Insurance & Commerce - Senate
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Bills discussed (13)
| Bill | Title | Sponsor | Status |
|---|---|---|---|
|
SB240
Act 343
· 4 mentions in transcript, agenda, chapter
Matched: “will go to uh How, how, uh, Senate Bill 240. Senator Hill and Ms. Tudor,”
|
TO AMEND THE CREDIT REPORTING DISCLOSURE ACT OF 1989; AND TO CLARIFY THE CONTENT REQUIRED … | Hill | Notification that SB240 is now Act 343 |
|
SB94
Act 233
· 4 mentions in agenda, transcript, chapter
Matched: “…vin Sen. Clint Penzo REGULAR AGENDA Number Sponsor Subtitle SB94 J. Dotson TO AMEND THE REQUIREMENT FOR NEW ALL-TERRAIN VEHI…”
|
TO AMEND THE REQUIREMENT FOR NEW ALL-TERRAIN VEHICLE DEALERS AND NEW LOW SPEED VEHICLE DEALERS … | J. Dotson | Notification that SB94 is now Act 233 |
|
HB1193
· 3 mentions in transcript, agenda, chapter
Matched: “…ere, and I won't have to run it. We're going to let her run House Bill 1193. You don't have to go for tomorrow. That's, no, no, no, com…”
|
TO REQUIRE AN INSURER TO INCLUDE A LIENHOLDER ON PAYMENTS MADE UNDER AN INSURANCE POLICY. | Cavenaugh | Died in House at Sine Die adjournment. |
|
SB242
Act 344
· 3 mentions in transcript, chapter
Matched: “Bill 242. Yes sir, Mr. Chair, we're gonna do Senate Bill 242, and”
|
TO AMEND THE LAW CONCERNING LOANS INVOLVING THE STOCK OF A STATE BANK. | Hill | Notification that SB242 is now Act 344 |
|
SB236
Act 261
· 2 mentions in agenda, chapter
Matched: “…EHICLE DEALERS TO MAINTAIN SERVICE AND PARTS STORAGE AREAS. SB236 J. Boyd TO AMEND THE INSURANCE HOLDING COMPANY REGULATORY A…”
|
TO AMEND THE INSURANCE HOLDING COMPANY REGULATORY ACT. | J. Boyd | Notification that SB236 is now Act 261 |
|
HB1238
Act 306
· 1 mention in agenda
Matched: “…rs and Staff Only'. DEFERRED BILLS Number Sponsor Subtitle HB1238 Cavenaugh TO AUTHORIZE A MORTGAGOR TO RECOVER FEES IN CERTA…”
|
TO AUTHORIZE A MORTGAGOR TO RECOVER FEES IN CERTAIN CIRCUMSTANCES UNDER THE STATUTORY FORECLOSURE LAW. | Cavenaugh | Notification that HB1238 is now Act 306 |
|
SB103
Act 425
· 1 mention in agenda
Matched: “…MUM REIMBURSEMENT RATE FOR BREAST RECONSTRUCTION SURGERIES. SB103 C. Penzo TO CREATE THE PHARMACY NONDISCRIMINATION ACT; TO R…”
|
TO CREATE THE PHARMACY NONDISCRIMINATION ACT; TO REQUIRE PHARMACY BENEFITS MANAGERS TO ACCEPT ANY PHARMACY … | C. Penzo | Notification that SB103 is now Act 425 |
|
SB104
Act 514
· 1 mention in agenda
Matched: “…ONABLE TERMS OF PARTICIPATION; AND TO DECLARE AN EMERGENCY. SB104 C. Penzo TO AMEND THE ARKANSAS PHARMACY BENEFITS MANAGER LI…”
|
TO AMEND THE ARKANSAS PHARMACY BENEFITS MANAGER LICENSURE ACT; TO PROTECT PATIENTS' RIGHTS AND ACCESS … | C. Penzo | Notification that SB104 is now Act 514 |
|
SB123
Act 553
· 1 mention in agenda
Matched: “…HTS AND ACCESS TO MEDICATIONS; AND TO DECLARE AN EMERGENCY. SB123 G. Leding TO AMEND THE LAW CONCERNING COVERAGE FOR MAMMOGRA…”
|
TO AMEND THE LAW CONCERNING COVERAGE FOR MAMMOGRAMS AND BREAST ULTRASOUNDS. | G. Leding | Notification that SB123 is now Act 553 |
|
SB140
· 1 mention in agenda
Matched: “…CONCERNING COVERAGE FOR MAMMOGRAMS AND BREAST ULTRASOUNDS. SB140 J. Boyd TO MANDATE THE USE OF BIOSIMILAR MEDICINES UNDER HE…”
|
TO MANDATE THE USE OF BIOSIMILAR MEDICINES UNDER HEALTH BENEFIT PLANS; TO REQUIRE A HEALTHCARE … | J. Boyd | Sine Die adjournment |
|
SB179
· 1 mention in agenda
Matched: “…CERTAIN CIRCUMSTANCES UNDER THE STATUTORY FORECLOSURE LAW. SB179 J. Boyd TO ESTABLISH THE STRENGTHEN ARKANSAS HOMES ACT; AND…”
|
TO ESTABLISH THE STRENGTHEN ARKANSAS HOMES ACT; AND TO CREATE THE STRENGTHEN ARKANSAS HOMES PROGRAM … | J. Boyd | Sine Die adjournment |
|
SB237
Act 554
· 1 mention in chapter
Matched: “SB237 J. Boyd TO AMEND THE LAW CONCERNING THE LICENSING AND REGUL…”
|
TO AMEND THE LAW CONCERNING THE LICENSING AND REGULATION OF CAPTIVE INSURERS. | J. Boyd | Notification that SB237 is now Act 554 |
|
SB83
Act 424
· 1 mention in agenda
Matched: “…RANCE POLICY. PENDING FISCAL IMPACT Number Sponsor Subtitle SB83 J. Bryant TO MANDATE COVERAGE FOR BREAST RECONSTRUCTION SUR…”
|
TO MANDATE COVERAGE FOR BREAST RECONSTRUCTION SURGERIES; TO REQUIRE PRIOR AUTHORIZATION FOR BREAST RECONSTRUCTION SURGERIES; … | J. Bryant | Notification that SB83 is now Act 424 |
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- October 2, 2026
Speaker 5
0:10
Oh. If everybody would take their seats. Insurance and commerce come to order and I chair Corum. Uh, we're going to begin with Senate Bill 94 and Senate Bill 94 has an agreed upon amendment already in place, and I think it's
removed all opposition, so and we have heard plenty of testimony, so you go ahead,
Senator Matt McKee
Unverified
0:47
Senator. Thank you, Mr. Chairman, members of the committee, Senator Jim Dodson. Senate District 34 Senate Bill 94, as you said, has an engrossed amendment adopted yesterday that I think has all parties in agreement on and basically to sum up the amendment, if you start on page 2, the newly engrossed bill.
About uh line 910 on down the rest of the bill is basically the amendment at this point, and it adds in language regarding service centers and warranty work all having to be within 40 miles of a new dealer who is selling new dealer or new new all-terrain vehicles and low speed vehicles. I think that kind of is the explanation of it. I don't think there's any opposition any longer. Everybody questions. Do you want
Speaker 10
1:46
to close your bill? I'm closed and would appreciate a good
Speaker 5
1:49
vote. Motion by Senator Ervin, seconded by Senator Boyd. All in favor. Say ah. All opposed like sign. Thank you, Senator. Thank you very much. So I'm
Speaker 11
1:59
going to kind of skip around a little bit since Representative Kavanaugh's here, and I won't have to run it. We're going to let her run House Bill 1193. You don't have to go for tomorrow. That's, no, no, no, come on, come on, come on.
Speaker 13
2:17
Well, I, I, I can't, I mean, I can't hardly see all the way down
Speaker 2
2:26
there, so. All right. You are recognized just let us know who you are
Representative Frances Cavenaugh
Unverified
2:30
and you can begin. Thank you, Mr. Chair, Fran Kavanaugh, State Representative, District 30. Um, this bill is just language that adds that if there is a third party claim or demand on a motor vehicle with an insure and the motor vehicle has a perfected lane by a lien holder than that
lien holder must be put on that check. Is there any questions? Go
Speaker 20
2:53
ahead, Senator Boyd. Uh, pardon my ignorance. What's a perfected lien holder? Someone that has
Representative Frances Cavenaugh
Unverified
3:00
an actual loan against the vehicle and they actually file a lien with the state. Senator Ervin, thank
Senator Missy Irvin
Unverified
3:10
you. Can you just identify what has happened in order to necessitate the bill. So lien holders a lot of times
Representative Frances Cavenaugh
Unverified
3:20
do not get their name added on to a check and the insured may go and cash that check and then not either fix the vehicle or get it applied to their loan and then they call lien holders a lot of times after that happens and says, please come and pick up my car and so the lien holder then didn't get an opportunity to take that check and apply it against
Senator Missy Irvin
Unverified
3:44
the debt that's owed to them. OK, so both um so both the lien holder and the, the claimant,
the insurance, the climate insurer would have to be ones to both sign in order to get the check. Is that correct? What, what happens like if somebody, like for me, if I take out a loan for my car. And the lien holder
is not in the state of Arkansas. This only applies to lien holder that
Representative Frances Cavenaugh
Unverified
4:11
has a presence in the state of Arkansas, a physical presence in the state of Arkansas, OK, but like a lot,
Senator Missy Irvin
Unverified
4:18
OK, OK, so that's one, but if it's in a different
town than if I'm financed with a bank over in Fort
Smith, but I live in Mountain View. I'd have to go to Fort Smith to get them to sign the checks most
Representative Frances Cavenaugh
Unverified
4:31
what most happens with most lien holders is they have local people that can do that for them, or if not, they have a system. Where you can overnight that check and get it sent back. OK. Any other questions? Seeing none.
Speaker 30
4:46
You want to close your bill? I appreciate it. Um, this
Representative Frances Cavenaugh
Unverified
4:51
is just a problem that's actually becoming more prevalent for lien
holders because the cost of automobiles have just gotten so much higher and the losses that they're seeing because of this is just escalating and so this will just help those people who have taken the risk, and with that, I appreciate a good
Speaker 10
5:09
vote. Is there any discussion? I mean motion by Senator Boyd, seconded by Senator McGee.
Speaker 11
5:15
Is there any discussion, so I mean, I think my daughter just bought a vehicle that cost as much as a house that she grew up in. It's
a different world nowadays than it was whenever I was younger, so I appreciate the bill. All in favor say
Speaker 5
5:36
aye. All opposed like sign. Thank you. Representative Kavanaugh. We
Speaker 2
5:42
will go to uh How, how, uh, Senate Bill 240. Senator Hill and Ms. Tudor,
Speaker 5
5:51
uh, since this is your first day to come to committee, would you
Speaker 10
5:56
come up? Miss Trogden, I'm sorry. So. Just recognize your yourself, so I did such a terrible job. Ricky Hill District 11. Laurie
Speaker 39
6:23
Trogden, president and CEO of the Arkansas Bankers Association, T R O G D E N.
That You're welcome again. Mr. Cherry, it is a
Senator Ricky Hill
Unverified
6:36
great pleasure to be sitting down here today and have Ms. Trogden with me to help present these bills. And so we'll start out with the Senate Bill 240. Basically what we're doing is taking it where you don't have to put a Social Security number on an adverse action letter that you send out to to your customers. And I'll be glad to take any questions. We're just
Speaker 42
6:57
eliminating that process. Do you have anything to add to that. Any questions?
Speaker 2
7:12
for your meal. I'm closer motion by Senator Ervin. seconded by Senator Boyd, all in favor. Say aye. I'll pose like. Thank you, Senator Hill. If you want to go to Senate
Speaker 13
7:22
Bill 242. Yes sir, Mr. Chair, we're gonna do Senate Bill 242, and
Senator Ricky Hill
Unverified
7:28
I'm going to turn it over to Ms. Trogden, and she's going to present this bill for us because she is the expert on this. We actually
Speaker 48
7:38
have a banker here who is the true expert on this, if you don't mind if he comes to talk about this. Just
Speaker 5
7:44
come on up and introduce yourself and you're recognized to uh to assist in any way.
Speaker 11
7:59
I apologize. This is not her first time in the committee. I was just messing with
Speaker 49
8:05
her. Good morning, Chair. Good morning, committee members. My name's Hunter Wendel. Uh, I'm a banking attorney currently with Simmons Bank, and I'm here to speak today on behalf of Senate Bill 242, Arkansas Code 2347503, which this bill would amend generally prohibits a state bank from making loans and taking its own stock as collateral for those loans. Essentially, it prevents the bank from Leaning against its equity.
Um, as the laws currently written, if, if an Arkansas State bank acquires another bank and that acquired bank has loans in its portfolio that were or that are secured by the stock of the acquiring bank, those loans are immediately out of compliance with the statute, and that puts the bank, the borrower, really all involved in sort of a legal rock and a hard place. And so this amendment would create a narrow, we think common sense exception to that requirement, because on the one hand we have this acquired loan which is governed by the loan agreement, the loan.
documents previously agreed collateral. And the bank is bound by those agreements with the customer and then the statute. So in those situations this this exception would allow the bank to continue to administer the loan consistent with sound banking principles, consistent with the loan agreement, um, and Avoid that situation where we're we're kind of coming up against both the statute and the documentation there, um, while I can't speak for the state bank department, I will note that they've reviewed the bill. We've discussed it with them and and
they've not submitted any kind of objections. And so with that, I'll request this committee support it. I appreciate the opportunity to speak to you all today. There any questions? Senator
Senator Mark Johnson
Unverified
9:50
Johnson. Thank you, Mr. Chairman. This is a big change that I'm not quite sure about all this now. Mr. Wendell, I appreciate your explanation, but It sounds like it would set up a
possibility where if there were Hey, shall we say a Kind of a home cooking bank, a smaller bank that's done a lot of insider loans like this that if if a larger bank wanted to be able to get around this. They could do it through acquisition of that smaller bank and it's what the change would be is if you,
you're in compliance, you acquire a bank that's out of compliance, that y'all aren't automatically. at out of compliance. Is there some time period to rectify the situation or it's just allowed to continue as a status quo. Uh, no, sir, to clarify, I guess a better analogy would be both
Speaker 49
10:56
banks are in compliance. The issue is that bank B would have a loan or loans on its
books secured by Bank A stocks. So when Bank A acquires B, it has these loans that are secured by that bank A stock. And so, so how do you clean it
Senator Mark Johnson
Unverified
11:17
up? Do you require them to come up with other collateral. Well, that's the issue that
Speaker 49
11:23
this exception would hopefully or would um resolve because um again, you're sort of an illegal rock and a hard place and, and, you know, the bank, together with the bank department, sort of have to puzzle through these loans on a
case by case basis, perhaps the loan documents would allow the bank to request the substitution of collateral, um, or call the note, I guess, right, which in in those sorts of cases or those solutions, I think. Arguably would inconvenience the borrow borrower. um I would think so. But, but I guess what
Senator Mark Johnson
Unverified
11:57
I'm trying to say is if the if the underlying premise of the original law is good, and I think it wouldn't be in there if
a lot of people didn't think it is good because for the reasons that you pointed out, uh, shouldn't there be some kind of time period or or or uh process where uh the, the portfolio is brought back into compliance with the original law. And I'm not, I don't want to belabor the point because obviously, as you said, you're between a rock and a hard place and a thing like that, but on the other hand, it, it would
seem there should be some consistency. If it was a good law to begin with this acquisition takes place. Yeah, it needs to be fixed, and I agree with that, but shouldn't there be a time period to allow that or maybe I'm not finding it in the in the statute and Senator Hill, you seem to be yeah, yeah. Look looking right
Senator Ricky Hill
Unverified
12:59
here, if you go to page 2 it
says any renewal, extension, or modification or refinancing of a loan or extension of credit is undertaken substantially at the
time of the terms and conditions will continue on. So if, if you have Senator Johnson, if you had a loan with with myself. And you were using stock. That loan materials up. At that point, we can, we can go ahead. And do that if you read that, if you want the extension modification stuff now at the time. The main issue here is overvaluing your local stock. is a big issue. What what is the true value of your local closely held stock. It's not like it's
traded on the market, whereas say Simmons, we know what their value is. You can look in the paper every day and your local, local markets are a little
bit different and so this actually just kind of keeps some of that from being
Senator Mark Johnson
Unverified
13:53
overinflated. OK, well, I can see that problem arising and that's a good answer. I appreciate that. I'll vote for the bill, but this is the kind of thing I wish I had a little bit more time to scratch my head over and all I had to do was look at the committee's a. didn't spend last night doing that and I didn't, so I certainly won't hold it up, but, but I wanted to make sure that
if the underlying original law was good and I guess everyone stipulates that it was good because it's kind of insider trading if it was, then there should be a way to transition into going back to compliance with what the premise of the original act was, but, but I understand all this happens
suddenly you're you're out of compliance. It's almost an ex post facto thing involved here because those loans were made under
under that rule at the time of
that previous the first bank, the bank, I guess you would call it, and then you're coming back to um that now but thank be acquires them and suddenly they're all out of compliance. That shouldn't be automatic. Now there is that thing about renewal extension modification, refinancing, and that has has to be dealt with, but, but I certainly will vote to get the out, but, but I wish I had a little bit more of an understanding of it, but thank you. I think you all have done a good job of of trying to bring me up to speed. Thank you. Thank you, Mr. Chairman.
Speaker 10
15:16
So when he, when he speaks of out of compliance. He's speaking to
Speaker 11
15:22
state law, not a federal. Compliance issue is it because, I mean, is there a scenario in federal federally chartered banks where this is handled differently than what what we're amending to. So this
Speaker 20
15:36
exception would apply just to the state law, which
Speaker 55
15:46
governs Arkansas state banks, so that, I
Speaker 8
15:48
mean, what I'm saying is the only The only reason you'd be
Speaker 11
15:53
out of compliance is because of the structure of the law that we're amending that, you know, whenever you acquire that bank that has your stock as a bank. Then you're, it makes you out of compliance because of our law, correct? I think generally speaking, yes. There are equivalents and
Speaker 49
16:18
Federal law or other states, you know, for other state banks, and those bodies of law which which govern different types of banks or banks have been chartered differently, um, have have exceptions. So in this case it would again just apply to this particular statute. Um, if, if that action was inconsistent with any other laws, this wouldn't affect that. I mean to
Speaker 46
16:44
answer your question is yes, Senator Johnson. OK. Yeah.
Speaker 11
16:50
I mean, is there a cure period or in in a federal regulatory system like Senator Johnson asked, Is there a cure period where you have to divest. Of your own stock in these loans. I do not know the answer to that.
Senator Ricky Hill
Unverified
17:06
I'll have to defer to the attorneys. So I
Speaker 55
17:10
mean the exceptions to these types of laws, um, Differ again
Speaker 49
17:15
according to The jurisdiction or or the state, um, I'm most familiar
with, with, with the federal one and, and there are exceptions. They they don't necessarily dovetail exactly with with how this exception is structured, but for example, um, You know, I know banks. Federally chartered banks, um, are able to hold stock temporarily of For, for the payment of debt. So if they were to get a hold of some of their, their stock, um, and, you know, collection type
case, um, and I believe that is 6 months Um But I would have to, I would have to review that wall, Senator
Senator Matt McKee
Unverified
18:03
McKee. Thank you, Mr. Chairman. So I just want to make sure I understand the examples that you gave a little bit earlier, um, It
would seem to me that The long term thinking involved in banking investments and things like that. There probably are occasions when Uh, a bank.
Has a plan to acquire certain assets whether it's another bank or not, and if those other assets do hold stock in Bank A, that would preclude them from that investment or planning on that investment, and so this appears like it would be a drastic reduction in risk. For banks in their future acquisitions. So that they, they, it wouldn't matter to them if if they had loaned money to another.
Entity that had stock in them because that that just seems like it would be a drastic reduction in risk. And
I Am I missing the whole thing? What was the question in that? I mean, I'm trying to find the question. I apologize. Is,
does this represent a drastic reduction in risk in future acquisitions because they no longer have to be concerned about the fact that those other entities or assets are secured by stock in their own.
Senator Ricky Hill
Unverified
19:31
Business or bank. OK, whenever a bank goes in to purchase
or take over another another bank. They actually go and they do the due diligence, they do the background work on it and this right here will, will be the types of loans that they will check out. So you, you'll have a pretty good idea unless something is just Totally hidden in the background, which most of the time if you're dealing with stock and everything, banks will go in and say, hey, how much How much are your loans valued at that you have loan to get stock of your bank. And so you, you'll get that idea from that. So that, that's kind
of disclosed on that side of it. If I
Speaker 49
20:05
might add a little color to that. The issue again for for a bank like like Simmons and some of the other larger publicly traded Arkansas banks is that while there is due diligence, um, sometimes that bank stock's holding a brokerage account or something and, and, um, I'm speaking in generalities, but you know some of these loans that are affected by this might be You know, relatively nominal, at least relative to the overall
portfolio of that um Bank that's being acquired the loan portfolio. So, um, You know, while there is the due diligence process to try to capture that, as you say, there might be something, some loans or some credits that wouldn't necessarily be. Be seen OK. Senator Johnson. Thank you, Mr. Chairman. Um, This brought up yet another
Senator Mark Johnson
Unverified
21:03
question, and I apologize for being redundant on this. It speaks of the uh What Pedre Young Senator Johnson, I'm on page 2 at about 22 and 23. If there's a securities account that's
the collateral for this loan. And the That's, you know, let's say it's a account that the the borrower actually trades, so the value of
that is going to be dynamic. It's going to go up and down. But if the underlying, if the securities in that account are not traded, I guess what I'm trying to say is
you say you have uh I won't use it. I shouldn't say an IRA, but you have an account and you have several securities in it, and you put that account up as collateral. Is that borrower prohibited from making trades within that account, even though the bank has a lien on it. OK, Senator Johnson, the way
Senator Ricky Hill
Unverified
22:05
most of that is handled is, let's say if you have a brokerage account and you put your entire brokerage account up against the loan. Banks
will typically loan, it depends on the bank's policy, anywhere from 50% to 70% values what they're doing, and you can still continue
to trade just they have a they have basically have a lien on that. Right, but,
Senator Mark Johnson
Unverified
22:23
but there's nothing to prohibit the borrower from Let's say I have a Schwab account and I've got 10 stocks
in it. And uh I put that up as collateral for a loan. I can
still trade within that account. It's going to depend on
Senator Ricky Hill
Unverified
22:41
your loan agreement with the bank. As long as it's valued, that would be all known upfront before you you put that up as collateral that could go either way, that can go either way, OK, but it's, it's it's permissible if it's in your agreement because a lot of times people will put their stock, put their entire portfolio up for collateral to do something with, and they continue to trade as normal because of the value they're only loaning 60-70% of the value of that entire portfolio to allow for fluctuations up and down, but
Senator Mark Johnson
Unverified
23:06
the bank could from time to time ask for a statement showing the value, yeah, they shot
Senator Ricky Hill
Unverified
23:12
and that could be part of your loan agreement as well. you provide us with a monthly or quarterly statement showing what your value is, and we can adjust your loan up and down based off
Senator Mark Johnson
Unverified
23:22
of that. All righty now on the end of page one and the beginning of page 2, and it's, it's compiled, it says that. And this may go back to my original question a while ago. The bank divests, it's considered previously contracted
in good faith, and that's on 33 and then down and 36 if divest the stock within 2 years and that I think
it was the original thing I was trying to find out. Is there a time period to clean that up? Is it 2 years? Am I, or is that not applying to the thing that I inquired about earlier. The with the. OK, yes, that is
Senator Ricky Hill
Unverified
24:01
correct. OK, that answers a lot. Thank you, Senator Hill. Thank you.
Speaker 10
24:10
Is there any other questions? Saying none, uh, you know, close to your bill. I'd appreciate a
Speaker 5
24:22
good vote. Thank you. Uh, motion by Senator Boyd, second by Senator Johnson, all in favor. Say aye. I'll oppose Laan. Thank you, Senator. You've passed your bill. Thank you. Thank you, Senator Johnson. And Senator Johnson, I would like
Senator Ricky Hill
Unverified
24:34
to say I appreciate Ms. Trogden being here today. I do
Speaker 93
24:42
too. Do you have anything to close with? OK.
Speaker 2
24:52
I, I apologize for butchering your name, Laurie. With your permission, I'm
Speaker 96
24:59
gonna try to do 237 1st bill if we don't have time we're going to go to Senate Bill 237.
Speaker 11
25:31
so maybe we can at least get one of the two, so both of them. You're, you're red and just introduce yourselves and you're, you can begin. Thank you, Mr. Chair. Justin Boyd, state senator, District
Senator Justin Boyd
Unverified
25:41
27. Alan McClain, state insurance commissioner. Leo Lu Ar insurance department chief analyst.
Thank you, Mr. Chair, for the opportunity
to present Senate Bill 237 in your committee this morning, a captive is an entity created to facilitate self-insurance for a company who owns the Captive. You might recall we're actually talking about this not related to this to legislation, but with schools having a captive and so basically it's just an entity for self insurance. This legislation seeks to make the ground more fertile, so captives will locate in Arkansas for Arkansas companies. Also, we would hope that we will
get outside investment where other companies who have captives locate their captives in Arkansas. So that's really what the point of this is, is to make more fertile ground, um, historically captives have located in places like Bermuda rather than in the United States, right sizing the regulations to attract captives is a national trend, and we're working to make sure that we don't lose captives and again have the fertile ground where hopefully they will be here.
Speaker 105
26:55
With that said, I'll turn it over to the experts. I don't have much to add to that, but we do try to make Arkansas
Speaker 106
27:06
a a fertile ground, the senator said, for for attracting captives, a number of businesses in Arkansas do form captives. It's just it's a method of of self-insuring and the captive is an insurance company was recognized as an insurance company, we talk about a captive, we're talking about an insurance company entity that is
formed to self-insure a company, a business. So the it's a uh You find it largely property and casualty or or the lines that are typically covered in some of our captives, it's not, I'm just kind of give you a little bit more of an overview. So when you look at our hard insurance market where it's really hard to where rates are pretty high right now and on a property insurance. This is a good alternative and you find people
wanting to form captives to help them to self-fund their own losses, so we're glad to be able to facilitate that and Chief analyst Liu and the rest of our finance team at the at the office, just all they do is monitor the financials of insurance companies and captives and people who are authorized to to to ensure in the state, so that we so we have a robust team that does that, but we also think it's good to encourage
people to form those captives. It creates some additional support. entities in the state who captive managers, third party administrators, CPA firms, people who support that, so we think it's good for the financial industry in the state as well, and, and who better than our team to help regulate those. So that's this just helps encourage that. So that's if you have any more specific questions, Leo can answer them. Senator Johnson and then Senator
Senator Mark Johnson
Unverified
28:58
Irvin. Um, Commissioner McClain, is EBD a captive? No, it's not considered
Speaker 106
29:07
a captive. It's just a state entity. It's just
Senator Mark Johnson
Unverified
29:10
because it doesn't have to be, but it's a, it's a self-insurance fine. Yes sir, right, but so it's to be silly for the state of Arkansas to create this entity because it can do what it can do as the state of Arkansas. OK. Second thing, um, will
Your department see premium tax increase. Well, this will raise
some money for the insurance department. Mr. Liu is nodding, so that's a good enough answer for me. I saw that, but I wanted to make sure I was seeing it correctly. Thank you very much. Thank you, Mr.
Senator Missy Irvin
Unverified
29:47
Chairman. Senator Irvin. So there was a lot of discussion in our executive subcommittee about the state of Arkansas creating a captive insurance for um our school property facilities. Well this
With this legislation affect that in any way?
Speaker 113
30:05
This is not intended to affect that in any way. This is totally dealing with the captive model that we have on the
Speaker 114
30:11
books now, and so, and so no it should not. OK, thank you. And Senator Irvin, I
Speaker 116
30:17
have reached out to Marty Gerrity and Jill Thayer
Senator Justin Boyd
Unverified
30:19
to have them double check to make sure that this isn't going to get in the way. Senator Penzo, uh, thank you, Mr. Chair.
Senator Clint Penzo
Unverified
30:32
Senator Boyd, what, what was the Origin of this bill like where was it requested by somebody in particular, or is it just policy you've picked up and Uh,
Senator Justin Boyd
Unverified
30:45
so, so that's a great question, Senator Pinzo. So where I first learned about this is National Council
of Insurance Legislators, and I believe you were there at the meeting with me, and again this is helping ensure Arkansas can compete with other states. We want people to do business in Arkansas, and again I believe this makes for
more fertile ground to attract those businesses and really it's you we want businesses who are located in Arkansas to have their captives in Arkansas. That's my primary intent, but hey, if we can bring in some other guys, that's great too. OK, thank you, sir. So
Speaker 5
31:24
in the insurance market that we're in, it's uh probably more favorable now than ever to to do
a situation with a captive of insurance and self-insure, that correct? Statement. Yes sir. So just as a cure on ignorance. What in these in these situations does your What's your fund balance or what you
Speaker 11
31:55
carry, is it got any correlation with your liability, whether on a property if you've got a $2 million property. Do
Speaker 5
32:07
you is there and these captives, you got to hold. 50,000, 100,000, is there a, is there some kind
Speaker 125
32:24
with you on that, um, Maybe a little long winded. I'll try to condense it. Um, the, the fund balance of these entities that own these captives should
not be affected. They will still, this is one of the risk management functions that the owners of these entities will do. They will still buy insurance typically they will um He a segregated fund in these captives to manage their retained risk, typically that's how it works. Um, it just provides the owners um
More flexibility to get insurance and reinsurance. It's kind of complicated. They have different kind of risk because they wouldn't, they would like to keep Without this, they will still keep those risks, but with this it provides them with more flexibility to go not only the insurance market but can directly go to the reinsurance market, and that's why this a
lot of these large Bigger entities corporations and businesses that would like to utilize this. It just simply give them more flexibility. There risk they're still managing. It's they will still have it. It doesn't affect their fund balance. They just Give them dedicated fund to manage the to counter the risk, and spreads, well, their
Speaker 11
34:16
liability is them rather than everybody else in the general
Speaker 125
34:20
market, right, right. It doesn't affect general consumers. Um, so that's why it's captive. It's somewhat like self insurance, so
Speaker 124
34:28
that's why there's this, this is a good thing. Thank you. Is there any other questions? Seeing none. You
Speaker 10
34:36
want to close your bill? Thank you, Mr. Chair. Um, again,
Senator Justin Boyd
Unverified
34:48
We want to be, we want to find the right size of regulations to make the ground fertile. We certainly want to protect our Kansans, but we also want to attract business interests, and I believe that this finds that balance and I'd appreciate a good vote and I make a motion to pass
and I hope someone will give me a second. Motion by Senator Boyd, second by Senator Penzo
Speaker 5
35:09
any discussion saying no all in favor say aye. All opposed like Sam, thank you. Senator, you've passed the bill.
237, you're going to go to 236. Thank
Senator Justin Boyd
Unverified
35:22
you, Mr. Chair. Senator Justin Boyd, Senate Bill 236. Alan McLean Insurance commissioner. Leo Lu,
Speaker 102
35:30
chief analyst of the insurance department. Thank you, Mr. Chair, again for the opportunity to
Senator Justin Boyd
Unverified
35:37
present Senate Bill 236 to your committee today, so first of all, I just want to clarify this relates to domestic insurers, a domestic insurer is an
insurance company that is licensed and operates within the same state where it is
chartered, so that means an insurance company located in Arkansas as opposed to a foreign insurance company is an insurance company that is incorporated in another state. It's say incorporated in Oklahoma, but then it comes into our Arkansas to sell insurance. That would be a foreign. So what we're talking about right now are domestic insurance companies, one that's located in Arkansas and sells insurance in Arkansas. This bill updates regulations on insurance holding companies, a holding company is simply an
umbrella company for insurance companies and non-insurance companies. An example of a of a holding company in Arkansas that would fit under this regulation would be Blue Cross Blue Cross Blue Shield, um, and with that
I'm gonna turn it over to the experts. Um, and, and I'll
Speaker 106
36:45
this is amending a law that's already on books regarding holding company regulation and, and so when we're uh
examining you can imagine a group of companies, a holding company, and one of them in Blue Cross example, it's they only own insurance companies, I believe, but they could be that that a holding company owns a Several different companies and an insurance company, so this just helps us in our examination of the group, and it is a national association of Insurance Commissioners passed a model, and it will be an accreditation standard for us to comply with, so we're hoping to
stay and keep our full accreditation with the NAIC. So this was vetted through the insurance companies that are members and for several years at the NAIC level and so this just helps our insolvency efforts and glad to answer any questions and Leo actually examines the companies and so he can drill into the details if you wish. And let me add one clarification in class that wasn't clear. The holding company
Senator Justin Boyd
Unverified
37:50
has to have at least one insurance company for this regulation to apply. If it's
just a I have a several farms, and that's all I have. This regulation has nothing to do with that. Only if there's an insurance company within the line of of companies. Are there
Speaker 10
38:13
any questions? Seeing none. You want close your bill? Yes,
Senator Justin Boyd
Unverified
38:21
sir. I would appreciate the opportunity to close for my bill. Uh, this is a bill that updates current regulation based on model legislation from the National Association of
Insurance Commissioners it is been well vetted and I would appreciate a good vote and I make a motion to pass. Motion by Senator Boyd,
Speaker 5
38:40
seconded by Senator Johnson, is there any discussion all in favor, say aye. I'll opposed like signed. Thank you, Senator. You have passed your 2nd bill. There
Speaker 11
38:52
is no other business before the committee, and we are adjourned until next Tuesday.
Agenda
CALL TO ORDER
SB94 J. Dotson TO AMEND THE REQUIREMENT FOR NEW ALL-TERRAIN VEHICLE DEALERS AND NEW LOW SPEED VEHICLE DEALERS TO MAINTAIN SERVICE AND PARTS STORAGE AREAS.
SB236 J. Boyd TO AMEND THE INSURANCE HOLDING COMPANY REGULATORY ACT.
SB237 J. Boyd TO AMEND THE LAW CONCERNING THE LICENSING AND REGULATION OF CAPTIVE INSURERS.
SB240 Hill TO AMEND THE CREDIT REPORTING DISCLOSURE ACT OF 1989; AND TO CLARIFY THE CONTENT REQUIRED FOR A NOTICE OF ADVERSE ACTION.
SB242 Hill TO AMEND THE LAW CONCERNING LOANS INVOLVING THE STOCK OF A STATE BANK.
HB1193 Cavenaugh TO REQUIRE AN INSURER TO INCLUDE A LIENHOLDER ON PAYMENTS MADE UNDER AN INSURANCE POLICY.
ADJOURNMENT
Documents
| Title | Type | Pages | Source |
|---|---|---|---|
| Agenda — INSURANCE & COMMERCE - SENATE, Feb 20, 2025 | Agenda | 2 | Official source ↗ |
Speakers
Speaker 5
Senator Matt McKee
Unverified
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Representative Frances Cavenaugh
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Senator Missy Irvin
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Senator Ricky Hill
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Senator Mark Johnson
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Senator Justin Boyd
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Senator Clint Penzo
Unverified
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