Texas Register, Volume 38, Number 47, Pages 8313-8478, November 22, 2013 Page: 8,372
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(1) a requirement that all parties to the agreement must
comply with the applicable requirements of the Insurance Code and
department rules, including holding the appropriate licenses or certifi-
cates of authority;
(2) a requirement that the captive management company
must permit the commissioner or the captive insurance company to
examine at any time:
(A) the financial solvency of the captive management
company; and
(B) the captive management company's ability to per-
form its responsibilities under the written agreement;
(3) a description of the duties or services that the captive
management company is to provide;
(4) a provision relating to continuation of services follow-
ing termination and the transfer of the books and records of a captive
insurance company from one captive management company to another
captive management company;
(5) a requirement that the books and records of the captive
insurance company:
(A) remain the property of the captive insurance com-
pany at all times;
(B) are available to the captive insurance company or
its designee at any time while in the custody of a captive management
company; and
(C) will be timely transferred to the captive insurance
company or its designee:
(i) upon request of the captive insurance company;
(ii) at the termination or cancellation of a written
agreement entered into by a captive management company; and
(iii) in compliance with all applicable statutory and
rule requirements;
(6) a requirement that the books and records must be
maintained as required in 6.306 of this title (relating to Books and
Records); and
(7) a provision that the captive management company has
no automatic right to terminate the agreement if all terms of the agree-
ment are being met and the captive insurance company is placed in
receivership under Insurance Code Chapter 443.
(b) Under this chapter, a written agreement includes an agree-
ment that is prepared, signed, or stored electronically.
The agency certifies that legal counsel has reviewed the pro-
posal and found it to be within the state agency's legal authority
to adopt.
Filed with the Office of the Secretary of State on November 8,
2013.
TRD-201305155
Sara Waitt
General Counsel
Texas Department of Insurance
Earliest possible date of adoption: December 22, 2013
For further information, please call: (512) 463-6327
4 4 4SUBCHAPTER C. CAPTIVE INSURANCE
COMPANY APPLICATION PROCESS
28 TAC 6.201 - 6.203
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.38 TexReg 8372 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/m1/60/: accessed July 17, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu.; crediting UNT Libraries Government Documents Department.