Okla. Stat. tit. 36, § 36-1509

discounting - Annual actuarial opinions - Investment limitations -

Unusual dividend or benefit payments.

A. If the Insurance Commissioner determines in writing that an

insurer's unearned premium reserve, however computed, is inadequate,

the Commissioner may require the insurer to compute the reserve or

any part thereof according to any other method or methods as are

prescribed in this article.

B. If the loss experience of an insurer shows that its loss

reserves, however estimated, are inadequate, the Commissioner, in

writing, shall require the insurer to maintain loss reserves in an

increased amount as is needed to make them adequate.

C. 1. Insurers shall not use present value discounting for

computing reserves for property and casualty insurance, except for

workers' compensation carriers and physicians' and hospitals'

professional liability insurance written on an occurrence basis.

Workers' compensation carriers may use present value discounting at

a rate of four percent (4%) for disability and death claims.

Property and casualty insurers which elect to use present value

discounting for computing reserves on physicians' and hospitals'

professional liability insurance shall file initially, and

thereafter annually, an actuarial opinion certifying to the adequacy

of such reserves which shall include an analysis of the propriety of

loss payout patterns, interest rate assumptions used in developing

the discount and the adequacy of the insurer's rates. Additionally,

the actuary shall consider the quality and liquidity of the

insurer's assets and the nature and extent of the insurer's

reinsurance program. In no event shall the interest rate used to

compute the discounted reserves exceed the insurer's average yield

on invested assets for the year, less one percent (1%).

2. Annual actuarial opinions required pursuant to this

subsection shall be filed by the insurer on or before the first day

of April. All actuarial opinions shall be from an independent

actuary with membership in the American Academy of Actuaries or The

Casualty Actuarial Society.

3. Except for workers' compensation insurance carriers,

insurers discounting reserves pursuant to this subsection shall

invest and maintain their funds only in cash; securities described

in the following sections of this Code:

Oklahoma Statutes - Title 36. Insurance Page 389

a. Section 1607 (securities of or guaranteed by the

United States),

b. Section 1608 (state and Canadian public obligations),

c. Section 1609 (county, municipal and district

obligations),

d. Section 1610 (public improvement bonds),

e. Section 1611 (obligations payable from public utility

revenues) limited to issues which, at time of

purchase, are rated A or better by Standard and Poor's

Bond Guide or Moody's Bond Record,

f. Section 1614 (corporate obligations) limited to issues

which, at time of purchase, are rated A or better by

Standard and Poor's Bond Guide or Moody's Bond Record,

and

g. Section 1620 (deposits, banks, savings and loans);

and any other investment specifically approved by the Commissioner.

4. This subsection applies to reserves established in

connection with incidents of loss occurring on or after January 1,

1989. The investment limitations prescribed by this subsection

shall be applicable on or after January 1, 1989.

D. During any period of reserve strengthening mandated by the

Commissioner pursuant to the provisions of this section, no insurer

shall pay dividends or other benefits which would not be normal

payments under the terms of a policy to any stockholder or

policyholder of such insurer and such insurer shall be subject to

any additional reasonable restrictions as the Commissioner shall

deem prudent.

E. Insurers shall report, on a form prescribed by the

Commissioner and filed with their annual statement, all funds

collected through policy fees or assessments which were collected in
rmal

payments under the terms of a policy to any stockholder or

policyholder of such insurer and such insurer shall be subject to

any additional reasonable restrictions as the Commissioner shall

deem prudent.

E. Insurers shall report, on a form prescribed by the

Commissioner and filed with their annual statement, all funds

collected through policy fees or assessments which were collected in

response to a written request to increase inadequate reserves from

the Commissioner made pursuant to the provisions of this section.

F. 1. Insurers domiciled in this state that are issuing

policies of medical professional liability insurance to physicians,

allied health care professionals and health care institutions, as

defined by Section 2202 of this title, on July 1, 2004, are granted

a moratorium on the applicability of any provisions of the laws of

this state that require the maintenance of adequate reserves. The

moratorium shall be in effect until December 31, 2008.

2. Any insurer eligible to utilize the moratorium provided by

this section that elects to utilize the moratorium shall notify the

Commissioner in writing of the election prior to the application of

the moratorium to the insurer.

3. Any policy issued by an insurer utilizing the moratorium

provided by this section shall, during the moratorium period,

contain the following notice in ten-point type on the front page and

the declaration page:

Oklahoma Statutes - Title 36. Insurance Page 390

NOTICE

The insurer is not subject to the insurance laws and regulations

related to maintenance of reserves and surplus.