(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.
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