34 TAC §41.15
The Teacher Retirement System of Texas (TRS) adopts on an
emergency basis a new §41.15 concerning the requirements to bid on insurance
for school district employees and retirees. The new rule is to be adopted
on an emergency basis pursuant to §2001.034 of the Texas Government Code,
which allows a state agency to adopt an emergency rule if a requirement of
state or federal law requires adoption of the rule on less than 30 days notice.
The new rule will implement Insurance Code article 3.50-4A, which was passed
by the 76th Legislature, 1999 in Senate Bill 1128 and became effective September
1, 1999. In addition, an amendment to the title of Chapter 41 is adopted on
an emergency basis which will more accurately reflect the subject matter of
the chapter. New titles for subchapters A and B are also being adopted on
an emergency basis. The new section is being simultaneously proposed for permanent
adoption in this issue.
In accordance with the new law, the rule sets forth the requirements for
the selection of contractors for new insurance plans established by Insurance
Code article 3.50-4A, including long-term care insurance, optional permanent
life insurance, and short-term and long-term disability insurance. The selection
requirements include minimum premium income requirements and minimum capital
and surplus requirements. These criteria are necessary to ensure financial
stability and integrity of the new programs and are consistent with Insurance
Code article 3.50-4A, §2(d), which provides that TRS may consider "ability
to service contracts, past experiences, financial stability, and other relevant
criteria." The rule also requires contractors to administer enrollment, adjudication
of claims and coordination of services for the applicable insurance plans
and requires contractors to account for premiums collected and disbursed.
This section is adopted on an emergency basis to enable the retirement
system to proceed with the issuance of a request for proposals and therefore
comply with the requirements of the new law, which became effective September
1, 1999. The agency finds that requirements of state law (specifically those
found in Insurance Code article 3.50-4A) require the adoption of this new
rule on fewer than 30 days notice. The rule is simultaneously being proposed
for permanent adoption.
The new section is adopted on an emergency basis under the Government
Code, Chapter 825, §825.102, which authorizes the Board of Trustees of
the Teacher Retirement System to adopt rules for the administration of the
funds of the retirement system. Further, it is adopted under Insurance Code
article 3.50-4A, including §2(d), which provides that competitive bidding
shall be required under rules adopted by TRS and that the rules may provide
criteria to determine qualified carriers. In addition, it is adopted under
Insurance Code article 3.50-4A §§3(a) and (b), which provide that
TRS shall adopt rules for the selection of contractors, that the rules must
require the contractors to perform certain functions and that TRS may adopt
other rules necessary to administer the program.
There are no other laws affected by this proposed rule.
§41.15.Requirements to Bid on Insurance For School District Employees and Retirees Under Article 3.50-4A of the Insurance Code.
(a)
All contractors contracting and providing coverage under
Article 3.50-4A of the Insurance Code shall:
(1)
administer enrollment;
(2)
adjudicate all claims related to the coverage, except
for eligibility of participant under the statute which shall remain the responsibility
of the Trustee;
(3)
coordinate services under the insurance coverages
provided under Insurance Code article 3.50-4A; and
(4)
account for any premiums collected and disbursed under
the coverages.
(b)
To be eligible to bid on providing long-term care insurance,
a carrier must:
(1)
have had during the preceding calendar year at least $10
million of long-term care premium income;
(2)
have capital and surplus of at least $500 million;
and
(3)
currently have at least three ratings within the top
four rating categories as defined by the major insurance industry rating agencies.
If a carrier is not rated, it may satisfy this requirement by showing that
the carrier has twice the minimum financial requirements as stated in paragraphs
(1) and (2) of this subsection.
(c)
To be eligible to bid on providing optional permanent life
insurance a carrier must:
(1)
have had at least $200 million of individual life premium
income during the last calendar year;
(2)
have capital and surplus of at least $500 million;
and
(3)
currently have at least three ratings within the top
four rating categories as defined by the major insurance industry rating agencies.
If a carrier is not rated, it may satisfy this requirement by showing that
the carrier has twice the minimum financial requirements as stated in paragraphs
(1) and (2) of this subsection.
(d)
To be eligible to bid on providing disability insurance
a carrier must:
(1)
have had during the preceding calendar year at least $50
million of short-term and long-term disability combined premium income;
(2)
have capital and surplus of at least $500 million;
and
(3)
currently have at least three ratings within the top
four rating categories as defined by the major insurance industry rating agencies.
If not rated, a carrier may satisfy this requirement by showing that the carrier
has twice the minimum financial requirements as stated in paragraphs (1) and
(2) of this subsection.
Filed with the Office of the Secretary of
State, on December 22, 1999.
TRD-9909019
Charles Dunlap
Executive Director
Teacher Retirement System of Texas
Effective date: December 22, 1999
Expiration date: April 20, 2000
For further information, please call: (512) 391-2115