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Commerce tightens rules for insurance firms
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Posted on Jul 01 2005
The Department of Commerce has proposed stricter regulations on financial reporting of insurance companies to the Office of the Insurance Commissioner, amid labor bond-related problems resulting from the closures and downsizing in the garment industry.
The draft regulations, submitted by Commerce Secretary Andrew Salas, would require the annual audited financial statement of insurers to meet statutory accounting principles.
Insurance companies would also be required to provide an analysis of the effect an immediate calling of 20 percent of labor bonds issued by the company would have on the viability of the insurance firm to continue doing business.
Further, the proposed regulations would compel insurance firms to disclose information as to how much of its bonds are concentrated in the garment industry, with respect to particular business customers.
“If the company engages in the business of issuing labor bonds, the report shall identify the percentage of the dollar value of bonds issued by the company for non-resident laborers that are attributable to garment-related industries located in the Commonwealth.
“If the company engages in the business of issuing labor bonds, the report shall identify the names of the three largest companies or entities for which the company has issued labor bonds,” a portion of the amendments read.
The regulations also require insurers and bonding companies to provide specimen language of bonds and insurance policies to the insurance commissioner.
The labor bond is held liable for any repatriation expenses, back wages, and damages due to a nonresident worker, in the event that his or her employer is not able to settle such claims following termination of employment.
