Source: http://www.tdi.texas.gov/rules/2004/1108a-059.html
Timestamp: 2018-03-19 05:00:00
Document Index: 334025711

Matched Legal Cases: ['§7', '§7', '§7', '§36', '§803', '§7']

Subchapter J. Examination Expenses and Assessments
28 TAC §7.1012
The Texas Department of Insurance proposes amendments to §7.1012 concerning assessments to cover the expenses of examining insurance companies. The amendments are necessary to adjust the rates of assessment to be levied against and collected from each domestic insurance company based on admitted assets and gross premium receipts for the 2004 calendar year, and from each foreign insurance company examined during the 2005 calendar year based on a percentage of the gross salary paid to an examiner for each month or part of a month during which the examination is made. The assessments made under authority of this proposed section will be in addition to, and not in lieu of any other charge which may be made under law, including the Insurance Code Article 1.16. The proposed amendment to subsection (c) will allow the department to efficiently collect the assessments.
Karen A. Phillips, Chief Financial Officer, has determined that for the first five-year period the section is in effect, the anticipated fiscal impact on state government is estimated income of $1,481,201 to the state´s general revenue fund. There will be no fiscal implications for local government as a result of enforcing or administering the section, and there will be no effect on local employment or the local economy.
Ms. Phillips has determined that for each year of the first five years the amended section is in effect, the public benefit anticipated as a result of enforcing the section will be the adoption of assessment rates to defray the expenses of examinations and administration of the laws related to examinations during the 2005 calendar year. Ms. Phillips has determined that the direct economic cost to individuals who are required to comply with the proposed section will vary. In the case of domestic companies, the amount of the assessment in 2005 will be .00045 of 1.0% of the domestic company´s admitted assets as of December 31, 2004 (excluding pension assets specified in subsection (b)(2)(A)) and .00128 of 1.0% of a domestic company´s gross premium receipts for 2004 (excluding pension related premiums specified in subsection (b)(2)(B) and premiums related to welfare benefits described in subsection (b)(5)). In the case of foreign companies examined in 2005, the amount of the assessment in 2005 will be 33% of the gross salary paid to each examiner for each month or partial month of the examination in order to cover the examiner´s longevity pay; state contributions to retirement, social security, and the state paid portion of insurance premiums; and vacation and sick leave accruals. The proposed amendment to subsection (c) will allow the department to collect assessments within a reasonable time frame of the billing date. There will be no difference in rates of assessments between micro, small and large businesses, except that a minimum charge of $25 is assessed domestic companies in §7.1012(b)(3). The actual cost of gathering the information required to fill out the form, calculate the assessment and complete the form will be the same for micro, small and large businesses based on the department´s experience. Generally a person familiar with the accounting records of the company and accounting practices in general will perform the activitie s necessary to comply with the section. Such perso ns are similarly compensated by small and large insurers. The compensation is generally between $17 - $30 an hour. The department estimates that the form can be completed in two hours to comply with this section. The department does not believe it is legal or feasible to waive or modify the requirements of the proposed section for small and micro businesses because the assessment is required by statute and makes no provision for waiving or reducing assessments for small or micro-businesses.
To be considered, written comments on the proposal must be submitted no later than 5:00 p.m. on December 20, 2004 , to Gene C. Jarmon, 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 should be simultaneously submitted to Karen A. Phillips, Chief Financial Officer, Mail Code 108-1A, Texas Department of Insurance, P.O. Box 149104 , Austin , Texas 78714-9104 . Any requests for a public hearing should be submitted separately to the Office of the Chief Clerk.
The amendment is proposed under the Insurance Code Article 1.16 and §36.001. The Insurance Code Article 1.16(a) and (b) authorizes the commissioner of insurance to make assessments necessary to cover the expenses of examining insurance companies and to comply with the provisions of the Insurance Code Articles 1.16, 1.17, and 1.18, in such amounts as the commissioner certifies to be just and reasonable. In addition, Article 1.16(c) provides that expenses incurred in the examination of foreign insurers by Texas examiners shall be collected by the commissioner by assessment. 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.
The following articles and section of the Insurance Code are affected by this rule: Articles 1.16, 1.17, 1.17A, 1.18, 1.19, 4.10 and 4.11, §803.007 (formerly Article 1.28).
§7.1012. Domestic and Foreign Insurance Company Examination Assessments, 2005 [ 2004 ].
(a) Foreign insurance companies examined during the 2005 [ 2004 ] calendar year shall pay for examination expenses according to the overhead rate of assessment specified in this subsection in addition to all other payments required by law including, but not limited to, the Insurance Code Article 1.16. Each foreign insurance company examined shall pay 33% of the gross salary paid to each examiner for each month or partial month of the examination in order to cover the examiner's longevity pay; state contributions to retirement, social security, and the state paid portion of insurance premiums; and vacation and sick leave accruals. The overhead assessment will be levied with each month's billing.
(b) Domestic insurance companies shall pay according to this subsection and rates of assessment herein for examination expenses as provided in the Insurance Code Article 1.16.
(1) The actual salaries and expenses of the examiners allocable to such examination shall be paid. The annual salary of each examiner is to be divided by the total number of working days in a year, and the company is to be assessed the part of the annual salary attributable to each working day the examiner examines the company during 2005 [ 2004 ]. The expenses assessed shall be those actually incurred by the examiner to the extent permitted by law.
(A) .00045 [ .00296 ] of 1.0% of the admitted assets of the company as of December 31, 2004 [ 2003 ], upon the corporations or associations to be examined taking into consideration the annual admitted assets that are not attributable to 90% of pension plan contracts as defined in Section 818(a) of the Internal Revenue Code of 1986 (26 U.S.C. Section 818(a)); and
(B) .00128 [ .00783 ] of 1.0% of the gross premium receipts of the company for the year 2004 [ 2003 ], upon the corporations or associations to be examined taking into consideration the annual premium receipts that are not attributable to 90% of pension plan contracts as defined in Section 818(a) of the Internal Revenue Code of 1986 (26 U.S.C. Section 818(a)).
(c) The overhead assessment assessed under subsections (b)(2) and (b)(3) of this section shall be payable and due to the Texas Department of Insurance, P.O. Box 149104, MC 108-3A, Austin, Texas 78714-9104 within 30 days of the invoice date [ on December 31, 2004 ] .