Carolyn Fahey and Francine Semaya recently had the pleasure of interviewing Oklahoma Insurance Department Commissioner John Doak and others in the Department. They talked about the Oklahoma Senate Bill 1101, known as the Insurance Business Transfer Act, that was signed by Governor Mary Fallin on May 7, 2018. This new law provides an efficient mechanism for insurance companies to divest blocks of business without the onerous process of commutations and it applies to all lines of business, not just Property & Casualty.
The law is viewed as a simple mechanism for an insurer to divest itself of a block of business to an Oklahoma domestic insurer. It includes a robust regulatory review process to ensure the protection of policyholders and claimants, as well as affected reinsurers. An independent expert will be utilized to review each proposed transaction, including the protection of policyholders and claimants rights. Once the proposed transfer receives domestic regulatory approval from the domiciliary state of the transferring insurer, and approval of the Oklahoma Insurance Department, the proposal will be filed with the Oklahoma County District Court, which will approve the transfer transaction provided there is no negative impact on affected policyholders and/or claimants.
Commissioner Doak made special mention during the interview that Tyler Laughlin and Buddy Combs had done extensive work on the Insurance Business Transfer Act for over two years. As well, the Oklahoma Insurance Department is very appreciative of their state legislators, Senator John Sparks and Representative Glen Mulready. Glen is running to be the next insurance commissioner and Commissioner Doak is optimistic that he is going to succeed, as he is very ingrained in this Act and will be able to manage it effectively for the next eight years.
Carolyn Fahey: Commissioner, first, I want to thank you for taking the time to speak with us today. Please tell us about your background in insurance before your election as Oklahoma Commissioner in 2010.
Commissioner Doak: I was in insurance for about 25 years prior to my election. My experience includes working at brokers, carriers and on the acquisition phases of the business. Early in my career I started a Farmers Insurance Agency. My unique and varied background has afforded me the privilege and honor of working with consumers from across the kitchen table to across the boardroom and even around the globe with different types of transactions. My diverse background uniquely positioned me to run for office. As a Political Science graduate from the University of Oklahoma, I always had an interest in politics.
Francine Semaya: One of the biggest new developments in Oklahoma is the Insurance Business Transfer Act. How did the idea of simplifying the transfer of a block of business without having the approval of the affected policyholders or the reinsurers get started?
Commissioner Doak: I think it’s been clear for many years that insurers have needed a mechanism in the U.S. to transfer blocks of business. The most common method of transfer by merger or acquisition of reinsurance did not offer the efficiency and finality that insurers have found with Part 7 transfers in the UK. Because the Insurance Business Transfer Act is modeled after Part 7, it provides insurers with the ease of transfer finality that they need while providing due process protections for policyholders and other stakeholders. We view ourselves as an emerging market in Oklahoma and a leader. Oklahoma is located directly in the middle of the U.S. –we believe that this law will put us on the map for the global insurance industry. We won’t be a flyover state anymore; we’ll be a point of destination for these types of insurance transfers.
For the full article, refer to page 6 in the Fall 2018 issue. https://www.airroc.org/assets/docs/matters/AIRROC_Matters_Fall_2018_Vol_14%20No_2.pdf
