Current through Reg. 50, No. 13; March 28, 2025
(a)
Purpose and scope. This section implements Insurance Code Chapter 401 which
directs the Commissioner to adopt procedures for filing and adoption of
examination reports and for hearings to be held under Insurance Code Chapter
401 and guidelines governing orders issued under Insurance Code Chapter 401.
The section provides an appeals process to preserve both the right of a company
to a fair and impartial examination and promote respect for the independence
and the importance of the on-site examiner who actually observes the conditions
being reported. The purpose of an appeal process is not to replace the
examination in the field, nor is it to substitute the judgment of the
supervisory or management personnel for that of the examiner. It is to properly
weigh the examination report, and to determine whether there is any error or
bias which should be corrected. This section applies to all examinations
conducted of any entity examined under Insurance Code Chapter 401, except for
entities that are subject to another examination appeals process under the
Insurance Code.
(b) Definitions.
The following words and terms, when used in this section, have the following
meanings, unless the context clearly indicates otherwise.
(1) Adopted examination report--An
examination report that has been adopted by the department under this
section.
(2) Appeal--The process by
which a company requests that the department review a final examination report
for error or bias before adoption of the final examination report.
(3) Company--Any entity examined by the
department under Insurance Code Chapter 401.
(4) Examination report--A report prepared by
or on behalf of the department as a result of an examination under Insurance
Code Chapter 401. An examination report does not include work papers related to
the examination.
(5) Final
examination report--An examination report that has been reviewed by the chief
examiner or designee, and transmitted to the examined company.
(6) Department--Texas Department of
Insurance.
(c)
Computation of time. A day is a calendar day. In computing any period of time
prescribed or allowed by these sections, by order of the agency, or by any
applicable statute, the day of the act, event, or default after which the
designated period of time begins to run is not included, but the last day of
the period so computed is included, unless it is a Saturday, Sunday, or legal
holiday, in which event the period runs until the end of the next day which is
neither a Saturday, Sunday, nor a legal holiday.
(d) Exit conference. At the conclusion of an
examination, the examiner-in-charge will provide company management the
opportunity to participate in an exit conference on the findings and
conclusions of the examination. Following the exit conference, the
examiner-in-charge will complete the examination report and file it with the
chief examiner or designee.
(e)
Transmittal of final examination report. After the chief examiner or designee
has reviewed an examination report, the final examination report will be
transmitted to the examined company with a cover letter identifying the report
as a final examination report and notifying the company that it has the right
to appeal the report under subsection (f) of this section.
(f) Appeal of examination report.
(1) First level appeal. The first level of
appeal is to the chief examiner or designee. Within 14 days of the receipt by
the company of a final examination report, the company may file with the chief
examiner or designee:
(A) a written rebuttal
to the final examination report specifying the error or bias in the examination
report,
(B) documentation
demonstrating the error or bias, and
(C) a written request for a hearing before
the chief examiner or designee.
(2) Consideration of first level appeal. The
chief examiner or designee will consider the written rebuttal and documentation
submitted by the company and any information received at a first level appeal
hearing, if the examined company requests one. No later than 14 days following
receipt of a written rebuttal under paragraph (1) of this subsection or the
conclusion of a first level appeal hearing, the chief examiner or designee may
make changes to the report to correct error or bias. After any changes are
made, the chief examiner or designee will transmit a copy of the amended
examination report to the company or notify the company that no changes have
been made.
(3) Second level appeal.
Second level appeals may be made to the deputy commissioner, Financial
Regulation Division, or designee only after a company has completed an appeal
under paragraph (2) of this subsection. Within 14 days of the receipt by the
company of the amended examination report or notice described in paragraph (2)
of this subsection, the company may file with the appropriate deputy
commissioner or designee:
(A) a written
rebuttal to the final examination report specifying the error or bias in the
examination report,
(B)
documentation demonstrating the error or bias, and
(C) a written request for a hearing before
the deputy commissioner or designee.
(4) Consideration of second level appeal. The
deputy commissioner or designee will consider the written rebuttal and the
documentation submitted by the company and any information received at a second
level hearing, if the examined company requests one. No later than 14 days
following receipt of a written rebuttal to the examination report under
paragraph (3) of this subsection or the conclusion of a second level hearing,
the deputy commissioner or designee may make changes to the examination report
to correct error or bias. After any changes are made, the deputy commissioner
or designee will transmit a copy of the amended examination report to the
company or notify the company that no changes have been made.
(g) Adoption of examination
reports. An examination report is deemed adopted if no appeal is pursued under
subsection (f)(1) or (3) of this section. An examination report appealed to the
deputy commissioner or designee will be adopted by the deputy commissioner or
designee under the provisions of subsection (f)(4) of this section.
(h) Review of report by board of directors.
The board of directors of the company must review the adopted examination
report. The minutes of the meeting of the board of directors at which the
adopted examination report is considered must reflect that each member of the
board of directors has reviewed the adopted examination report.
(i) Examination reports of foreign and alien
companies .
(1) Examination reports of foreign
and alien insurance companies authorized to transact business in this state
which are prepared by other jurisdictions and filed with the department may be
accepted by the department in lieu of examining such foreign or alien
company.
(2) Examination reports of
foreign or alien insurance companies authorized to transact business in this
state which are filed with the department under paragraph (1) of this
subsection are deemed adopted when received.
(j) Extensions of time. Any of the deadlines
in this section may be extended by mutual agreement of the company and the
department's employee assigned to conduct that portion of the appeal.
(k) Other matters.
(1) Commissioner's authority. Notwithstanding
this section the Commissioner may take regulatory action at any time against a
company, using any information obtained during the course of any examination.
Nothing contained in this section will be construed to limit the Commissioner's
authority to use any final or preliminary examination report, any examiner or
company work papers or other documents, or any other information discovered or
developed during the course of any examination in the furtherance of any legal
or regulatory action which the Commissioner may, in his or her sole discretion
deem appropriate.
(2) Disclosure by
Commissioner. Nothing contained in this section will be construed to prohibit
the Commissioner from disclosing the content of an examination report,
preliminary examination report or results, or any related matter, to the
insurance department of any other state or country in which the examined
company does business, or to law enforcement officials of this or any other
state, or to an agency of the federal government at any time. The Commissioner
may request any recipient of such reports or related matters to agree in
writing to hold it confidential in a manner consistent with Insurance Code
Chapter 401.
