Part 1.
TEXAS DEPARTMENT OF INSURANCE
Chapter 7.
CORPORATE AND FINANCIAL REGULATION
Subchapter A. EXAMINATION AND FINANCIAL ANALYSIS
28 TAC §7.9
The Commissioner of Insurance adopts new §7.9, concerning
the examination of the actuarial opinion of an insurer that is required to
file an actuarial opinion with its property and casualty annual statement.
The new section is adopted without changes to the proposed text as published
in the October 28, 2005, issue of the
Texas Register
(30 TexReg 6999).
The new section is necessary to facilitate the examination of an actuarial
opinion submitted in accordance with Insurance Code §802.002 which requires
an actuarial opinion to be submitted with an insurer's annual statement. The
new section will assist the department in identifying insurers requiring further
analysis to determine their financial condition. Conversely, it will help
the department determine which insurers do not need further examination.
The adopted section requires a domestic property and casualty insurer to
submit to the department annually, on or before March 15th, an Actuarial Opinion
Summary which will facilitate the examination of the actuarial opinion submitted
with an insurer's annual statement as required by Insurance Code §802.002.
The section further provides that the Actuarial Opinion Summary and the Actuarial
Report and Workpapers be completed in accordance with the National Association
of Insurance Commissioners' Annual Statement Instructions, Property and Casualty
(Instructions) that are adopted annually by the department in conjunction
with its adoption of the annual statement forms. The Actuarial Opinion Summary
is a recapitulation of the Actuarial Report and Workpapers and will provide
information on the opining actuary's point estimate and/or range of reasonable
estimates, explanation of any exceptional adverse development, and other information
required by the Instructions. In addition, the section provides that the commissioner
may request a domestic property and casualty insurer to furnish its Actuarial
Report and Workpapers and a foreign insurer to furnish its Actuarial Opinion
Summary and Actuarial Report and Workpapers. Finally, the section provides
that the Actuarial Opinion Summary; Actuarial Report and Workpapers; and any
documents, materials or other information provided by an insurer will be used
by the department to examine a company's financial condition, and, therefore,
such documents will be considered information obtained during the course of
an examination under Insurance Code Article 1.15, §8(b) which provides
that such information is confidential and may not be disclosed to the public.
No comments were received regarding the new section.
The new section is adopted under the Insurance Code Articles
1.15, 1.32, 21.39, 21.54 and §§802.001, 802.002, 861.254, 862.001,
883.203, 883.204, 885.401, 911.002, 911.304, 912.301, 941.252, 942.201, 982.004,
984.153, 984.202, and 36.001. Article 1.15 authorizes the Commissioner to
examine each insurer doing business in this state. Article 1.32 authorizes
the Commissioner to establish criteria for hazardous conditions. Article 21.39
requires insurers to establish adequate reserves and provides for the adoption
of each current formula for establishing reserves applicable to each line
of insurance. Section 802.001 authorizes the Commissioner to make changes
in the forms of the annual statements required of insurance companies of any
kind, as shall seem best adapted to elicit a true exhibit of their condition
and methods of transacting business. Section 802.002 requires an insurance
company's annual statement to include an actuarial opinion relating to the
loss and loss adjustment expense reserves for property and casualty risks.
Article 21.54 and §§861.254, 862.001, 883.203, 883.204, 885.401,
911.002, 911.304, 912.301, 941.252, 942.201, 982.004, 984.153, and 984.202
require insurers subject to the adopted section to file an annual statement,
other financial reports and other information and provide specific rulemaking
authority of the Commissioner relating to those insurers. Section 36.001 provides
that the Commissioner may adopt any rules necessary and appropriate to implement
the powers and duties of the Texas Department of Insurance under the Insurance
Code and other laws of this state.
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 January 6, 2006.
TRD-200600106
Gene C. Jarmon
General Counsel and Chief Clerk
Texas Department of Insurance
Effective date: January 26, 2006
Proposal publication date: October 28, 2005
For further information, please call: (512) 463-6327