Indiana Code
Chapter 23. Regulation of Insurance Holding Company Systems
27-1-23-2.5. Acquisitions in Which There Is a Change in Control of an Insurer; Pre-Acquisition Notification; Waiting Period; Competitive Standards; Violations; Order; Penalties

Sec. 2.5. (a) The following definitions apply throughout this section:
(1) "Acquisition" means any agreement, arrangement, or activity the consummation of which results in a person acquiring directly or indirectly the control of another person. The term includes the acquisition of voting securities, and the acquisition of assets, assumption reinsurance, and mergers.
(2) "Involved insurer" includes an insurer that:
(A) acquires;
(B) is acquired;
(C) is affiliated with an acquirer;
(D) is affiliated with an acquired; or
(E) is the result of a merger.
(b) Except as provided in subsection (c), this section applies to any acquisition in which there is a change in control of an insurer authorized to do business in Indiana.
(c) This section does not apply to the following:
(1) An acquisition subject to approval or disapproval by the commissioner under section 2 of this chapter.
(2) A purchase of securities solely for investment purposes, so long as those securities are not used by voting or otherwise to cause or attempt to cause the substantial lessening of competition in any insurance market in this state. If a purchase of securities results in a presumption of control under section 1(e) of this chapter, it is not solely for investment purposes unless the commissioner of the insurer's state of domicile accepts a disclaimer of control or affirmatively finds that control does not exist and this disclaimer action or affirmative finding is communicated by the domiciliary commissioner to the commissioner of Indiana.
(3) The acquisition of a person by another person when both persons are neither directly nor through affiliates primarily engaged in the business of insurance, if a pre-acquisition notification is filed with the commissioner in accordance with subsection (d) at least thirty (30) days before the proposed effective date of the acquisition. However, a pre-acquisition notification is not required for an exclusion from this section if the acquisition would otherwise be excluded from this section by any other subdivision of this subsection.
(4) The acquisition of persons already affiliated with the acquirer.
(5) An acquisition if, as an immediate result of the acquisition:
(A) in no market would the combined market share of the involved insurers exceed five percent (5%) of the total market;
(B) there would be no increase in any market share; or
(C) in no market would the combined market share of the involved insurers:
(i) exceed twelve percent (12%) of the total market; or
(ii) increase by more than two percent (2%) of the total market.
(6) An acquisition for which a pre-acquisition notification would be required under this section due solely to the resulting effect on the ocean marine insurance line of business.
(7) An acquisition of an insurer, if:
(A) the domiciliary commissioner of the insurer affirmatively finds that:
(i) the insurer is in failing condition;
(ii) there is a lack of feasible alternatives to improving that condition; and
(iii) the public benefits of improving the insurer's condition through the acquisition exceed the public benefits that would arise from not lessening competition; and
(B) those findings are communicated by the domiciliary commissioner to the commissioner of Indiana.
For the purposes of this subsection, a "market" means the total direct written insurance premium of all insurers providing insurance in Indiana for a particular line of business, as reported in the annual statements required to be filed by insurers licensed to do business in Indiana.
(d) An order pursuant to subsection (j) may be entered with respect to an acquisition to which this section applies unless the acquiring person files a pre-acquisition notification with respect to the acquisition and the waiting period referred to in subsection (f) has expired. An acquired person may also file a pre-acquisition notification with respect to an acquisition. Information in pre-acquisition notifications filed under this section is confidential and protected from disclosure under section 6 of this chapter.
(e) A pre-acquisition notification filed under this section must be in the form and must contain the information prescribed by the NAIC, as adopted by the commissioner in rules under IC 4-22-2, with respect to markets that meet the description set forth in subsection (c)(5), causing an acquisition not to be exempted from the provisions of this section. The commissioner may require additional material and information that the commissioner considers necessary to determine whether the proposed acquisition, if consummated, would violate the competitive standard set forth in subsection (g). The required information may include an opinion of an economist as to the competitive impact of the acquisition in Indiana, accompanied by a summary of the education and experience of the economist, indicating the economist's ability to render an informed opinion.
(f) The waiting period required with respect to a proposed acquisition begins on the day when the commissioner receives a pre-acquisition notification and ends:
(1) on the thirtieth day after the day the commissioner receives the notification; or
(2) upon the commissioner's termination of the waiting period, if earlier.
Before the end of the waiting period, the commissioner, on a one-time basis, may require the submission of additional needed information relevant to the proposed acquisition. If the commissioner requests additional information under this subsection, the waiting period ends on the earlier of the thirtieth day after receipt of the additional information by the commissioner or the termination of the waiting period by the commissioner.
(g) The commissioner may enter an order under subsection (j) with respect to an acquisition if:
(1) there is substantial evidence that the effect of the acquisition may be substantially to lessen competition in any line of insurance in Indiana or to tend to create a monopoly in any line of insurance in Indiana; or
(2) the insurer fails to file adequate information in compliance with subsections (d) and (e).
(h) In determining whether a proposed acquisition to which this section applies would violate the competitive standard set forth in subsection (g), the commissioner shall consider the following:
(1) An acquisition to which this section applies that involves two (2) or more insurers competing in the same market is prima facie evidence of a violation of the competitive standard:
(A) If the market is highly concentrated and the involved insurers possess the following shares of the market:
(i) Insurer A a share of four percent (4%) and insurer B a share of four percent (4%) or more.
(ii) Insurer A a share of ten percent (10%) and insurer B a share of two percent (2%) or more.
(iii) Insurer A a share of fifteen percent (15%) and insurer B a share of one percent (1%) or more.
(B) If the market is not highly concentrated and the involved insurers possess the following shares of the market:
(i) Insurer A a share of five percent (5%) and insurer B a share of five percent (5%) or more.
(ii) Insurer A a share of ten percent (10%) and insurer B a share of four percent (4%) or more.
(iii) Insurer A a share of fifteen percent (15%) and insurer B a share of three percent (3%) or more.
(iv) Insurer A a share of nineteen percent (19%) and insurer B a share of one percent (1%) or more.
For the purposes of this subdivision, a highly concentrated market is a market in which the share of the four (4) largest insurers is seventy-five percent (75%) or more of the market. Percentages not referred to in this subdivision must be interpolated proportionately to the percentages that are referred to in this subdivision. If more than two (2) insurers are involved in a proposed acquisition, exceeding the total of the two (2) figures set forth for insurer A and insurer B in an item set forth in this subdivision is prima facie evidence of violation of the competitive standard set forth in subsection (g). For the purpose of this subdivision, the insurer with the largest share of the market shall be considered to be insurer A.
(2) There is a significant trend toward increased concentration when the aggregate market share of any grouping of the largest insurers in the market, from the two (2) largest to the eight (8) largest, has increased by seven percent (7%) or more of the market over a period of time extending from any base year five (5) to ten (10) years before the acquisition up to the time of the acquisition. Any acquisition or merger to which this section applies involving two (2) or more insurers competing in the same market is prima facie evidence of violation of the competitive standard set forth in subsection (g) if:
(A) there is a significant trend toward increased concentration in the market;
(B) one (1) of the insurers involved is one (1) of the insurers in a grouping of those large insurers showing the requisite increase in the market share; and
(C) the market share of another involved insurer is two percent (2%) or more.
(3) For the purposes of this subsection:
(A) The term "insurer" includes any company or group of companies under common management, ownership, or control.
(B) The term "market" means the relevant product and geographical markets. In determining the relevant product and geographical markets with respect to an acquisition, the commissioner shall give due consideration to, among other things, the definitions or guidelines, if any, promulgated by the NAIC, and to information, if any, submitted by parties to the acquisition. In the absence of sufficient information to the contrary, the relevant product market is assumed to be the direct written insurance premium for a line of business that is used in the annual statement required to be filed by insurers doing business in Indiana, and the relevant geographical market is assumed to be Indiana.
(C) The burden of showing prima facie evidence of a violation of the competitive standard rests upon the commissioner.
(4) Even though an acquisition is not prima facie violative of the competitive standard under subdivisions (1) and (2), the commissioner may establish the requisite anticompetitive effect based upon other substantial evidence. Even though an acquisition is prima facie violative of the competitive standard under subdivisions (1) and (2), a party may establish the absence of the requisite anticompetitive effect based upon other substantial evidence. Relevant factors in making a determination under this subdivision include, but are not limited to, the following:
(A) Market shares.
(B) Volatility of ranking of market leaders.
(C) Number of competitors.
(D) Concentration and trend of concentration in the industry.
(E) Ease of entry into and exit from the market.
(i) An order may not be entered under subsection (j) if:
(1) the acquisition will yield substantial economies of scale or economies in resource utilization that cannot be feasibly achieved in any other way, and the public benefits that would arise from those economies exceed the public benefits that would arise from not lessening competition; or
(2) the acquisition will substantially increase the availability of insurance, and the public benefits of that increase exceed the public benefits that would arise from not lessening competition.
(j) If an acquisition violates the standards set forth in this section, the commissioner may enter an order:
(1) requiring an involved insurer to cease and desist from doing business in Indiana with respect to the line or lines of insurance involved in the violation; or
(2) denying the application of an acquired or acquiring insurer for a license to do business in Indiana.
(k) An order may not be entered under subsection (j) unless:
(1) there is a hearing;
(2) notice of the hearing is issued before the end of the waiting period and not less than fifteen (15) days before the hearing; and
(3) the hearing is concluded and the order is issued not more than sixty (60) days after the end of the waiting period.
Every order shall be accompanied by a written decision of the commissioner setting forth the commissioner's findings of fact and conclusions of law.
(l) An order entered under subsection (j) shall not become final less than thirty (30) days after it is issued, during which time the involved insurer may submit a plan to remedy the anticompetitive impact of the acquisition within a reasonable time. Based upon that plan or other information, the commissioner shall specify the conditions, if any, under which the aspects of the acquisition causing a violation of the standards of this section would be remedied and the order vacated or modified, and the time period within which those aspects would have to remedied.
(m) An order entered under subsection (j) does not apply if the acquisition to which the order applies is not consummated.
(n) A person who violates a cease and desist order issued by the commissioner under subsection (j) while that order is in effect may, after notice and hearing under IC 4-21.5 and upon order of the commissioner, be subject at the discretion of the commissioner to any one (1) or more of the following:
(1) A civil penalty of not more than ten thousand dollars ($10,000) for each day of violation.
(2) The suspension or revocation of the person's license.
(3) Both a monetary penalty under subdivision (1) and the suspension or revocation or the person's license under subdivision (2).
(o) An insurer or other person who fails to make any filing required by this section and also fails to demonstrate a good faith effort to comply with that filing requirement is subject to a civil penalty of not more than fifty thousand dollars ($50,000).
(p) Sections 8(b), 8(c), and 10 of this chapter do not apply to an acquisition to which this section applies.
As added by P.L.26-1991, SEC.10. Amended by P.L.124-2018, SEC.40.