Texas Register, Volume 38, Number 47, Pages 8313-8478, November 22, 2013 Page: 8,358
8313-8478 p. ; 28 cm.View a full description of this periodical.
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of business organization authorized under the Business Organi-
zations Code. The terms are used throughout Insurance Code
Chapter 964, but the reference neither creates a requirement
that these entities must be corporations nor does the reference
only apply to entities formed as corporations. Subsection (a) in-
corporates the statutory definitions into these sections.
The term "annual report" incorporates the three required compo-
nent parts of the report. As stated in the definition, these com-
ponent parts are addressed in other sections and the adopted
Texas Captive Annual Report form and its instructions.
The term "certificate of filing" is used in these sections instead of
the term "certificate of formation." The term "certificate of filing"
has been offered by the Secretary of State to better track the
terminology for the document the Secretary of State will issue
when the captive insurance company entity is formed.
The term "general partnership" is defined to include a general
partnership designated as a limited liability partnership. This is
based on information from the Secretary of State that a limited
liability partnership is not a separate type of entity, but a des-
ignation that a general partnership or limited partnership may
hold. This distinction is necessary because Insurance Code
964.053(b) prohibits formation of a captive insurance company
as a general partnership.
The term "governing body" is also defined for the purpose of im-
plementing Insurance Code Chapter 964, because it may have
different meanings between its use in the formation of certain
entities under the Business Organizations Code and the depart-
ment's interpretation of its use in Insurance Code Chapter 964.
Specifically, the Business Organizations Code may allow for the
governing body of certain entities to be other entities. Insurance
Code 964.053(d) and (e) require the captive insurance com-
pany to designate individuals as a members of a governing body
for the purpose of performing acts necessary to comply with In-
surance Code Chapter 964 and these sections. The term "gov-
erning body" in these sections applies to those individuals, and
not to formation of the entity. These sections are not intended
to create or amend any formation or submission requirements
used by the Secretary of State.
6.2. Submissions and Notifications to the Commissioner and
Department. This section provides instructions for delivering
submissions and notices to the commissioner and department.
Subchapter B. Captive Management Companies. This subchap-
ter addresses the registration of captive management compa-
nies, the duration of the registration, the designation of the re-
sponsible party, contracting with the captive insurance company,
and requirements of a contract with the captive insurance com-
pany.
6.101. Registration of Captive Management Companies. Reg-
istered captive management companies may provide adminis-
trative services to captive insurance companies. As provided in
subsection (a), the commissioner must approve the captive man-
agement company's registration prior to providing administrative
services. The sections do not prohibit a captive management
company from seeking registration approval at the same time the
captive insurance company submits its application. However,
the department will not approve the captive insurance company's
application if the registration is not approved and the unregis-
tered captive management company continues to be listed as
providing administrative services to the captive insurance com-
pany.Subsection (b) establishes that individuals may not provide ad-
ministrative services to a captive insurance company except as
an employee of a captive insurance company or a captive man-
agement company. This requirement is based on the language
in Insurance Code 964.001 defining "captive management
company" and the registration requirement in Insurance Code
964.067. Administrative services are defined in 6.1.
Subsection (c) establishes the information that the captive man-
agement company must provide the department when register-
ing as a captive management company. This includes informa-
tion about the captive management company and the captive
management company's designated responsible party. The des-
ignated responsible party will be the primary source of contact for
the department. Information related to the designated responsi-
ble party is listed in 6.103. While the department may provide a
registration form that registrants may submit, the department has
chosen not to establish a requirement that the registrant must
use a specific form to submit the required information.
The department considers this level of review both necessary
and authorized by statute. Insurance Code 964.067 requires
a captive management company to register with the department
and provide information required by the commissioner. This is a
legislative direction that provides the ability to set some standard
for registering and maintaining that registration. The department
is concerned that captive insurance companies will have varying
levels of resources and sophistication to independently evaluate
solicitations from these third party contractors.
To the extent that some captive insurance companies may place
weight on a department registration, some level of review is war-
ranted before the registration is granted. However, the captive
management company is not a risk bearing entity, and it is lim-
ited to providing administrative services within the scope of a
contract with a captive insurance company that is limited under
Insurance Code Chapter 964 to insuring its affiliate's risks and
unaffiliated controlled business risks. The department has pro-
posed a limited level of review focused on information about the
captive management company's designated responsible party,
in addition to basic contact and identification information.
Because the captive management company may have the re-
quired information in another format for another jurisdiction, the
department has chosen not to establish a requirement that the
registrant must use a specific Texas form to submit the required
information.
6.102. Maintenance and Duration of the Registration. Sub-
section (a) provides that a captive management company must
notify the department of changes in its registration information
within 30 days of the change. Subsection (b) establishes that
the captive management company must replace a designated
responsible party within 30 days or it may no longer operate as
a captive management company. This is because this person
is the identified representative of the captive management com-
pany and operating without a designated responsible party does
not comply with this chapter. While the department prefers that
the captive management company not have any gap in a des-
ignated responsible party, the 30-day period allows the captive
management company time to comply following an unexpected
event without an immediate disruption in its operations and the
captive insurance company's operations.
Subsection (c) provides that a captive management company's
registration will expire if the entity is not actively providing ad-
ministrative services to a captive insurance company for more38 TexReg 8358 November 22, 2013 Texas Register
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Texas. Secretary of State. Texas Register, Volume 38, Number 47, Pages 8313-8478, November 22, 2013, periodical, November 22, 2013; Austin, Texas. (https://texashistory.unt.edu/ark:/67531/metapth379965/m1/46/: accessed July 17, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu.; crediting UNT Libraries Government Documents Department.