| (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.
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