Texas Register, Volume 38, Number 47, Pages 8313-8478, November 22, 2013 Page: 8,360
8313-8478 p. ; 28 cm.View a full description of this periodical.
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quires the commissioner to set an application fee of not less than
$1,500 by rule for applications commencing on and after January
1, 2019. Establishing the fee at this time eliminates the need to
have another proposal simply to set that fee. If the department
determines that a greater fee is necessary for applications com-
mencing on and after January 1, 2019, a subsequent proposal
will be necessary.
6.202. Captive Insurance Company Certificate of Authority Ap-
plication Contents and Process. This section lists the informa-
tion an applicant for a certificate of authority must submit and
describes the application process. The application requirements
in subsections (a) - (d), including a plan of operation, certifica-
tions, and verifications, are authorized under Insurance Code
964.057 and necessary to evaluate the applicant under Insur-
ance Code 964.059. To retain some flexibility in this new licens-
ing area, subsection (g) provides that the commissioner may
waive the submission of certain information if warranted. Fur-
ther, the department has not proposed to adopt and require a
specific application form. Subsection (d) will allow the applicant
to use forms and formats from other jurisdictions or other recipi-
ents that provide the required information.
Subsection (a)(1) - (10) lists general information requirements
about the captive insurance company applicant. The required
information includes biographical affidavits on certain persons
listed in 6.303 of this title, unless the function that person is
performing has or will be contracted to a captive management
company. This review is authorized under Insurance Code
964.059(b)(2). Fingerprints are not required under this section
for these individuals. In the situation of pure captives and to
some extent controlled unaffiliated business captives, these
persons are not managing an unrelated third party's risk.
Subsection (a)(11) lists the requirements for a plan of opera-
tion. The department considers this information to be critical in
assessing the viability and soundness of the captive insurance
company. Subsection (b) lists additional requirements that apply
to captive insurance company applicants that are redomesticat-
ing to Texas. Subsection (c) lists additional requirements that
apply to captive insurance company applicants that will be oper-
ating with unaffiliated controlled businesses.
As described in subsection (e), the department will review the
submitted information. In discussions with the department or
during the process of the examination, the applicant entity may
amend its information without restarting the application process.
Following completion of the review, either the department will is-
sue a certificate of general good, or the commissioner will deny
the application. Denial of the application will trigger administra-
tive rights the applicant has under Insurance Code 964.059.
The statute does not require a certificate of general good; how-
ever, this section establishes that the department will provide
written confirmation to the applicant that the application is ac-
ceptable.
As described in subsection (f), the department will then consider
a certificate of filing from the Secretary of State as the next step
in the process of issuing the certificate of authority. As to whether
the Secretary of State will consider the certificate of general good
in its review is a matter solely within the discretion of the Sec-
retary of State. The certificate of filing must be accompanied
by the affidavits and information required under Insurance Code
964.057.
6.203. Issuance of Captive Insurance Company Certificate of
Authority Application. This section provides that when the de-partment has received the required information under 6.202
and certificate of filing as required under 6.202, the depart-
ment will conduct a final review of the documents to determine
if a certificate of authority should be issued. This review will
satisfy the qualifying examination requirement under Insurance
Code 964.058 for start-up captive insurance companies and
the commissioner's determination requirement under Insurance
Code 964.071 for redomestications. The department antici-
pates that in most cases the entity documentation will be sub-
mitted to the Secretary of State within days after the certificate
of general good is issued and that the certificate of filing will be
provided to the department within a few days of that submission.
However, if a significant period of time has elapsed following the
issuance of the certificate of general good, or some irregular-
ity appears, the department may request updated projections
or other information. Communication throughout the application
process, especially of any foreseen or unforeseen difficulties, will
enhance the process for all parties.
Subchapter D. Maintenance of a Captive Insurance Company's
Certificate of Authority. This subchapter establishes the re-
quirements for maintenance of a captive insurance company's
certificate of authority. In addition, 6.302 and 6.303 address
the captive insurance company's governing body and persons
required to submit biographical information that are also refer-
enced in the application process.
6.301. Ongoing Requirements. Subsection (a) of this section
lists the basic requirements for maintenance of the captive in-
surance company's certificate of authority. This includes main-
tenance of its corporate structure and payment of related fees.
The department will work with captive insurance companies to
assure compliance, including a return to compliance. However,
failure to meet these requirements may subject a captive insur-
ance company to disciplinary action as described in 6.701.
6.302. Governing Body. As required under Insurance Code
964.059, the captive insurance company must have officers or
directors with "sufficient insurance experience, ability, standing,
and good record to make success of the captive insurance com-
pany probable." The department considers meeting this stan-
dard to require both individuals overseeing the operation and
individuals with technical skill. Rather than attempt to define a
management structure for each captive insurance company to
include directors and officers regardless of its business struc-
ture, the proposed sections simply require the captive insurance
company to have a governing body. The term governing body is
defined in 6.2 of this title as the individuals "who comprise the
ultimate decision-making body of a captive insurance company,
including directors and officers."
This section establishes that the persons comprising the gov-
erning body collectively must have the experience and ability
to oversee the operations of the captive insurance company as
part of the fulfillment of the requirement under Insurance Code
964.059. This oversight responsibility is further described in
subsection (b). The technical skills necessary to operate the
captive insurance company may be provided by members of the
governing body, other managers, or captive management com-
panies.
6.303. Captive Insurance Company Biographical Information.
This section specifies the individuals who must provide biograph-
ical information for certain individuals. The biographical informa-
tion will be used to evaluate the individual's experience, ability,
standing, and good record as required under Insurance Code
964.059. This section includes persons responsible for manag-38 TexReg 8360 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/m1/48/: accessed July 17, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu.; crediting UNT Libraries Government Documents Department.