Bill Text: GA SB203 | 2011-2012 | Regular Session | Comm Sub

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Insurance; provide that certain individuals who collect/input data; automated claims adjudication system are exempt from licensure

Spectrum: Partisan Bill (Republican 3-0)

Status: (Passed) 2012-07-01 - Effective Date [SB203 Detail]

Download: Georgia-2011-SB203-Comm_Sub.html

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11 LC 37 1230ERS

The House Committee on Insurance offers the following substitute to SB 203:

A BILL TO BE ENTITLED
AN ACT

To amend Title 33 of the Official Code of Annotated, relating to insurance, so as to provide that certain individuals who collect and input data into an automated claims adjudication system are exempt from licensure; to provide for definitions; to change certain resident independent adjuster license requirements; to add certain nonresident independent adjuster license requirements; to establish a small business investment company credit; to provide definitions; to provide standardized application format; to provide for qualification requirements; to provide for limitations; to provide for certification continuance requirements; to provide for reporting; to provide for decertification; to provide for registration; to provide for reports to the Governor and General Assembly; to provide reports to the Commissioner of Insurance; to provide the tax credit; to provide for an effective date; to provided for related matters; to repeal conflicting laws; and for other purposes.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:

SECTION 1.

Title 33 of the Official Code of Georgia Annotated, relating to insurance, is amended by adding a new paragraph to subsection (a) of Code Section 33-23-1, relating to definitions, to read as follows:

"(3.1) 'Automated claims adjudication system' means a preprogrammed computer system designed for the collection, data entry, calculation, and final resolution of property insurance claims used under policies described in subsection (d) of Code Section 33-23-12 which:

(1) May only be utilized by a licensed independent adjuster, licensed agent, or supervised individuals operating pursuant to this paragraph;

(2) Shall comply with all claims payment requirements of the Georgia Insurance Code; and

(3) Shall be certified as compliant with this Code section by a licensed independent adjuster that is an officer of a business entity licensed under this chapter."

SECTION 2.

Said title is further amended by adding a new paragraph to subsection (b) of Code Section 33-23-1, relating to definitions, to read as follows:

"(8) An individual who collects claim information from, or furnishes claim information to, insureds or claimants, and who conducts data entry including entering data into an automated claims adjudication system, provided that the individual is an employee of a licensed independent adjuster or its affiliate where no more than 25 such persons are under the supervision of one licensed independent adjustor or licensed agent."

SECTION 3.

Said title is further amended by adding a new Code section to read as follows:

"33-1-19.

(a) As used in this Code section, the term:

(1) 'Affiliate' means:

(A) Any person who, directly or indirectly, beneficially owns, controls, or holds power to vote 15 percent or more of the outstanding voting securities or other voting ownership interest of a Georgia small business investment company or insurance company; or

(B) Any person, 15 percent or more of whose outstanding voting securities or other voting ownership interests are directly or indirectly beneficially owned, controlled, or held with power to vote by a Georgia small business investment company or insurance company.

(2) 'Allocation date' means the date on which a Georgia small business investment company receives an investment of designated capital from participating investors under this Code section.

(3) 'Department' means the Department of Economic Development established by Code Section 50-7-1.

(4) 'Designated capital' means an amount of money that:

(A) Is invested by a participating investor in a Georgia small business investment company; and

(B) Fully funds the purchase price of either or both participating investor's equity interest in a Georgia small business investment company or a qualified debt instrument issued by a Georgia small business investment company.

(5) 'Georgia small business investment company' means a partnership, corporation, trust, or limited liability company, organized on a for profit basis, that:

(A) Has its principal office located or is headquartered in Georgia;

(B) Has as its primary business activity the investment of cash in qualified businesses; and

(C) Is certified by the department as meeting the criteria in this Code section.

(6) 'Participating investor' means a person with state premium tax liability that contributes designated capital pursuant to this Code section.

(7) 'Person' means any natural person or entity, including, but not limited to, a corporation, general or limited partnership, trust, or limited liability company.

(8) 'Qualified business' means a business that meets all of the following requirements:

(A) It is headquartered in Georgia, its principal business operations are located in this state, and at least 60 percent of its employees are located in Georgia;

(B) It has not more than 100 employees;

(C) It is not predominantly engaged in:

(i) Professional services provided by accountants, doctors, or lawyers;

(ii) Banking or lending;

(iii) Real estate development;

(iv) Insurance;

(v) Oil and gas exploration;

(vi) Direct gambling activities; or

(vii) Making loans to or investments in a Georgia small business investment company or an affiliate; and

(D) It is not a franchise of and has no financial relationship with a Georgia small business investment company or any affiliate of a Georgia small business investment company prior to a Georgia small business investment company's first qualified investment in the business.

A business classified as a qualified business at the time of the first qualified investment in the business will remain classified as a qualified business and may receive continuing qualified investments from any Georgia small business investment company. Continuing investments will constitute qualified investments even though the business may not meet the definition of a qualified business at the time of such continuing investments.

(9) 'Qualified debt instrument' means a debt instrument issued by a Georgia small business investment company which meets all of the following criteria:

(A) It is issued at par value or a premium;

(B) It has an original maturity date of at least four years from the date of issuance, and a repayment schedule which is not faster than a level principal amortization over four years; and

(C) Has no interest or payment features that allow for the prepayment of interest or are tied to the profitability of the Georgia small business investment company or the success of its investments.

(10) 'Qualified distribution' means any distribution or payment by a Georgia small business investment company in connection with the following:

(A) Costs and expenses of forming, syndicating, and organizing the Georgia small business investment company, including fees paid for professional services, and the costs of financing and insuring the obligations of a Georgia small business investment company provided such payments are not made to a participating investor;

(B) An annual management fee not to exceed two percent of designated capital on an annual basis to offset the costs and expenses of managing and operating a Georgia small business investment company;

(C) Reasonable and necessary fees in accordance with industry custom for ongoing professional services, including, but not limited to, legal and accounting services related to the operation of a Georgia small business investment company, not including any lobbying or governmental relations;

(D) Any increase or projected increase in federal or state taxes, including penalties and related interest of the equity owners of a Georgia small business investment company resulting from the earnings or other tax liability of a Georgia small business investment company to the extent that the increase is related to the ownership, management, or operation of a Georgia small business investment company; and

(E) Payments of principal and interest to holders of qualified debt instruments issued by a Georgia small business investment company may be made without restriction whatsoever.

(11) 'Qualified investment' means the investment of money by a Georgia small business investment company in a qualified business for the purchase of any debt, debt participation, equity, or hybrid security of any nature and description whatsoever, including a debt instrument or security that has the characteristics of debt but which provides for conversion into equity or equity participation instruments such as options or warrants.

(12) 'State premium tax liability' means any liability incurred by an insurance company under Code Sections 33-3-26 and 33-8-4.

(b)(1) The department shall provide a standardized format for applying for the small business investment credit under subsection (j) of this Code section. An applicant is required to:

(A) File an application with the department;

(B) Pay a nonrefundable application fee of $7,500.00 at the time of filing the application;

(C) Submit as part of its application an audited balance sheet that contains an unqualified opinion of an independent certified public accountant issued not more than 35 days before the application date that states that the applicant has an equity capitalization of $500,000.00 or more in the form of unencumbered cash, marketable securities, or other liquid assets; and

(D) Have at least two principals or persons employed or engaged to manage the funds who each have a minimum of five years of money management experience in the venture capital or small business investment industry.

(2) The department may certify partnerships, corporations, trusts, or limited liability companies, organized on a for profit basis, which submit an application to be designated as a Georgia small business investment company if such applicant is located, headquartered, and licensed or registered to conduct business in Georgia, has as its primary business activity the investment of cash in qualified businesses, and meets the other criteria set forth in this Code section.

(3) The department shall review the organizational documents of each applicant for certification and the business history of each applicant, determine whether the applicant has satisfied the requirements of this Code section, and determine whether the officers and the board of directors, general partners, trustees, managers, or members are trustworthy and are thoroughly acquainted with the requirements of this Code section.

(4) Within 30 days after the receipt of an application, the department shall issue the certification or refuse the certification and communicate in detail to the applicant the grounds for refusal, including suggestions for the removal of such grounds.

(5) The department shall begin accepting applications to become a Georgia small business investment company as defined by subsection (a) of this Code section by August 1, 2011.

(c)(1) An insurance company or affiliate of an insurance company shall not, directly or indirectly:

(A) Beneficially own, whether through rights, options, convertible interest, or otherwise, 15 percent or more of the voting securities or other voting ownership interest of a Georgia small business investment company;

(B) Manage the operations of a Georgia small business investment company; or

(C) Control the direction of investments for a Georgia small business investment company.

(2) This subsection does not preclude a participating investor, insurance company, or other party from exercising its legal rights and remedies, including, without limitation, interim management of a Georgia small business investment company, in the event that a Georgia small business investment company is in default of its statutory obligations or its contractual obligations to such participating investor, insurance company, or other party, or from monitoring a Georgia small business investment company to ensure its compliance with this Code section or disallowing any investments that have not been approved by the department.

(3) The department may contract with an independent third party to review, investigate, and certify that the applications comply with the provisions of this Code section.

(d)(1) The aggregate amount of investment tax credits to be allocated to all participating investors of Georgia business investment companies under this Code section shall not exceed $125,000,000.00. No Georgia small business investment company, on an aggregate basis with its affiliates, may file credit allocation claims that exceed $125,000,000.00.

(2) Credits shall be allocated to participating investors in the order that the credit allocation claims are filed with the department, provided that all credit allocation claims filed with the department on the same day shall be treated as having been filed contemporaneously. Any credit allocation claims filed with the department prior to the initial credit allocation claim filing date will be deemed to have been filed on such initial credit allocation claim filing date. The department will set the initial credit allocation claim filing date to be not less than 120 days and not greater than 150 days after the department begins accepting applications for certification.

(3) In the event that two or more Georgia small business investment companies file credit allocation claims with the department on behalf of their respective participating investors on the same day, and the aggregate amount of credit allocation claims exceeds the aggregate limit of investment tax credits under this Code section or the lesser amount of credits that remain unallocated on that day, then the credits shall be allocated among the participating investors who filed on that day on a pro rata basis with respect to the amounts claimed. The pro rata allocation for any one participating investor is the product obtained by multiplying a fraction, the numerator of which is the amount of the credit allocation claim filed on behalf of a participating investor and the denominator of which is the total of all credit allocation claims filed on behalf of all participating investors on that day, by the aggregate limit of credits under this Code section or the lesser amount of credits that remain unallocated on that day.

(4) Within ten business days after the department receives a credit allocation claim filed by a Georgia small business investment company on behalf of one or more of its participating investors, the department shall notify the Georgia small business investment company of the amount of credits allocated to each of the participating investors of that Georgia small business investment company. In the event a Georgia small business investment company does not receive an investment of designated capital from each participating investor required to earn the amount of credits allocated to such participating investor within ten business days of the Georgia small business investment company's receipt of notice of allocation, then it shall notify the department on or before the next business day, and the credits allocated to such participating investor of the Georgia small business investment company will be forfeited. The department shall then reallocate those forfeited credits among the participating investors of the other Georgia small business investment companies on a pro rata basis with respect to the credit

allocation claims filed on behalf of the participating investors. The commissioner is authorized, but not required, to levy a fine of not more than $50,000.00 on any participating investor that does not invest the full amount of designated capital required to fund the credits allocated to it by the department in accordance with the credit allocation claim filed on its behalf.

(5) No participating investor, on an aggregate basis with its affiliates, shall file an allocation claim for more than 25 percent of the maximum amount of investment tax credits authorized hereunder, regardless of whether such claim is made in connection with one or more Georgia small business investment companies.

(e)(1) To maintain its certification, a Georgia small business investment company shall make qualified investments as follows:

(A) Within three years after the allocation date, a Georgia small business investment company shall invest an amount equal to at least 35 percent of its designated capital in qualified investments; and

(B) Within four years after the allocation date, a Georgia small business investment company shall invest an amount equal to at least 50 percent of its designated capital in qualified investments.

(2) Prior to making a proposed qualified investment in a specific business, a Georgia small business investment company shall request from the department a written determination that the proposed investment will qualify as a qualified investment in a qualified business. The department shall notify a Georgia small business investment company within ten business days from the receipt of a request of its determination and an explanation thereof. If the department fails to notify the Georgia small business investment company of its determination within the ten-business-day period, the proposed investment shall be deemed to be a qualified investment in a qualified business. If the department determines that the proposed investment does not meet the definition of a qualified investment or qualified business or both, the department may nevertheless consider the proposed investment a qualified investment and, if necessary, the business a qualified business, if the department determines that the proposed investment will further state economic development.

(3) All designated capital not invested in qualified investments by a Georgia small business investment company shall be held or invested in such manner as the Georgia small business investment company, in its discretion, deems appropriate. Designated capital and proceeds of designated capital returned to a Georgia small business investment company after being originally invested in qualified investments may be invested again in qualified investments, and such investment shall count toward the requirements of this subsection with respect to making investments of designated capital in qualified investments.

(4) If, within five years after its allocation date, a Georgia small business investment company has not invested at least 60 percent of its designated capital in qualified investments, neither the Georgia small business investment company nor its affiliates shall be permitted to receive management fees, until such time as it has made such qualified investments.

(5) If, within seven years after its allocation date, a Georgia small business investment company has not invested at least 100 percent of its designated capital in qualified investments, neither the Georgia small business investment company nor its affiliates shall be permitted to receive management fees, until such time as it has made such qualified investments.

(6) A Georgia small business investment company shall not invest more than 15 percent of its designated capital in any one qualified business without the specific approval of the department.

(7) For purposes of calculating the above investment percentage thresholds of paragraph (1) of this subsection, the cumulative amount of all qualified investments made by a Georgia small business investment company from the allocation date shall be considered.

(f)(1) Each Georgia small business investment company shall report the following to the department:

(A) As soon as practicable after the receipt of designated capital:

(i) The name of each participating investor from which the designated capital was received, including such participating investor's insurance tax identification number;

(ii) The amount of each participating investor's investment of designated capital; and

(iii) The date on which the designated capital was received;

(B) On an annual basis, on or before January 31 of each year:

(i) The amount of the Georgia small business investment company's remaining uninvested designated capital at the end of the immediately preceding taxable year;

(ii) Whether or not the Georgia small business investment company has invested more than 15 percent of its total designated capital in any one business;

(iii) All qualified investments that the Georgia small business investment company has made in the previous taxable year, including the number of employees of each qualified business in which it has made investments at the time of such investment and as of December 1 of the preceding taxable year; and

(iv) For any qualified business where the Georgia small business investment company no longer has an investment, the Georgia small business investment company shall provide employment figures for that company as of the last day before the investment was terminated;

(C) Other information that the department may reasonably request that will help the department ascertain the impact of the Georgia small business investment company

program both directly and indirectly on the economy of the State of Georgia, including, but not limited to, the number of jobs created by qualified businesses that have received qualified investments; and

(D) Within 180 days of the close of its fiscal year, annual audited financial statements of the Georgia small business investment company, which shall include the opinion of an independent certified public accountant.

(2) A Georgia small business investment company shall pay to the department an annual, nonrefundable certification fee of $5,000.00 on or before April 1, or $10,000.00 if later. No annual certification fee is required if the payment date for such fee is within six months of the date that a Georgia small business investment company is first certified by the department.

(3) Upon satisfying the requirements of subparagraph (B) of paragraph (1) of subsection (e) of this Code section, a Georgia small business investment company shall provide notice to the department and the department shall, within 60 days of receipt of such notice, either confirm that the Georgia small business investment company has satisfied the requirements of subparagraph (B) of paragraph (1) of subsection (e) of this Code section as of such date or provide notice of noncompliance and an explanation of any existing deficiencies. If the department does not provide such notification within 60 days, the Georgia small business investment company shall be deemed to have met the requirements of subparagraph (B) of paragraph (1) of subsection (e) of this Code section.

(g) A Georgia small business investment company may make qualified distributions at any time. In order for a Georgia small business investment company to make a distribution other than a qualified distribution to its equity holders, the cumulative amount of all qualified investments of the Georgia small business investment company shall equal or exceed 100 percent of its designated capital.

(h)(1) The department shall conduct an annual review of each Georgia small business investment company to determine if a Georgia small business investment company is abiding by the requirements of certification and to ensure that no investment has been made in violation of this Code section. The cost of the annual review shall be paid by each Georgia small business investment company according to a reasonable fee schedule adopted by the department.

(2) Any violation of paragraphs (A) and (B) of paragraph (1) of subsection (e) of this Code section may be grounds for decertification of a Georgia small business investment company and the disallowance of credits under subsection (k) of this Code section, provided that in all instances the department shall provide notice to the Georgia small business investment of the grounds of such proposed decertification and the opportunity to cure such violation before any such decertification shall become effective.

(3) Once a Georgia small business investment company has invested an amount cumulatively equal to 100 percent of its designated capital in qualified investments, provided that the Georgia small business investment company has met all other requirements under this Code section as of such date, the Georgia small business investment company shall no longer be subject to regulation by the department or the reporting requirements under subsection (f) of this Code section. Upon receiving certification by a Georgia small business investment company that it has invested an amount equal to 100 percent of its designated capital, the department shall notify a Georgia small business investment company within 60 days that it has or has not met the requirements, with a reason for the determination if it has not. If the department does not provide notification of deregulation within 60 days, the Georgia small business investment company shall be deemed to have met the requirements and shall be deemed to no longer be subject to regulation by the department.

(4) The department shall send written notice of any decertification proceedings to the Commissioner of Insurance and to the address of each participating investor whose tax credit may be subject to recapture or forfeiture, using the address shown on the last filing submitted to the department.

(i) All investments by participating investors for which tax credits are awarded under this Code section shall be registered or specifically exempt from registration.

(j) The department shall make an annual report to the governor and the chairs and ranking minority members of the committees having jurisdiction over taxes and economic development. The report shall include:

(1) The number of Georgia small business investment companies holding designated capital;

(2) The amount of designated capital invested in each Georgia small business investment company;

(3) The cumulative amount that each Georgia small business investment company has invested as of January 1, 2012, and the cumulative total each year thereafter;

(4) The cumulative amount of follow-on capital that the investments of each Georgia small business investment company have created in terms of capital invested in qualified businesses at the same time or subsequent to investments made by a Georgia small business investment company in such businesses by sources other than Georgia small business investment companies;

(5) The total amount of investment tax credits applied under this Code section for each year;

(6) The performance of each Georgia small business investment company with regard to the requirements for continued certification;

(7) The classification of the companies in which each Georgia small business investment company has invested according to industrial sector and size of company;

(8) The gross number of jobs created by investments made by each Georgia small business investment company and the number of jobs retained;

(9) The location of the companies in which each Georgia small business investment company has invested;

(10) Those Georgia small business investment companies that have been decertified, including the reasons for decertification; and

(11) Other related information as necessary to evaluate the effect of this Code section on economic development.

(k)(1) A participating investor as defined under subsection (a) of this Code section shall earn a vested credit against its state premium tax liability equal to 100 percent of the participating investor's investment of designated capital in a Georgia small business investment company. Beginning January 1, 2014, a participating investor may claim the credit as follows:

(A) In tax year 2014, an amount equal to 20 percent of the participating investor's investment of designated capital;

(B) In tax year 2015, an amount equal to 20 percent of the participating investor's investment of designated capital;

(C) In tax year 2016, an amount equal to 20 percent of the participating investor's investment of designated capital;

(D) In tax year 2017, an amount equal to 20 percent of the participating investor's investment of designated capital; and

(E) In tax year 2018, an amount equal to 20 percent of the participating investor's investment of designated capital.

(2) The credit for any taxable year shall not exceed the state premium tax liability for such year. If the amount of the credit determined under this Code section for any taxable year exceeds the state premium tax liability for such year, the excess shall be an investment tax credit carryover to future taxable years without limitation. Credits may be used in connection with both final payments and prepayments of a participating investor's state premium tax liability.

(3) A participating investor claiming a credit under this Code section is not required to pay any additional retaliatory tax levied as a result of claiming the credit.

(4) A participating investor is not required to reduce the amount of tax pursuant to the state premium tax liability included by the participating investor in connection with ratemaking for any insurance contract written in this state because of a reduction in the participating investor's tax liability based on the tax credit allowed under this Code section.

(5) If the taxes paid by a participating investor with respect to its state premium tax liability constitute a credit against any other tax that is imposed by this state, the participating investor's credit against the other tax shall not be reduced by virtue of the reduction in the participating investor's tax liability based on the tax credit allowed under this Code section.

(6) Final decertification of a Georgia small business investment company under subsection (h) of this Code section may result in the disallowance and the recapture of the credit allowed under this Code section. The amount to be disallowed and recaptured shall be assessed as follows:

(A) Decertification of a Georgia small business investment company within two years of its allocation date and prior to meeting the requirements of subparagraph (A) of paragraph (1) of subsection (e) of this Code section shall result in the disallowance of all of the credits allowed under this Code section; and

(B) Decertification of a Georgia small business investment company that has already met the requirements of subparagraphs (A) and (B) of paragraph (1) of subsection (e) of this Code section shall not cause the disallowance of any credits allowed under this Code section nor the recapture of any portion of the credits that was previously taken.

(7) A participating investor shall not transfer, agree to transfer, sell, or agree to sell the credit under this Code section until 180 days from the date on which the participating investor invested designated capital. After 180 days from the date of investment, a participating investor, or subsequent transferee, may transfer credits based upon rules adopted by the department to facilitate such transfers. Any transfer or sale of the credits shall not affect the time schedule for claiming the credit. Any tax credits recaptured under this Code section shall remain the liability of the original participating investor that applied the credit towards its tax liability.

(l) The Commissioner of Insurance may require each participating investor to provide an annual report, the contents of which to be determined by the Department of Insurance."

SECTION 4.

(a) This Act shall become effective July 1, 2011, except as provided in subsection (b) of this section.

(b) Section 3 of this Act shall become effective January 1, 2012.

SECTION 5.

All laws and parts of laws in conflict with this Act are repealed.