• Increase Text Icon
  • Decrease Text Icon
  • Email Icon
  • Print this page
You are here: Home . rules . 2005 . financialrules

Subchapter A. Examination and Financial Analysis

28 TAC §7.9

1. INTRODUCTION. 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 published in the October 28, 2005 issue of the Texas Register (30 TexReg 6999).

2. REASONED JUSTIFICATION. 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.

3. HOW THE SECTION WILL FUNCTION. 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.

4. SUMMARY OF COMMENTS. No comments were received.

5. STATUTORY AUTHORITY. 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.

6. TEXT.

§7.9. Examination of Actuarial Opinion for Property and Casualty Insurers.

(a) Scope. This section applies to all insurers that are required to file an actuarial opinion with the property and casualty annual statement adopted by the commissioner under Insurance Code §802.001, including fire, fire and marine, general casualty, fire and casualty, or U.S. branch of an alien insurer, county mutual insurance company, mutual insurance company other than a life insurance company, Lloyd's plan, reciprocal or inter-insurance exchange, domestic risk retention group, life insurance company that is licensed to write workers' compensation, any farm mutual insurance company that filed a property and casualty annual statement that had gross written premiums in excess of $5,000,000, any Mexican non-life insurer licensed under any provision of the Insurance Code other than, or in addition to, Insurance Code Chapter 984, domestic joint underwriting association, the Texas Mutual Insurance Company, and the Texas FAIR Plan Association.

(b) Purpose. The section will facilitate the examination of the statement of actuarial opinion required to be attached to an insurer's annual statement under Insurance Code §802.002. The Actuarial Opinion Summary will provide information which will assist the department in identifying those insurers which require additional analysis to determine their financial condition.

(c) Actuarial Opinion Summary. By March 15th of each year a domestic insurer subject to this section shall submit to the department an Actuarial Opinion Summary completed in accordance with applicable National Association of Insurance Commissioners Annual Statement Instructions, Property and Casualty.

(d) Additional Documents. Upon request of the commissioner:

(1) a domestic insurer shall submit the Actuarial Report and Workpapers that support its actuarial opinion, and

(2) a foreign insurer shall submit its Actuarial Opinion Summary and /or Actuarial Report and Workpapers that support its actuarial opinion.

(e) Submission of Documents. The documents described in subsections (c) and (d) of this section shall be submitted to the Actuarial Division, Financial Program, M.C. 302-3A, Texas Department of Insurance, 333 Guadalupe, P.O. Box 149104, Austin, Texas 78714-9104, or they may be submitted electronically to ActuarialDivision@tdi.state.tx.us.

(f) Confidentiality. The Actuarial Opinion Summary, Actuarial Report and Workpapers, and any documents, materials or other information provided by an insurer under subsections (c) or (d) of this section to the department will be used to examine the company's financial condition. The documents will be considered information obtained during the course of an examination under Insurance Code Article 1.15 and treated as confidential.

(g) Applicability. This section is applicable to the actuarial opinion included with an insurer's 2005 Property and Casualty Annual Statement and thereafter.



For more information, contact:

Contact Information and Other Helpful Links