Current through Reg. 50, No. 13; March 28, 2025
(a) Purpose. This
section governs the frequency of examinations conducted under Insurance Code
§
401.052. The section
implements Insurance Code §
401.052(b),
which directs the Commissioner to adopt rules governing the frequency of
examinations of carriers that have been organized or incorporated for less than
five years.
(b) Applicability. This
section applies only to examinations commenced after the effective date of this
section.
(c) Definitions. The
following words and terms, when used in this section, have the following
meanings, unless the context clearly indicates otherwise.
(1) Carrier--For the purposes of this
section, carrier includes any entity subject to examination under Insurance
Code §
401.051. The term does
not include a workers' compensation self-insurance group as that term is
defined by Labor Code Chapter 407A.
(2) Commissioner--The Commissioner of
Insurance.
(3) Department--The
Texas Department of Insurance.
(4)
Insurance holding company system --As described in Insurance Code §
823.006.
(5) Redomesticated carrier --A carrier that
redomesticates to this state from another state under Insurance Code §
983.051.
(6) Self-insurance group --An unincorporated
association or business trust composed of five or more private employers
holding a certificate of approval to act as a workers' compensation
self-insurance group issued by the department under the Labor Code Chapter
407A.
(d) Examination of
Texas domestic carriers organized or incorporated for five years or more under
the laws of this state. Except as provided in subsections (f) and (g) of this
section, Insurance Code §
401.052(a)
governs the frequency of examinations for Texas domestic carriers organized or
incorporated for five years or more under the laws of this state.
(e) Examination of Texas domestic carriers
incorporated or organized for less than five years under the laws of this
state.
(1) Except as provided in paragraph
(2) of this subsection and subsections (f), (g), and (h) of this section, the
department will conduct an examination of a Texas domestic carrier incorporated
or organized for less than five years under the laws of this state in the
carrier's first, third, and fifth years. For a Texas domestic carrier that
receives a certificate of authority or other authorization from the department
on or before June 30, the first year to be examined will be the calendar year
in which the carrier received the certificate of authority or other
authorization from the department. For a Texas domestic carrier that receives a
certificate of authority or other authorization from the department after June
30, the first year to be examined will be the calendar year immediately
following the calendar year in which the carrier received the certificate of
authority or other authorization from the department and will include the first
partial year. After the fifth year, Insurance Code §
401.052(a)
will govern the frequency of examination.
(2) If a Texas domestic carrier incorporated
or organized for less than five years under the laws of this state is a member
of an insurance holding company system with one or more affiliated Texas
domestic carriers, the department may conduct an examination of the Texas
domestic carrier at the same time it conducts the examination of the affiliated
Texas domestic carrier or carriers, provided one or more of the Texas domestic
affiliated carriers has conducted the business of insurance in Texas
continuously for 10 or more consecutive calendar years. In making this
determination, the department will consider whether:
(A) any affiliated carriers of the Texas
domestic carrier are in a hazardous condition or conditions, including the
conditions described in §
8.3 of this title;
(B) any affiliated carriers of the Texas
domestic carrier are the subject of pending administrative action by a
regulatory agency of this state, the United States, or another state;
and
(C) the department has any
financial or other regulatory concerns regarding any affiliated carriers of the
Texas domestic carrier.
(f) Examination of redomesticated carriers.
The department will conduct an examination of a redomesticated carrier no later
than five years from the carrier's last examination by a prior state of
domicile or three years from the date the carrier redomesticates to Texas,
whichever is less. The department will conduct an examination of a
redomesticated carrier as often as the department considers
necessary.
(g) Examination of
self-insurance groups. This section does not apply to self-insurance groups
governed by Labor Code §
407A.252.
(h) Examination of captive insurance
companies. This section does not apply to captive insurance companies governed
by Insurance Code Chapter 964, unless the department determines an examination
of a captive insurance company is necessary.
(i) Commissioner's authority. This section
does not in any way limit the Commissioner's authority to visit or examine a
carrier as often as the Commissioner considers necessary.
(j) Conflicts. In the event of a conflict
between this section and the Insurance Code or the Labor Code, the provisions
of the Insurance Code or the Labor Code prevail.
