# Title 26.1 — Insurance

## Chapter 26.1-10.2 — Own Risk and Solvency Assessments

### § 26.1-10.2-01. Definitions.

1. "Insurance group" means those insurers and affiliates included within an insurance
holding company system as defined in chapter 26.1-10.
2. "Insurer" has the same meaning as set forth in section 26.1-29-02, except the term
does not include agencies, authorities, or instrumentalities of the United States, its
possessions and territories, the Commonwealth of Puerto Rico, the District of
Columbia, or a state or political subdivision of a state.
3. "Own risk and solvency assessment" means a confidential internal assessment,
appropriate to the nature, scale, and complexity of an insurer or insurance group,
conducted by that insurer or insurance group of the material and relevant risks
associated with the insurer or insurance group's current business plan, and the
sufficiency of capital resources to support those risks.
4. "Own risk and solvency assessment guidance manual" means the current version of
the own risk and solvency assessment guidance manual developed and adopted by
the national association of insurance commissioners and adopted by the
commissioner and as amended from time to time. A change in the own risk and
solvency assessment guidance manual is effective on the January first following the
calendar year in which the changes have been adopted by the national association of
insurance commissioners and the commissioner.
5. "Own risk and solvency assessment summary report" means a confidential high-level
summary of an insurer or insurance group's own risk and solvency assessment.
### § 26.1-10.2-02. Risk management framework.

An insurer shall maintain a risk management framework to assist the insurer with
identifying, assessing, monitoring, managing, and reporting on the material and relevant risks of
the insurer. This requirement may be satisfied if the insurance group of which the insurer is a
member maintains a risk management framework applicable to the operations of the insurer.
### § 26.1-10.2-03. Own risk and solvency assessment requirement.

Subject to section 26.1-10.2-05, an insurer, or the insurance group of which the insurer is a
member, regularly shall conduct an own risk and solvency assessment consistent with a
process comparable to the own risk and solvency assessment guidance manual. The own risk
and solvency assessment must be conducted no less than annually but also at any time there
are significant changes to the risk profile of the insurer or the insurance group of which the
insurer is a member.
### § 26.1-10.2-04. Own risk and solvency assessment summary report.

1. Upon the commissioner's request, and no more than once each year, an insurer shall
submit to the commissioner an own risk and solvency assessment summary report or
any combination of reports that together contain the information described in the own
risk and solvency assessment guidance manual, applicable to the insurer or the
insurance group of which it is a member. Notwithstanding any request from the
commissioner, if the insurer is a member of an insurance group, the insurer shall
submit the reports required by this subsection if the commissioner is the lead state
commissioner of the insurance group as determined by the procedures within the
financial analysis handbook adopted by the national association of insurance
commissioners.
2. The report must include a signature of the insurer or insurance group's chief risk officer
or other executive having responsibility for the oversight of the insurer's enterprise risk
management process attesting to the best of the individual's belief and knowledge that
the insurer applies the enterprise risk management process described in the own risk

and solvency assessment summary report and that a copy of the report has been
provided to the insurer's board of directors or the appropriate committee of the board.
3. An insurer may comply with subsection 1 by providing the most recent and
substantially similar report provided by the insurer or another member of an insurance
group of which the insurer is a member to the commissioner of another state or to a
supervisor or regulator of a foreign jurisdiction, if that report provides information that
is comparable to the information described in the own risk and solvency assessment
guidance manual. Any report in a language other than English must be accompanied
by a translation of that report into the English language.
### § 26.1-10.2-05. Exemption.

1. An insurer is exempt from the requirements of this chapter 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 federal flood program,
less than five hundred million dollars; and
b. The insurance group of which the insurer is a member 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, less than one billion dollars.
2. If an insurer qualifies for exemption under subdivision a of subsection 1, but the
insurance group of which the insurer is a member does not qualify for exemption under
subdivision b of subsection 1, then the own risk and solvency assessment summary
report that may be required under section 26.1-10.2-04 must include every insurer
within the insurance group. This requirement may be satisfied by the submission of
more than one own risk and solvency assessment summary report for any
combination of insurers provided any combination of reports includes every insurer
within the insurance group.
3. If an insurer does not qualify for exemption under subdivision a of subsection 1, but
the insurance group of which the insurer is a member qualifies for exemption under
subdivision b of subsection 1, then the only own risk and solvency assessment
summary report that may be required under section 26.1-10.2-04 must be the report
applicable to that insurer.
4. An insurer that does not qualify for exemption under subsection 1 may apply to the
commissioner for a waiver from the requirements of this chapter based upon unique
circumstances. In deciding whether to grant the request for waiver, the commissioner
may consider the type and volume of business written, the ownership and
organizational structure of the insurer, and any other factor the commissioner
considers relevant to the insurer or insurance group of which the insurer is a member.
If the insurer is part of an insurance group with insurers domiciled in more than one
state, the commissioner shall coordinate with the lead state commissioner and with the
other domiciliary commissioners in considering whether to grant the insurer's request
for a waiver.
5. Notwithstanding the exemptions stated in this section:
a. The commissioner may require an insurer maintain a risk management
framework, conduct an own risk and solvency assessment, and file an own risk
and solvency assessment summary report based on unique circumstances,
including the type and volume of business written, the ownership and
organizational structure of the insurer, a federal agency request, or an
international supervisor request.
b. The commissioner may require an insurer maintain a risk management
framework, conduct an own risk and solvency assessment, and file an own risk
and solvency assessment summary report if the insurer has risk-based capital for
company action level event as set forth in section 26.1-03.1-03; meets one or
more of the standards of an insurer deemed to be in hazardous financial

condition as defined in section 26.1-06.1-11; or otherwise exhibits qualities of a
troubled insurer as determined by the commissioner.
6. If an insurer that qualifies for an exemption under subsection 1 subsequently no longer
qualifies for that exemption due to changes in premium as reflected in the insurer's
most recent annual statement or in the most recent annual statements of the insurers
within the insurance group of which the insurer is a member, the insurer has one year
following the year the threshold is exceeded to comply with the requirements of this
chapter.
### § 26.1-10.2-06. Contents of an own risk and solvency assessment summary report.

1. The own risk and solvency assessment summary report must be prepared consistent
with the own risk and solvency assessment guidance manual subject to the
requirements of subsection 2. Documentation and supporting information must be
maintained and made available upon examination or upon request of the
commissioner.
2. The review of the own risk and solvency assessment summary report and any
additional request for information must be made using similar procedures used in the
analysis and examination of multi-state or global insurers and insurance groups.
### § 26.1-10.2-07. Confidentiality.

1. Any document, material, or other information, including the own risk and solvency
assessment summary report, in the possession of or control of the insurance
department which is obtained by, created by, or disclosed to the commissioner or any
other person under this chapter, is recognized by this state as being proprietary and to
contain trade secrets. Any such document, material, or other information is confidential
and privileged, not subject to section 44-04-18, not subject to subpoena, and not
subject to discovery and not admissible in evidence in any private civil action.
However, the commissioner may use any document, material, or other information in
the furtherance of any regulatory or legal action brought as a part of the
commissioner's official duties. The commissioner may not otherwise make the
document, material, or other information public without the prior written consent of the
insurer.
2. Neither the commissioner nor any person that received any document, material, or
other own risk and solvency assessment-related information, through examination or
otherwise, while acting under the authority of the commissioner or with whom such
document, material, or other information is shared under this chapter may be permitted
or required to testify in any private civil action concerning any confidential document,
material, or information subject to subsection 1.
3. To assist in the performance of the commissioner's regulatory duties, the
commissioner:
a. Upon request, may share any document, material, or other own risk and solvency
assessment-related information, including any confidential and privileged
document, material, or information subject to subsection 1 and any proprietary
and trade secret document and material with any other state, federal, or
international financial regulatory agency, including a member of any supervisory
college as defined in section 26.1-10-06.1, the national association of insurance
commissioners, or any third-party consultant designated by the commissioner,
provided the recipient agrees in writing to maintain the confidentiality and
privileged status of the own risk and solvency assessment-related document,
material, or other information and has verified in writing the legal authority to
maintain confidentiality.
b. May receive any document, material, or other own risk and solvency assessment-
related information, including any otherwise confidential and privileged document,
material, or information, and any proprietary and trade-secret information or
document, from regulatory officials of other foreign or domestic jurisdictions,
including a member of any supervisory college as defined in section 26.1-10-06.1

or from the national association of insurance commissioners, and shall maintain
as confidential or privileged any document, material, or information received with
notice or the understanding it is confidential or privileged under the laws of the
jurisdiction that is the source of the document, material, or information.
c. Shall enter a written agreement with the national association of insurance
commissioners or a third-party consultant governing sharing and use of
information provided under this chapter, consistent with this subsection which
must:
(1) Specify procedures and protocols regarding the confidentiality and security
of information shared with the national association of insurance
commissioners or a third-party consultant under this chapter, including
procedures and protocols for sharing by the national association of
insurance commissioners with other state regulators from states in which
the insurance group has domiciled insurers. The agreement must provide
the recipient agrees in writing to maintain the confidentiality and privileged
status of any own risk and solvency assessment-related document, material,
or other information and has verified in writing the legal authority to maintain
confidentiality;
(2) Specify ownership of information shared with the national association of
insurance commissioners or a third-party consultant under this chapter
remains with the commissioner and the national association of insurance
commissioner's or a third-party consultant's use of the information is subject
to the direction of the commissioner;
(3) Prohibit the national association of insurance commissioners or third-party
consultant from storing the information shared under this chapter in a
permanent database after the underlying analysis is completed;
(4) Require prompt notice to be given to an insurer for which confidential
information in the possession of the national association of insurance
commissioners or a third-party consultant under this chapter is subject to a
request or subpoena to the national association of insurance commissioners
or a third-party consultant for disclosure or production;
(5) Require the national association of insurance commissioners or a third-party
consultant to consent to intervention by an insurer in any judicial or
administrative action in which the national association of insurance
commissioners or a third-party consultant may be required to disclose
confidential information about the insurer shared with the national
association of insurance commissioners or a third-party consultant under
this chapter; and
(6) In the case of an agreement involving a third-party consultant, provide for
the insurer's written consent.
4. The sharing of any information or document by the commissioner under this chapter
does not constitute a delegation of regulatory authority or rulemaking, and the
commissioner is solely responsible for the administration, execution, and enforcement
of this chapter.
5. A waiver of any applicable privilege or claim of confidentiality in any document,
proprietary and trade-secret material, or other own risk and solvency
assessment-related information does not occur as a result of disclosure of the own risk
and solvency assessment-related information or document to the commissioner under
this section or as a result of sharing as authorized in this chapter.
6. Any document, material, or other information in the possession or control of the
national association of insurance commissioners or a third-party consultant under this
chapter is confidential and privileged, not subject to section 44-04-18, not subject to
subpoena, and not subject to discovery and not admissible in evidence in any private
civil action.

### § 26.1-10.2-08. Sanctions - Penalty.

Any insurer failing, without just cause, to timely file the own risk and solvency assessment
summary report as required in this chapter, after notice and hearing, shall pay a penalty of one
thousand dollars for each day's delay. The commissioner may reduce the penalty if the insurer
demonstrates to the commissioner the imposition of the penalty would constitute a financial
hardship to the insurer.
