Current through Register 2024 Notice Reg. No. 38, September 20, 2024
(a) Variable products may be reviewed to determine
if the investments involve hazardous operations.
(b) Hazardous operations shall not exist if the
variable product issued, or issued for delivery, in this state:
(1) has underlying investment portfolio(s) that
are registered under the Investment Company Act of 1940, regardless of whether such
underlying portfolio(s) meet the criteria set forth in Section
2534.45 of these regulations;
(2) is issued in connection with a plan that is
subject to the fiduciary standards of the Employee Retirement Income Security Act of
1974 (ERISA) or is issued in connection with a welfare benefit, deferred
compensation, pension, profit sharing, or retirement plan established or maintained
by or for a plan sponsor;
(3) is a
variable life insurance contract issued under California Insurance Code Section
10506.3;
(4) is issued under California Insurance Code
Section
10541 to
entities such as a trust or foundation;
(5) or is issued only to "accredited investors" as
that term is defined in Section 501(a) of Regulation D, promulgated under the
Securities Act of 1933, (17 CFR
Section 230.501(a)) or to
"qualified purchasers" as that term is defined in Section 2(a)(51)(A) of the
Investment Company Act of 1940, ( 15 USC § 80a -2(a)(51)(A)).
(c) Notwithstanding the above, the Commissioner
reserves the right to review any variable product falling into any of the above
categories for possible hazardous operations where he deems there is good cause to
believe that the issuance of such a product may pose a hazard to California
policyholders or the public, or where he finds that any material risk is not
adequately disclosed.
(d) If the
Commissioner determines that hazardous operations are involved, the following
procedure will be utilized:
(1) The insurer will
be notified of the Commissioner's initial finding regarding hazardous operations. At
that time, the insurer will be given a reasonable opportunity to present a response
consisting of evidence to refute the Commissioner's initial findings. Such response
shall be given within 30 days of the service of the Commissioner's initial
findings.
(2) If the insurer fails to
provide satisfactory evidence that hazardous operations are not involved in the
variable product, pursuant to the authority of Article 14.5., Chapter 1., Part 2.,
Division 1. of the Insurance Code, commencing with section 1065.1, the Commissioner
shall issue such order or orders as are necessary to support his or her findings
regarding hazardous operations. Such orders shall include, but not be limited to,
the prohibition of the sale, issuance and delivery of an insurance policy or
contract. The Commissioner may exercise all other powers provided in Article 14.5.
Any hearing held pursuant to this article shall be before an administrative law
judge of the Administrative Hearing Bureau of the Department of
Insurance.
1. New section
filed 12-13-2006; operative 1-12-2007 (Register 2006, No.
50).
Note: Authority cited: Sections 1065.1 and Section
10506(h),
Insurance Code. Reference: Sections 1065.1 and Section
10506(h),
Insurance Code.
