Current through Reg. 50, No. 13; March 28, 2025
(a)
Purpose and Scope. The purpose of this section is to describe the procedure an
eligible insurer must follow when it desires to relocate and maintain all or
any portion of its books, records, and accounts and its principal offices
outside this state at a location within the United States. To facilitate
brevity, "all or any portion of its books, records, and accounts and its
principal offices" will be referred to as "records" in this section. Insurance
Code Article 1.28 and this section describe the standards that an insurer must
meet to be eligible to relocate its records outside this state and sets forth
the information an eligible insurer must provide to the department in its
notice of intent to relocate records so that the Commissioner of Insurance
(Commissioner) can make an informed decision to approve or disapprove the
proposed relocation. The normal records relating to the business produced by an
agency of an eligible insurer are not subject to Insurance Code Article 1.28.
The department interprets the term "agency" in Insurance Code Article 1.28 to
mean a person described in Insurance Code Article 21.02. An eligible insurer
that desires to relocate its records to an out of state location must provide
the information required by subsection (d) of this section. An eligible
insurance company that desires to deliver possession of its records to another
person located out of state who is an affiliate of the eligible insurer must
also provide the information required by subsections (e) and (f) of this
section. When that person is not affiliated with the eligible insurer, the
person must comply with the provisions of subsections (e) - (g) of this
section. Records of a health maintenance organization relating to its quality
assurance program are not subject to this section.
(b) Definitions. The following words and
terms, when used in this section, have the following meanings, unless the
context clearly indicates otherwise.
(1)
Affiliate - As defined in Insurance Code §
823.003.
(2) Domestic insurance company - As defined
in Insurance Code §
803.001.
(3) Eligible insurer - A domestic insurance
company that is:
(A) an affiliate of an
insurance holding company system; or
(B) a health maintenance organization that is
an affiliate of another health maintenance organization or health care
provider.
(4) Health care
provider - Is the same as the term "provider" in Insurance Code §
843.002.
(5) Insurance holding company system - As
defined in Insurance Code §
823.006.
(c) Notice of Intent to Relocate
Records. An eligible insurer desiring to change the location of its records to
a location outside this state must file with Financial Analysis and
Examinations, 333 Guadalupe, Austin, Texas 78701 or P.O. Box 149099, Austin,
Texas 78714-9099, Mail Code 303-1A an original and one copy of a notice of
intent to relocate records setting forth the information required by subsection
(d) of this section, accompanied by the required filing fee established in
§
7.1301(d)(18) of
this title (relating to Fees). Alternatively, an eligible insurer complies with
this section when it provides the department the information required by this
section in an agreement with an affiliate, and such agreement has been approved
or not disapproved as required by Insurance Code Article 21.49-1,
§4.
(d) Contents of Notice of
Intent to Relocate Records. The notice of intent to relocate records required
by Insurance Code Article 1.28 and subsection (c) of this section must provide:
(1) the name of the eligible insurer desiring
to relocate its records outside the state;
(2) the street address of the eligible
insurer's principal office or offices (if there is more than one principal
office, identify the activities that are performed at each principal office;
e.g., accounting, actuarial, investments, underwriting, claims, marketing, data
processing, human resources and corporate matters);
(3) the street address of the location or
locations of the eligible insurer's records before the proposed relocation of
records (if there is more than one location, identify the records that are
maintained at each location; e.g., accounting, actuarial, investments,
underwriting, claims, marketing, data processing, human resources and corporate
matters);
(4) the street address of
the eligible insurer's principal office or offices after the proposed
relocation of records (if there is more than one principal office, identify the
activities that will be performed at each principal office; e.g., accounting,
actuarial, investments, underwriting, claims, marketing, data processing, human
resources and corporate matters);
(5) the street address of the proposed
location or locations of the eligible insurer's records;
(6) a detailed description of the records
that will be maintained at the proposed location or locations named in
paragraph (5) of this subsection;
(7) the anticipated effective date of the
proposed relocation of the eligible insurer's records;
(8) a description of the eligible insurer's
affiliation with an insurance holding company system or health maintenance
organizations or health care providers;
(9) if the eligible insurer is affiliated
with an insurance holding company system, a statement that the eligible insurer
has made the necessary filings required by the Insurance Code Article
21.49-1;
(10) if the eligible
insurer is affiliated with an insurance holding company system, a statement
that the eligible insurer is in compliance with the Insurance Code Article
21.49-1;
(11) if the eligible
insurer is a health maintenance organization that is not affiliated with an
insurance holding company system, but is affiliated with other health
maintenance organizations or health care providers, the health maintenance
organization must furnish the information as set forth in §
7.210 of this title (relating to
Form B);
(12) a description of any
actual, proposed, or contemplated financial involvement with respect to the
relocation of the records by an officer, director or employee or a person who
is the beneficial owner, directly or indirectly, of 10% or more of the voting
securities of the eligible insurer or affiliated insurance holding company
system or health maintenance organization;
(13) an analysis of the benefits to the
eligible insurer anticipated as a result of the relocation of the records,
including the effect on the location being abandoned;
(14) a description of the effect of the
relocation of the records on policyholders and claimants;
(15) a service of process form executed by
the eligible insurer (see subsection (l) of this section to obtain an example
of an acceptable form);
(16) a
service of process form executed by a controlling person of the eligible
insurer (see subsection (l) of this section to obtain an example of an
acceptable form);
(17) if the
records of the eligible insurer will be maintained by a person other than the
eligible insurer, state the name of the person who will be maintaining the
records of the eligible insurer;
(18) if a person is named in paragraph (17)
of this subsection, provide the information in subsection (e) of this section;
and
(19) such other related
information as the department may require so that an informed determination can
be made to approve or disapprove the proposed relocation of records out of
state.
(e) Additional
Information Required for the Relocation and Possession of Records with a Person
Other than the Eligible Insurer. If the eligible insurer intends for a person
other than the eligible insurer to possess and maintain its records, the
following information must be included in the notice of intent to relocate
records:
(1) the name of the person who will
possess and maintain the records;
(2) the names of the directors, executive
officers, principals or principal shareholders of the person named in paragraph
(1) of this subsection;
(3) a
statement describing the person's affiliation with the insurance holding
company system or health maintenance organization or health care providers
named in subsection (d)(8) of this section, if any;
(4) an explanation and description of control
mechanisms in place to assure the effective and efficient reconciliation of the
records to be maintained by the person with those corporate records maintained
by the eligible insurer;
(5) an
explanation of how the eligible insurer will maintain direct supervision,
management and control of the records that are relocated;
(6) a copy of the agreement between the
eligible insurer and the person possessing and maintaining the records. The
agreement must comply with the requirements of subsection (f) of this
section;
(7) a description of the
additional management reporting systems and internal controls that the eligible
insurer will use relative to its arrangement with the person possessing and
maintaining the records of the eligible insurer; and
(8) a description of any existing computer
link-up that will permit on-line access to the eligible insurer by departmental
examiners, or an explanation acceptable to the Commissioner why such link-up
would not be practical.
(f) Agreement Between Eligible Insurer and
Person to Maintain Records. An eligible insurer must have a written agreement
with the person possessing and maintaining the records of the eligible insurer.
(1) The agreement shall include:
(A) a description of the functions to be
performed by the person possessing and maintaining the records;
(B) a provision that requires the records of
the eligible insurer be under the eligible insurer's direct supervision,
management and control;
(C) a
provision authorizing the department to examine, at the eligible insurer's
expense, the records and operations of the person possessing and maintaining
the records of the eligible insurer at the location of such records, regarding
the arrangement with the eligible insurer; and
(D) a provision requiring the person
possessing and maintaining the records to fully cooperate with the department
staff during an examination conducted pursuant to subparagraph (C) of this
paragraph.
(2) The
agreement required by this section is subject to the standards in Insurance
Code Article 21.49-1, §4.
(3)
If the person possessing and maintaining the records of the eligible insurer is
not an affiliate of the eligible insurer under Insurance Code Article 21.49-1,
the agreement between the nonaffiliated person and the eligible insurer must
also comply with subsection (g) of this section.
(g) Requirements and Restrictions Applicable
to Nonaffiliated Person Maintaining Records. When an eligible insurer desires
to have a nonaffiliated person maintain its records, there must be a written
agreement between the eligible insurer and the nonaffiliated person that
contains the provisions described in subsection (f) of this section and
paragraphs (1) - (8) of this subsection.
(1)
Only records related to policyholder claims, policy administration and related
processes may be maintained by the nonaffiliated person.
(2) Only active claims files may be
maintained by a nonaffiliated person.
(3) Claim files, when closed, must be
returned to the eligible insurer within 60 days of closing.
(4) Copies of active claim files will be
maintained by the eligible insurer at all times, unless the Commissioner's
approval of the relocation of the records finds that it would not be practical
and specifically waives this requirement.
(5) Active claim files maintained by the
nonaffiliated person must be provided to examiners representing the department
on site within three days of request.
(6) Representatives of the nonaffiliated
person responsible for the maintenance of the eligible insurer's records must
be reasonably available at the location of the eligible insurer's records when
examiners representing the department are at the location.
(7) The nonaffiliated person must be licensed
by the department to perform the services contemplated by the arrangement with
the eligible insurer.
(8) A
requirement that the eligible insurer must audit the nonaffiliated person at
least once each 6 months to evaluate the internal controls and compliance with
the agreement between the eligible insurer and the nonaffiliated person
(performance audit) with regard to the records of the eligible insurer
maintained by the nonaffiliated person. Such audits shall be conducted by
persons who are knowledgeable in the claims adjusting process and internal
controls; auditors should include representatives of the eligible insurer's
internal audit department and/or the audit committee of the board of directors
of the eligible insurer; and the audit reports must be reviewed by the board of
directors of the eligible insurer and the nonaffiliated person.
(h) Accepted Filing of Notice of
Intent. The Commissioner may approve or disapprove the notice of intent to
relocate records within 30 days after a complete notice is filed with the
department. The written notice required under this section shall be considered
complete and filed with the department only when all materials sufficient to
allow the Commissioner to conduct an informed decision on the application,
including any information subsequently requested by the Commissioner, are
filed. If within 30 days after the date that the eligible insurer files its
complete notice of intent to relocate records, including the applicable filing
fee, the Commissioner does not request additional information and has not
disapproved such notice, the notice shall be deemed approved.
(i) Relocation of Records Approved to be
Located Out of State. An eligible insurer that has relocated records out of
state pursuant to Insurance Code Article 1.28 and this section and desires to
relocate those records to another location, must file with the department the
notice of intent to relocate records required by subsection (c) of this
section. The eligible insurer may use the previously approved notice of intent
to relocate records to comply with this subsection to the extent there has been
no change in the information previously submitted.
(j) Articles of Incorporation or Charter. An
eligible insurer that relocates its records out of state is not required to
amend its articles of incorporation, charter or other organizational document
to reflect the relocation to the extent there has been no change in such
documents as a result of the relocation.
(k) Revocation of Authority to Relocate
Records. The Commissioner, upon notice and opportunity for hearing, may limit
or revoke the authority of an eligible insurer to maintain records outside this
state if the eligible insurer or person possessing and maintaining the records
of the eligible insurer fails or refuses to comply with a request to provide
information as part of an examination, or if the Commissioner determines that
the continued operations of the eligible insurer might be hazardous to
policyholders, creditors or the general public.
(l) Examples of the service of process form
to be executed by the eligible insurer (TDI/SOP (2000)) and the controlling
person (TDI/SOP-CP (2000)) under subsection (d)(15) & (16) of this section
are available from the Company Licensing and Registration Division, Texas
Department of Insurance, 333 Guadalupe. P.O. Box 149104, Austin, Texas
78714-9104.