Texas Register, Volume 38, Number 47, Pages 8313-8478, November 22, 2013 Page: 8,363
8313-8478 p. ; 28 cm.View a full description of this periodical.
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Subchapter H. Disciplinary Action. This subchapter clarifies in
6.701 that disciplinary action may be taken for violations of
statute and this chapter, including violations of 6.501 address-
ing workers' compensation insurance and Labor Code 401.011.
FISCAL NOTE. Jamie Walker, associate commissioner of the
Financial Regulation Division, Licensing Services Section, has
determined that for each year of the first five years the proposed
sections will be in effect, there will be no fiscal impact to state
and local governments as a result of the enforcement or admin-
istration of the proposal. There will be no measurable effect on
local employment or the local economy as a result of the pro-
posal.
The waiver of taxes and fees is discussed in 6.601. However,
the proposal does not establish a waiver requirement or limit
the commissioner's statutory authority to waive taxes and fees.
The proposal establishes a registration fee for applications com-
mencing on and after January 1, 2019. Because January 1,
2019, is expected to be beyond the first five-year period that
these sections are in effect, the establishment of the fee after
that date is not considered in this analysis. Prior to January 1,
2019, the application fee is established under Insurance Code
964.057(d) and not as a result of this proposal.
PUBLIC BENEFIT/COST NOTE. Ms. Walker also has deter-
mined that for each year of the first five years the proposed sec-
tions are in effect, there will be public benefits resulting from the
proposal and there will be costs to persons required to comply
with the proposal.
Anticipated public benefits. The department anticipates that a
primary public benefit resulting from the proposal will be the im-
plementation of SB 734 and a flexible procedure for the licens-
ing and regulation of captive insurance companies designed to
make success of the captive insurance company probable.
Estimated costs for persons required to comply with the pro-
posal. The proposal establishes requirements and related costs
on captive management companies and captive insurance com-
panies.
Captive management companies. Insurance Code 964.067 re-
quires captive management company to register with the com-
missioner by providing the information required by the commis-
sioner. It is a business decision of the captive management com-
pany to choose to subject itself to these regulations by electing
to register to do business in Texas. Sections 6.101 - 6.103 ad-
dress the registration of captive management companies, the
maintenance of the registration, and information that must be
submitted by a captive management company's designated re-
sponsible party. Section 6.101 requires the captive management
company to provide four pieces of information with its registra-
tion. Of these, the requirement in 6.101 and 6.103 for a finger-
print background check on the designated responsible party will
result in an additional cost unless the individual is exempt under
1 .504. The DPS vendor collects the fingerprints and processing
fees. If the fingerprints are collected electronically at a vendor
site, the current fee is $41.45.
If electronic collection is not available or practical, fingerprints
can be collected on paper cards and mailed to the DPS ven-
dor to be scanned for electronic processing with payment of the
vendor's fee. The fingerprints must be captured by a law en-
forcement agency. The DPS vendor fee for this service remains
$41.45, however, the applicant may be required to pay additional
amounts for capturing the fingerprints and will be required to in-
cur postal charges.The department estimates the capture fee to be $10 per set of fin-
gerprints; however, it is not feasible to estimate the exact amount
because the jurisdiction capturing the fingerprint will determine
the amount. The Texas Legislature has established a charge
of $10 in Human Resources Code 80.001(b). However, indi-
viduals in Texas would be better served by the using the DPS
vendor's electronic services. The charges for capturing finger-
prints in other states will vary. The department estimates postal
charges for mailing in the fingerprint card would be less than $1.
Additional postal services, such as certified or overnight mail,
would increase this amount but are not required by the proposal.
The total costs for fingerprints are estimated to range between
$41.45 and $62.45. A captive management company would be
required to incur a similar cost if it changed its designated re-
sponsible party or was required to reinstate its registration un-
der 6.102, unless the requirement was waived by the commis-
sioner.
The required registration information should otherwise be read-
ily available to the captive management company and should re-
sult in no additional costs to obtain. The requirement to submit
the registration is imposed by statute and not as a result of this
proposal. The department considers the requirement to register
as a requirement to maintain the information when it changes,
so the requirement to provide updated information under 6.102
does not create an additional submission cost. Even if the reg-
istration requirement is an additional requirement, the new in-
formation should be readily available at no cost to the captive
management company. The department estimates the cost of
making an electronic submission to be minimal and impossible
to reasonably estimate and the cost of a mail submission to be
less than $5 in aggregate for postage, envelope, paper, and mail
preparation.
The department does not anticipate that the requirements
in 6.104 and 6.105 create additional costs for the captive
management companies. These sections place contractual
requirements on the captive insurance company, which will
pay for the cost of the service. The decision to enter into the
contract will be a business decision of the captive management
company. The captive management company can set its fees
at a sufficient level to cover the requirements of the contract.
Captive insurance companies. The proposal establishes re-
quirements for the captive insurance company's certificate of
authority application, maintenance of its certificate of authority
and operations, and the annual report to implement Insurance
Code Chapter 964. The decision to apply for a certificate of
authority to act as a captive insurance company is a business
decision of the applicant and not a requirement of this proposal.
The cost for captive insurance companies will vary for many rea-
sons, including size, structure, and prior experience. While it
is not feasible to determine the actual cost of each activity for
all captive insurance companies, the department has provided
factors that will generate costs under this proposal. It is a busi-
ness decision of the captive insurance company to hire staff or
contract for services through a captive management company.
Contracting for the service does not eliminate the cost because
it will be reflected in the contract price. The department has not
applied these costs to captive management companies, even
though they must also comply with the requirements in this chap-
ter.
The department has received estimated ranges of costs from in-
dustry. The industry cost estimates appear to refer to the overallPROPOSED RULES November 22, 2013 38 TexReg 8363
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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/m1/51/: accessed July 17, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu.; crediting UNT Libraries Government Documents Department.