Texas Register, Volume 38, Number 47, Pages 8313-8478, November 22, 2013 Page: 8,367
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waiving or eliminating the fingerprint requirement for small and
micro businesses effectively eliminates the requirement. For
these reasons the department determined that it is not practical
to eliminate or waive the initial fingerprint requirement.
The department also recognizes that to re-establish a lapsed
registration a full registration application may not be necessary
in all situations. Section 6.102 provides that the commissioner
may waive certain registration requirements if the commissioner
determines that the requirement or information is not applicable
or provides no additional value in reviewing the registration sub-
mission. This could include waiving the fingerprint requirement
in some instances.
Captive insurance companies. Because the proposal regulates
a new type of insurer, no captive insurance companies currently
have a certificate of authority in Texas. The department antic-
ipates that nearly all captive insurance companies that receive
a certificate of authority under these rules will be small or micro
businesses based solely on the employment criteria. The pro-
posal was drafted based on that consideration.
To accommodate applicants the proposal allows applicants for a
certificate of authority to submit documents and work with the de-
partment to have an acceptable plan of operation prior to form-
ing and funding an entity, which could tie up large amounts of
the applicant's funds. The department included a provision in
6.202(g) to allow for the waiver of application requirements,
if warranted. Further, under 6.202(d) the department has not
proposed to adopt and require that applicants use a specific ap-
plication form. Applicants will not have to create forms just for
the application if the required information has already been pre-
pared for other jurisdictions or recipients. Also, the department
has interpreted Insurance Code 964.060(b)(2) to provide that
the annual audited statement is subject to the exemption found
in Insurance Code 401.006.
Insurance Code 964.054, 964.056, 964.059, 964.060, and
964.065 impose requirements that, in summary, require the de-
partment to monitor captive insurance companies to ensure they
are operating in a sound condition. For these reasons the de-
partment has determined that it is not practical to eliminate or
waive other registration requirements in this proposal.
TAKINGS IMPACT ASSESSMENT. The department has deter-
mined that this proposal affects no private real property interests
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 so does not constitute a taking or require a takings
impact assessment under the Government Code 2007.043.
REQUEST FOR PUBLIC COMMENT. To have your comments
considered, you must submit written comments on the proposal
no later than 5:00 p.m. on December 23, 2013, to the Office
of Chief Clerk, Mail Code 113-2A, Texas Department of Insur-
ance, P.O. Box 149104, Austin, Texas 78714-9104. A copy of
your comments must be simultaneously submitted to Ms. Jamie
Walker, Associate Commissioner, Financial Regulation Division,
Mail Code 305-2A, Texas Department of Insurance, P.O. Box
149104, Austin, Texas 78714-9104.
The commissioner will consider the adoption of the proposed
amendments and new sections in a public hearing under Docket
No. 2758 scheduled for December 9, 2013, at 9:00 a.m. in
Room 100 of the William P. Hobby, Jr. State Office Building,
333 Guadalupe Street, Austin, Texas. The commissioner will
consider written and oral comments presented at the hearing.SUBCHAPTER A. GENERAL MATTERS
28 TAC 6.1, 6.2
STATUTORY AUTHORITY. The department proposes the new
sections under the Government Code 411.083, 411.087, and
411.106, and Insurance Code 401.002, 401.006, 401.051,
803.005, 803.008, 964.002, 964.051 - 964.060, 964.062,
964.063, 964.065 - 964.067, 964.069, 964.071, and 36.001.
Government Code 411.106 authorizes the department to re-
ceive criminal history information from DPS regarding insurance
company principals and officers and applicants for any entity
holding or seeking a license, certificate, permit, registration, or
other authorization issued by the department to engage in a
regulated activity under the Insurance Code. Government Code
411.083 and 411.087 authorize the department to obtain,
through DPS, criminal history information from the FBI on those
individuals described in Government Code 411.106.
Section 401.002 provides that the purpose of Insurance Code
Chapter 401 Subchapter A is to require an annual audit by an
independent certified public accountant of the financial state-
ments, reporting on the financial condition and the results of
operations, of each insurer or health maintenance organization.
Section 401.006 provides for a procedure to obtain an exemp-
tion from the requirement to file an audited financial report if the
insurer has less than $1 million in direct premiums written in this
state during a calendar year. Section 401.051 establishes the
department's duty to examine insurers under Insurances Code
Chapter 401, Subchapter B.
Section 803.005 requires the books, records, accounts, or of-
fices of a domestic company to be under the company's direct
supervision, management, and control. Section 803.008 autho-
rizes the commissioner to adopt rules to authorize a domestic
company to maintain its books and records with a nonaffiliated
entity other than an agency.
Section 964.002 provides that a captive insurance company is
subject to Insurance Code Chapters 401 and 823. Further, the
section provides that Insurance Code Chapter 823 applies to a
captive insurance company only if the company is affiliated with
another insurer that is subject to Chapter 823.
Section 964.051 provides that a captive insurance company may
only insure the operational risks of the company's affiliates and
risks of a controlled, unaffiliated business. The section further
provides that a captive insurance company is authorized to issue
a contractual reimbursement policy to an affiliated certified self-
insurer authorized under Chapter 407, Labor Code, or an affiliate
that is insured by a workers' compensation insurance policy with
a negotiated deductible endorsement.
Insurance Code 964.052 provides the types of reinsurance that
the captive insurance company may write, including workers'
compensation insurance and employer liability policies issued
to affiliates, if the insurer that directly issues workers' compen-
sation insurance and employer's liability policies or its licensed,
if required by law, administrator or adjuster services all claims
incurred during the policy period, and complies with all require-
ments for an insurer under the Insurance Code, including Chap-
ter 462, and under Title 5, Labor Code. The section further al-
lows a credit for reserves on risks or portions of risks ceded to
reinsurers under Chapter 492, Subchapter C, and Chapter 493,
Subchapter C.
Section 964.053 provides that a captive insurance company may
be formed and operated in any form of business organization au-PROPOSED RULES November 22, 2013 38 TexReg 8367
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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/m1/55/: accessed July 17, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu.; crediting UNT Libraries Government Documents Department.