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Ohio Laws and Rules
(A) Authority
This rule is promulgated pursuant to section 3901.041 of the Revised Code, providing that the superintendent of insurance shall adopt, amend and rescind rules and make adjudications necessary to discharge the superintendent's duties and exercise the superintendent's powers under Title 39 of the Revised Code, subject to Chapter 119. of the Revised Code; and section Chapter 3305. of the Revised Code, which establishes an alternative or optional retirement program for eligible employees of public institutions of higher education. Pursuant to section 3305.03 of the Revised Code, the department of insurance shall designate three or more entities to provide investment options and periodically review each designated provider or vendor to ensure the requirements of Chapter 3305. of the Revised Code are met.
Sections 3901.19 to 3901.26 of the Revised Code prohibit unfair and deceptive acts or practices by any person in the business of insurance, which for the purposes of Chapter 3305. of the Revised Code, includes any person designated as a provider or vendor pursuant to section 3305.3 of the Revised Code. In addition, Section 3901.21 of the Revised Code also provides that the enumeration of specific unfair or deceptive acts or practices in the business of insurance is not exclusive or restrictive or intended to limit the power of the superintendent to adopt rules to implement that section.
(B) Purpose
The purpose of this rule is to establish procedures and set objective standards for the designation and for the periodic review of providers or vendors and the investment options offered to institutions of higher education to assure that the qualifications, standards and requirements in effect at the time of initial designation of the vendors or providers and the investment option or options remain in compliance with the requirements and purposes of Chapter 3305. of the Revised Code, and this rule.
(C) Definitions
Unless otherwise defined in this paragraph, terms used in this rule have the same meaning as defined in Chapter 3305. of the Revised Code and section 1.59 of the Revised Code:
(1) "Alternative or optional retirement plan or program" means a defined contribution plan sponsored by an institution of higher education and qualified under section 401(a) of the Internal Revenue Code that provides retirement and death benefits through one or more investment options. "Death benefits" may include accumulated investment account balance at death.
(2) "Applicant" means an entity that has applied to the department of insurance to be a designated provider or vendor of one or more investment options for an alternative or optional retirement plan or program sponsored by an institution of higher education.
(3) "Institution of higher education" means a public institution of higher learning as defined under division (A) of section 3505.01 of the Revised Code.
(4) "Investment options" may include life insurance, annuities, variable annuities, regulated investment trusts or companies, pooled investment funds, or other forms of investment, at the option of each electing employee.
(D) Procedure for designation by the department of insurance:
(1) Each applicant applying for designation as a provider or vendor of investment options shall provide the following documentation to the department of insurance evidencing that the applicant meets the standards, qualifications and requirements for designation:
(a) The applicant is authorized to conduct business in this state with regard to the investment options to be offered under an alternative or optional requirement plan or program sponsored by an institution of higher education.
(b) The applicant provides the same or similar investment options to public employees in at least ten other states; and
(2) The applicant provides the following in a form approved by the department of insurance:
(a) The applicant has experience and is capable of providing investment options for employees of institutions of higher education in this state. To qualify under this standard, the applicant must submit a detailed narrative describing its experience and capabilities. The narrative must include, at minimum, the following:
(i) The applicant's experience in providing investment options under alternative or optional plans or programs sponsored by institutions of higher education in other states;
(ii) The applicant's potential effectiveness in recruiting institutions of higher education or eligible employees as appropriate to enter into contracts and in retaining those contracts;
(iii) The nature and extent of the rights and benefits to be provided under the investment options;
(iv) The relationship between the rights and benefits under the investment options and the amount of the contributions made under those options;
(v) The suitability of the rights and benefits under the investment options to the needs and interests of eligible employees;
(vi) The capability of the applicant to provide the rights and benefits under the investment options; and
(vii) A certification by an authorized officer of the applicant that, if designated a provider or vendor, the company will abide by the contracts entered into by and between the provider or vendor and the institution of higher education without limitation, any summary plan descriptions or other materials or plan documents and the laws of this state and all applicable federal statutes and regulations.
(b) Documentation that the applicant meets the following minimum objective standards:
(i) A minimum of three billion dollars in IRS-qualified retirement plans for public employees.
(ii) If the applicant is an insurance company authorized to conduct the business of insurance in this state, it must offer only one or more insurance products filed and approved in this state as an alternative or optional retirement program.
(iii) If the applicant is other than an insurance company, it must be registered with the securities and exchange commission under the Investment Company Act of 1940; registered to conduct business in this state and in good standing with the department of commerce; and must be ranked among the top five investment companies by assets under management.
(iv) In applying the standards contained in this paragraph (D)(2)(b), the department may take into account the financial affairs of a holding, parent, affiliated or subsidiary company of the applicant if there is a legally enforceable contract between the applicant and the holding, parent, subsidiary or affiliated company guarantying the applicant's performance under the alternative or optional retirement system program.
(c) A copy of the materials related to the investment options that will be provided to the institutions of higher education.
(d) A minimum of three letters of recommendation from officers of institutions of higher education who must be among the principal officers for the institution's alternative or optional retirement plan or program, attesting to the potential effectiveness of the applicant and its investment option in the recruitment and retention of academic or administrative employees and the suitability of the rights and benefits under the investment option to the needs and interests of academic or administrative employees. The letters must be sent directly to the department of insurance by the institution's officer.
(e) An analysis of the present and future federal tax consequences to employees of institutions of higher education enrolling in the investment options.
(f) If the investment options are offered by an insurance company, an analysis of the extent of coverage for the plan with the Ohio life and health guaranty association.
(g) Other matters relevant to the department's review, including the following:
(i) The originals and one copy of all submissions comprising the application for designation must be provided in three-ring notebooks divided into sections in the order set forth in this rule, and with dividers clearly labeling the content of each section.
(ii) Unless the applicant is advised that the department requires additional time, the applicant will be notified, in writing, of the department's decision within thirty days of the applicant's submission of a complete application containing all of the documentation and submissions required by this rule.
(iii) Failure by the applicant to complete the application process, including without limitation, submitting the information required by the department in a timely manner, shall be deemed an incomplete application and the applicant will be asked to withdraw the application. If the applicant wishes to reapply at a later date, the applicant must comply with paragraph (D) of this rule as though no previous application had been filed.
(E) Review of provider or vendor designation and continuing qualification
(1) A designated provider or vendor shall have an affirmative duty to advise the department and the institution of higher education, in writing, of any change in the design of the investment options, its capability to provide the rights and benefits under the investment options, changes in the federal tax law affecting the rights and benefits under the investment options or any material change in the documentation, standards, qualifications or requirements submitted at the time of its application for designation.
(2) The department shall periodically review each designated provider or vendor and the investment options being offered to ensure that the requirements and purposes of Chapter 3305. of the Revised Code are being met. If the department finds that the provider or vendor is not in compliance with any requirement of Chapter 3305. of the Revised Code or the provider or vendor is not satisfactorily meeting the purposes of Chapter 3305. of the Revised Code by complying with the requirements and maintaining the qualifications and standards set forth in this rule, the department may rescind the provider or vendor's designation.
(3) Pursuant to section 3305.03 of the Revised Code, the department may engage a person with expertise in the relevant investment options to assist the department in its review of an applicant or a designated provider or vendor, without competitive bidding. All fees and administrative costs for the performance of services rendered by the person providing assistance shall be paid by the applicant, or the designated provider or vendor, as the case may be, through invoice from the department.
(4) Companies approved by the department as designated providers or vendors on or before December 31, 2008, shall be permitted to retain their status as designated providers or vendors, provided they continue to meet the qualifications and standards under which they were originally approved by the department and remain in compliance with the requirements of Chapter 3305. of the Revised Code and paragraph (E) of this rule.
(F) Penalties
An applicant or designated provider or vendor providing false or misleading information to the department of insurance, or its designee, or to an institution of higher education or failing to comply with any requirements of paragraph (E) of this rule shall have committed an unfair and deceptive practice under sections 3901.19 to 3901.26 of the Revised Code, which may result in administrative fines or rescission of designation as a provider or vendor or both. Nothing in this rule shall be construed to limit a private cause of action by an institution of higher education or a plan participant.
(G) Severability
If any provision of this rule or the application thereof to any person or circumstance is for any reason held to be invalid, the remainder of the rule and the application of such provision to other persons or circumstances shall not be affected thereby.
Effective: 02/19/2009
R.C.
119.032 review dates: 10/14/2008
and 08/29/2013
Promulgated Under:
119.03
Statutory
Authority:
3901.041
Rule
Amplifies:
3305.03
Prior
Effective Dates: 2/21/1998