(1) Transactions within an insurance holding company system to which an insurer subject to registration is a party shall be subject to the following standards:
(a)  The terms shall be fair and reasonable;
(b)  Agreements for cost-sharing services and management shall include such provisions as required by rule promulgated by the director;
(c)  Charges or fees for services performed shall be reasonable;
(d)  Expenses incurred and payment received shall be allocated to the insurer in conformity with customary insurance accounting practices consistently applied;
(e)  The books, accounts and records of each party to all such transactions shall be so maintained as to clearly and accurately disclose the precise nature and details of the transactions, including such accounting information as is necessary to support the reasonableness of the charges or fees to the respective parties; and
(f)  The insurer’s surplus regarding policyholders following any dividends or distributions to shareholder affiliates shall be reasonable in relation to the insurer’s outstanding liabilities and adequate to meet its financial needs.
(2)  The following transactions involving a domestic insurer and any person in its insurance holding company system, including amendments or modifications of affiliate agreements previously filed pursuant to this section, that are subject to any materiality standards contained in paragraphs (a) through (g) of this subsection, may not be entered into unless the insurer has notified the director in writing of its intention to enter into the transaction at least thirty (30) days prior thereto, or such shorter period as the director may permit, and the director has not disapproved it within that period. The notice for amendments or modifications shall include the reasons for the change and the financial impact on the domestic insurer. Informal notice shall be reported to the director within thirty (30) days after the termination of a previously filed agreement, for determination of the type of filing required, if any.
(a)  Sales, purchases, exchanges, loans, extensions of credit, guarantees or investments, provided the transactions are equal to or exceed:
(i)   With respect to non-life insurers, the lesser of three percent (3%) of the insurer’s admitted assets or twenty-five percent (25%) of surplus regarding policyholders as of December 31 of the year immediately preceding;
(ii)   With respect to life insurers, three percent (3%) of the insurer’s admitted assets as of December 31 of the year immediately preceding;
(b)  Loans or extensions of credit to any person who is not an affiliate, where the insurer makes loans or extensions of credit with the agreement or understanding that the proceeds of the transactions, in whole or in substantial part, are to be used to make loans or extensions of credit to, to purchase assets of, or to make investments in, any affiliate of the insurer making the loans or extensions of credit, provided the transactions are equal to or exceed:
(i)   With respect to non-life insurers, the lesser of three percent (3%) of the insurer’s admitted assets or twenty-five percent (25%) of surplus regarding policyholders as of December 31 of the year immediately preceding;
(ii)  With respect to life insurers, three percent (3%) of the insurer’s admitted assets as of December 31 of the year immediately preceding;
(c)   Reinsurance agreements or modifications thereto, including:
(i)   All reinsurance pooling agreements;
(ii)  Agreements in which the reinsurance premium or a change in the insurer’s liabilities, or the projected reinsurance premium or a change in the insurer’s liabilities, in any of the next three (3) years, equals or exceeds five percent (5%) of the insurer’s surplus regarding policyholders, as of December 31 of the year immediately preceding, including those agreements which may require as consideration the transfer of assets from an insurer to a nonaffiliate, if an agreement or understanding exists between the insurer and the nonaffiliate that any portion of the assets will be transferred to one (1) or more affiliates of the insurer;
(d)  All management agreements, service contracts, tax allocation agreements, guarantees and all cost-sharing arrangements;
(e)  Guarantees when made by a domestic insurer, provided however, that a guarantee that is quantifiable as to amount is not subject to the notice requirement of this section, unless it exceeds the lesser of one-half of one percent (.5%) of the insurer’s admitted assets or ten percent (10%) of surplus regarding policyholders as of December 31 of the year immediately preceding. Further, all guarantees that are not quantifiable as to amount are subject to the notice requirements of this section;
(f)  Direct or indirect acquisitions or investments in a person that controls the insurer or in an affiliate of the insurer in an amount that, together with the insurer’s present holdings in such investments, exceeds two and one-half percent (2.5%) of the insurer’s surplus to policyholders. Direct or indirect acquisitions or investments in subsidiaries acquired pursuant to section 41-3803, Idaho Code, or authorized under any other section of this chapter, or in nonsubsidiary insurance affiliates that are subject to the provisions of this chapter, are exempt from this requirement; and
(g)  Any material transactions, specified by statute or rule, that the director determines may adversely affect the interests of the insurer’s policyholders.
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Terms Used In Idaho Code 41-3810

  • Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
  • Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
  • Insurance holding company system: means two (2) or more affiliated persons, one (1) or more of whom is an insurer. See Idaho Code 41-3802
  • Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
  • Month: means a calendar month, unless otherwise expressed. See Idaho Code 73-114
  • Person: means an individual, a corporation, a limited liability company, a partnership, an association, a joint stock company, a business trust, an unincorporated organization, or any similar entity or any combination of the foregoing acting in concert, but shall not include any joint venture partnership exclusively engaged in owning, managing, leasing or developing real or tangible personal property. See Idaho Code 41-3802
  • Statute: A law passed by a legislature.
Nothing in this section shall be deemed to authorize or permit any transactions that, in the case of an insurer not a member of the same insurance holding company system, would be otherwise contrary to law.
(3)  A domestic insurer may not enter into transactions that are part of a plan or series of like transactions with persons within the insurance holding company system if the purpose of those separate transactions is to avoid the statutory threshold amount and thus avoid the review that would occur otherwise. If the director determines that separate transactions were entered into over any twelve (12) month period for that purpose, the director may exercise his authority pursuant to section 41-3819, Idaho Code.
(4)  The director, in reviewing transactions pursuant to subsection (2) of this section, shall consider whether the transactions comply with the standards set forth in subsection (1) of this section and whether they may adversely affect the interests of policyholders.
(5)  The director shall be notified within thirty (30) days of any investment of the domestic insurer in any one (1) corporation, if the total investment in the corporation by the insurance holding company system exceeds ten percent (10%) of the corporation’s voting securities.