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Subchapter A. Examination and Financial Analysis

28 TAC §7.28

The Texas Department of Insurance proposes the repeal of §7.28 concerning the regulation of accounting for reinsurance agreements by insurers. The repeal of the section is necessary to eliminate the differences between the requirements of §7.28 and §7.18. Section 7.18 adopts by reference the National Association of Insurance Commissioners Accounting Practices and Procedures Manual (Manual). Appendix A-791 in the Manual also prescribes accounting requirements for reinsurance agreements by insurers. The repeal of the section will further the objective of the Manual to codify statutory accounting guidance into a single source in order to improve consistency in the regulations applicable to the accounting standards, treatments and practices of insurers doing business in Texas.

Betty Patterson, Senior Associate Commissioner, Financial Program has determined that, for the first five-year period the repeal of the section will be in effect, there will be no fiscal implications for state or local government as a result of enforcing or administering the repeal, and there will be no effect on local employment or local economy.

Ms. Patterson also has determined that, for each year of the first five years the repeal of the section will be in effect, the public benefit anticipated as a result of the repeal of the section will be more efficient and standardized accounting by insurers licensed to do business in Texas and enhanced comparability of financial statements of insurers domiciled in different states. There is no economic cost to persons who are required to comply with the repeal as proposed. The department finds it is neither legal nor feasible to reduce the effect of the proposed section for micro or small businesses. The solvency of an insurer must be measured fairly and objectively, regardless of the size of the insurer.

To be considered, written comments on the proposal must be submitted no later than 5:00 p.m. on December 9, 2002 to Gene C. Jarmon, Acting General Counsel and Chief Clerk, Mail Code 113-2A, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104. An additional copy of the comments must be simultaneously submitted to Betty Patterson, Senior Associate Commissioner, Financial Program, Mail Code 305-2A, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104. A request for a public hearing should be submitted separately to the Office of the Chief Clerk.

The repeal of the section is proposed under the Insurance Code, Articles 1.11, 1.32, 3.10, and 5.75-1 and §36.001. Article 1.11 authorizes the commissioner to change the form of the annual statement to elicit a true exhibit of an insurer's financial condition. Article 1.32 authorizes the commissioner to adopt rules to establish or set standards for the evaluation of the financial condition of insurers. Articles 3.10 and 5.75-1 authorize rules relating to accounting and financial statement requirements and the treatment of reinsurance agreements between insurers. Section 36.001 authorizes the commissioner to adopt rules for the conduct and execution of the duties and functions of the department as authorized by statute.

Insurance Code Articles 1.11, 1.32, 3.10, and 5.75-1 are affected by this proposal.

§7.28. Regulation of Accounting for Reinsurance Agreements by Insurers.



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