G) General standards for settlement of claims

(1) An insurer shall within twenty-one days of the receipt of properly executed proof(s) of loss decide whether to accept or deny such claim(s). If more time is needed to investigate the claim than the twenty-one days allow, the insurer shall notify the claimant within the twenty-one day period, and provide an explanation of the need for more time. If an extension of time is needed, the insurer has a continuing obligation to notify the claimant in writing, at least every forty-five days, of the status of the investigation and the continued time for the investigation.

If the form and execution of a proof of loss is material to an insurer, the insurer shall immediately provide the claimant with the specific documents and specific instructions so the claimant can submit the claim. An insurer shall not otherwise deny a claim solely on the basis the proof of loss is not on the insurer's usual form.

If an insurer reasonably believes, based upon information obtained and documented within the claim file, that a claimant has fraudulently caused or contributed to the loss as represented by a properly executed and documented proof of loss, such information shall be presented to the fraud division of the department within sixty days of receipt of the proof of loss. Any person making such report shall be afforded such immunity and the information submitted will be confidential as provided by sections 3901.44 and 3999.31 of the Revised Code.

(2) No insurer shall deny a claim on the grounds of a specific policy provision, condition or exclusion unless reference to such provision, condition, or exclusion is included in the denial. The claim file of the insurer shall contain documentation of the denial in accordance with paragraph (D) of this rule.

(3) Except as otherwise provided by policy provisions, an insurer shall settle first party claims upon request by the insured with no consideration given to whether the responsibility for payment should be assumed by others.

(4) No insurer shall require an insured to submit to a polygraph examination unless authorized under the applicable insurance contract.

(5) Notice shall be given to claimants at least sixty days before the expiration of any statute of limitation or contractual limit, where the insurer has not been advised that the claimant is represented by legal counsel.

(6) An insurer shall tender payment to a first party claimant no later than ten days after acceptance of a claim if the amount of the claim is determined and is not in dispute, unless the settlement involves a structured settlement, action by a probate court, or other extraordinary circumstances as documented in the claim file.

(7) If a claim involves a non-negligent party's property loss and multiple liability insurers, the multiple liability insurers shall adjust the property loss within a reasonable time and pay the non-negligent party's loss in equal shares. After payment, the multiple liability insurers may then pursue available remedies to resolve the question of responsibility for the non-negligent party's loss.

(8) If a claim involves multiple coverages under any policy, no insurer shall withhold payment under any such coverage when the payment is known, the payment is not in dispute, and the payment would extinguish the insurer's liability under that coverage. No insurer shall withhold such payment for the purpose of forcing settlement on all other coverage to effect a single payment.

(9) An insurer must document the application of comparative negligence to any claim settlement. Such information shall be fully disclosed to the claimant upon the claimant's written request. An insurer shall not use pattern settlements as set forth in division (P) of section 3901.21 of the Revised Code.

(10) An insurer shall not use settlement practices that result in compelling first party claimants to litigate by offering substantially less than the amounts claimed compared to the amount ultimately recovered in actions brought by such claimants.

(H) Standards for prompt, fair and equitable settlements of automobile insurance claims

(1) When partial losses will be settled on the basis of a written estimate prepared by or for an insurer, the insurer shall supply the claimant a copy of the estimate upon which the proposed settlement is based. If the claimant subsequently claims that necessary repairs will exceed the written estimate, the insurer shall pay the difference between the written estimate and a higher estimate obtained by the claimant or promptly provide the claimant with the name of at least one repair shop that will make the repairs for the amount of the written estimate. If the insurer provides the name of only one repair shop, it shall ensure that the repairs are performed in a workmanlike manner. The insurer shall maintain documentation of all communications with the claimant pursuant to this paragraph.

(2) If an insurer reduces a claim amount because of betterment, depreciation or comparative negligence, it shall maintain all information pertaining to the reduction in the claim file. Such deductions shall be itemized and specified on the written estimate as to dollar amount and shall be appropriate for the amount of deductions.

(3) An insurer may reduce a claim amount because of betterment deductions only if the deductions reflect a measurable decrease in market value due to the poorer condition of, or prior damage to, the vehicle; or reflect the general overall condition of the vehicle, considering its age, for the wear and tear or rust, and/or missing parts, limited to no more of a deduction than the replacement costs of part or parts.

(4) When partial losses will be settled on the basis of a written estimate prepared by or for an insurer, the estimate must clearly indicate the use of the parts in compliance with section 1345.81 of the Revised Code. When like kind and quality parts are expected to be used in the repair, the estimate shall clearly indicate the location of the licensed salvage dealer where the like kind and quality parts are to be obtained.

(5) An insurer which elects to repair and designates a specific repair shop for automobile repairs shall cause the damaged automobile to be restored to its condition prior to the loss. The insurer shall assess no additional cost against the claimant other than as stated in the policy, and the repairs should be effected within a reasonable period of time.

(6) In settlement of claimants' automobile total losses on the basis of actual cash value or replacement of the automobile with another vehicle of like kind and quality, an insurer which elects to offer a replacement automobile shall:

(a) Provide an automobile by the same manufacturer, of the same or newer year, of similar body style, with similar options and mileage as the claimant's vehicle and in as good or better overall condition than the first party automobile prior to loss;

(b) Ensure that the automobile is available for inspection within a reasonable distance of the claimant's residence;

(c) Pay all applicable taxes, license fees, and other fees incident to transfer of evidence of ownership of the automobile at no cost to claimant other than any deductible provided in the policy; and

(d) Document the offer of the replacement automobile and any rejection of the offer in the claim file.

(7) In settlement of claimants' automobile total losses on the basis of actual cash value or replacement of the automobile with another of like kind and quality, an insurer which elects to offer a cash settlement to claimant shall base the offer upon the actual cost to purchase a comparable automobile less any applicable deductible amount contained in the policy, and/or deduction for betterment as contained in paragraph (H)(2) of this rule. The settlement value may be derived from:

(a) The average cost of two or more comparable automobiles in the local market area if comparable automobiles are or were available to consumers within the last ninety days; or

(b) The average cost of two or more comparable automobiles in areas proximate to the local market area, including the closest in-state or out-of-state major metropolitan areas, that are or were available to consumers within the last ninety days if comparable automobiles are not available pursuant to paragraph (H)(7)(a) of this rule; or

(c) The average of two or more quotations obtained by the insurer from two or more licensed dealers located within the local market area if comparable automobiles are not available pursuant to paragraphs (H)(7)(a) and (H)(7)(b) of this rule; or

(d) The cost as determined from a generally recognized used motor vehicle industry source such as:

(i) An electronic database if the pertinent portions of the valuation documents generated by the database are provided by the insurer to the claimant upon request; or

(ii) A guidebook that is generally available to the general public if the insurer identifies the guidebook used as the basis for the cost to the claimant upon request, and to which appropriate adjustments for condition, mileage and major options are made and documented in the claim file.

(e) Any method or source chosen as specified in paragraph (H)(7)(d) of this rule shall be used consistently over a period of time by the insurer.

(f) If within thirty days of receipt by the claimant of a cash settlement for the total loss of an automobile, the claimant purchases a replacement automobile, the insurer shall reimburse the claimant for the applicable sales taxes incurred on account of the claimant's purchase of the automobile, but not to exceed the amount that would have been payable by the claimant for sales taxes on the purchase of an automobile with a market value equal to the amount of the cash settlement. If the claimant purchases an automobile with a market value less than the amount of the cash settlement, the insurer shall reimburse only the actual amount of the applicable sales taxes on the purchased automobile. If the claimant cannot substantiate such purchase and the payment of such sales taxes by submission to the insurer of appropriate documentation within thirty-three days after receipt of the cash settlement, the insurer shall not be required to reimburse the claimant for such sales taxes. In lieu of reimbursement, the insurer may pay directly the applicable sales taxes to the claimant at the time of the cash settlement.

An insurer that settles a total loss on a cash settlement basis must maintain in the claim file the documentation used to determine the loss. Such information shall be provided to the first party claimant upon request. An insurer shall notify the first party claimant of any rights to renegotiate the settlement if a comparable vehicle is not available for purchase within thirty-five days of receipt of the settlement.

When an insurer elects to offer a replacement vehicle available to the claimant, the insurer shall provide all the details where such vehicle is available including the vehicle identification number.

(g) An insurer that settles a total loss claim shall provide written notice to the claimant of the right to reimbursement of applicable sales tax as specified in paragraph (H)(7)(f) of this rule. The notice shall be issued to the claimant simultaneously with the conveyance of the settlement check to the claimant. If an insurer elects to pay the applicable sales taxes directly to the claimant at the time of the cash settlement in lieu of reimbursement as provided in paragraph (H)(7)(f) of this rule, the insurer is not required to provide written notice of the claimant's right to sales tax reimbursement.

(8) An insurer shall not require a claimant to travel an unreasonable distance to inspect a replacement automobile, to obtain a repair estimate, or to have the automobile repaired at a specific repair shop.

(9) An insurer shall provide notice to a claimant prior to termination of payment for automobile storage charges. The insurer shall document all actions taken pursuant to this paragraph in accordance with paragraph (D) of this rule.

(10) An insurer shall include the first party claimant's deductible, if any, in subrogation demands. The insurer shall share any subrogation recovery received on a proportionate basis with the first party claimant, unless the first party claimant's deductible has been paid in advance or recovered. The insurer shall not deduct expenses from this amount except that an outside attorney or collection agency retained to collect such recovery may be paid a pro rata share of his expenses for collecting this amount.

(I) Standards for prompt, fair and equitable settlement of claims under fire and extended coverage insurance policies

(1) If a fire and extended coverage insurance policy provides for the adjustment and settlement of first party losses based on replacement cost, the following shall apply:

(a) When a loss requires replacement of an item or part, any consequential physical damages incurred in making such repair or replacement not otherwise excluded by the policy, shall be included in the loss.

(b) When an interior or exterior loss requires replacement of an item and the replaced item does not match the quality, color or size of the item suffering the loss, the insurer shall replace as much of the item as to result in a reasonably comparable appearance.

(c) When an insurer settles a loss that results in the insured paying a portion of the repair or replacement as betterment, the insurer shall maintain documentation of the basis for computing the betterment charge, and the insured's agreement to such charge prior to incurring the expense of the repair or replacement.

(2) If a fire and extended coverage insurance policy provides for the adjustment and settlement of losses on an actual cash value basis, the following shall apply:

(a) The insurer shall determine actual cash value by determining the replacement cost of property at the time of loss, including sales tax, less any depreciation. Upon the insured's request, the insurer shall provide documentation detailing all depreciation deductions.

(b) If the insured's interest is limited because his property has nominal or no economic value, or a value disproportionate to replacement cost less depreciation, the insurer is not required to comply with paragraph (I)(2)(a) of this rule regarding the determination of actual cash value. However, the insurer shall provide upon the insured's request, a written explanation of the basis for limiting the amount of recovery along with the amount payable under the policy.

(J) Applicability of rule 3901-1-07 of the Administrative Code

If any provisions of any section of this rule conflicts with any of the provisions contained in rule 3901-1-07 of the Administrative Code, the provisions of this rule will apply.

(K) Imposition of fine

Pursuant to section 3901.22 of the Revised Code and a consent agreement with the insurer, the superintendent may recover the cost of an investigation under this rule and/or a penalty from the insurer.

(L) Severability

Last updated February 14, 2022 at 8:55 AM

History

Effective: February 14, 2022
Promulgated Under: 119.03

Ohio Adm.Code 3901-1-55 Use of Credit history and credit scores.

(A) Authority

This rule is issued pursuant to section 3901.041 of the Revised Code which provides that the superintendent of insurance shall adopt, amend, and rescind rules and make adjudications, necessary to discharge the superintendent's duties and exercise the superintendent's powers, including, but not limited to, the superintendent's duties and powers under Chapters 1751. and 1753. and Title XXXIX of the Revised Code, subject to Chapter 119. of the Revised Code.

Sections 3901.20 and 3901.21 of the Revised Code prohibit unfair or deceptive practices in the business of insurance and define certain acts or practices as unfair or deceptive. Section 3901.21 also provides that the enumeration of specific unfair or deceptive acts or practices in the business of insurance is not exclusive or restrictive, or intended to limit the powers of the superintendent of insurance to adopt rules to implement section 3901.21 or to take action under other sections of the Revised Code.

(B) Purpose

The purpose of this rule is to clearly define certain unfair practices and to set forth standards with respect to insurers' and agents' use of credit history and credit scores in connection with underwriting and rating personal lines coverage.

This rule applies only to personal lines coverage as defined in paragraph (D)(6) of this rule.

(D) Definitions

As used in this rule:

(1) "Adverse action" has the same meaning as defined in the Fair Credit Reporting Act, 15 U.S.C. 1681 et seq. (1998), and includes a denial or cancellation of, an increase in any charge for, or a reduction or other adverse or unfavorable change in the terms of coverage or amount of, any insurance, existing or applied for, in connection with the underwriting or rating of insurance. Issuance of a policy at a rate higher than that which the consumer would have received if the consumer's credit history had not been taken into account is an adverse action.

(2) "Consumer" means any insured or applicant for personal lines coverage.

(3) "Credit history" means any written, oral, or other communication of any information bearing on a consumer's creditworthiness, credit standing, or credit capacity that is used or expected to be used, or collected in whole or in part, for the purpose of serving as a factor in determining rates, placement within a tier or with an affiliated company, or eligibility for coverage.

(4) "Credit score" means a number or rating that is derived from an algorithm, computer application, model or other process that is based in whole or in part on credit history.

(5) "Insurance score" and "credit based insurance score" have the same meaning: a number or rating that is derived from an algorithm, computer application, a model or other process that is based in whole or in part on a credit score or credit history, for the purpose of predicting the future insurance loss exposure of a consumer (that is, any insured or applicant).

(6) "Personal lines" means a policy of property and casualty insurance issued to a natural person primarily for personal or family protection for personal automobile, homeowner's, tenant's, mobile-homeowner's, non-commercial dwelling fire or personal umbrella coverage.

(7) "Consumer reporting agency" means any person which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for purposes of furnishing such information to third parties.

(E) Credit cannot be the sole underwriting or rating factor

Credit history or a credit score or any aspect thereof, either individually or collectively, may not be used without consideration of any other applicable underwriting or rating factor as the sole basis for:

(1) Any underwriting decision;

(2) Any total premium determination; or

(3) Any adverse action.

This paragraph does not prohibit an insurer from raising a premium rate at renewal based on a change in credit history, in a credit score, or in the actuarial indications for a particular credit history or credit score if other non-credit related factors are also considered in the total premium determination.

(F) Prohibited underwriting, rating and credit scoring factors

No insurer underwriting or rating a policy of personal lines insurance shall use any of the following as a negative factor in any credit scoring methodology or in reviewing the credit history of any consumer:

(1) Credit inquiries not initiated by the consumer;

(2) Credit inquiries relating to insurance coverage;

(3) Disputed information that is currently under investigation by the consumer reporting agency, if so identified on the records of such agency;

(4) Collection accounts with a medical industry code, if so identified on the records of the consumer reporting agency;

(5) Multiple lender inquiries, if coded by the consumer reporting agency on the consumer's credit report as being from the home mortgage industry and made within thirty days of one another, unless only one inquiry is considered; or

(6) Multiple lender inquiries, if coded by the consumer reporting agency on the consumer's credit report as being from the automobile lending industry and made within thirty days of one another, unless only one inquiry is considered.

(G) Disclosure requirements

(1) The consumer must be provided notice either prior to or at the time the insurance application is taken that credit history or a credit score may be obtained and used in connection with underwriting or rating a policy. Such notice shall either be written or provided to the consumer in the same medium as the application for insurance. The insurer need not provide such notice to any insured on a renewal policy, if such notice has previously been provided.

(2) If an adverse action is taken as a result of credit history or a credit score the following disclosures must be made to the consumer in writing within thirty days of the date the adverse action is taken:

(a) The insurer must identify and describe the nature of the adverse action;

(b) The insurer must describe the significant factors of the credit history or credit score that resulted in the adverse action, which may include the descriptive credit explanations provided by credit scoring vendors; and

(c) The insurer must provide the consumer with all disclosures required by the Fair Credit Reporting Act, 15, U.S.C. 1681 et seq. (1998). Such disclosures shall include:

(i) The name, address, and telephone number of the consumer reporting agency (including a toll-free telephone number established by the agency if the agency compiles and maintains files on consumers on a nationwide basis) that furnished the consumer information;

(ii) A statement that the consumer reporting agency did not make the decision to take the adverse action and is unable to provide the consumer with the specific reasons why the adverse action was taken;

(iii) Notice to the consumer of the consumer's right to obtain a free copy of the consumer's credit report from the consumer reporting agency; and

(iv) Notice to the consumer of the consumer's right to dispute with the consumer reporting agency the accuracy or completeness of any information in a credit report furnished by the agency.

(H) Updating credit history and credit scores

(1) If credit history or a credit score, or any aspect thereof, is considered in underwriting or rating a consumer and a consumer reporting agency determines that the credit information is inaccurate or incomplete and the insurer receives notice of this determination from a consumer or a consumer reporting agency, the insurer shall, within thirty days after receiving the notice:

(a) Re-underwrite the consumer;

(b) Re-rate the consumer; and

(2) If it is determined by the re-underwriting or re-rating in accordance with paragraph (H)(1) of this rule that the consumer has overpaid the premium, the insurer shall refund to the consumer the amount of the overpayment of premium. Such payment shall be calculated back to the shorter of:

(a) The last twelve months of coverage; or

(b) The current policy term.

(3) After any policy of insurance has been issued and in the absence of a determination of the consumer reporting agency that the consumer's information is inaccurate or incomplete as described in paragraph (H)(1) of this rule, the insurer must recheck the insured's credit history or credit score at the written request of the insured, but no more than once every twelve months. The insurer may wait to recheck the credit information until the next renewal. The insurer shall adjust the premium or coverage of any insured whose credit history or credit score was rechecked under this section that reflects any change in the insured's credit history or credit score. Any such premium or coverage adjustment shall be applied prospectively to the next policy term.

(I) Compliance with rule

(1) Section 3901.20 of the Revised Code prohibits insurers from engaging in unfair or deceptive acts. Section 3901.21 of the Revised Code defines as an unfair and deceptive act the following unfair discriminatory conduct:

Making or permitting any unfair discrimination between individuals of the same class and of essentially the same hazard in the amount of premium, policy fees, or rates charged for any policy or contract of insurance, other than life insurance, or in the benefits payable thereunder, or in underwriting standards and practices or eligibility requirements, or in any of the terms or conditions of such contract, or in any other manner whatever.

(2) Division (A) of section 3937.02 and division (C) of section 3935.03 of the Revised Code set forth the factors an insurer or rating organization may consider in establishing rates for property and casualty insurance. Division (C) of section 3937.02 of the Revised Code provides that risks may be grouped by classification for the establishment of rates and minimum premiums, and states:

Classification rates may be modified to produce rates for individual risks in accordance with rating plans which establish standards for measuring variations in hazards or expense provisions, or both. Such standards may measure any differences among risks that can be demonstrated to have a probable effect upon losses or expenses.

(3) Division (D) of section 3937.02 of the Revised Code further provides: "Rates shall not be excessive, inadequate, or unfairly discriminatory."

In order to comply with the foregoing paragraphs, insurers shall abide by the following guidelines:

(a) Insurers shall establish that credit history and credit scores used in underwriting or rating determinations are valid risk characteristics and are used in accordance with actuarial principles and standards of practice.

(b) If a consumer has no available credit history (known as a "no hit"), has insufficient credit history to develop a credit score (known as "no score"), or the available credit history is not used for rating, the consumer must be underwritten and rated in accordance with actuarial principles and standards of practice.

(c) Insurers shall not use credit history or credit scores for arbitrary, capricious or unfairly discriminatory purposes. Credit history and credit scores shall not be based on race, color, religion, national origin, sex, marital status, handicap, or age.

(d) Insurers must maintain, implement and make available standards concerning how credit history and credit scores affect underwriting and rating decisions. Insurers shall file with the superintendent all risk classification criteria and rating manuals that relate to credit history and credit scores.

(e) If a credit scoring model is modified or if its use in determining rates or rating plans is modified, the insurer shall re-file risk classification criteria and rating manuals with the superintendent, and shall re-establish that the credit scores are valid risk characteristics and are used in accordance with actuarial principles and standards of practice.

(J) Severability

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 the remaining provisions to such persons or circumstances shall not be affected thereby.

Last updated October 11, 2023 at 1:48 PM

History

Effective: March 20, 2008
Promulgated Under: 119.03

Ohio Adm.Code 3901-1-57 Transaction fees.

(A) Purpose

The purpose of this rule is to establish fees and charges for certain transactions or services performed by the department of insurance.

(B) Authority

This rule is promulgated pursuant to the authority vested in the superintendent under sections 3901.041, 3901.043, 3901.07, and 3913.37 of the Revised Code.

(1) Transactions pursuant to section 3901.321 of the Revised Code:

(a) Filing of the statement (form A) relating to the change of control or takeover of a domestic insurance company. Twenty-five hundred dollars.

(b) Filing for an exemption from the requirements of section 3901.321 of the Revised Code. One thousand dollars.

(2) Transactions pursuant to section 3901.341 of the Revised Code:

Filing of any transaction (form D) required by this paragraph. Two hundred fifty dollars.

(3) Transactions pursuant to Chapter 3905. of the Revised Code:

(a) Filing of a notice of appointment of an agent, including the renewal of an agent at the time of annual renewal. Ten dollars/per appointment.

(b) Filing for authority to conduct business as a surplus lines insurer. One thousand dollars/annually.

(4) Transactions pursuant to section 3907.12 of the Revised Code:

Filing for approval of a plan of reinsurance that exceeds the limits set forth in section 3907.12 of the Revised Code, or a plan of assumption reinsurance on policies issued by a domestic insurance company. Fifteen hundred dollars.

(5) Transactions pursuant to sections 3911.011, 3915.14, 3917.06, 3918.07, and 3923.02 of the Revised Code:

Any filing required to be submitted to the superintendent. Fifty dollars per insurer/per filing. Multiple forms relating to a single policy may be filed together for one fifty dollar fee, otherwise, each form filed is considered a separate filing and a fifty dollar fee applies to each.

(6) Transactions pursuant to sections 3913.01 to 3913.38 of the Revised Code:

(a) Filing of a plan of conversion of a domestic stock life insurance corporation into a mutual insurance corporation. Twenty-five hundred dollars.

(b) Filing of a plan of conversion of a domestic mutual life insurance company to a stock life insurance company. Twenty-five hundred dollars.

(c) Filing of a plan of conversion of a non-life mutual insurance company to a stock non-life insurance company. Twenty-five hundred dollars.

(d) Filing of a plan of reorganization or merger of a mutual insurance company or mutual insurance holding company. Twenty-five hundred dollars.

(7) Transactions pursuant to section 3913.40 of the Revised Code:

Filing of a plan to transfer the domicile of an insurance company either to or from the state of Ohio. Twenty-five hundred dollars.

(8) Transactions pursuant to section 3935.04 of the Revised Code:

(a) Any filing required to be submitted to the superintendent. Fifty dollars per insurer/per filing. Multiple forms relating to a single policy may be filed together for one fifty dollar fee, otherwise, each form or policy is considered a separate filing and a fifty dollar fee applies to each.

(b) Any excess rate filing required to be submitted to the superintendent pursuant to division (G) of section 3935.04 of the Revised Code is exempt from the filing fee.

(9) Transactions pursuant to section 3937.03 of the Revised Code:

(b) Any special filing pursuant to division (E) of section 3937.03 of the Revised Code and any excess rate filing pursuant to division (G) of section 3937.03 of the Revised Code that are required to be submitted to the superintendent are exempt from the filing fee.

(D) Whenever another state or jurisdiction charges a greater fee for a transaction listed in this rule to an insurer domiciled in Ohio, then the superintendent may charge that higher fee to the insurer not domiciled in Ohio, who seeks to have the transaction completed in this state.

(E)

(1) The department will invoice the insurer for the fee charged for the transactions listed in paragraph (C)(3) of this rule.

(2) Fees charged for the transactions listed in paragraphs (C)(1), (C)(2), (C)(4), (C)(6) and (C)(7) of this rule shall be submitted with the first documents sent to the department.

(3) Fees charged for the transactions listed in paragraphs (C)(5), (C)(8) and (C)(9) of this rule shall be paid via the "EFT" functionality built into the "System for Electronic Rates and Forms Filing" commonly known as "SERFF."

(4) All fees collected pursuant to this rule shall be deposited to the credit of the department of insurance operating fund created pursuant to section 3901.021 of the Revised Code.

(F)

(1) For purposes of this paragraph, "expenses" has the same meaning as set forth in division (M) of section 3901.07 of the Revised Code.

(2) Expenses incurred from the conduct of a financial examination authorized by division (B) of section 3901.07 of the Revised Code will be billed directly to the insurer.

(a) Such expenses authorized by division (M)(4) of section 3901.07 of the Revised Code are calculated at 0.96 of the amount assessed pursuant to division (M)(1)(a) of section 3901.07 of the Revised Code.

(b) Such expenses billed to the insurer are due upon the insurer's receipt of an invoice from the department pursuant to division (L) of section 3901.07 of the Revised Code.

(3) Expenses incurred pursuant to divisions (M)(1)(b) to (M)(1)(f) and (M)(4) of section 3901.07 of the Revised Code apart from the conduct of a financial examination authorized by division (B) of section 3901.07 of the Revised Code are assessed annually to the insurer.

(a) Such expenses for each domestic insurer are established pursuant to the following schedule, provided that the total amount due from an insurance holding company system with more than one domestic insurer is not to exceed one hundred twenty-five thousand dollars in the aggregate:

| Annual Countrywide Direct Premiums Written | Total Amount Due | | --- | --- | | $100,000,000 or Greater | $29,000 | | $50,000,000 to $99,999,999 | $19,000 | | $25,000,000 to $49,999,999 | $16,000 | | $10,000,000 to $24,999,999 | $13,000 | | $5,000,000 to $9,999,999 | $6,000 | | $500,000 to $4,999,999 | $1,600 | | Less Than $500,000 | $500 |

(b) Such expenses billed to the insurer are due upon the insurer's receipt of an invoice from the department.

(G) Severability

Last updated July 27, 2023 at 9:02 AM

History

Effective: July 1, 2023
Promulgated Under: 119.03

Ohio Adm.Code 3901-1-58 Standard credentialing form for physician and non-physician providers.

(A) Purpose

The purpose of this rule is to prescribe the standard credentialing form to be used when credentialing or recredentialing providers. For purposes of this rule, the term "providers" has the same meaning as in division (P) of section 3963.01 of the Revised Code.

(B) Authority

This rule is promulgated pursuant to the authority vested in the superintendent under sections 3901.041, 3901.21, and 3963.08 of the Revised Code.

All credentialing and recredentialing of physicians and non-physician individual providers identified in division (P) of section 3963.01 of the Revised Code is to be performed using the credentialing form available from the council for affordable quality healthcare (CAQH) in electronic or paper format. The CAQH credentialing form is referred to as the department of insurance part A credentialing form. Copies of this form may be obtained electronically from CAQH or from the department of insurance. The department of insurance part B credentialing form is used to credential hearing aid dealers, home health agencies, hospice care providers and all other providers, with the exception of hospitals, that are not individuals. Copies of this form may be obtained from the department of insurance. The credentialing forms prescribed by this rule may be reproduced as needed and may be amended from time to time.

(D) Severability

Last updated November 16, 2023 at 8:29 AM

History

Effective: November 16, 2023
Promulgated Under: 119.03

Ohio Adm.Code 3901-1-64 Medical liability data collection.

(A) Purpose

The purpose of this rule is to establish procedures and requirements for the reporting of specific medical, dental, optometric and chiropractic claims data to the Ohio department of insurance.

(B) Authority

This rule is promulgated pursuant to the authority vested in the superintendent under sections 3901.041 and 3929.302 of the Revised Code.

(1) "Medical, dental, optometric and chiropractic claims" include those claims asserted against a risk located in this state that either:

(a) Meet the definition of "medical claim," "dental claim," "optometric claim," or "chiropractic claim" in section 2305.113 of the Revised Code, or

(b) Have not been asserted in any civil action, but that otherwise meet the definition of "medical claim," "dental claim," "optometric claim," or "chiropractic claim" in section 2305.113 of the Revised Code.

(2) "Risk retention group" has the same meaning as in section 3960.01 of the Revised Code.

(3) "Surplus lines insurer" means an insurer that is not licensed to do business in this state, but is nonetheless approved by the department to offer insurance because coverage is not available through licensed insurers.

(4) "Self-insurer" means any person or persons who set aside funds to cover liability for future medical, dental, optometric or chiropractic claims or that otherwise assume their own risk or potential loss for such claims. "Self-insurer" includes captives.

(D) Each authorized insurer, surplus lines insurer, risk retention group, self-insurer, the medical liability underwriting association if created under section 3929.63 of the Revised Code, or any other entity that offers medical malpractice insurance to, or that otherwise assumes liability to pay medical, dental, optometric or chiropractic claims for, risks located in this state, shall report at least annually to the superintendent of insurance, or to the superintendent's designee, information regarding any medical, dental, optometric, or chiropractic claim asserted against a risk located in this state, if the claim resulted in:

(1) A final judgment in any amount,

(2) A settlement in any amount, or

(3) A final disposition of the claim resulting in no indemnity payment on behalf of the covered person or persons.

(E) The report required by paragraph (D) of this rule includes for each claim:

(1) The name, address and specialty coverage of each covered person;

(2) The insured's policy number, if applicable;

(3) The date of the occurrence that created the claim;

(4) The name and address of the injured person;

(5) The date the claim was reported and the claim number;

(6) The injured person's age and sex;

(7) If the medical, dental, optometric, or chiropractic claim was filed with the court, the case number and the name and location of the court;

(8) In the case of a judgment, the date and amount of the judgment and, if the judgment is subject to the itemization requirements in division (B) of section 2323.43 of the Revised Code, a description of the portion of the judgment that represents economic loss, non-economic loss and punitive damages, if any;

(9) In the case of a settlement, the date and amount of the settlement and, if known, the injured person's incurred medical expense, wage loss, and other expenses;

(10) Any loss adjustment expenses allocated to the claim or, if known, the amount allocated to each covered person;

(11) The loss adjustment expense, broken down between fees and expenses, paid to defense counsel;

(12) The date and reason for final disposition, if no judgment or settlement, and the type of disposition;

(13) Unless disclosure is otherwise prohibited by state or federal law, a summary of the occurrence which created the claim including:

(a) The name of the institution, if any, and the location at which the injury occurred;

(b) The operation, diagnosis, treatment, procedure or other medical event or incident giving rise to the alleged injury;

(F) Frequency

The report(s) required by this rule shall be filed with the superintendent, or the superintendent's designee, on or before May first of each year, and contain information for the previous calendar year.

(G) Noncompliance

Any person listed in paragraph (D) of this rule that fails to timely submit the report required under this section shall be subject to a fine not to exceed five hundred dollars.

(H) Confidentiality

Information reported to the superintendent or the superintendent's designee pursuant to this rule is confidential and privileged and is not a public record as defined in section 149.43 of the Revised Code. The information provided under this section is not subject to discovery or subpoena and will not be made public by the superintendent or any other person, including any rating organizations or other agencies designated by the superintendent to gather and/or compile the information.

(I) The requirements of this rule do not apply to reinsurers, reinsurance contracts, reinsurance agreements, or reinsurance claims transactions.

(J) Severability

Last updated February 13, 2025 at 8:09 AM

History

Effective: February 13, 2025
Promulgated Under: 119.03

Ohio Adm.Code 3901-1-65 Medical malpractice annual filing requirements.

(A) Purpose

The purpose of this rule is to safeguard the interest of the public by allowing reasonable inspection and analysis of insurers' rating plans on an annual basis for the regulation and monitoring of medical malpractice premium rates.

(B) Authority

This rule is adopted pursuant to the authority vested in the superintendent under sections 3901.041, 3937.04 and 3937.12 of the Revised Code.

(1) Every insurer issued a certificate of authority to write medical malpractice insurance in this state and that issues such insurance in this state, shall at a minimum, file annually with the superintendent of insurance, appropriate information and exhibits, in support of the insurer's existing rating plan. If at any time the superintendent of insurance finds that a rate no longer complies with sections 3937.01 to 3937.17 of the Revised Code, the superintendent may, in accordance with section 3937.04 of the Revised Code, state that the rate shall no longer be effective.

(2) In lieu of the filing required in paragraph (C)(1) of this rule a carrier may annually file for a rate adjustment in accordance with section 3937.03 of the Revised Code.

(3) Included with a filing required in paragraph (C)(1) or (C)(2) of this rule, every insurer that issues medical malpractice insurance in this state, shall file the average, minimum, and maximum deviation from manual rates due to individual risk premium modifications, also known as schedule rating credits and debits, or discretionary credits and debits, applied by the insurer during a twelve month period which ends no more than six months before the date of the filing. If at any time the superintendent of insurance finds that the credits and debits exceed the maximum allowed or may result in inadequate rates or be destructive of competition or detrimental to solvency of insurers, the superintendent may in accordance with section 3937.04 of the Revised Code state that the rate shall no longer be effective.

(D) Superintendent's discretionary authority

Extensions of time for the filing required under paragraph (C) of this rule may be granted by the superintendent upon a showing by the insurer the reasons for requesting such extension and a determination by the superintendent of good cause for the extension. The request for an extension must be submitted in writing not less than ten days prior to the due date of the required filing.

(E) Severability

Last updated February 13, 2025 at 8:10 AM

History

Effective: February 13, 2025
Promulgated Under: 119.03

Ohio Adm.Code 3901-1-66 Surety bail bond agent conduct.

(A) Purpose. The purpose of this rule is to establish criteria for surety bail bond agent conduct.

(B) Authority. This rule is promulgated pursuant to the authority vested in the superintendent under sections 3901.041 and 3905.95 of the Revised Code.

(1) "Cash bond" means the full amount of the bail required to be paid in cash to release a defendant from jail.

(2) "Power of attorney" means a legal instrument that is used by a authorized surety company to delegate authority to a licensed general agent or surety bail bond agent for the posting of surety bail bonds with a court of law up to a specified monetary amount.

(3) "Surety bail bond" means a court accepted bond instrument from a licensed insurance company issued for or on behalf of an incarcerated person held under criminal charges in any Ohio mayor, municipal, county, or federal court.

(4) "Immigration bond" means a federally accepted bond instrument from a surety company approved by the United States department of treasury issued for and on behalf of alien detainees held by United States immigration and customs enforcement, within the department of homeland security pending a hearing or court appearance; or to guarantee that an alien will be financially independent during a lawful visit or prolonged stay to the United States.

(D) Stacking bonds prohibited.

A surety bail bond agent shall not submit more than one power of attorney for any single bond, charge or charges, as is assigned a number by a court of proper jurisdiction.

(E) Submitting powers and bonds

(1) All surety bail bonds submitted to the court or the custodian of an arrested person must be accompanied by a current, non-expired, legal power of attorney.

(2) Only one power of attorney shall be submitted per bond. The face value of the power shall be equal to or greater than the amount of the bond set by the court in the single charge or charges for which the bond and power are being submitted.

(3) No power of attorney that has been altered or erased shall be submitted to a court or insurance company.

(4) No expired power of attorney shall be submitted to a court or insurance company.

(5) No power of attorney shall be used or submitted to a court or insurance company more than once.

(F) Immigration bonds

Immigration bonds may be solicited, sold, or negotiated only by:

(1) A person holding an Ohio insurance license with a casualty line of authority conferred pursuant to Title 39 of the Revised Code.

(2) A person holding an Ohio surety bail bond line of authority conferred pursuant to Title 39 of the Revised Code, who has been given a bond power that expressly allows for the writing of an immigration bond.

(G) Bond money from loan companies

No surety bail bond agent shall be employed by, contracted with, or act as an agent for, or own an ownership interest in any person or business entity that loans money for, or takes collateral for the loan of money for, the purpose of posting a cash bond or surety bail bond on behalf of a defendant.

(H) Real property as collateral

When accepting real property as collateral for a bond,

(1) A surety bail bond agent shall not require the transfer of title of any real property as a condition of issuing the bail bond.

(2) A surety bail bond agent may require a defendant, or anyone agreeing to provide real property as collateral on a defendants behalf, to establish title and unencumbered value, at the defendants expense, together with mortgage security or other documents necessary to establish the surety bail bond agent's lien interest in the real property by the bail agent.

(3) A surety bail bond agent shall not provide title, notary, or lien filing services directly or indirectly to the client or defendant for a fee. A surety bail bond agent shall not receive any valuable consideration for referring a person for title, notary, or lien filing services.

(4) Return of security document collateral:

(a) If the security document has not been filed with the state or a division of the state to perfect the lien, and the bond has not been called or otherwise needed or used, the original mortgage or other security document must be stamped cancelled and returned to the client or defendant within twenty-one days from the end of the bond.

(b) If the security document has been filed with the state or a division of the state to perfect the lien, and the bond has not been called or otherwise needed or used, a release of the mortgage or release of the other security document must be completed within twenty-one days after the end of the bond. A copy of the release containing an official date/time stamp must be provided to the client within twenty-six days after the end of the bond.

(I) Solicitation

(1) The following activities shall constitute prohibited solicitation by a surety bail bond agent on the grounds of a courthouse or detention facility:

(a) Approaching a person not currently a client and in any way initiating communication concerning bail bond services.

(b) Writing bonds for an individual without their direct knowledge and consent.

(c) Communicating as, or holding oneself out to be, a court appointed surety bail bond agent or suggesting in any manner that one has been appointed by a court or other public agency to write a bond for a particular defendant, or on a particular case.

(d) Wearing clothing that indicates a person is in the bail bond industry unless otherwise directed by the court or detention facility, except the wearing of the issued department of insurance ID card.

(e) Conducting business in a loud and conspicuous manner.

(f) Distributing a business card, pen, or any other item, that identifies an individual or business entity as providing surety bail bond services.

(g) Physically impeding, blocking, or hindering the public from viewing or obtaining the docket or other information needed to ascertain the status or procedure of any court process including all court bonding processes.

(h) Engaging or hiring any person, directly or indirectly, to perform any acts listed in paragraphs (I)(1)(a) to (I)(1)(g) of this rule.

(i) Any other activity that may be construed as the sale or solicitation of surety bail bonds.

(2) The following activities shall not constitute prohibited solicitation by a surety bail bond agent on the grounds of a courthouse or detention facility subject to the limitations of paragraph (I)(1) of this rule:

(a) Having personal business matters before a court or detention facility;

(b) Attending a scheduled hearing or meeting with any person(s) regarding surety bail bonds as long as the meeting is arranged with the person(s) prior to the arrival at the courthouse or detention facility;

(d) Gathering court and docket information for business purposes;

(e) Writing a bond and posting a bond with the court;

(f) Returning a fugitive from justice pursuant to section 2927.27 of the Revised Code;

(g) Notifying a court, or detention facility of professional activities being conducted by the surety bail bond agent, other than solicitation; or

(h) Filing required paperwork with the court or detention facility regarding bonds, prisoners, bail bond license status, or fugitives.

(J) Severability

If any section, term or provision of this rule is adjudged invalid for any reason, such judgment shall not affect, impair or invalidate any other section, term or provision of this rule, but the remaining sections, terms and provisions shall be and continue in full force and effect.

Last updated December 8, 2022 at 8:35 AM

History

Effective: December 8, 2022
Promulgated Under: 119.03

Ohio Adm.Code 3901-1-67 Alternative derivative and reserve accounting practices.

(A) Purpose

The purpose of this rule is to allow insurance companies to utilize certain alternative derivative and reserve accounting practices for eligible derivative instruments and indexed products, respectively, in order to better match derivative and reserve accounting as it relates to interest crediting for indexed products and to provide for a more true and fair representation of the capital position and net gain from operations of insurance companies that offer or have in force indexed products. Specifically, this rule addresses the mismatches related to the changes in value of an eligible derivative instrument as compared to the interest accrual in the reserve calculation for the underlying indexed product in two ways. This rule provides insurance companies with the ability, once certain criteria are met, to: (1) account for eligible derivative instruments using the amortized cost method, and (2) make an election at a policy level to use a reserve calculation methodology for indexed annuity products under which interest credits based upon one or more external indices are included in the reserve only after those interest credits have been credited to the contract holder under the terms of the annuity contract. In addition, regardless of the use of the ability provided for in the previous sentence, this rule provides insurance companies with the ability to record changes in, and settlement of, eligible derivative instruments through net investment income in the summary of operations.

(B) Authority

This rule is promulgated pursuant to the authority vested in the superintendent under sections 3901.77 and 3903.72 to 3903.7211 of the Revised Code.

For the purposes of this rule, the following definitions shall apply:

(1) "Eligible derivative instrument" means:

(a) A call or put option derivative instrument that is purchased to hedge the growth in interest credited to an indexed product as a direct result of changes in the related external index or external indices;

(b) A call or put option derivative instrument that is written to offset all or a portion of a call or put option derivative instrument that meets the criteria set forth in paragraph (C)(1)(a) of this rule; or

(c) Other derivative instruments, such as index futures, swaps and "swaptions," that may be used to hedge the growth in interest credited to indexed products as a direct result of changes in the related external index or external indices.

(2) "External index" means an index, a combination of indices, a combination of indices and other financial instruments, or an exchange traded fund that is published or disseminated by a source external to the insurance company and its affiliates.

(3) "Indexed annuity products" means fixed indexed or index-linked variable annuity contracts that include interest crediting provisions under which interest (which may be subject to caps, participation rates, spreads, floors, terms or similar limitations) is credited based upon the performance of one or more external indices.

(4) "Indexed life products" means fixed indexed or index-linked variable life insurance policies that include interest crediting provisions under which interest (which may be subject to caps, participation rates, spreads, floors, buffers, terms or similar limitations) is credited based upon the performance of one or more external indices.

(5) "Indexed products" means indexed annuity products and indexed life products.

(6) "Interest crediting period" means the period of time over which the performance of an external index or external indices is measured for purposes of determining the amount of interest credited under an indexed product.

(D) Derivative accounting

Insurance companies may elect to account for eligible derivative instruments at amortized cost with the ability to record settlement gains or losses through net investment income, if the insurance company can demonstrate that such eligible derivative instruments meet all of the following criteria for an economic hedge:

(1) At inception of the hedge, or as of the date that an insurance company elects to use the accounting practices prescribed by this rule if later, there must be formal documentation of the economic hedging relationship and the insurance company's risk management objective and strategy for undertaking the economic hedge, including identification of the specific eligible derivative instruments purchased to hedge indexed products, the nature of the particular risk being hedged, and how the eligible derivative instruments' effectiveness will be assessed, retrospectively and prospectively, on a qualitative basis.

(2) At inception of the hedge, or as of the date that an insurance company elects to use the accounting practices prescribed by this rule if later, and at the end of each quarterly reporting period thereafter, the insurance company must maintain documentation that the economic hedge is expected to be and continues to be highly effective as defined by the criteria in paragraph (D)(1) of this rule in achieving offsetting changes in fair value attributable to the hedged risk during the period that the economic hedge is designated.

(3) Amortized cost will be based on the value at purchase for eligible derivative instruments defined in paragraphs (C)(1)(a) and (C)(1)(b) of this rule. For eligible derivative instruments defined in paragraph (C)(1)(c) of this rule, amortized cost will be established at the beginning of a policy's crediting term based upon the company's best estimate of the expected cost of the strategy using well-established financial market mathematical models, formulae, or equations that use assumptions that maximize the use of verifiable inputs. Deviations from this estimate or other breakage on dynamic trading strategies will be recognized immediately.

(4) All income associated with eligible derivative instruments shall be recorded in the summary of operations, and shall be consistent with how the changes in indexed products are recorded.

(E) Indexed annuity products reserve calculation methodology

Insurance companies account for indexed annuity product reserves in accordance with sections 3903.72 to 3903.7211 of the Revised Code, and with the applicable actuarial guidelines and statutory accounting principles. Based on the current guidelines, this rule provides insurance companies with the ability to make the following adjustment, on a policy level, to their indexed annuity product reserves for any index crediting period that the policy is hedged by eligible derivative instruments that are accounted for in accordance with paragraph (D) of this rule:

(1) If an insurance company determines indexed annuity product reserves based on "Actuarial Guideline XXXV," the insurance company may assume the market value of the eligible derivative instruments associated with the current interest crediting period is zero, regardless of the observable market for such eligible derivative instruments. Cash surrender values used to determine the reserves shall be calculated consistently.

(2) At the conclusion of each interest crediting period, interest credited to an indexed annuity product shall be reflected in the reserves and cash surrender value as realized, based on the actual performance of the relevant external index.

(F) Indexed life product reserve calculation methodology

Insurance companies account for indexed life product reserves in accordance with the applicable actuarial guidelines and statutory accounting principles. This rule does not provide for any adjustment to the reserve calculation methodology for indexed life products.

(G) Other requirements

(1) Indexed annuity products. The alternative accounting practices prescribed by this rule must be applied during an index crediting period to both the eligible derivative instruments used to hedge indexed annuity products and the related indexed annuity product reserves.

(2) Indexed life products. The alternative accounting practices prescribed by this rule must be applied only to the eligible derivative instruments used to hedge indexed life products. This rule shall not impact the calculation of indexed life product reserves.

(3) If an insurance company elects to use the alternative accounting practices prescribed by this rule, it shall report quarterly to the superintendent, for analysis purposes:

(a) The market value of its eligible derivative instruments and what the related actuarial reserves would be using market value of such eligible derivative instruments, and the documentation the economic hedge is and remains highly effective required by paragraph (D)(2) of this rule.

(b) For hedging activity that uses the dynamic hedging strategy, the company shall report:

(i) The estimate of amortized cost, including the assumptions used in financial market models; and

(ii) The amount of deviation from the estimate of amortized cost recognized during the period reported.

(4) Application of this rule is not mandatory. An insurance company that elects to use the alternative accounting practices prescribed by this rule may not elect to change its accounting practices back to those that would apply in the absence of this rule without the prior approval of the superintendent.

(H) Severability

Last updated December 16, 2025 at 11:13 AM

History

Effective: April 15, 2021
Promulgated Under: 119.03

Chapter 3901-2 Proxies, Consents, and Authorizations of Domestic Stock Insurance

Ohio Adm.Code 3901-2-01 Application of Chapter 3901-2 of the Administrative Code.

(A) Purpose

The purpose of this rule is to set forth the application of Chapter 3901-2 of the Administrative Code.

(B) Authority

This rule is promulgated pursuant to the authority vested in the superintendent under sections 3901.041 and 3901.31 of the Revised Code.

(C) No domestic stock insurance company subject to division (D) of section 3901.31 of the Revised Code, or any director, officer, or employee of such insurer, or any other person, may solicit, or permit the use of the person's name to solicit, by mail or otherwise, any proxy, consent, or authorization with respect to any such class of equity securities in contravention of Chapter 3901-2 of the Administrative Code. A domestic stock insurer that files with the securities and exchange commission with respect to any class of securities forms of proxies, consents, and authorizations complying with the requirements of the Securities Exchange Act of 1934, as amended, and regulation 14A promulgated thereunder, is exempt from the provisions of Chapter 3901-2 of the Administrative Code with respect to such class of securities.

(D) Unless proxies, consents or authorizations respecting any class of equity securities of a domestic insurer subject to Chapter 3901-2 of the Administrative Code are solicited by or on behalf of the management of such insurer from the holders of record of such securities in accordance with this chapter prior to any annual or other meeting of such security holders, such insurer shall file with the superintendent of insurance and transmit to every security holder who is entitled to vote regarding any matter to be acted upon at the meeting and from whom a proxy is not solicited, a written information statement containing the information specified in rule 3901-2-15 of the Administrative Code.

(E) Severability

Last updated November 14, 2024 at 8:48 AM

History

Effective: November 14, 2024
Promulgated Under: 119.03

Ohio Adm.Code 3901-2-15

(A) Purpose

The purpose of this rule is to describe the information that must be included in an information statement when there is no proxy sought.

(B) Authority

This rule is promulgated pursuant to the authority vested in the superintendent under sections 3901.041 and 3901.31 of the Revised Code.

(C) Where any paragraph other than paragraph (H) of this rule calls for information with respect to any matter to be acted upon at the meeting, such paragraph should be answered only with respect to proposals to be made by the issuer.

(D) Information required by rule 3901-2-13 of the Administrative Code.

Furnish the information called for by rule 3901-2-13 of the Administrative Code regarding proxies, consents, and authorizations (other than paragraphs (C), (E), and (F) of this rule), which would be applicable to any matter to be acted upon at the meeting if proxies were to be solicited in connection with the meeting.

(E) Statement that proxies are not solicited

Include the following statement on the first page of the information statement in bold face type:

"WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY."

(F) Date, time, and place of meeting

State the date, time, and place of the meeting of security holders, unless such information is otherwise disclosed in material furnished to security holders with the information statement.

(G) Interest of certain persons in matters to be acted upon

Describe briefly any substantial interest, direct or indirect, by security holdings or otherwise, by each of the following persons in any matter to be acted upon, other than elections to office:

(1) Each person who has been a director or officer of the issuer at any time since the beginning of the last fiscal year.

(2) Each nominee for election as a director of the issuer.

(3) Each associate of the foregoing persons.

(4) Give the name of any director of the issuer who has informed the management in writing that the director intends to oppose any action to be taken by the management at the meeting and indicate the action which the director intends to oppose.

(H) If any security holder entitled to vote at the meeting has, not less than ninety days before the issuer's annual meeting, submitted to the issuer a proposal which is accompanied by notice of the security holder's intention to present the proposal for action at the meeting, make a statement to that effect, identify the proposal, and indicate the disposition proposed to be made of the proposal by the management at the meeting.

(I) Severability

Last updated November 14, 2024 at 8:52 AM

History

Effective: November 14, 2024
Promulgated Under: 119.03

Ohio Adm.Code 3901-2-02 Definitions.

(A) Purpose

The purpose of this rule is to define certain terms as used in Chapter 3901-2 of the Administrative Code.

(B) Authority

This rule is promulgated pursuant to the authority vested in the superintendent under sections 3901.041 and 3901.31 of the Revised Code.

The following definitions apply unless the context otherwise requires:

(1) "Affiliate", or a "person affiliated with a specified person" means, 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.

(2) "Associate" means:

(a) Any corporation or organization (other than the issuer or a majority-owned subsidiary of the issuer) of which any person is an officer or partner or is, directly or indirectly, the beneficial owner of ten per cent or more of any class of equity securities;

(b) Any trust or other estate in which any person has a substantial beneficial interest or as to which any person serves as trustee or in a similar fiduciary capacity; or

(c) Any relative or spouse of any person, or any relative of such spouse, who has the same home as any person or who is a director or officer of the issuer or any of its parents or subsidiaries.

(3) "Beneficial owner" means any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares:

(a) Voting power including the power to vote, or the power to direct voting of, a security; or

(b) Investment power including the power to dispose of, or the power to direct the disposition of, such security.

(4) "Control" (including the terms "controlling," "controlled by," and "under common control with") means the possession, directly or indirectly, 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.

(5) "Issuer" means the issuer of the securities for which a proxy is solicited.

(6) "Last fiscal year" of the issuer means the most recent fiscal year of the issuer ending prior to the date of the meeting for which proxies are to be solicited.

(7) "Officer" means the president, secretary, treasurer, any vice president in charge of a principal business function (such as sales, administration or finance), and any other person who performs similar policy-making functions for the issuer.

(8) "Parent of a specified person" means an affiliate controlling such person, directly or indirectly, through one or more intermediaries.

(9) "Person" means an individual, a corporation, a partnership, an association, a joint stock company, a trust, any unincorporated organization, or a government or political subdivision thereof. As used in this paragraph, the term "trust" shall include only a trust where the interest or interests of the beneficiary or beneficiaries are evidenced by a security.

(10) "Proxy statement" means the statement required by rule 3901-2-04 of the Administrative Code, whether or not contained in a single document.

(11) "Solicit" and "solicitation" mean:

(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 form of proxy or other communication to security holders under circumstances reasonably calculated to result in the procurement, withholding, or revocation of a proxy.

The terms do not apply to the furnishing of a form of proxy to a security holder upon the unsolicited request of such security holder, the performance by the issuer of acts required by rule 3901-2-08 of the Administrative Code, or the performance by any person of ministerial acts on behalf of a person soliciting a proxy.

(D) Severability

Last updated November 14, 2024 at 8:49 AM

History

Effective: November 14, 2024
Promulgated Under: 119.03

Ohio Adm.Code 3901-2-04

(A) Purpose

The purpose of this rule is to identify information that should be furnished to security holders in solicitations subject to Chapter 3901-2 of the Administrative Code.

(B) Authority

This rule is promulgated pursuant to the authority vested in the superintendent under sections 3901.041 and 3901.31 of the Revised Code.

(C) No solicitation subject to this chapter may be made unless each person solicited is concurrently furnished or has previously been furnished with a written proxy statement containing the information specified in rule 3901-2-13 of the Administrative Code.

(D) If the solicitation is made on behalf of the issuer and relates to an annual meeting of security holders at which directors are to be elected, each proxy statement shall be accompanied by an annual report to security holders that includes the following:

(1) In comparative columnar form, such financial statements for the last two fiscal years, prepared on a consistent basis, as will in the opinion of the management adequately reflect the financial position of the issuer at the end of each such year and the results of its operations for each such year and include consolidated financial statements of the issuer and its subsidiaries in the report if they are necessary to reflect the financial position and results of operations of the issuer and its subsidiaries, but in such case, the individual statements of the issuer may be omitted. The superintendent of insurance may, upon the request of the issuer, permit the omission of financial statements for the earlier of such two fiscal years upon a showing of good cause therefor.

(2) The financial statements for the last two fiscal years required by paragraph (D)(1) of this rule prepared in a manner acceptable to the superintendent of insurance.

(3) In comparative columnar form, a summary of the issuer's operations, the operations of the issuer and its subsidiaries consolidated, or both as appropriate, for each of the last five fiscal years of the issuer (or the life of the issuer and its predecessors, if less).

(4) A brief description of the business or businesses done by the issuer and its subsidiaries during the most recent fiscal year which will, in the opinion of management, indicate the general nature and scope of the business of the issuer and its subsidiaries.

(5) Each of the issuer's directors and officers, the principal occupation or employment of each such person, and the name and principal business of any organization by which such person is so employed.

(6) The principal market in which securities of any class entitled to vote at the meeting are traded, stating the range of bid and asked quotations for each quarterly period during the issuer's two most recent fiscal years, including each dividend paid during such two-year period.

(7) Subject to the foregoing requirements, the report may be in any form deemed suitable by management and the information required by paragraphs (D)(3) to (D)(6) of this rule may be presented in an appendix or other separate section of the report, provided that the attention of security holders is called to such presentation.

(8) Paragraph (D) of this rule does not apply to solicitations made on behalf of the management before the financial statements are available if a solicitation is being made at the time in opposition to the management and if the management's proxy statement includes an undertaking in bold face type to furnish such annual report to all persons being solicited, at least twenty days before the date of the meeting.

(E) Two copies of the report sent to security holders pursuant to this rule shall be mailed to the superintendent of insurance, solely for the superintendent's information, not later than the date on which such report was first sent or given to security holders or the date on which preliminary copies of solicitation material are filed, pursuant to rule 3901-2-07 of the Administrative Code, whichever date is later.

(F) If the issuer knows that securities of any class entitled to vote at a meeting with respect to which the issuer intends to solicit proxies, consents or authorizations are held of record by a broker, dealer, bank or voting trustee, or their nominees, the issuer shall inquire of such record holder at least ten days prior to the record date for the meeting of security holders whether other persons are the beneficial owners of such securities and, if so, the number of copies of the proxy and other soliciting material and, in the case of an annual meeting at which directors are to be elected, the number of copies of the annual report to security holders, necessary to supply such material to beneficial owners. The issuer shall supply such record holder in a timely manner with additional copies in such quantities, assembled in such form and at such a place, as the record holder may reasonably request in order to address and send one copy of each to each beneficial owner of securities so held, and upon the request of such record holder, pay its reasonable expenses for mailing such material to security holders to whom the material is sent.

(G) Severability

Last updated November 14, 2024 at 8:49 AM

History

Effective: November 14, 2024
Promulgated Under: 119.03

Ohio Adm.Code 3901-2-08

If the management of the issuer has made or intends to make any solicitation subject to this chapter, the issuer shall perform such of the following acts as may be duly requested in writing with respect to the same subject matter or meeting by any security holder who is, or security holders who are, entitled to vote at least one per cent of the votes entitled to be voted on such matter and who shall defray the reasonable expenses to be incurred by the issuer in the performance of the act or acts requested.

(A) Purpose

The purpose of this rule is to set forth mailing communications requirements for security holders.

(B) Authority

This rule is promulgated pursuant to the authority vested in the superintendent under sections 3901.041 and 3901.31 of the Revised Code.

(C) The issuer shall mail or otherwise furnish to such security holder, as promptly as practicable after the receipt of such request:

(1) A statement of the approximate number of record owners and, to the extent known to the issuer, the approximate number of beneficial owners of any class of securities, any of whom have been or are to be solicited on behalf of the management, or any group of whom the security holder shall designate.

(2) An estimate of the cost of mailing a specified proxy statement, form of proxy, or other communication to such owners.

(D)

(1) Copies of any proxy statement, form of proxy, or other communication furnished by the security holder shall be mailed by the issuer to such of the security owners specified in paragraph (C)(1) of this rule as the security holder designates.

(2) Such material furnished by the security holder shall be mailed with reasonable promptness after receipt of the material to be mailed, envelopes or other containers therefor, and postage or payment for postage. The issuer need not mail any such material prior to the first day on which solicitation is made on behalf of the issuer.

(3) The issuer shall not be responsible for such proxy statement, form of proxy, or other communication.

(E) In lieu of performing the acts specified in this rule, the issuer may, at its option, furnish promptly to such security holder a reasonably current list of the names and addresses of such of the record owners and, to the extent known to the issuer, the beneficial owners as the security holder designates, and a schedule of the handling and mailing costs if such schedule has been supplied to the issuer.

(F) Severability

Last updated November 14, 2024 at 8:50 AM

History

Effective: November 14, 2024
Promulgated Under: 119.03

Ohio Adm.Code 3901-2-03 Solicitations to which Chapter 3901-2 of the Administrative Code applies.

(A) Purpose

The purpose of this rule is to identify specific rules that apply to solicitations subject to Chapter 3901-2 of the Administrative Code.

(B) Authority

This rule is promulgated pursuant to the authority vested in the superintendent under sections 3901.041 and 3901.31 of the Revised Code.

(C)

Rule 3901-2-10 of the Administrative Code applies to every solicitation that is subject to this chapter. Rules 3901-2-02 to 3901-2-09 and 3901-2-11 of the Administrative Code apply to every solicitation that is subject to this chapter except the following:

(1) Any solicitation made otherwise than on behalf of the issuer where the total number of persons solicited is not more than ten.

(2) Any solicitation by a person respecting securities carried in the person's name, in the name of the person's nominee (otherwise than as voting trustee), or held in the person's custody, if such person:

(a) Receives no commission or remuneration for such solicitation, directly or indirectly, other than reimbursement of reasonable expenses;

(b) Furnishes promptly to the person solicited a copy of all soliciting material with respect to the same subject matter or meeting received from all persons who shall furnish copies thereof for such purpose and, if requested, defray the reasonable expenses to be incurred in forwarding such material; and

(c) In addition, does no more than impartially instruct the person solicited to forward a proxy to the person, if any, to whom the person solicited desires to give a proxy, or impartially request from the person solicited instructions as to the authority to be conferred by the proxy and state that a proxy will be given if no instructions are received by a certain date.

(3) Any solicitation by a person respecting securities of which the person is the beneficial owner.

(4) Any solicitation through the medium of a newspaper advertisement that informs security holders of a source from which they may obtain copies of a proxy statement, form of proxy, and any other soliciting material and does no more than:

(a) Name the issuer;

(b) State the reason for the advertisement; and

(5) Any solicitation that the superintendent of insurance finds for good cause should be exempted from this chapter or any part thereof.

(D) Severability

Last updated November 14, 2024 at 8:49 AM

History

Effective: November 14, 2024
Promulgated Under: 119.03

Ohio Adm.Code 3901-2-10

(A) Purpose

The purpose of this rule is to prohibit false or misleading statements from a proxy statement, form of proxy, notice of meeting, information statement, or other communication subject to Chapter 3901-2 of the Administrative Code.

(B) Authority

This rule is promulgated pursuant to the authority vested in the superintendent under sections 3901.041 and 3901.31 of the Revised Code.

(C)

No proxy statement, form of proxy, notice of meeting, information statement, or other communication, written or oral, subject to this rule, may contain any statement that 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 to make the statements therein not false or misleading or is necessary to correct any statement in any earlier communication with respect to the same meeting or subject matter which has become false or misleading.

(D) Severability

Last updated November 14, 2024 at 8:51 AM

History

Effective: November 14, 2024
Promulgated Under: 119.03

Ohio Adm.Code 3901-2-13

(A) Purpose

The purpose of this rule is to describe in detail and provide the format for the information that must be included in a proxy statement.

(B) Authority

This rule is promulgated pursuant to the authority vested in the superintendent under sections 3901.041 and 3901.31 of the Revised Code.

State whether 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.

(D) Dissenters' rights of appraisal

Outline briefly any rights of appraisal or similar rights of dissenters with respect to any matter to be acted upon and indicate any statutory procedure required to be followed by dissenting security holders to perfect such 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 will be notified of such date.

(E) Persons making the solicitation

(1) Solicitations not subject to rule 3901-2-12 of the Administrative Code.

(a) If the solicitation is made by the issuer, so state. Give the name of any director of the issuer who has informed the issuer in writing that the director intends to oppose any action intended to be taken by the issuer and indicate the action which the director intends to oppose.

(b) If the solicitation is made otherwise than by the issuer, so state and give the names of the persons by whom and on whose behalf it is made.

(c) If the solicitation is not to be made by the use of mail, describe the methods to be employed. If the solicitation is to be made by specially engaged employees or paid solicitors, state:

(i) The material features of any contract or agreement for such solicitation and identify the parties; and

(ii) The cost or anticipated cost thereof.

(d) State the names of the persons by whom the cost of solicitation has been or will be borne, directly or indirectly.

(2) Solicitations subject to rule 3901-2-12 of the Administrative Code.

(a) State by whom the solicitation is made and describe the methods employed and to be employed to solicit security holders.

(b) If regular employees of the issuer or any other participant in a solicitation have been or are to be employed to solicit security holders, describe the class or classes of employees to be so employed and the manner and nature of their employment for such purpose.

(c) If specially engaged employees, representatives, or other persons have been or are to be employed to solicit security holders, state:

(i) The material features of any contract or arrangement for such solicitation and identify the parties;

(ii) The cost or anticipated cost thereof; and

(iii) The approximate number of such employees or employees of any other person (naming such other person) who will solicit security holders.

(d) State the total amount estimated to be spent and the total expenditures to date for, in furtherance of, or in connection with, the solicitation of security holders.

(e) State by whom the cost of the solicitation will be borne. If reimbursement will be sought from the issuer, state whether the question of such reimbursement will be submitted to a vote of security holders.

(f) If any such solicitation is terminated pursuant to a settlement between the issuer and any other participant in such solicitation, describe the terms of such settlement, including the cost or anticipated cost thereof to the issuer.

(F) Interest of certain persons in matters to be acted upon.

(1) Solicitations not subject to rule 3901-2-12 of the Administrative Code.

Describe briefly any substantial interest, direct or indirect, of each of the following persons in any matter to be acted upon, other than elections to office:

(a) If the solicitation is made on behalf of the issuer, each current director or officer of the issuer.

(b) If the solicitation is made otherwise than on behalf of the issuer, any person who would be a participant in a solicitation (except the issuer, officer, director, or nominee of the issuer).

(d) Each associate of the foregoing persons.

(2) Solicitations subject to rule 3901-2-12 of the Administrative Code.

Describe briefly any substantial interest, direct or indirect, of each participant (except the issuer) in any matter to be acted upon at the meeting and include, with respect to each participant, the information or an adequate summary thereof, required by paragraphs (D)(1), (D)(3), (E), (F)(2), and (F)(3) of rule 3901-2-14 of the Administrative Code.

(G) Voting securities and principal holders thereof.

(1) State as to each class of voting securities of the issuer entitled to be voted at the meeting, the number of shares outstanding and the number of votes to which each class is entitled.

(2) Give the date as of which the record of security holders entitled to vote at the meeting will be determined. If the right to vote is not limited to security holders of record on that date, indicate the conditions under which other security holders may be entitled to vote.

(3) If action is to be taken with respect to the election of directors and if the persons solicited have cumulative voting rights:

(a) Make a statement that they have such rights;

(b) Describe such rights;

(d) If discretionary authority to cumulate votes is solicited, so indicate.

(4) Furnish security ownership information as of the most recent practicable date, in substantially the tabular form set forth in appendix I to this rule, with respect to:

(a) Any person or group of persons who is known to be the beneficial owner of more than five per cent of any class of securities; and

(b) All directors and nominees, naming them, and directors and officers of the issuer as a group, without naming them.

(5) If, to the knowledge of the persons on whose behalf the solicitation is made, a change in control of the issuer has occurred since the beginning of its last fiscal year, state the name of the person(s) who acquired control, the amount and the source of the consideration used by such person or persons, the basis of the control, the date, a description of the transaction(s) which resulted in the change of control, and the percentage of voting securities of the issuer now beneficially owned, directly or indirectly, by the person(s) who acquired control and the identity of the person(s) from whom control was assumed. Describe any arrangements which may at a subsequent date result in a change of control of the issuer.

(H) Directors and executive officers.

If action is to be taken with respect to 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 person whose term of office will continue after the meeting. If the solicitation is made on behalf of persons other than the issuer, the information required need be furnished only as to nominees of the persons making the solicitation.

(1) Identification of directors and officers. List the names and ages of all directors and officers of the issuer and all persons nominated or chosen to become directors or officers; indicate all positions and offices with the issuer held by each such person; state such person's term of office as director or officer and any period(s) during which such person has served as such; briefly describe any arrangement or understanding between such person and any other person or persons, naming such person(s), pursuant to which such person was or is to be selected as a director, officer, or nominee.

(2) Information furnished in issuer's annual report. The information regarding officers need not be furnished in proxy or information statements provided that such information is furnished in a separate item in the issuer's annual report to stockholders.

(3) Family relationships. State the nature of any family relationship not more remote than first cousin between any director, officer, or person nominated or chosen by the issuer to become a director or officer, and any such family relationship between any such person and any officer or director of any of the issuer's parents, subsidiaries, or other affiliates.

(4) Business experience. State the principal occupations and employment during the past five years of each director or officer and each person nominated or chosen to become a director or officer and the name and principal business of any corporation or other organization in which such occupations and employment were carried on.

(5) Directorships. Indicate other directorships held by each director or person nominated or chosen to become a director.

(6) Involvement in certain legal proceedings. Describe any legal proceedings that have occurred during the past five years or which are pending that are material to an evaluation of the ability or integrity of any director, or person nominated to become a director or officer of the issuer.

(7) Describe any of the following relationships which exist.

(a) If the nominee or director is, or has within the last two full fiscal years been, an officer, director, or employee of, or owns, or has within the last two fiscal years owned, directly or indirectly, in excess of a one per cent equity interest in any firm, corporation, or other business or professional entity:

(i) Which has made payments to the issuer or its subsidiaries during the issuer's last full fiscal year or which proposes to make payments to the issuer or its subsidiaries during the current fiscal year in excess of one per cent of the issuer's consolidated gross revenues for its last full fiscal year;

(ii) To which the issuer or its subsidiaries were indebted at any time during the issuer's last fiscal year in an aggregate amount in excess of one per cent of the issuer's total consolidated assets at the end of such fiscal year;

(iii) To which the issuer or its subsidiaries have made payments during such entity's last fiscal year or to which the issuer or its subsidiaries propose to make payments during such entity's current fiscal year in excess of one per cent of such entity's consolidated gross revenues for its last full fiscal year;

(iv) To determine whether payments made or proposed to be made exceed one per cent of the consolidated gross revenues of any entity, other than the issuer for such entity's last full fiscal year, it is appropriate to rely on information provided by the nominee or director;

(v) In calculating payments for property and services the following may be excluded:

(a) Payments where the rates or charges involved in the transaction are determined by competitive bids or the transaction involves the rendering of services as a public utility at rates or charges fixed in conformity with law or governmental authority;

(b) Payments which arise solely from the ownership of securities of the issuer and no extra or special benefit not shared on a pro rata basis by all holders of the class of securities is received.

(vi) In calculating indebtedness for purposes of paragraph (H)(7)(a)(ii) of this rule, debt securities which have been publicly offered, admitted to trading on a national securities exchange, or quoted in the automated quotation system of a registered securities association may be excluded.

(b) If the nominee or director is a member, employee of, or is associated with a law firm which the issuer has retained in the last two full fiscal years or proposes to retain in the current fiscal year where fees paid or anticipated to be paid by the issuer are material to either the law firm, the issuer, or both.

(c) If the nominee or director is a director, partner, officer, or employee of any investment banking firm which has performed services for the issuer other than as a participating underwriter in a syndicate in the last two full fiscal years or which the issuer proposes to have perform services in the current year.

(d) If the nominee or director is a control person of the issuer (other than solely as a director of the issuer).

(8) Audit:

(a) State whether the issuer has standing audit, nominating, and compensation committees of the board of directors, or committees performing similar functions. If the issuer has such committees, however designated, identify each committee member, state the number of committee meetings held by each such committee during the last fiscal year, and describe briefly the functions performed by such committees.

(b) If the issuer has a nominating or similar committee, state whether the committee will consider nominees recommended by shareholders and, if so, describe the procedures to be followed by shareholders in submitting such recommendations.

(9) State the total number of meetings of the board of directors (including regularly scheduled and special meetings) which were held during the last full fiscal year. Name each incumbent director who during the last full fiscal year attended fewer than seventy-five per cent of the aggregate of:

(a) The total number of meetings of the board of directors (held during the period for which he has been a director); and

(b) The total number of meetings held by all committees of the board on which the incumbent director(s) served (during the periods that the incumbent director(s) served).

(10) If a director has resigned or declined to stand for reelection to the board of directors since the date of the last annual meeting of shareholders because of a disagreement with the issuer on any matter relating to the issuer's operations, policies, or practices, and if the director has furnished the issuer with a letter describing such disagreement and requesting that the matter be disclosed, the issuer shall state the date of resignation or declination to stand for reelection and summarize the director's description of the disagreement. If the issuer believes that the description provided by the director is incorrect or incomplete, the issuer may include a brief statement presenting its views on the disagreement.

(11) With respect to those classes of voting stock which participated in the election of directors at the most recent meeting at which directors were elected:

(a) State the percentage of shares present at the meeting and voting or withholding authority to vote in the election of directors; and

(b) Disclose in tabular format, the percentage of total shares cast for and withheld from the vote for or, where applicable, cast against, each nominee, which, respectively, were voted for and withheld from the vote for, or voted against, such nominee. When groups of classes or series of classes vote together in the election of a director or directors, they shall be treated as a single class for the purpose of the preceding sentence.

(12) Instructions:

(a) Calculate the percentage of shares present at the meeting and voting or withholding authority to vote in the election of directors, referred to in paragraph (H)(11)(a) of this rule, by dividing the total shares cast for and withheld from the vote for or, where applicable, voted against, the director in respect of whom the highest aggregate number of shares was cast by the total number of shares outstanding which were eligible to vote as of the record date for the meeting.

(b) No information need be given in response to paragraph (H)(11) of this rule unless, with respect to any class of voting stock (or group of classes which voted together), five per cent or more of the total shares cast for and withheld from the votes for or, where applicable, cast against any nominee were withheld from the vote for or cast against such nominee.

(c) If an issuer elects less than the entire board of directors annually, disclosure is required as to all directors if five per cent or more of the total shares cast for and withheld from the votes for, or, where applicable, cast against any incumbent director were withheld from, or cast against the vote for such director at the meeting at which he was most recently elected.

(d) No information need be given in response to paragraph (H)(11) of this rule if the issuer has previously furnished to its security holders a report of the most recent meeting of security holders at which directors were elected which includes:

(i) A description of each matter voted upon at the meeting and a statement of the percentage of the shares voting which were voted for and against each such matter; and

(ii) The information which would be called for by paragraph (H)(11) of this rule. If an issuer has previously furnished such results to its security holders, this fact should be set forth in a letter accompanying the filing of preliminary proxy materials with the superintendent of insurance.

(I) Remuneration of directors and officers.

(1) Furnish the following information if action is to be taken with regard to:

(a) The election of directors;

(b) Any bonus, profit sharing or other remuneration plan, contract, or arrangement in which any director, nominee for election as a director, or officer of the issuer will participate;

(d) The granting or extension to any such person of any options, warrants or rights to purchase any securities, other than warrants or rights issued to security holders as such, on a pro rata basis. If the solicitation is made on behalf of persons other than the issuer, the information required need be furnished only as to nominees of the person making the solicitation and associates of such nominees.

(2) Current remuneration. Furnish the information required below, in substantially the tabular form set forth in appendix II to this rule, concerning all remuneration of the following persons and groups for services in all capacities to the issuer and its subsidiaries during the issuer's last fiscal year, or, in specified instances, certain prior fiscal years:

(a) Five officers or directors. Each of the five most highly compensated officers or directors of the issuer as to whom the total remuneration required to be disclosed in columns C1 and C2 of the table set forth in appendix II to this rule, would exceed fifty thousand dollars, naming each such person; and

(b) All officers or directors. All officers and directors of the issuer as a group, stating the number of persons in the group without naming them.

(c) Information to be included. Columns C1, C2, and D of the table set forth in appendix II to this rule should contain, with respect to each person or group of persons specified in paragraphs (I)(2)(a) and (I)(2)(b) of this rule, a dollar amount which reflects the total of all items of remuneration described in the heading to that column including, but not necessarily limited to, those items set forth in the subparagraphs of that column.

(i) Column C of the table set forth in appendix II to this rule shall include all cash and cash equivalent forms of remuneration received during the fiscal year and all such amounts accrued during the fiscal year which, with reasonable certainty, will be distributed or vested in the future.

(ii) Column C1 of the table set forth in appendix II to this rule shall include salaries, bonuses, fees, and commissions, including:

(a) All cash remuneration distributed or accrued in the form of salaries, commissions, bonuses, and fees for services rendered.

(b) Compensation earned for services performed in the latest fiscal year even if it is deferred for future payment.

(c) Payments received in the latest fiscal year but earned in prior years which were deferred until the latest year, if such amounts were not shown in an earlier proxy statement or annual report to stockholders.

(iii) Column C2 of the table set forth in appendix II to this rule shall include securities, property, insurance benefits or reimbursements, and personal benefits (perquisites), including:

(a) The spread between the acquisition price, if any, and fair market price of securities or property acquired under any contract, plan, or arrangement.

(b) Cost of any life insurance premiums, health insurance premiums, and medical reimbursement plans. Premiums for nondiscriminatory plans generally available to all salaried employees are excluded.

(c) Personal benefits (perquisites) not directly related to job performance, excluding benefits provided on a nondiscriminatory basis, valued on the basis of cost to the issuer of providing such benefits.

(i) If unreasonable effort or expense is required to determine the amounts of personal benefits, they may be omitted if their aggregate value does not exceed ten thousand dollars for each officer.

(ii) If the amount of personal benefits exceed ten per cent of the amount of total remuneration, or twenty-five thousand dollars, whichever is less, the amount and a brief description of the benefits must be disclosed in a footnote.

(d) Vested company contributions to thrift, profit sharing, pension, stock purchase, and similar plans.

(iv) Column D of the table set forth in appendix II to this rule shall include all contingent forms of remuneration, vesting, and measurement of which is subject to future events. Report only amounts relating to the latest fiscal year, not amounts accrued in previous periods. Column D shall also include:

(a) The amount expensed for financial reporting purposes representing nonvested contributions, payments, or accruals under any pension or retirement plans, annuities, employment contracts, and deferred compensation plans, including IRS qualified plans, unless the amount for the individual cannot be separated, in which case a footnote is required indicating the percentage which contributions to the plan bear to participants' total remuneration.

(b) The amounts expensed for financial reporting purposes under any incentive compensation plans (long-term income plans), such as stock appreciation rights, stock options, and performance share plans, where the payout is based on objective standards or stock values. In subsequent years, if the corporation credits compensation expense for financial reporting purposes as a result of a decline in the value of contingent compensation, column D may be reduced by a corresponding amount. A footnote explaining such action should be included.

(c) The amount expensed for financial reporting purposes for any nonvested contribution payment or accrual to stock purchase plans, profit sharing, and thrift plans whether or not they are qualified under the Internal Revenue Code.

(d) Transactions with third parties. Paragraph (I)(2) of this rule, among other things, includes transactions between the issuer and a third party when the primary purpose of the transaction is to furnish remuneration to the persons specified in paragraph (I)(2) of this rule. Other transactions between the issuer and third parties in which persons specified in paragraph (I)(2) of this rule have an interest, or may realize a benefit, generally are addressed by other disclosure requirements concerning the interest of management and others in certain transactions. Paragraph (I)(2) of this rule does not require disclosure of remuneration paid to a partnership in which any officer or director was a partner; any such transaction should be disclosed pursuant to these other disclosure requirements and not as a note to the remuneration table set forth in appendix II to this rule presented pursuant to paragraph (I)(2) of this rule.

(e) Other permitted disclosure. The issuer may provide additional disclosure through a footnote to the table set forth in appendix II to this rule, through additional columns, or otherwise describing the components of aggregate renumeration in such greater detail as is appropriate.

(3) Proposed remuneration:

(a) Briefly describe all remuneration payments proposed to be made in the future, pursuant to any existing plan or arrangement to the persons and groups specified in paragraph (I)(2) of this rule. As to defined benefit or actuarial plans with respect to which amounts are not included in the table set forth in appendix II to this rule, include a separate table showing the estimated annual benefits payable upon retirement to persons in specified remuneration and years-of-service classification.

(b) Information need not be furnished with respect to any group life, health, hospitalization, or medical reimbursement plans which do not discriminate in favor of officers or directors of the issuer and which are available generally to all salaried employees.

(4) Remuneration of directors. Describe any standard or special arrangements, stating amounts, by which directors of the issuer are compensated for services as a director.

(5) Options, warrants, or rights:

(a) Furnish the information required by the table set forth in appendix III to this rule as to all options to purchase securities from the issuer or its subsidiaries which were granted to or exercised by the persons and groups specified in paragraph (I)(2) of this rule since the beginning of the issuer's last fiscal year, and as to all options held by such persons as of the latest practicable date.

(b) The information included in the table set forth in appendix III to this rule will show as to each director, officer, and as to all directors and officers as a group:

(i) The amount of options granted since the beginning of the issuer's last full fiscal year;

(ii) The amount of shares acquired since the date through the exercise of options;

(iii) The amount of shares of the same class sold during such period; and

(iv) The amount of shares subject to all unexercised options held as of the most recent practicable date.

(i) All figures should be adjusted, where applicable, in accordance with the terms of the options to reflect stock splits and to give effect to share dividends.

(ii) Other tabular presentations are acceptable if they include the necessary data. Tabular presentation may not be needed if only a limited number of options have been granted.

(iii) Total market value:

(a) Where the total market value on the granting dates of the securities called for by all options granted during the period specified does not exceed ten thousand dollars for any officer or director named in answer to paragraph (I)(2) of this rule, or forty thousand dollars for all officers and directors as a group, this item need not be answered with respect to options granted to such person or group.

(b) Where the total market value on the dates of purchase of all securities purchased through the exercise of options during the period specified does not exceed ten thousand dollars for any such person or forty thousand dollars for such group, this item need not be answered with respect to options exercised by such person or group.

(c) Where the total market value as of the latest practicable date of the securities called for by all options held at such time does not exceed ten thousand dollars for any such person or forty thousand dollars for such group, this item need not be answered with respect to options held as of the specified date by such person or group.

(d) The term "options" as used in paragraph (I)(5) of this rule includes all options, warrants, or rights, other than those issued to security holders as such on a pro rata basis. Where the average option price per share is called for, the weighted average price per share shall be given.

(e) The extension, regranting or material amendment of options is deemed the granting of options within the meaning of paragraph (I)(5) of this rule.

(f) If the options relate to more than one class of securities, the information shall be given separately for each such class.

(6) Indebtedness of management.

(a) State as to each of the following persons who was indebted to the issuer or its subsidiaries at any time since the beginning of the last fiscal year of the issuer:

(i) The largest aggregate amount of indebtedness outstanding at any time during such period;

(ii) The nature of the indebtedness outstanding and the transaction in which it was incurred;

(iii) The amount thereof outstanding as of the latest practicable date; and

(iv) The rate of interest paid or charged thereon:

(a) Each director or officer of the issuer;

(b) Each nominee for election as a director; and

(b) Paragraph (I)(6) of this rule does not apply to:

(i) Any person whose aggregate indebtedness did not exceed ten thousand dollars or one per cent of the issuer's total assets, whichever is less, at any time during the period specified; or

(ii) Indebtedness under an insurance policy.

(7) Transactions with management.

(a) Describe briefly any transaction since the beginning of the issuer's last fiscal year or any presently proposed transactions, to which the issuer or any of its subsidiaries was or is to be a party, in which any of the following persons had or is to have a direct or indirect material interest, naming such person and stating such person's relationship to the issuer, the nature of such person's interest in the transaction, and, where practicable, the amount of such interest:

(i) Any director or officer of the issuer;

(ii) Any nominee for election as a director;

(iii) Any security holder who is known to the issuer to own of record of beneficially more than ten per cent of any class of the issuer's voting securities; and

(iv) Any relative or spouse of any of the foregoing persons, or any relative of such spouse, who has the same home as such person or who is a director or officer of any parent or subsidiary of the issuer.

(b) Describe briefly any material legal proceedings to which any such person is a party adverse to the issuer or any of its subsidiaries or has a material interest adverse to the issuer or any of its subsidiaries.

(c) No information need be given in response to paragraph (I)(7) of this rule as to any remuneration or other transaction reported in response to paragraph (I)(2), (I)(3), (I)(4), (I)(5), or (I)(6) of this rule, or as to any transaction with respect to which information may be omitted pursuant to these items.

(d) No information need be given in answer to paragraph (I)(7) of this rule as to any transaction where:

(i) The rates or charges involved in the transaction are determined by competitive bids, or at rates or charges fixed in conformity with law or governmental authority;

(ii) The transaction involves services as a bank depository of funds, transfer agent, registrar, trustee under a trust indenture, or similar services;

(iii) The amount involved in the transactions or series of similar transactions, including all periodic installments in the case of any lease or other agreement providing for periodic payments or installments, does not exceed forty thousand dollars; or

(iv) The interest of the specified person arises solely from the ownership of securities of the issuer and the specified person receives no extra or special benefit not shared on a pro rata basis by all holders of securities of the class.

(e) This item calls for disclosure of indirect, as well as direct, material interests in transactions. A person who has a position or relationship with a firm, corporation, or other entity, which engages in a transaction with the issuer or its subsidiaries, may have an indirect interest in such transaction by reason of such position or relationship. A person does not to have a material indirect interest in a transaction within the meaning of paragraph (I)(7) of this rule where:

(i) The interest arises only:

(a) From such person's position as a director of another corporation or organization (other than a partnership) which is a party to the transaction; or

(b) From the direct or indirect ownership by such person and all other persons specified in paragraph (I)(7) of this rule of less than a ten per cent equity interest in another person (other than a partnership) which is a party to the transaction; or

(ii) The interest arises only from such person's position as a limited partner in a partnership in which that person and all other persons specified in paragraph (I)(7) of this rule had an interest of less than ten per cent; or

(iii) The interest of such person arises solely from the holding of an equity interest (including a limited partnership interest but excluding a general partnership interest) or a creditor interest in another person which is a party to the transaction with the issuer or any of its subsidiaries and the transaction is not material to such other person.

(f) Instructions:

(i) In describing any transactions involving the purchase or sale of assets by or to the issuer or any of its subsidiaries, otherwise than in the ordinary course of business, state the cost of the assets to the purchaser and, if acquired by the seller within two years prior to the transaction, the cost thereof to the seller. Indicate the principle followed in determining the issuer's purchase or sale price and the name of the person making such determination.

(ii) Information shall be furnished in answer to this item with respect to transactions not excluded above which involve remuneration from the issuer or its subsidiaries, directly or indirectly, to any of the specified persons for services in any capacity unless the interest of such persons arises solely from the ownership individually and in the aggregate of less than ten per cent of any class of equity securities of another corporation furnishing the services to the issuer or its subsidiaries.

(8) Transactions with pension or similar plans:

(a) Describe briefly any transactions since the beginning of the issuer's last fiscal year, or any presently proposed transactions, to which any pension, retirement, savings or similar plan provided by the issuer, or any of its parents or subsidiaries was or is to be a party, in which any of the persons specified in paragraph (I)(7) of this rule or the issuer or any of its subsidiaries had or is to have a direct or indirect material interest, naming such person and stating such person's relationship to the issuer, the nature of such person's interest in the transaction and, where practicable, the amount of such interest.

(b) No information need be given in answer to paragraph (I)(8) of this rule with respect to:

(i) Payments to the plan, or payments to beneficiaries, pursuant to the terms of the plan;

(ii) Payment of remuneration for services not in excess of five per cent of the aggregate remuneration received by the specified person during the issuer's last fiscal year from the issuer and its subsidiaries; or

(iii) Any interest of the issuer or any of its subsidiaries which arises solely from its general interest in the success of the plan.

(i) Paragraph (I)(7)(c) of this rule applies to paragraph (I)(8) of this rule.

(ii) Without limiting the general meaning of the term "transaction," include any remuneration received or any loans received or outstanding during the period, or proposed to be received.

(J) Matters related to accounting. If the solicitation is made on behalf of the issuer and relates to an annual meeting of security holders at which directors are to be elected, or financial statements are included, furnish the following information:

(1) If the issuer's financial statements are not certified by independent public or certified accountants, so state.

(2) If the board of directors has no audit or similar committee, so state.

(3) If the issuer's financial statements are certified by independent public or certified accountants, so state and provide the following information:

(a) The name of the principal accountant selected or being recommended to shareholders for election, approval, or ratification for the current year. If no accountant has been elected or recommended, so state and briefly describe the reason therefor.

(b) The name of the principal accountant for the fiscal year most recently completed if different from the accountant selected or recommended for the current year or if no accountant has been elected or recommended for the current year.

(c) If a change or changes in accountants have taken place since the date of the proxy statement for the most recent annual meeting of shareholders, so state, and if in connection with such change(s) a material disagreement in connection with financial disclosure between the accountant and issuer has occurred, the disagreement shall be described. Prior to filing the preliminary proxy materials with the superintendent of insurance which contains or amends such description, the issuer shall furnish the description of the disagreement to any accountant with whom the disagreement has occurred. If that accountant believes that the description of the disagreement is incorrect or incomplete, the accountant may include a brief statement, not to exceed two hundred words, in the proxy statement presenting the accountant's view of the disagreement. This statement shall be submitted to the issuer within ten business days of the date the accountant receives the issuer's description.

(d) The proxy statement shall indicate whether representatives of the principal accountants for the current year and for the most recently completed fiscal year are expected to be present at the stockholders' meeting with the opportunity to make a statement if they desire to do so and whether such representatives are expected to be available to respond to appropriate questions.

(e) If any change in accountants has taken place since the date of the proxy statement for the most recent annual meeting of shareholders, state whether such change was recommended or approved by:

(i) Any audit or similar committee of the board of directors, if the issuer has such a committee; or

(ii) The board of directors, if the issuer has no such committee.

(4) For the fiscal year most recently completed, describe each professional service provided by the principal accountant and state the percentage relationship which the aggregate of the fees for all nonaudit services bear to the audit fees, and, except as provided in this paragraph, state the percentage relationship which the fee for each nonaudit service bears to the audit fees. Indicate whether, before each professional service provided by the principal accountant was rendered, it was approved by, and the possible effect on the independence of the accountant was considered by:

(a) Any audit or similar committee of the board of directors; and

(b) For any service not approved by an audit or similar committee, the board of directors.

(5) Instructions:

(a) For purposes of paragraph (J) of this rule, all fees for services provided in connection with the audit function (e.g., reviews of quarterly reports) may be computed as part of the audit fees. Indicate which services are reflected in the audit fees computation.

(b) If the fee for any nonaudit services is less than three per cent of the audit fees, the percentage relationship need not be disclosed.

(c) Each service should be specifically described. Broad general categories such as "tax matters" or "management advisory services" are not sufficiently specific.

(d) Describe the circumstances and give details of any services provided by the issuer's independent accountant during the latest fiscal year that were furnished at rates or terms that were not customary.

(e) Describe any existing direct or indirect understanding or agreement that places a limit on the current or future years' audit fees, including fee arrangements that provide fixed limits on fees that are not subject to reconsideration if unexpected issues involving accounting or auditing are encountered. Disclosure of fee estimates is not required.

(K) Bonus, profit sharing, and other remuneration plans; pension and retirement plans.

If action is to be taken with respect to any bonus, profit sharing, or other remuneration plan, or any pension or retirement plan, furnish the following information:

(1) Describe briefly the material features of the plan, identify each class of persons who will participate therein, indicate the approximate number of persons in each such class, and state the basis of such participation.

(2) Furnish such information, in addition to that required by paragraphs (I) and (K) of this rule, as may be necessary to describe adequately the provisions already made pursuant to all bonus, profit sharing, pension, retirement, stock option, stock purchase, deferred compensation, or other remuneration or incentive plans, now in effect or in effect within the past five years, for:

(a) Each director or officer named in answer to paragraph (I)(2) of this rule who may participate in the plan to be acted upon;

(b) All present directors and officers of the issuer as a group, if any director or officer may participate in the plan; and

(3) If the plan to be acted upon can be amended otherwise than by a vote of stockholders, to increase the cost thereof to the issuer or to alter the allocation of the benefits as between the directors and officers on the one hand and employees on the other, state the nature of the amendments which can be so made.

(4) With regard to any bonus, profit sharing, or other remuneration plan, on which action is to be taken, furnish the following information.

(a) State separately the amounts which would have been distributable under the plan during the last fiscal year of the issuer:

(i) To directors and officers; and

(ii) To employees if the plan had been in effect.

(b) State the name and position with the issuer of each person specified in paragraph (I)(2) of this rule who will participate in the plan and the amount which each such person would have received under the plan for the last fiscal year of the issuer if the plan had been in effect.

(5) With regard to any pension or retirement plan on which action is to be taken, furnish the following information:

(a) 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;

(b) The estimated annual payments to be made for the benefit of:

(i) Directors and officers; and

(ii) Employees.

(c) The name and position with the issuer of each person specified in paragraph (I)(2) of this rule who will be entitled to participate in the plan;

(d) The amount which would have been paid or set aside by the issuer and its subsidiaries for the benefit of such person for the last fiscal year of the issuer if the plan had been in effect; and

(e) The amount of the annual benefits estimated to be payable to such person in the event of retirement at normal retirement date.

(6) Instructions:

(a) If action is to be taken with respect to the amendment or modification of an existing plan, the item shall be answered with respect to the plan as proposed to be amended or modified and indicate any material differences from the existing plan.

(b) The following instruction applies to paragraph (K)(2) of this rule:

(i) Information need only be given with respect to benefits received or set aside within the past five years.

(ii) Information need not be included as to payments made for, or benefits to be received from, group life or accident insurance, group hospitalization or similar group payments or benefits.

(iii) If action is to be taken with respect to any plan in which directors or officers may participate, the information called for by paragraph (I)(5) of this rule shall be furnished for the last five fiscal years of the issuer and any period subsequent to the end of the latest such fiscal year, in aggregate amounts for the entire period for such person and group. If any named person, or any other director or officer, purchased securities through the exercise of options during such period, state the aggregate amount of securities of that class sold during the period by such named person and such other directors and officers as a group. The information called for by these instructions is in lieu of the information since the beginning of the issuer's last fiscal year called for by paragraph (I)(5) of this rule. If employees may participate in the plan to be acted upon, state the aggregate amount of securities called for by all options granted to employees during the five-year period, and if the options were other than "incentive stock options" or options granted pursuant to an "employee stock purchase plan," as the quoted terms are defined in sections 422 to 423 (2017) and 424 (2018) of the Internal Revenue Code, state that fact and the weighted average option price per share. The information called for by these instructions may be furnished in the form of the table set forth in paragraph (I)(5) of this rule.

(c) If the plan to be acted upon is set forth in a written document, a copy thereof shall be filed with the superintendent of insurance at the time preliminary copies of the proxy statement and form of proxy are filed.

(d) The information called for by paragraph (K)(5) of this rule need not be given as to payments made on an actuarial basis pursuant to any group pension plan which provides for fixed benefits in the event of retirement at a specified age or after a specified number of years of service.

(L) Options, warrants, or rights. If action is to be taken with respect to the granting or extension of any options to purchase securities of the issuer or any subsidiary, furnish the following information:

(1) The title and amount of securities called for or to be called for by such options;

(2) The prices, expiration dates, and other material conditions upon which the options may be exercised;

(3) The consideration received or to be received by the issuer or subsidiary for the granting or extension of the options;

(4) The market value of the securities called for or to be called for by the options as of the latest practicable date; and

(5) In the case of options, the federal income tax consequences of the issuance and exercise of such option to the recipient and to the issuer.

(6) State separately the amount of options received or to be received by the following persons, naming each such person:

(a) Each director and officer named in answer to paragraph (I)(2) of this rule;

(b) Each nominee for election as a director of the issuer;

(d) Each other person who received or is to receive ten per cent or more of such options. State, also, the total amount of such options received or to be received by all directors and officers of the issuer as a group, without naming them.

(7) Furnish such information, in addition to that required by paragraphs (I) and (L) of this rule as may be necessary to describe adequately the provisions already made pursuant to all bonus, profit sharing, pension, retirement, stock option, stock purchase, deferred compensation, or other remuneration or incentive plans, now in effect or in effect within the past five years, for:

(a) Each director or officer named in answer to paragraph (I)(2) of this rule who may participate in the plan to be acted upon;

(b) All present directors and officers for the issuer as a group, if any director or officer may participate in the plan; and

(8) Instructions:

(a) For the purpose of paragraph (L) of this rule, the term "option" includes any option, warrant or right.

(b) Paragraphs (L)(2) and (L)(3) of this rule do not apply to warrants or rights to be issued to security holders as such on a pro rata basis.

(d) If the options described in answer to paragraph (L) of this rule are issued pursuant to a plan which is set forth in a written document, a copy thereof shall be filed with the superintendent of insurance at the time preliminary copies of the proxy statement and form of proxy are filed.

(M) Authorization or issuance of securities otherwise than for exchange.

If action is to be taken with respect to the authorization or issuance of any securities otherwise than for exchange for outstanding securities of the issuer, furnish the following information:

(1) State the title and amount of securities to be authorized or issued.

(2) If the securities are other than additional shares of 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; and interest rate and date of maturity.

(3) Describe briefly the transaction in which the securities are to be issued, including a statement as to:

(a) The nature and approximate amount of consideration received or to be received by the issuer; and

(b) The approximate amount devoted to each purpose, as far as is determinable, for which the net proceeds have been or are to be used. If it is impracticable to describe the transaction in which the securities are to be issued, state the reason, indicate the purpose of the authorization of the securities, and state whether further authorization for the issuance of the securities by a vote of security holders will be solicited prior to such issuance.

(4) If the securities are to be issued otherwise than in a general public offering for cash, state the reasons for the proposed authorization or issuance and the general effect thereof upon the rights of existing security holders.

(N) Modification or exchange of securities.

If action is to be taken with respect to the modification of any class of securities of the issuer, or the issuance or authorization for issuance of securities of the issuer in exchange for outstanding securities of the issuer, furnish the following information:

(1) If the outstanding securities are to be modified, state the title and amount thereof. If securities are to be issued in exchange for outstanding securities, state the title and amount of securities to be so issued, the title and amount of outstanding securities to be exchanged therefor and the basis of the exchange.

(2) Describe any material differences between the outstanding securities and the modified or new securities.

(3) State the reasons for the proposed modification or exchange and the general effect thereof upon the rights of existing security holders.

(4) Furnish a brief statement as to arrears in dividends or as to defaults in principal or interest with respect to the outstanding securities which are to be modified or exchanged and such other information as may be appropriate in the particular case to disclose adequately the nature and effect of the proposed action.

(5) Outline briefly any other material features of the proposed modification or exchange. If the plan of proposed action is set forth in a written document, file copies thereof with the superintendent of insurance at the time the preliminary proxy material is filed.

(O) Mergers, consolidations, acquisitions, and similar matters.

(1) Furnish the following information if action is to be taken with respect to any plan for:

(a) The merger or consolidation of the issuer;

(b) The acquisition by the issuer or any of its security holders of securities of another person;

(d) The sale or other transfer of all or any substantial part of the assets of the issuer; or

(e) The liquidation or dissolution of the issuer.

(2) Outline briefly the material features of the plan. State the reasons therefor and the general effect thereof upon the rights of existing security holders. If the plan is set forth in a written document, file a copy thereof with the superintendent of insurance at the time preliminary copies of the proxy statement and form of proxy are filed.

(3) Furnish the following information as to the issuer and each person which is to be merged into the issuer or into or with which the issuer is to be merged or consolidated or the business or assets of which are to be acquired or which is the issuer of securities to be acquired by the issuer in exchange for all or a substantial part of its assets or to be acquired by security holders of the issuer. What is required is information essential to an investor's appraisal of the action proposed to be taken.

(a) Describe briefly the business of such person.

(b) State the location and describe the general character of the plants and other important physical properties of such person. The description is to be given from an economic and business standpoint, as distinguished from a legal standpoint. Portfolio or investment assets of an issuer need not be disclosed.

(c) Furnish a brief statement as to dividends in arrears or defaults in principal or interest in respect of any securities of the issuer or of such person, and as to the effect of the plan thereon and such other information as may be appropriate in the particular case to disclose adequately the nature and effect of the proposed action.

(d) Furnish a tabulation in columnar form showing the existing and the pro forma capitalization.

(e) Furnish in columnar form for each of the last five fiscal years an historical summary of earnings and show per-share amounts of net earnings, dividends declared for each year, and book value per share at the end of the latest period.

(f) Furnish in columnar form for each of the last five fiscal years a combined pro forma summary of earnings, as appropriate in the circumstances, indicating the aggregate and per-share earnings for each such year and the pro forma book value per share at the end of the latest period. If the transaction establishes a new basis of accounting for assets of any of the persons included therein, the pro forma summary of earnings shall be furnished only for the most recent fiscal year and interim period and shall reflect appropriate pro forma adjustments resulting from such new basis of accounting.

(g) To the extent material for the exercise of prudent judgment in regard to the matter to be acted upon, furnish the historical and pro forma earnings data specified in paragraphs (G) and (H) of this rule for interim periods of the current and prior fiscal years, if available.

(4) Instructions:

Paragraphs (O)(2) and (O)(3) of this rule do not apply if the plan described in answer to paragraph (O)(1) of this rule involves only the issuer and one or more of its wholly owned subsidiaries. As to each class of securities of the issuer, or of any person specified in paragraph (O)(2) of this rule, which is admitted to dealing on a national securities exchange or with respect to which a market otherwise exists, and which will be materially affected by the plan, state the high and low sale prices (or, in the absence of trading in a particular period, the range of the bid and asked prices) for each quarterly period within two years. This information may be omitted if the plan involves only the liquidation or dissolution of the issuer.

(P) Financial statements.

(1) If action is to be taken with respect to any matter specified in paragraph (M), (N), or (O) of this rule, financial statements of the issuer and its subsidiaries complying with the requirements of paragraphs (D)(1), (D)(2), and (D)(3) of rule 3901-2-04 of the Administrative Code shall be furnished, including schedules of supplementary profit and loss information. Such statements may be omitted with respect to a plan described in answer to paragraph (O) of this rule if the plan involves only the issuer and one or more of its wholly owned subsidiaries.

(2) If action is to be taken with respect to any matter specified in paragraph (O) of this rule, furnish for each person specified therein, other than the issuer, financial statements complying with the requirements of paragraphs (D)(1), (D)(2), and (D)(3) of rule 3901-2-04 of the Administrative Code.

(3) The superintendent of insurance may, upon the request of the issuer, permit the omission of any of the statements herein required where such statements are not necessary for the exercise of prudent judgment in regard to any matter to be acted upon, or may permit the filing in substitution therefor of appropriate statements of comparable character. The superintendent of insurance may also require the filing of other statements in addition to, or in substitution for, the statements herein required in any case where such statements are necessary or appropriate for an adequate presentation of the financial condition of any person whose financial statements are required, or whose statements are otherwise material for the exercise of prudent judgment in regard to any matter to be acted upon. In the usual case, financial statements are deemed material to the exercise of prudent judgment where the matter to be acted upon is the authorization or issuance of a material amount of senior securities, but are not deemed material where the matter to be acted upon is the authorization or issuance of common stock, otherwise than in an exchange, merger or consolidation, acquisition, or similar transaction.

(4) The proxy statement may incorporate by reference any financial statements contained in an annual report sent to security holders with respect to the same meeting as that to which the proxy statement relates, provided such financial statements substantially meet the requirements of this item.

(Q) Acquisition or disposition of property.

If action is to be taken with respect to the acquisition or disposition of any property, furnish the following information:

(1) Describe briefly the general character and location of the property.

(2) State the nature and amount of consideration to be paid or received by the issuer or any subsidiary. To the extent practicable, outline briefly the facts bearing upon the question of the fairness of the consideration.

(3) State the name and address of the transferor or transferee as the case may be, and the nature of any material relationship of such person to the issuer or an affiliate of the issuer.

(4) Briefly outline any other material features of the contract or transaction.

(R) Restatement of accounts.

If action is to be taken with respect to the restatement of any asset, capital, or surplus account of the issuer, furnish the following information:

(1) State the nature of the restatement and the date as of which it is to be effective.

(2) Briefly outline the reasons for the restatement and for the selection of the particular effective date.

(3) State the name and amount of each account (including any reserve accounts) affected by the restatement and the effect of the restatement thereon. Tabular presentation of the amounts shall be made when appropriate, particularly in the case of recapitalization.

(4) To the extent practicable, state whether and the extent, if any, to which the restatement will, as of the date thereof, alter the amount available for distribution to the holders of equity securities.

(S) Action with respect to reports.

If action is to be taken with respect to any report of the issuer or of its directors, officers, or committees or any minutes of meetings of its stockholders, furnish the following information:

(1) State whether such action is to constitute approval or disapproval of any of the matters referred to in such reports or minutes.

(2) Identify each of such matters which it is intended will be approved or disapproved and furnish the information required by the appropriate item or items of this schedule with respect to each such matter.

(T) 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 security holders, state the nature of such matter, the reason for submitting it to a vote of security holders, and what action is intended to be taken by the management in the event of a negative vote on the matter by the security holders.

(U) Amendment of charter, bylaws, or other documents.

(1) If action is to be taken with respect to any amendment of the issuer's charter, bylaws, or other documents as to which information is not required by this rule, state briefly the reasons for and general effect of such amendment.

(2) Where the matter to be acted upon is the classification of directors, state whether vacancies which occur during the year may be filled by the board of directors to serve only until the next annual meeting or may be so filled for the remainder of the full term.

(V) Other proposed action.

If action is to be taken with respect to any matter not specifically referred to in this rule, describe briefly the substance of each such matter in substantially the same degree of detail as is required by paragraphs (G) to (U) of this rule.

(W) Vote required for approval.

As to each matter which is to be submitted to a vote of security holders, other than election to office or the selection or approval of auditors, state the vote required for its approval.

(X) Severability

View AppendixView AppendixView Appendix

Last updated November 14, 2024 at 8:51 AM

History

Effective: November 14, 2024
Promulgated Under: 119.03

Ohio Adm.Code 3901-2-07

(A) Purpose

The purpose of this rule is to identify the form of proxy, proxy statement, or solicitation material that should be filed with the superintendent of insurance when such form of proxy, proxy statement, or solicitation material is subject to Chapter 3901-2 of the Administrative Code.

(B) Authority

This rule is promulgated pursuant to the authority vested in the superintendent under sections 3901.041 and 3901.31 of the Revised Code.

(C) A preliminary copy of the proxy statement and any other soliciting material to be furnished to security holders concurrently therewith (or the information statement pursuant to rule 3901-2-15 of the Administrative Code) shall be filed with the superintendent of insurance at least ten days prior to the date definitive copies of such material are first sent or given to security holders, or such shorter period prior to that date as the superintendent of insurance may authorize upon a showing of good cause therefor.

(D) A preliminary copy of any additional soliciting material relating to the same meeting or subject matter to be furnished to security holders subsequent to the proxy statement shall be filed with the superintendent of insurance at least two days (exclusive of Saturdays, Sundays and holidays) prior to the date copies of such material are first sent or given to security holders, or such shorter period prior to such date as the superintendent of insurance may authorize upon a showing of good cause therefor.

(E) A definitive copy of the proxy statement, form of proxy and all other soliciting material (or the information statement) in the form in which such material is furnished to security holders, shall be filed with, or mailed for filing to, the superintendent of insurance no later than the date such material is first sent or given to any security holder.

(F) Copies of replies to inquiries from security holders requesting further information and copies of communications that do no more than request that forms of proxy theretofore solicited be signed and returned need not be filed.

(G) Notwithstanding the provisions of paragraphs (C) and (D) of this rule and of paragraph (G) of rule 3901-2-12 of the Administrative Code, copies of soliciting material in the form of speeches, press releases and radio or television scripts may, but need not, be filed with the superintendent of insurance prior to use or publication. Definitive copies, however, shall be filed with or mailed for filing to the superintendent of insurance as required by paragraph (E) of this rule not later than the date such material is used or published. The provisions of paragraphs (C) and (D) of this rule and of paragraph (G) of rule 3901-2-12 of the Administrative Code shall apply, however, to any reprints or reproductions of all or any part of such material.

(H) Where any proxy statement, form of proxy or other material filed pursuant to this rule is amended or revised, one of the copies of such amended or revised material filed pursuant to this rule shall be marked to indicate clearly and precisely the changes effected therein.

(I) Severability

Last updated November 14, 2024 at 8:50 AM

History

Effective: November 14, 2024
Promulgated Under: 119.03

Ohio Adm.Code 3901-2-05 Requirements as to proxy.

(A) Purpose

The purpose of this rule is to set forth information that should be included in a form of proxy, proxy statement, or solicitation that is subject to Chapter 3901-2 of the Administrative Code.

(B) Authority

This rule is promulgated pursuant to the authority vested in the superintendent under sections 3901.041 and 3901.31 of the Revised Code.

(1) Indicate in bold face type whether the proxy is solicited on behalf of the issuer's board of directors, and, if not, by whom it is solicited;

(2) Provide a specifically designated blank space for dating the proxy; and

(3) Identify clearly and impartially each matter or group of related matters intended to be acted upon, whether proposed by the issuer or by security holders. No references need be made to proposals as to which discretionary authority is conferred pursuant to paragraph (E) of this rule.

(D) Ballot and authority to vote

(1) A method shall be provided in the form of proxy whereby the person solicited is afforded an opportunity to specify by ballot a choice between approval or disapproval of, or abstention with respect to, each matter or group of related matters referred to therein as intended to be acted upon, other than elections to office. A proxy may confer discretionary authority with respect to matters as to which a choice is not so specified, provided the form of proxy states in bold face type how it is intended to vote the shares represented by the proxy in each such case.

(2) A form of proxy which provides both for the election of directors and for action on other specified matters shall be prepared so as to provide clearly by a box or otherwise, means by which the security holder may withhold authority to vote for any nominee for election as a director. Any such form of proxy which is executed by the security holder in such manner as not to withhold authority to vote for the election of all nominees grants such authority for all nominees for which a vote is not withheld, provided the form of proxy so states in bold face type.

(E) A proxy may confer discretionary authority to vote with respect to any of the following matters:

(1) Matters which the persons making the solicitation do not know, a reasonable time before the solicitation, are to be presented at the meeting, if a specific statement to that effect is made in the proxy statement or form of proxy;

(2) Approval of the minutes of the prior meeting if such approval does not amount to ratification of the action taken at that meeting;

(3) The election of any person to any office for which a bona fide nominee is named in the proxy statement and such nominee is unable to serve or for good cause will not serve;

(4) Any proposal omitted from the proxy statement and form of proxy pursuant to rule 3901-2-09 of the Administrative Code; or

(5) Matters incident to the conduct of the meeting.

(F) No proxy confers authority to:

(1) Vote for the election of any person to any office for which a bona fide nominee is not named in the proxy statement; or

(2) 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 form of proxy are first sent or given to security holders. A person is not deemed to be a bona fide nominee and is not to be named as such unless the nominee has consented to being named in the proxy statement and to serve if elected.

(G) The proxy statement or form of proxy shall provide, subject to reasonable specified conditions, that the securities represented by the proxy will be voted, and that where the person solicited specifies by means of a ballot provided pursuant to paragraph (C) of this rule, choice with respect to any matter to be acted upon, the securities will be voted in accordance with specifications so made.

(H) Severability

Last updated November 14, 2024 at 8:49 AM

History

Effective: November 14, 2024
Promulgated Under: 119.03

Ohio Adm.Code 3901-2-09

(A) Purpose

The purpose of this rule is to identify the manner in which a proponent may present to security holders a proposal in a form of proxy or proxy statement that is subject to Chapter 3901-2 of the Administrative Code.

(B) Authority

This rule is promulgated pursuant to the authority vested in the superintendent under sections 3901.041 and 3901.31 of the Revised Code.

(C) If any holder or holders of the securities of an issuer (hereafter referred to as the "proponent") notifies the issuer in writing not less than ninety days before the issuer's annual meeting of the proponent's intention to present a lawful proposal for action at a forthcoming meeting of the issuer's security holders and at the time of such notice the proponent is entitled to vote on such proposal, the issuer shall set forth the proposal in its proxy statement, identify it in its form of proxy and provide for the specification of approval or disapproval, and include the name and address of the proponent.

(D) If the issuer opposes any proposal received from a proponent, at the request of the proponent, the issuer shall include in its proxy statement a statement of the proponent of not more than two hundred words in support of the proposal.

(E) The issuer may omit a proposal and any statement in support thereof from its proxy statement and form of proxy under any of the following circumstances:

(1) The proponent has submitted more than one proposal in connection with a particular meeting.

(2) The proposal is more than three hundred words in length.

(3) The proposal or the supporting statement is contrary to any rule contained in this chapter, including rule 3901-2-10 of the Administrative Code, which prohibits false or misleading statements in proxy soliciting materials.

(4) The proposal relates to the enforcement of a personal claim or the redress of a personal grievance against the issuer, its management, or any other person.

(5) The proposal deals with a matter not significantly related to the issuer's business, a matter beyond the issuer's power to effectuate, a matter relating to the conduct of the ordinary business operations of the issuer, or an election to office.

(6) The proposal is counter to a proposal to be submitted by the issuer at the meeting, the proposal has been rendered moot, or the proposal relates to specific amounts of cash or stock dividends.

(7) The proposal is substantially duplicative of a proposal previously submitted to the issuer by another proponent, which proposal will be included in the management's proxy material for the meeting.

(8) Substantially the same proposal has previously been submitted to security holders in the issuer's proxy statement and form of proxy relating to any annual or special meeting of security holders held within the preceding five calendar years and received less than five per cent of the total number of votes cast in respect thereof at the time of its most recent submission.

(F) If the issuer intends to omit any proposal from its proxy statement and/or forms of proxy, it shall notify the proponent in writing of its intention at least ten days before the issuer's preliminary proxy material is filed pursuant to paragraph (C) of rule 3901-2-07 of the Administrative Code.

(G) Severability

Last updated November 14, 2024 at 8:50 AM

History

Effective: November 14, 2024
Promulgated Under: 119.03

Ohio Adm.Code 3901-2-06 Presentation of information in proxy statement.

(A) Purpose

The purpose of this rule is to set forth the manner in which information should be presented in a form of proxy, proxy statement, or solicitation subject to Chapter 3901-2 of the Administrative Code.

(B) Authority

This rule is promulgated pursuant to the authority vested in the superintendent under sections 3901.041 and 3901.31 of the Revised Code.

(C) The information included in the proxy statement shall be clearly presented and divided into groups according to the subject matter with appropriate headings.

(D) All proxy statements shall disclose, under an appropriate caption, the date by which proposals of security holders intended to be presented at the next annual meeting must be received by the issuer for inclusion in the issuer's proxy statement and form of proxy relating to that meeting, such date to be calculated in accordance with the provisions of paragraph (C) of rule 3901-2-09 of the Administrative Code. If the date of the next annual meeting is subsequently advanced by more than thirty calendar days or delayed by more than ninety calendar days from the date of the annual meeting to which the proxy statement relates, the issuer shall, in a timely manner, inform security holders, by any means reasonably calculated to so inform them, of such change, and the date by which proposals of security holders must be received.

(E) Severability

Last updated November 14, 2024 at 8:50 AM

History

Effective: November 14, 2024
Promulgated Under: 119.03

Ohio Adm.Code 3901-2-12

(A) Purpose

The purpose of this rule is to set forth the manner and form of solicitations that are subject to Chapter 3901-2 of the Administrative Code for election contests.

(B) Authority

This rule is promulgated pursuant to the authority vested in the superintendent under sections 3901.041 and 3901.31 of the Revised Code.

(C) This rule applies to any solicitation subject to Chapter 3901-2 of the Administrative Code by any person or group for the purpose of opposing a solicitation subject to Chapter 3901-2 of the Administrative Code by any other person or group with respect to the election or removal of directors at any annual or special meeting of security holders.

(D) Participant or participant in a solicitation.

(1) For purposes of this rule, the terms "participant" and "participant in a solicitation" mean:

(a) The issuer;

(b) Any director of the issuer, and any nominee for whose election as a director proxies are solicited; or

(c) Any other person, acting alone or with one or more other persons, committees or groups, in organizing, directing, or financing the solicitation.

(2) For the purpose of this rule, the terms "participant" and "participant in a solicitation" do not include:

(a) A bank, broker, or dealer who, in the ordinary course of business, lends money or executes orders for the purchase or sale of securities and who is not otherwise a participant;

(b) Any person or organization retained or employed by a participant to solicit security holders 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, advertising, public relations, or financial adviser, and whose activities are limited to the performance of that person's duties in the course of such employment;

(d) Any person regularly employed as an officer or employee of the issuer 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 such officer, director, or employee is not otherwise a participant.

(E) Filing of information required by rule 3901-2-14 of the Administrative Code.

(1) No solicitation subject to this rule may be made by any person other than the issuer unless at least five business days prior thereto, or such shorter period as the superintendent of insurance may authorize upon a showing of good cause therefor, there has been filed with the superintendent of insurance, by or on behalf of each participant in such solicitation other than the issuer, a statement containing the information specified by rule 3901-2-14 of the Administrative Code.

(2) Within five business days after a solicitation subject to this rule is made by the issuer, or such longer period as the superintendent of insurance may authorize upon a showing of good cause therefor, there shall be filed with the superintendent of insurance, by or on behalf of each participant in such solicitation other than the issuer, a statement containing the information specified by rule 3901-2-14 of the Administrative Code.

(3) If any solicitation on behalf of the issuer or any other person has been made, or if proxy material is ready for distribution, prior to a solicitation subject to this rule in opposition thereto, a statement containing the information specified in rule 3901-2-14 of the Administrative Code shall be filed with the superintendent of insurance, by or on behalf of each participant in such prior solicitation, other than the issuer, as soon as reasonably practicable after the commencement of the solicitation in opposition thereto.

(4) If, subsequent to the filing of the statements required by paragraphs (C), (D), and (E) of this rule, additional persons become participants in a solicitation subject to this rule, there shall be filed with the superintendent of insurance, by or on behalf of each such person, a statement containing the information specified by rule 3901-2-14 of the Administrative Code, within three business days after such person becomes a participant, or such longer period as the superintendent of insurance may authorize upon a showing of good cause therefor.

(5) If any material change occurs in the facts reported in any statement filed by or on behalf of any participant, an appropriate amendment to such statement shall be filed promptly with the superintendent of insurance.

(6) Each statement and amendment thereto filed pursuant to paragraph (E) of this rule shall be part of the public files of the superintendent of insurance.

(F) Solicitations prior to furnishing required written proxy statement.

Notwithstanding the provisions of paragraph (C) of rule 3901-2-04 of the Administrative Code, a solicitation subject to this rule may be made prior to furnishing security holders a written proxy statement containing the information specified in rule 3901-2-13 of the Administrative Code with respect to such solicitation, provided that:

(1) The statements required by paragraph (E) of this rule are filed by or on behalf of each participant in such solicitation.

(2) No form of proxy is furnished to security holders prior to the time the written proxy statement required by paragraph (C) of rule 3901-2-04 of the Administrative Code is furnished to such persons, provided that this paragraph does not apply where a proxy statement then meeting the requirements of rule 3901-2-13 of the Administrative Code has been furnished to security holders.

(3) At least the information specified in paragraphs (E)(2) and (E)(3) of this rule to be filed by each participant, or an appropriate summary thereof, are included in each communication sent or given to security holders in connection with the solicitation.

(4) A written proxy statement containing the information specified in rule 3901-2-13 of the Administrative Code with respect to a solicitation is sent or given security holders at the earliest practicable date.

(G) Solicitations prior to furnishing required written proxy statement - filing requirements.

A copy of any soliciting materials proposed to be sent or given to security holders prior to the furnishing of the written proxy statement required by paragraph (C) of rule 3901-2-04 of the Administrative Code shall be filed with the superintendent of insurance in preliminary form at least five business days prior to the date definitive copies of such material are first sent or given to such persons, or such shorter period as the superintendent of insurance may authorize upon a showing of good cause therefor.

(H) Notwithstanding the provisions of paragraph (D)(3) of rule 3901-2-04 of the Administrative Code, a copy of any portion of the annual report referred to in paragraph (D) of rule 3901-2-04 of the Administrative Code which comments upon or refers to any solicitation subject to this rule or to any participant in any such solicitation, other than the solicitation by the management, shall be filed with the superintendent of insurance as proxy material subject to this rule. Such portion of the report shall be filed with the superintendent of insurance, in preliminary form, at least five business days prior to the date copies of the report are first sent or given to security holders.

(I) Severability

Last updated November 14, 2024 at 8:51 AM

History

Effective: November 14, 2024
Promulgated Under: 119.03

Ohio Adm.Code 3901-2-11 Prohibition of certain solicitations.

(A) Purpose

The purpose of this rule is to prohibit any person from soliciting an undated or postdated proxy statement that is subject to Chapter 3901-2 of the Administrative Code.

(B) Authority

This rule is promulgated pursuant to the authority vested in the superintendent under sections 3901.041 and 3901.31 of the Revised Code.

(C)

No person making a solicitation that is subject to this chapter may solicit any undated or postdated proxy or any proxy which provides that it is deemed to be dated as of any date subsequent to the date on which it is signed by the security holder.

(D) Severability

Last updated November 14, 2024 at 8:51 AM

History

Effective: November 14, 2024
Promulgated Under: 119.03

Ohio Adm.Code 3901-2-14

(A) Purpose

The purpose of this rule is to set forth information that should be included in a proxy solicitation subject to Chapter 3901-2 of the Administrative Code filed by or on behalf of a participant in an election contest.

(B) Authority

This rule is promulgated pursuant to the authority vested in the superintendent under sections 3901.041 and 3901.31 of the Revised Code.

State the name and address of the issuer.

(D) Identity and background

(1) State the following:

(a) Your name and business address.

(b) 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.

(d) Information as to all material occupations, positions, offices, or employment 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.

(2) State whether 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.

(3) State whether, 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 paragraph need not be included in the proxy statement or other proxy soliciting material.

(E) Interest in securities of the issuer

(1) State the amount of each class of securities of the issuer which you own beneficially, directly or indirectly.

(2) State the amount of each class of securities of the issuer which you own of record but not beneficially.

(3) State, with respect to all securities of the issuer purchased or sold within the past two years, the dates on which they were purchased or sold and the amount purchased or sold on each such date.

(4) If any part of the purchase price or market value of any of the securities specified in paragraph (E) of this rule is represented by funds borrowed or otherwise obtained for the purpose of acquiring or holding such securities, 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.

(5) State whether you are a party to any contracts, arrangements, or understandings with any person with respect to any securities of the issuer including but not limited to joint ventures, loan or option arrangements, puts or calls, guarantees against losses or guarantees of profits, divisions of losses or profits, or the giving or withholding of proxies. If so, name the persons with whom such contracts, arrangements, or understandings exist and give the details thereof.

(6) State the amount of securities of the issuer owned beneficially, directly or indirectly, by each of your associates and the name and address of each such associate.

(7) State the amount of each class of securities of any parent, subsidiary, or affiliate of the issuer which you own beneficially, directly or indirectly.

(F) Further matters

(1) 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 as a participant.

(2) Describe briefly, and where practicable state the approximate amount of, any material interest, direct or indirect, of yourself and 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.

(3) State whether you or any of your associates have any arrangement or understanding with any person:

(a) With respect to any future employment by the issuer or its subsidiaries or affiliates; or

(b) With respect to any future transactions to which the issuer or any of its subsidiaries or affiliates will or may be a party; and

(G) 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)"

(H) Severability

Last updated November 14, 2024 at 8:52 AM

History

Effective: November 14, 2024
Promulgated Under: 119.03

Chapter 3901-3 Acquisitions and Mergers; Insurance Holding Company Systems

Ohio Adm.Code 3901-3-01 Requirement for approval of the proposed acquisition of control of or merger with a domestic insurer.

(A) Purpose

The purpose of this rule is to establish the content of and form to be used in the application for approval of the proposed transaction with an insurer domiciled in this state. Section 3901.321 of the Revised Code requires any person who wishes to engage in any transaction described in division (B)(1) of section 3901.321 of the Revised Code to file with the superintendent an information statement (hereinafter called "form A").

(B) Authority

This rule is promulgated pursuant to the authority vested in the superintendent under sections 3901.321 and 3901.041 of the Revised Code.

In addition to the information expressly required to be included in form A, there shall be added such further material information, if any, as may be necessary to make the information contained therein not misleading. The superintendent reserves the right to request other information or documentation that in the superintendent's sole discretion is deemed necessary or appropriate for the protection of policyholders of the domestic insurer or in the public interest.

(D) Exhibits

Applicants may file supplemental exhibits as desired in addition to those expressly required by form A. Exhibits shall clearly indicate the subject matter to which they refer.

(E) Amendments or modifications

Applicants shall promptly advise the superintendent of any changes in the information furnished on form A arising subsequent to the date upon which the information was furnished.

(F) Definitions

Terms found in this regulation are used as defined in the Insurance Holding Company Systems Regulatory Act, sections 3901.32 to 3901.37 of the Revised Code, and rule 3901-3-02 of the Administrative Code.

(G) General requirements

Applicants must file the information statement in the exact form as set forth in paragraph (H) of this rule. The statement shall contain the numbers and captions of all items. If the answer to any item is in the negative, an appropriate statement to that effect shall be made. The information statement, including exhibits and all other documents filed as a part thereof, shall be filed with the superintendent in physical or electronic form. The information statement, including exhibits and all other documents filed as a part thereof shall be clear, easily readable and in the English language with monetary values stated in United States currency. If any exhibit or document filed 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 shall be converted into United States currency.

(H) Information to be included in form A.

"Form A

Statement regarding the acquisition of control of or merger with a domestic insurer

Name of domestic insurer

Name and address of acquiring person

Filed with the insurance department of

(State of domicile of insurer being acquired)

Dated: ___________________________, 20

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 of 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 and 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 which is owned or controlled by the applicant or by any other such person. If control of any person 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. If court proceedings involving a reorganization or liquidation are pending with respect to any such person, indicate which person, and 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

(1) Identify the applicant if the applicant is an individual or, if the applicant is not an individual, all persons who are directors, executive officers or owners of ten per cent or more of the voting securities of the applicant.

(2) Each individual applicant or all persons who are directors, executive officers or owners of ten per cent or more of the voting securities of the applicant shall complete a biographical affidavit and authority for release of information that is prescribed for such use by the superintendent.

Item 4. Nature, source and amount of consideration

(A) Describe the nature, source and amount of funds or other consideration used or to be used in effecting the proposed transaction. If any part of the consideration is or is to be 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 (whether direct or indirect), between the borrower and the lender, the amounts borrowed or to be borrowed, and copies of all agreements, understanding, promissory notes and security arrangements relating thereto. If the stock or any asset of the domestic insurer is to be pledged or hypothecated in any way, so describe and provide a copy of the agreement or arrangement.

(B) Explain the criteria used in determining the nature and amount of such consideration.

Item 5. Future plans of insurer

(1) Describe any contemplated or actual plans or proposals which the applicant may have to: cause the insurer to declare dividends, liquidate or dissolve the insurer, sell any asset of the insurer, enter into any rental, leasing, service or financial, or other arrangements with the insurer, or merge/reorganize the insurer with any person or persons. Provide terms and conditions of all applicable arrangements to the transaction.

(2) Provide a plan of operation for the domestic insurer for three years following consummation of the proposed transaction including: type of business to be written, amount of anticipated premiums, investment policy, marketing plans, relocation of home office or of corporate records and changes in reinsurance or reinsurers.

(3) Describe all changes planned to be made after consummation of the proposed transaction concerning the board of directors or executive officers of the domestic insurer and those of the organization which will succeed the latter as a result of the proposed transaction. Describe the nature, extent and amount of any commitments to or agreements or understandings with the present officers and directors of the domestic insurer. Attach copies of all contemplated or actual contracts, commitments, agreements or understandings for: employment, consultation, advice, management or services.

(4) Provide pro forma balance sheets and income statements of the insurer prepared in accordance with statutory accounting principles, for three years following consummation of the proposed transaction. If any part of the consideration for the proposed transaction involves borrowed funds, describe debt service in detail. If any part of the consideration is to be obtained from or financed by an affiliate of the applicant, identify the source of funds and describe the method of distribution.

(5) If the insurer will be a member of an insurance holding company system following consummation of the proposed transaction, provide the following:

(a) A pro forma balance sheet and income statement showing the effect of the proposed transaction, prepared on a consolidated and applicant-only basis.

(b) If the applicant is an insurer actively engaged in the business of insurance, the statements shall be prepared in accordance with statutory accounting principles.

(c) If the applicant is not an insurer actively engaged in the business of insurance, the statements shall be prepared in accordance with generally accepted accounting principles.

(6) State the amount of premiums written by the domestic insurer and all affiliates for each line of business transacted in Ohio, as of the thirty-first day of December next preceding. State the amount of premiums written by the applicant and all affiliates for each line of business transacted in Ohio, as of the thirty-first day of December next preceding.

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, plans to acquire. Describe the terms of the offer, request, invitation, agreement or acquisition. State the method used to determine the fairness of the proposal.

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

Fully describe any contracts, arrangements 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. Identify the persons with whom such contracts, arrangements or understandings have been entered.

File as exhibits copies of all tender offers for, requests or invitations for, tenders of, exchange offers for, and agreements to acquire or exchange any voting securities of the insurer and, if distributed, of additional soliciting material relating thereto and annual reports to the stockholders of the insurer and applicant for the last two fiscal years.

Item 9. Recent purchases of voting securities

Describe any purchases of any voting securities of the insurer by the applicant, its affiliates or any person listed in item 3 during the twelve calendar months preceding the filing of this statement. Include in the description the dates of purchase, the names of the purchasers, and the consideration paid or agreed to be paid therefore. State whether any such shares are pledged or 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 twelve 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

(A) Financial statements shall be attached to this statement as exhibits. However, list under this item the financial statements so attached.

(B) The financial statements shall include: (1) 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 of its predecessors shall have been in existence and (2) 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 superintendent otherwise requires, on a consolidated basis, if the consolidated statements are prepared in the usual course of business.

(C) 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 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 applicant is an insurer which is actively engaged in the business of insurance, the financial statements must be based on the annual statement of such person filed with the insurance department of the person's domiciliary state and be in accordance with the requirements of insurance or other accounting principles prescribed or permitted under the law and regulations of such state.

Item 13. Corporate authority

If the applicant is not an individual, file a certified copy of:

(1) The resolution of the board of directors of the applicant approving the transaction and directing that the agreement underlying the transaction be submitted to a vote of the shareholders, members or policyholders entitled to vote on the matter.

(2) The resolution of the shareholders, members or policyholders of the applicant approving the transaction.

Item 14. Notice to domestic insurer

State whether the applicant has sent a copy of form A to the domestic insurer.

Item 15. Signature and certification

Signature and certification required as follows:

Signature

Pursuant to the requirements of section 3901.321 of the Revised Code ________________ has caused this application to be duly signed on its behalf in the city of ______________ and state of______________ on the ___________ day of ____, 20.

Name of applicant

| By: _____________________________, | its: _____________________________ | | --- | --- | | (Name) | | | Attest: | | | ________________________________, | ________________________________ | | (Signature of officer) | (Title) |

Certification

The undersigned deposes and says that the undersigned has duly executed the attached application dated _____________, 20, for and on behalf of _________________________(Name of applicant), and that the undersigned is authorized to execute and file such instrument. Deponent further says that the undersigned is the ________________________ of such company and that the undersigned is familiar with such instrument and the contents thereof, and that the facts therein set forth are true to the best of the undersigned's knowledge, information and belief.

| | (Signature) ___________________________ | | --- | --- | | | ____________________________________ | | | (Type or print name) | | | | | State of _______________________ ) | | | | ss | | County of _____________________ ) | | | | |

The foregoing instrument was acknowledged before me this___________ day of __________, 20.

Notary public"

(I) Severability

Last updated March 2, 2026 at 8:33 AM

History

Effective: February 28, 2026
Promulgated Under: 119.03

Ohio Adm.Code 3901-3-02

(A) Purpose

The purpose of this rule is to interpret certain terms, establish standards, and to promulgate forms to be adhered to in the regulation and registration of insurers authorized to do business in this state.

(B) Authority

This rule is promulgated pursuant to the authority vested in the superintendent under section 3901.041 of the Revised Code. Sections 3901.32 to 3901.37 of the Revised Code, provide for the regulation and registration of insurance holding company systems.

(1) "Executive officer" means any individual charged with active management and control, in an executive capacity, including a president, vice president, treasurer, secretary, controller, and any other individual performing for a person, whether incorporated or unincorporated, functions corresponding to those performed by the foregoing officers.

(2) "Ultimate controlling person" means that person within an insurance holding company system which is not controlled by any other person.

(3) "Insurer" as defined in division (G) of section 3901.32 of the Revised Code includes, but is not limited to, domestic, foreign, and alien stock or mutual insurance companies, mutual protective insurance associations, fraternal benefit societies, risk retention groups domiciled in this state as described in division (A) of section 3960.02 of the Revised Code, reciprocals, title guarantee and trust companies, health insuring corporations, and any other persons engaged either directly or indirectly in this state in the business of insurance which is subject to regulation by the superintendent of insurance.

(4) "Applicant" means a person or persons seeking to control an insurer.

(5) All other terms used herein shall have the same meanings prescribed in section 3901.32 of the Revised Code unless the context otherwise requires. Other nomenclature or terminology is according to the Revised Code, or insurance usage if not defined by the Revised Code.

(D) Registration of insurer--statement filing

An insurer required to file a registration statement or an amendment thereto pursuant to section 3901.33 of the Revised Code shall furnish the required information on form B as outlined in paragraph (M) of this rule.

(E) Amendments

(1) Form B is the annual registration statement to be filed annually by the registered insurer on or before June one, each year after the initial registration. Such annual filing shall restate the form B and make current all information in the form B, including amendments filed during the current reporting year.

(2) An amendment to form B shall be filed within fifteen days after the end of any month in which the following occurs:

(a) There is a change in the control of the registered insurer, in which case the entire form B shall be made current;

(b) There is a material change in or addition to the information given in item 5 or item 6 of form B.

(F) Alternative and consolidated registrations

(1) Any insurer authorized to do business in this state may file a registration statement on behalf of any affiliated insurer or insurers which are required to register under section 3901.33 of the Revised Code. Such registration statement may include information regarding any insurer in the insurance holding company system even if such insurer is not authorized to do business in this state. In lieu of filing a registration statement on form B, an insurer authorized to do business in this state may file a copy of the registration statement or similar report which it is required to file in its state 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.

(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 simple 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.

(3) With the prior approval of the superintendent, an insurer not authorized to do business in this state may follow any of the procedures which could be done by an insurer authorized to do business in this state under paragraph (F)(1) of this rule.

(4) Two or more affiliated insurers subject to registration may file a consolidated registration statement or consolidated reports amending their consolidated registration statement or their individual registration statements. The superintendent, however, reserves the right to require individual registration statements if the superintendent deems it necessary in the interest of clarity, ease of administration or the public good.

(G) Exemptions

(1) A foreign or alien insurer otherwise subject to section 3901.33 of the Revised Code shall not be required to register pursuant to section 3901.33 of the Revised Code if it is subject to disclosure requirements and standards adopted by statute or regulation in the jurisdiction of its domicile which are substantially similar to those contained in section 3901.33 of the Revised Code.

(2) The state of entry of an alien insurer shall be deemed to be its domiciliary state for the purposes of section 3901.33 of the Revised Code.

(3) Any insurer not otherwise exempt from section 3901.33 of the Revised Code may apply for an exemption from the requirements of section 3901.33 of the Revised Code by submitting a statement to the superintendent setting forth its reasons for being exempt. No exemption shall be granted except upon written order of the superintendent, stating the superintendent's findings, made after a hearing held upon not less than ten days written notice to the insurer requesting the exemption.

(H) Disclaimers and termination of registration

(1) A disclaimer of affiliation pursuant to division (J) of section 3901.33 of the Revised Code or a request for termination of registration pursuant to division (F) of section 3901.33 of the Revised Code claiming that a person does not, or will not upon the taking of some proposed action, control any other person (hereinafter referred to as the "subject") shall contain the following:

(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:

(i) The number and percentage of shares of the subject's voting securities which are held of record or know to be beneficially owned, and the number of such shares concerning which there is a right to acquire, directly or indirectly;

(ii) Information as to all transactions in any voting securities of the subject which were effected during the past six months by such persons;

(c) All material relationships and bases for affiliations 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.

(2) A request for termination of registration shall be deemed to have been granted unless the superintendent, within thirty days after the superintendent received the request, notifies the registered insurer otherwise.

(I) Enterprise risk report

The ultimate controlling person of an insurer required to file an enterprise risk report, pursuant to division (K) of section 3901.33 of the Revised Code, shall furnish the required information on form F, hereby made a part of this rule.

(J) Group capital calculation

(1) Where an insurance holding company system has previously filed the annual group capital calculation at least once, the lead state commissioner has the discretion to exempt the ultimate controlling person from filing the annual group capital calculation if the lead state commissioner makes a determination based upon that filing that the insurance holding company system meets all of the following criteria:

(a) Has annual direct written and unaffiliated assumed premium (including international direct and assumed premium), but excluding premiums reinsured with the "Federal Crop Insurance Corporation" and "Federal Flood Program," of less than one billion dollars;

(b) Has no insurers within its holding company structure that are domiciled outside of the United States or one of its territories;

(c) Has no banking, depository or other financial entity that is subject to an identified regulatory capital framework within its holding company structure;

(d) The holding company system attests that there are no material changes in the transactions between insurers and non-insurers in the group that have occurred since the last filing of the annual group capital; and

(e) The non-insurers within the holding company system do not pose a material financial risk to the insurer's ability to honor policyholder obligations.

(2) Where an insurance holding company system has previously filed the annual group capital calculation at least once, the lead state commissioner has the discretion to accept in lieu of the group capital calculation a limited group capital filing if:

The insurance holding company system has annual direct written and unaffiliated premium (including international direct and assumed premium), but excluding premiums reinsured with the "Federal Crop Insurance Corporation" and "Federal Flood Program," of less than one billion dollars; and all of the following additional criteria are met:

(a) Has no insurers within its holding company structure that are domiciled outside of the United States or one of its territories;

(b) Does not include a banking, depository or other financial entity that is subject to an identified regulatory capital framework; and

(c) The holding company system attests that there are no material changes in transactions between insurers and non-insurers in the group that have occurred since the last filing of the report to the lead state commissioner and the non-insurers within the holding company system do not pose a material financial risk to the insurers ability to honor policyholder obligations.

(3) For an insurance holding company that has previously met an exemption with respect to the group capital calculation pursuant to paragraph (J)(1) or (J)(2) of this rule, the lead state commissioner may require at any time the ultimate controlling person to file an annual group capital calculation, completed in accordance with the NAIC group capital calculation instructions, if any of the following criteria are met:

(a) Any insurer within the insurance holding company system is in a risk-based capital action level event as set forth in section 3903.84 of the Revised Code or a similar standard for a non-U.S. insurer; or

(b) Any insurer within the insurance holding company system meets one or more of the standards of an insurer deemed to be in hazardous financial condition as defined in rule 3901-3-04 of the Administrative Code; or

(c) Any insurer within the insurance holding company system otherwise exhibits qualities of a troubled insurer as determined by the lead state commissioner based on unique circumstances including, but not limited to, the type and volume of business written, ownership and organizational structure, federal agency requests, and international supervisor requests.

(4) A non-U.S. jurisdiction is considered to "recognize and accept" the group capital calculation if it satisfies the following criteria:

(a) With respect to the division (L)(4)(d) of section 3901.33 of the Revised Code:

(i) The non-U.S. jurisdiction recognizes the U.S. state regulatory approach to group supervision and group capital, by providing confirmation by a competent regulatory authority, in such jurisdiction, that insurers and insurance groups whose lead state is accredited by the NAIC under the NAIC accreditation program shall be subject only to worldwide prudential insurance group supervision including worldwide group governance, solvency and capital, and reporting, as applicable, by the lead state and will not be subject to group supervision, including worldwide group governance, solvency and capital, and reporting, at the level of the worldwide parent undertaking of the insurance or reinsurance group by the non-U.S. jurisdiction; or

(ii) Where no U.S. insurance groups operate in the non-U.S. jurisdiction, that non-U.S. jurisdiction indicates formally in writing to the lead state with a copy to the international association of insurance supervisors that the group capital calculation is an acceptable international capital standard. This will service as the documentation otherwise required in paragraph (J)(4)(a)(i) of this rule.

(b) The non-U.S. jurisdiction provides confirmation by a competent regulatory authority in such jurisdiction that information regarding insurers and their parent, subsidiary, or affiliated entities, if applicable, shall be provided to the lead state commissioner in accordance with a memorandum of understanding or similar document between the commissioner and such 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. The commissioner shall determine, in consultation with the NAIC committee process, if the requirements of the information sharing agreements are in force.

(5) A list of non-U.S. jurisdictions that "recognize and accept" the group capital calculation will be published through the NAIC committee process:

(a) A list of jurisdictions that "recognize and accept" the group capital calculation pursuant to division (L)(4)(d) of section 3901.33 of the Revised Code, is published through the NAIC committee process to assist the lead state commissioner in determining which insurers shall file an annual group capital calculation. The list will clarify those situations in which a jurisdiction is exempted from filing under division (L)(4)(d) of section 3901.33 of the Revised Code. To assist with a determination under division (L)(5) of section 3901.33 of the Revised Code, the list will also identify whether a jurisdiction that is exempted under either division (L)(4)(c) or (L)(4)(d) of section 3901.33 of the Revised Code requires a group capital filing for any U.S. based insurance group's operations in that non-U.S. jurisdiction.

(b) For a non-U.S. jurisdiction where no U.S. insurance groups operate, the confirmation provided to meet the requirement of paragraph (J)(4)(a)(ii) of this rule will serve as support for recommendation to be published as a jurisdiction that "recognizes and accepts" the group capital calculation through the NAIC committee process.

(c) If the lead state commissioner makes a determination pursuant to division (L)(4)(d) of section 3901.33 of the Revised Code that differs from the NAIC list, the lead state commissioner shall provide thoroughly documented justification to the NAIC and other states.

(d) Upon determination by the lead state commissioner that a non-U.S. jurisdiction no longer meets one or more of the requirements to "recognize and accept" the group capital calculation, the lead state commissioner may provide a recommendation to the NAIC that the non-U.S. jurisdiction be removed from the list of jurisdictions that "recognize and accepts" the group capital calculation.

(K) Extraordinary dividends and other distributions

Request for approval of extraordinary dividends or any other extraordinary distribution shall include the following:

(1) The amount of extraordinary dividend or extraordinary distribution;

(2) The date established for payment of the dividend or distribution;

(3) A statement as to whether the dividend or distribution is to be in cash or other property and, if in property, a description thereof, its cost, and the fair market value of such property together with an explanation of the basis for valuation;

(4) The amounts and dates of all dividends or distributions paid within the period of twelve consecutive months ending on the date fixed for payment of the proposed dividend or distribution for which approval is sought and commencing on the day after the same day of the same month in the last preceding year;

(5) A balance sheet and statement of income for the period intervening from the last annual statement filed with the superintendent and the end of the month preceding the month in which the request for dividend or distribution approval is submitted;

(6) A brief statement as to the effect of the proposed dividend or distribution upon the insurer's surplus and the reasonableness of surplus in relation to the insurer's outstanding liabilities and the adequacy of surplus relative to the insurer's financial needs.

(L) Form B: instructions

(1) General requirements

(a) Form B is intended to be a guide in the preparation of the statement required by section 3901.33 of the Revised Code. It is not intended to be a blank form which is to be filled in. The statement filed shall contain the numbers and captions of all items, but the text of the items may be omitted provided the answers thereto are so prepared as to indicate to the reader the coverage of the items without the necessity of referring to the text of the items or the instructions thereto. 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 not applicable or the answer thereto is in the negative, an appropriate statement to that effect shall be made;

(b) Each statement, including exhibits and all other documents filed as a part thereof, shall be filed with the superintendent in physical or electronic form. If a consolidated report is made to amend the individual registration statement of more than one insurer, one complete copy of such report shall be filed. 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 or report;

(c) All copies of any statement, report, financial statement, or exhibits shall be clear and easily readable. Debits in credit categories shall be designed so as to be clearly distinguishable as such. Statements or reports shall be in the English language and monetary values shall be stated in United States currency. If any exhibit or other document filed with the statement or report 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 shall be converted into United States currency.

(2) Incorporation by reference, summaries and omissions.

(a) Information required by an item of form B may be incorporated by reference in answer or partial answer to any other item. Information contained in any financial statement, annual report, proxy statement, 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 B provided such document is filed as an exhibit to the statement or report. Excerpts of documents may be filed as exhibits if the documents are extensive. Documents already on file with the superintendent 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 or report incomplete, unclear or confusing;

(b) Where an item requires a summary or outline of the provisions of any document, only a brief statement shall be made as to the most important provisions of the document. In addition to such statement, the summary or outline may incorporate by reference particular parts of any exhibit or document on file with the superintendent 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 the documents need be filed with a schedule identifying the omitted documents and setting forth the material details in which such omitted documents differ from the document of which a copy is filed. The superintendent may at any time in the superintendent's discretion require the filing of copies of any omitted documents.

(3) Information unknown or unavailable and extension of time to furnish:

(a) Information required need be given only insofar as it is known or reasonably available to the registered insurer. If any required information is unknown and not reasonably available to the registered insurer, either because the obtaining thereof would involve unreasonable effort or expense, or because it rests peculiarly within the knowledge of another person not affiliated with the registered insurer filing, the information may be omitted, subject to the following conditions:

(i) The registered insurer shall give such information on the subject as it possesses or can acquire without unreasonable effort or expense, together with the sources thereof; and

(ii) The registered insurer 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.

(b) If it is impractical to furnish any required information, document or report at the time it is required to be filed, there may be filed with the superintendent as a separate document an application (i) identifying the information, document or report in question, (ii) stating why the filing thereof at the time required is impractical, and (iii) requesting an extension of time for filing the information, document or report to a specified date. The application shall be deemed granted unless the superintendent within thirty days after receipt thereof, shall enter an order denying the application.

(4) Additional information and exhibits.

In addition to the information expressly required to be included in form B, 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.

(5) Amendments

Any amendment to form B shall include on the top of the cover page the phrase: "amendment no. _____ to" and shall indicate the date of the amendment and the date of the original filing of the statement being amended.

(M) Form B: Information to be included in form B

"Insurance holding company system registration statement

Filed with the insurance department of the state of Ohio by

Name of registrant (or registrants if this is a consolidated registration statement)

"NAIC Group No." _____________________

On behalf of the following insurance companies:

Dated: ______________, 20

Name, title and address of officer to whom notices and correspondence concerning this statement should be addressed:

Item 1. Identity and control of registrant

Furnish the exact name of each insurer registering or being registered (hereinafter called "the registrant"), the home office address and principal executive officers 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 and interrelationships amount all affiliated persons within the insurance holding company system. The chart or list 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 or 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, furnish the following information:

(a) Name;

(b) Home office address;

(d) The organizational structure of the person, e.g., corporation, partnership, individual, trust, etc.;

(e) The principal business of the person;

(f) The name and address of any person who holds ten per cent or more of any class of voting security of the ultimate controlling person, the class of such security, the name of shares held of record or known to be beneficially owned, and the percentage of class so held or owned.

Item 4. Biographical information

Furnish the following information on the directors or trustees, the members of a non- profit corporation, as well as the executive officers of the insurer and ultimate controlling person, beneficial or record owners of ten per cent or more of any class of voting security of the ultimate controlling person:

(a) For new registrants, provide a biographical affidavit on a form prescribed by the superintendent for all persons described in item 4.

(b) For registrants without any changes to the list of persons described in item 4 since the previous filing, provide each person's name and address, each person's 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.

(c) For registrants with changes to the list of persons described in item 4 since the previous filing, provide a biographical affidavit on a form prescribed by the superintendent for any person not previously required to submit biographical information; for all others provide the information described in paragraph (b) of item 4.

Item 5. Transaction, relationships and agreements

Briefly describe the following agreements in force, relationships subsisting, and transactions currently outstanding between the registrant and its affiliates:

(a) Loans, other investments, or purchases, sales or exchanges of securities of the affiliated by the registrant or of the registrant by its affiliates;

(b) Purchases, sales or exchanges of assets;

(d) 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;

(e) All management and service contracts and all cost sharing arrangements;

(f) Reinsurance agreements;

(g) Dividends and other distributions to shareholders;

(h) Consolidated tax allocation agreements;

(i) Any pledge of the insurer's stock, including stock of any subsidiary or controlling affiliate, for a loan made to any member of the insurance holding company system, and

(j) Other matters concerning transactions between registered insures and any affiliates as may be included from time to time in any registration forms adopted or approved by the superintendent.

No Information need be disclosed if such information is not material. Sales purchases, exchanges, loans or extensions of credit or investments involving one-half of one per cent or less of the registrant's admitted assets as of the thirty-first day of December next preceding shall not be deemed material.

The description shall be in a manner as to permit the proper evaluation thereof by the superintendent, and shall include at least the following: the nature and purpose of the transaction; the nature and the amounts of any payments or transfers of assets between the parties; the identity of all parties to such transaction; the relationship of the affiliated parties to the registrant; and if applicable the date upon which the agreements, relationships, transactions and distributions described in item 5 of paragraph (M) of this rule were reported to the superintendent pursuant to division (C) of section 3901.34 or section 3901.341 of the Revised Code.

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 directors or executive officers of the ultimate controlling person was a party or of which the property of any such person is or was the subject; give the names of the parties, the court or agency in which such litigation or proceeding is or was pending, and the date when commenced:

(a) Criminal prosecutions or administrative proceedings by any governmental agency or authority which may be relevant to the trustworthiness or any party thereto; and

(b) Proceedings which may have a material effect upon the solvency or capital structure of the ultimate controlling person including, but not necessarily limited to, bankruptcy, liquidation, receivership, or corporate reorganizations.

Item 7. Financial statements and exhibits

(a) Financial statements and exhibits for registrants shall be attached to this statement as an appendix unless incorporated herein by reference to such statements or exhibits already filed with the superintendent;

(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 such person's latest fiscal year.

If at the time of the initial registration, any annual financial statements required to be filed 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. Financial statements may be prepared on either an individual basis, or unless the superintendent otherwise requires, on a consolidated basis if such consolidated statements are prepared in the usual course of business.

Unless the superintendent 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 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 such insurer filed with the insurance department 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 such state.

(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.

Signatures

Signatures and certification of the forms as follows:

Pursuant to the requirements of section 3901.33 of the Revised Code and rule 3901-3-02 of the Administrative Code, the registrant has caused this registration statement to be duly signed on its behalf in the city of __________ and state of __________ on the _____ day of _______, 20.

__________________________________ (Name) (Title)

(Seal)

______________________________ (Name of registrant)

Attest:

_______________________ (Signature of officer)

_______________________ (Title)

The undersigned deposes and says the undersigned has duly executed the attached registration statement dated _______, 20, for and on behalf of __________; that the undersigned is the __________ (Title of officer) of such company, and that the undersigned has the authority to execute and file such instrument. Deponent further says that the undersigned is familiar with such instrument and that the facts therein set forth are true to the best of the undersigned's knowledge, information and belief.

(Signature)__________________________

(Type or print name beneath) __________________________"

(N) Summary of registration statement

A form C summary of registration statement, must be prepared and filed with each form B filing in the following form:

Form C

Summary of registration statement

Filed with the insurance department of the state of __________

Name of registrant

"NAIC Group No." ______________________________

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 superintendent 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 ten per cent 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 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:

Pursuant to the requirements of section 3901.33 of the Revised Code, registrant has caused this registration statement summary be duly signed on its behalf of the city of __________ and state 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 the undersigned has duly executed the attached annual registration statement dated _______, 20, for and on behalf of __________ (name of applicant); that the undersigned is the __________ (title of officer) of such company and that the undersigned is authorized to execute and file such instrument. Deponent further says that the undersigned is familiar with such instrument and the contents thereof, and that the facts therein set forth are true to the best of the undersigned's knowledge, information and belief.

(Signature) _______________________

(Type or print name beneath) _______________________

(O) Form F: Information to be included in form F

"Form F

Enterprise risk report

Filed with the insurance department of the state of Ohio

By __________________________________

Name of registrant/applicant

On behalf of/related to the 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 division (K) of section 3901.33 of the Revised Code, provided such information is not disclosed in the insurance holding company system annual registration statement filed on behalf of this or another insurer for which it is the ultimate controlling person:

(a) Any material developments regarding strategy, internal audit findings, compliance or risk management affecting the insurance holding company system;

(b) Acquisition or disposal of insurance entities and reallocating of existing financial or insurance entities within the insurance holding company system;

(c) Any changes of shareholders of the insurance holding company system exceeding ten per cent or more of voting securities;

(d) Developments in various investigations, regulatory activities or litigation that may have a significant bearing or impact on the insurance holding company system;

(e) Business plan of the insurance holding company system and summarized strategies for next twelve months;

(f) Identification of material concerns of the insurance holding company system raised by supervisory college, if any, in last year;

(g) Identification of insurance holding company system capital resources and material distribution patterns;

(h) 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);

(i) Information on corporate or parental guarantees throughout the holding company and the expected source of liquidity should such guarantees be called upon; and

(j) Identification of any material activity or development of the insurance holding company system that, in the opinion of senior management, would adversely affect the insurance holding company system.

The registrant/applicant may attach the appropriate form most recently filed with the "United States 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 United States, 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."

(P) Severability

Last updated March 2, 2026 at 8:33 AM

History

Effective: February 28, 2026
Promulgated Under: 119.03