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Texas Department of Insurance
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Subchapter A. Automobile Insurance Division 1. Certificates of Assumption 28 TAC §5.11

The Commissioner of Insurance adopts an amendment to §5.11, concerning assumption certificates related to automobile insurance policies. The amended section is adopted without changes to the proposed text as published in the June 14, 2002 issue of the Texas Register (27 TexReg 5063) and will not be republished.

The amendment to §5.11 deletes the strict requirement that only a carrier in conservatorship or receivership may have issued certificate of assumptions for automobile insurance policies ceded to another carrier. The department recognizes the need for approving assumption reinsurance agreements in limited situations. In general, these limited situations are tied to the best interests of the policyholders and include situations involving carriers attempting to dissolve or sell a charter, or carriers in hazardous financial condition. Each proposed assumption transaction with respect to the best interest of the policyholders will be determined on a case-by-case review. The amendment recognizes the need for additional flexibility in considering these kinds of assumptions.

The amendment should result in the more efficient servicing and handling of policyholders in situations where the ceding insurer is dissolving, being sold, or in hazardous financial condition. As stated above, the security of the policyholder having an automobile insurance policy is a primary factor in the consideration of any request to approve these assumption reinsurance transactions. This section will be utilized when an assumption transaction has been approved by the department involving automobile insurance policies.

No comments were received on the proposed amendment.

The amendment is proposed under the Insurance Code Articles 5.06 and 5.10 and §36.001. Articles 5.06 and 5.10 authorize the commissioner to adopt rules as necessary to carry out the provisions of the Insurance Code, Chapter 5, regarding automobile insurance. Section 36.001 provides the commissioner of insurance with the authority to adopt rules for the conduct and execution of the powers and duties of the department as authorized by statute.

§5.11. Certificates of Assumption. A certificate of assumption may be attached only to an automobile insurance policy issued for an insurer for which a reinsurance assumption agreement has been approved by a commissioner´s order pursuant to 28 Texas Administrative Code §7.604. For utilization under this section, the Texas Department of Insurance adopts by reference a certificate of assumption form which is published by the Texas Department of Insurance and available from the Automobile Division, P.O. Box 149104, Mail Code 104-1A, Austin, Texas 78714-9104.

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