Texas Register, Volume 37, Number 1, Pages 1-84, January 6, 2012 Page: 52
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partment has determined that the routine costs to comply with
this proposal, i.e., making concurrent filings with the NAIC, will
not have an adverse economic effect on small or micro busi-
nesses, the Department is not required to consider alternative
methods of achieving the purpose of these requirements in the
proposed rule. Moreover, the Insurance Code 802.055 requires
an insurance company to pay all costs of preparing and furnish-
ing to the NAIC the information required under the Insurance
Code 802.052, including any related filing fees. Accordingly,
the cost to insurance companies of preparing and filing the an-
nual statement with the NAIC results from statutory requirements
and not as a result of the adoption, enforcement, or administra-
tion of this proposal.
Nevertheless and although not strictly required by the Govern-
ment Code 2006.002(c), the proposed section contains a num-
ber of provisions that will mitigate the impact of proposed 7.68
for certain carriers that, because of their carrier type, are more
likely to be small or micro business carriers. Specifically, pro-
posed 7.68(n) does not require farm mutual insurance compa-
nies that write less than $6 million in premium to pay these fil-
ing fees. Proposed 7.68(o) does not require statewide mutual
assessment associations, local mutual aid associations, mutual
burial associations, and exempt associations to pay these filing
fees. Proposed 7.68(p) does not require nonprofit legal service
corporations to pay these filing fees. Proposed 7.68(q) does
not require Mexican casualty insurance companies to pay these
filing fees.
Proposed 7.68(b) and (f) - (m); Software Expenses. As re-
quired by the Government Code 2006.002(c), the Department
has determined that approximately 50 to 100 of the carriers spec-
ified in proposed 7.68(b) are small or micro business carriers
that will essentially be required by proposed 7.68(f) - (m) to pur-
chase software to prepare their financial statements and make
the related filings with the NAIC. These small or micro business
carriers will incur routine costs associated with purchasing this
software.
Also, as required by the Government Code 2006.002(c), the
Department has determined that these routine costs will not have
an adverse economic effect on the approximately 50 to 100 small
or micro business carriers. The Department's cost analysis and
resulting estimated costs for carriers to purchase this software
contained in the Public Benefit/Cost Note portion of this proposal
are equally applicable to small or micro business carriers. As
indicated in the Public Benefit/Cost Note analysis, these costs
of compliance may vary based upon a number of factors. The
cost of software to prepare the financial statements is approxi-
mately $2,280 for a single company. The cost of software may
be greater or less depending on the amount charged by the ven-
dor, the type of software needed and any extra services that are
agreed to between the company and the vendor.
Under the Government Code 2006.002(c), before adopting a
rule that may have an adverse economic effect on small or mi-
cro businesses, an agency is required to prepare in addition to
an economic impact statement a regulatory flexibility analysis
that includes the agency's consideration of alternative methods
of achieving the purpose of the proposed rule. Because the De-
partment has determined that the routine costs to comply with
this proposal, i.e., the purchase of software, will not have an ad-
verse economic effect on small or micro business carriers, the
Department is not required to consider alternative methods of
achieving the purpose of these requirements in the proposed
rule. Moreover, the Insurance Code 802.055 requires an in-surance company to pay all costs of preparing and furnishing
to the NAIC the information required under the Insurance Code
802.052, including any related filing fees. Accordingly, the cost
to an insurance company of preparing and filing the annual state-
ment with the NAIC results from statutory requirements and not
as a result of the adoption, enforcement, or administration of this
proposal. Furthermore, each carrier subject to this proposal is
required by statute to provide the Department with various an-
nual reports on its operations, and therefore, the related costs re-
sult from statutory requirements and not as a result of the adop-
tion, enforcement, or administration of this proposal.
Nevertheless and although not strictly required by the Govern-
ment Code 2006.002(c), the proposed section contains several
provisions that will mitigate the impact of proposed 7.68 for cer-
tain carriers that, because of their carrier type, are more likely
to be small or micro business carriers. Specifically, proposed
7.68(i)(2) exempts stipulated premium companies from the re-
quirement that applies to most other life carriers to file quarterly
interim financial statements with the Department, if certain con-
ditions are met. This exemption will lessen the software needs of
stipulated premium companies. Proposed 7.68(n) does not re-
quire that farm mutual insurance companies that write less than
$6 million in premium to acquire this software and thereby in-
cur the related expense. Proposed 7.68(o) does not require
statewide mutual assessment associations, local mutual aid as-
sociations, mutual burial associations, and exempt associations
to acquire this software and thereby incur the related expense.
Proposed 7.68(p) does not require that nonprofit legal service
corporations to acquire this software and incur the related ex-
pense. Proposed 7.68(q) does not require Mexican casualty
insurance companies to acquire this software and incur the re-
lated expense.
Additionally, the Department anticipates that the cost of com-
pliance as detailed in this Public Benefit/Cost Note part of the
proposal will be relatively more significant for carriers licensed
in Texas for less than one year because of initial software ac-
quisitions costs. Because the Department for many years has
routinely required the preparation and filing of substantially simi-
lar financial statements, which are also required by the proposal,
most of these software costs for carriers licensed for one year or
more have already been incurred.
TAKINGS IMPACT ASSESSMENT. The Department has de-
termined that no private real property interests are affected by
this proposal and that this proposal does not restrict or limit
an owner's right to property that would otherwise exist in the
absence of government action and, therefore, does not consti-
tute a taking or require a takings impact assessment under the
Government Code 2007.043.
REQUEST FOR PUBLIC COMMENT. To be considered, writ-
ten comments on the proposal must be submitted no later than
5:00 p.m. on February 6, 2012, to Sara Waitt, Acting Gen-
eral Counsel, Mail Code 113-2A, Texas Department of Insur-
ance, P.O. Box 149104, Austin, Texas 78714-9104. An addi-
tional copy of the comments should be submitted simultaneously
to Danny Saenz, Deputy Commissioner, Financial Regulation Di-
vision, Mail Code 305-2A, Texas Department of Insurance, P.O.
Box 149104, Austin, Texas 78714-9104. Any request for a pub-
lic hearing on the proposal should be submitted separately to the
Office of the Chief Clerk, Mail Code 113-2A, Texas Department
of Insurance, P.O. Box 149104, Austin, Texas 78714-9104, be-
fore the close of the public comment period. If a hearing is held,37 TexReg 52 January 6, 2012
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Texas. Secretary of State. Texas Register, Volume 37, Number 1, Pages 1-84, January 6, 2012, periodical, January 6, 2012; Austin, Texas. (https://texashistory.unt.edu/ark:/67531/metapth215965/m1/51/: accessed July 17, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu.; crediting UNT Libraries Government Documents Department.