Texas Register, Volume 38, Number 47, Pages 8313-8478, November 22, 2013 Page: 8,379
8313-8478 p. ; 28 cm.View a full description of this periodical.
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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-
thorized under the Business Organizations Code except as a risk
retention group or general partnership. The section further pro-
vides that the captive insurance company must have a board of
directors or governing body. Section 964.054 requires the cap-
tive insurance company to use generally accepted accounting
principles as an accounting basis, except that a captive insur-
ance company that is required to hold a certificate of authority
under another jurisdiction's insurance laws must use statutory
accounting principles.
Section 964.055 provides that a captive insurance company may
not engage in business as a captive insurance company domi-
ciled in this state unless it holds a certificate of authority issued by
the department to act as a captive insurance company. The sec-
tion further provides that the captive insurance company mustmaintain its principal office and books and records in this state,
unless the commissioner grants an application to relocate the
entity's books and records under Chapter 803.
Section 964.056 requires the commissioner to determine the
amount of the captive insurance company's capital and surplus
based on the factors listed in this section and any other criteria
that has an impact on the operations of the captive insurance
company determined to be significant by the commissioner. The
section further provides the amount of capital and surplus deter-
mined by the commissioner may not be less than $250,000.
Section 964.056 also provides that the capital and surplus re-
quired by Subsection (a) may be in the form of an irrevocable
letter of credit, in a form approved by the commissioner and not
secured by a guarantee from an affiliate, naming the commis-
sioner as beneficiary for the security of the captive insurance
company's policyholders and issued by a bank approved by the
commissioner.
Section 964.057 establishes the requirements for an application
to obtain a certificate of authority for a captive insurance com-
pany, including a fee of $1,500.
Section 964.058 requires the commissioner to conduct an ex-
amination of the applicant to determine whether the minimum
capital and surplus requirements of 964.056 are satisfied, the
capital and surplus are the bona fide property of the applicant,
and the applicant has fully complied with applicable insurance
laws.
Section 964.059 requires the commissioner to determine if the
certificate of authority will be issued. The commissioner may
consider the factors listed in the section and any other factors
the commissioner considers relevant to determine whether the
applicant will be able to meet its policy obligations. The section
establishes an appeal process if the application is denied.
Section 964.060 requires a captive insurance company to file
with the commissioner on or before March 1 of each year, a state-
ment of the company's financial condition, verified by two of its
executive officers and filed in a format prescribed by the com-
missioner; and on or before June 1 of each year, a report of its
financial condition at last year end with an independent certified
public accountant's opinion of the company's financial condition.
The section further allows for the captive insurance company to
request filing its annual report required under this section at its
fiscal year end. The section provides that a captive insurance
company using a fiscal year end must provide its balance sheet,
income statement, and statement of cash flows, verified by two
of its executive officers, before March 1 of each year to provide
sufficient detail to support a premium tax return.
Section 964.062 requires the commissioner to approve in ad-
vance any amendments to the captive insurance company's cer-
tificate of formation.
Section 964.063 requires a captive insurance company to notify
the commissioner in writing when issuing policyholder dividends.
Section 964.065 provides that the commissioner, after notice and
an opportunity for hearing, may revoke or suspend the certificate
of authority of a captive insurance company.
Section 964.066 provides that the commissioner may adopt rules
establishing standards to ensure that an affiliated company is
able to exercise control of the risk management function of any
controlled unaffiliated business to be insured by the captive in-
surance company.PROPOSED RULES November 22, 2013 38 TexReg 8379
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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/m1/67/: accessed July 17, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu.; crediting UNT Libraries Government Documents Department.