28 TAC §5.2006
The Commissioner of Insurance adopts new §5.2006 concerning
reinsurance in the operation of the Texas Medical Liability Insurance Underwriting
Association (JUA). The new section is adopted without changes to the proposed
text as published in the April 21, 2000, issue of the
Texas Register
(25 TexReg 3410) and will not be republished.
The adopted section is necessary to implement Insurance Code Article 21.49-3, §3(b)(4)
concerning the authority of the JUA to cede and purchase reinsurance. The
JUA is established by Insurance Code Article 21.49-3 to provide medical liability
insurance on a self-supporting basis to physicians and health care providers
who are in one of the named categories eligible for such coverage. Article
21.49-3, §3A(a) provides that the Commissioner of Insurance shall establish
by order the categories of physicians and health care providers eligible to
obtain coverage from the JUA and may revise his order to include or exclude
from eligibility particular categories of such physicians and health care
providers. In accord with Article 21.49-3, §3(b)(4), the JUA shall have
the power on behalf of its members to, among other things, cede and purchase
reinsurance, and rules governing the JUA provide that such reinsurance shall
be governed by rules promulgated by the commissioner. By Commissioner's Order
No. 00-0175, dated February 14, 2000, the commissioner ordered that not-for-profit
nursing homes shall be included as a category of providers eligible to obtain
insurance coverage from the JUA pursuant to Insurance Code Article 21.49-3.
The adopted section governs the JUA's authority to cede and purchase reinsurance
in order to (i) accommodate the inclusion of not-for-profit nursing homes
as a category of providers eligible to obtain insurance coverage from the
JUA, (ii) maintain the statutory purpose of the JUA to provide medical liability
insurance on a self-supporting basis, (iii) protect the operations of the
JUA and the policyholder's stabilization reserve fund, and (iv) protect the
general revenue of the State of Texas.
New §5.2006 sets forth the purpose of the section as necessary to
implement Insurance Code Article 21.49-3, §3(b)(4) and allows the JUA
to develop a reinsurance program, subject to prior approval by the commissioner.
The section further sets forth some of the elements to be included in the
reinsurance program, among which are the proposed reinsurance program structure
and terms, including the reinsurance proposal and proposed reinsurance contract
terms and conditions; cost of the proposed reinsurance program; the recommended
percentage of reinsured business to be assumed by each individual reinsurer;
a summary of the financial condition of each recommended reinsurer; the JUA's
costs to administer the reinsurance program; compliance with §§7.601
- 7.615 of Title 28, Administrative Code (relating to Reinsurance), to the
extent that such provisions do not conflict with the section or Article 21.49-3
of the Insurance Code, or unless such provisions are waived by the commissioner;
and any other information the commissioner deems necessary to enable the commissioner
to determine whether to approve or disapprove the reinsurance program. The
section also contains time periods for submission to the commissioner of a
renewal program or any amendments to any existing reinsurance contract.
Comments were received regarding adoption of this new section.
The new section is adopted pursuant to the Insurance Code Article
21.49-3 and §36.001. Article 21.49-3 provides that the JUA shall have
the power on behalf of its members to, among other things, cede and purchase
reinsurance; such reinsurance shall be governed by the plan of operation promulgated
by the Commissioner of Insurance. Insurance Code §36.001 authorizes the
Commissioner of Insurance to adopt rules for the conduct and execution of
the duties and functions of the Texas Department of Insurance only as authorized
by statute.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on May 24, 2000.
TRD-200003664
Lynda Nesenholtz
General Counsel and Chief Clerk
Texas Department of Insurance
Effective date: June 13, 2000
Proposal publication date: April 21, 2000
For further information, please call: (512) 463-6327