reglab/statecodes huggingface dataset:
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle A - General Provisions › Chapter 401 - Audits and Examinations › Subchapter A. Independent Audit of Financial Statements › Section 401.005. Alternative Filing for Canadian or British Insurers or Health Maintenance Organizations

Sec. 401.005.  ALTERNATIVE FILING FOR CANADIAN OR BRITISH INSURERS OR HEALTH MAINTENANCE ORGANIZATIONS.  (a)  Instead of the audited financial report required by Section 401.004, an insurer or health maintenance organization domiciled in Canada or the United Kingdom may file the insurer's or health maintenance organization's annual statement of total business on the form filed by the insurer or health maintenance organization with the appropriate regulatory authority in the country of domicile.  The statement must be audited by an independent accountant chartered in the country of domicile.
(b)  The chartered accountant must be registered with the commissioner under Section 401.014(a).  The registration must be accompanied by a statement, signed by the accountant, indicating that the accountant is aware of the requirements of this subchapter and affirming that the accountant will express the accountant's opinion in conformity with those requirements.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle A - General Provisions › Chapter 401 - Audits and Examinations › Subchapter A. Independent Audit of Financial Statements › Section 401.006. Exemption for Certain Small Insurers and Health Maintenance Organizations

Sec. 401.006.  EXEMPTION FOR CERTAIN SMALL INSURERS AND HEALTH MAINTENANCE ORGANIZATIONS.  (a)  An insurer or health maintenance organization that has less than $1 million in direct premiums written in this state during a calendar year is exempt from the requirement to file an audited financial report if the insurer or health maintenance organization submits an affidavit, made under oath by one of the insurer's or health maintenance organization's officers, that specifies the amount of direct premiums written in this state during that period.
(b)  Notwithstanding Subsection (a), the commissioner may require an insurer or health maintenance organization, other than a fraternal benefit society  that does not have any direct premiums written in this state for accident and health insurance during a calendar year, to comply with this subchapter if the commissioner finds that the insurer's or health maintenance organization's compliance is necessary for the commissioner to fulfill the commissioner's statutory responsibilities.
(c)  An insurer or health maintenance organization that has assumed premiums of at least $1 million under reinsurance agreements is not exempt under Subsection (a).
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle A - General Provisions › Chapter 401 - Audits and Examinations › Subchapter A. Independent Audit of Financial Statements › Section 401.007. Exemption for Certain Foreign or Alien Insurers or Health Maintenance Organizations

Sec. 401.007.  EXEMPTION FOR CERTAIN FOREIGN OR ALIEN INSURERS OR HEALTH MAINTENANCE ORGANIZATIONS.  (a)  A foreign or alien insurer or health maintenance organization that files an audited financial report in another state in accordance with that state's requirements for audited financial reports may be exempt from filing a report under this subchapter if the commissioner finds that the other state's requirements are substantially similar to the requirements prescribed by this subchapter.
(b)  An insurer or health maintenance organization exempt under this section shall file with the commissioner a copy of:
(1)  the audited financial report, the report on significant deficiencies in internal controls, and the accountant's letter of qualifications filed with the other state; and
(2)  any notification of adverse financial conditions report filed with the other state.
(c)  The reports and letter required by Subsection (b)(1) must be filed in accordance with the filing dates prescribed by Sections 401.004 and 401.019.  The report required by Subsection (b)(2) must be filed in accordance with the filing date prescribed by Section 401.017.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle A - General Provisions › Chapter 401 - Audits and Examinations › Subchapter A. Independent Audit of Financial Statements › Section 401.008. Hardship Exemption

Sec. 401.008.  HARDSHIP EXEMPTION.  (a)  An insurer or health maintenance organization that is not eligible for an exemption under Section 401.006 or 401.007 may apply to the commissioner for a hardship exemption.
(b)  Subject to Subsection (c), the commissioner may grant an exemption under this section if the commissioner finds, after reviewing the application, that compliance with this subchapter would constitute a severe financial or organizational hardship for the insurer or health maintenance organization.  The commissioner may grant the exemption at any time for one or more specified periods.
(c)  The commissioner may not grant an exemption under this section if:
(1)  the exemption would diminish the department's ability to monitor the financial condition of the insurer or health maintenance organization; or
(2)  the insurer or health maintenance organization:
(A)  during the five-year period preceding the date the application for the exemption is made:
(i)  has been placed under supervision, conservatorship, or receivership;
(ii)  has undergone a change in control, as described by Section 823.005; or
(iii)  has been subject to a significant number of complaints, as determined by the commissioner;
(B)  has been identified by the department as troubled;
(C)  has been or is the subject of a disciplinary action by the department; or
(D)  is not complying with the law or with a rule adopted by the commissioner.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle A - General Provisions › Chapter 401 - Audits and Examinations › Subchapter A. Independent Audit of Financial Statements › Section 401.009. Contents of Audited Financial Report

Sec. 401.009.  CONTENTS OF AUDITED FINANCIAL REPORT.  (a)  An audited financial report required under Section 401.004 must:
(1)  describe the financial condition of the insurer or health maintenance organization as of the end of the most recent calendar year and the results of the insurer's or health maintenance organization's operations, changes in financial position, and changes in capital and surplus for that year;
(2)  conform to the statutory accounting practices prescribed or otherwise permitted by the insurance regulator in the insurer's or health maintenance organization's state of domicile; and
(3)  include:
(A)  the report of an accountant;
(B)  a balance sheet that reports admitted assets, liabilities, capital, and surplus;
(C)  a statement of gain or loss from operations;
(D)  a statement of cash flows;
(E)  a statement of changes in capital and surplus;
(F)  any notes to financial statements;
(G)  supplementary data and information, including any additional data or information required by the commissioner; and
(H)  information required by the department to conduct the insurer's or health maintenance organization's examination under Subchapter B.
(b)  The notes to financial statements required by Subsection (a)(3)(F) must include:
(1)  a reconciliation of any differences between the audited statutory financial statements and the annual statements filed under this code, with a written description of the nature of those differences;
(2)  any notes required by the appropriate National Association of Insurance Commissioners annual statement instructions or by generally accepted accounting principles;  and
(3)  a summary of the ownership of the insurer or health maintenance organization and that entity's relationship to any affiliated company.
(c)  An insurer or health maintenance organization required under Section 401.004 to file an audited financial report that does not retain an independent certified public accountant to perform an annual audit for the previous year may not be required to include in the report audited statements of operations, cash flows, or changes in capital and surplus for the first year.  The insurer or health maintenance organization must include those statements in the first-year report and label the statements as unaudited.  The insurer or health maintenance organization must include in the first-year report all other reports described by Section 401.004.
(d)  The commissioner shall adopt rules governing the information to be included in the audited financial report under Subsection (a)(3)(H).
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle A - General Provisions › Chapter 401 - Audits and Examinations › Subchapter A. Independent Audit of Financial Statements › Section 401.010. Requirements for Financial Statements in Audited Financial Report

Sec. 401.010.  REQUIREMENTS FOR FINANCIAL STATEMENTS IN AUDITED FINANCIAL REPORT.  (a)  An accountant must audit the financial reports provided by an insurer or health maintenance organization for purposes of an audit under this subchapter.  The accountant who audits the reports must conduct the audit in accordance with generally accepted auditing standards or with standards adopted by the Public Company Accounting Oversight Board, as applicable, and must consider the standards specified in the Financial Condition Examiner's Handbook adopted by the National Association of Insurance Commissioners or other analogous nationally recognized standards adopted by commissioner rule.
(b)  The financial statements included in the audited financial report must be prepared in a form and using language and groupings substantially the same as those of the relevant sections of the insurer's or health maintenance organization's annual statement filed with the commissioner.  Beginning in the second year in which an insurer or health maintenance organization is required to file an audited financial report, the financial statements must also be comparative, presenting the amounts as of December 31 of the reported year and the amounts as of December 31 of the preceding year.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
Amended by:
Acts 2007, 80th Leg., R.S., Ch. 730 (H.B. 2636), Sec. 3B.001(a), eff. September 1, 2007.
Acts 2007, 80th Leg., R.S., Ch. 921 (H.B. 3167), Sec. 9.001(a), eff. September 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle A - General Provisions › Chapter 401 - Audits and Examinations › Subchapter A. Independent Audit of Financial Statements › Section 401.012. Hearing on Accountant Qualifications; Replacement of Accountant

Sec. 401.012.  HEARING ON ACCOUNTANT QUALIFICATIONS; REPLACEMENT OF ACCOUNTANT.  The commissioner may hold a hearing to determine if an accountant is qualified and independent.  If, after considering the evidence presented, the commissioner determines that an accountant is not qualified and independent for purposes of expressing an opinion on the financial statements in an audited financial report filed under this subchapter, the commissioner shall issue an order directing the insurer or health maintenance organization to replace the accountant with a qualified and independent accountant.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle A - General Provisions › Chapter 401 - Audits and Examinations › Subchapter A. Independent Audit of Financial Statements › Section 401.013. Accountant's Letter of Qualifications

Sec. 401.013.  ACCOUNTANT'S LETTER OF QUALIFICATIONS.  (a)  The audited financial report required under Section 401.004 must be accompanied by a letter provided by the accountant who performed the audit stating:
(1)  the accountant's general background and experience;
(2)  the experience of each individual assigned to prepare the audit in auditing insurers or health maintenance organizations and whether the individual is an independent certified public accountant; and
(3)  that the accountant:
(A)  is properly licensed by an appropriate state licensing authority, is a member in good standing of the American Institute of Certified Public Accountants, and is otherwise qualified under Section 401.011;
(B)  is independent from the insurer or health maintenance organization and conforms to the standards of the profession contained in the American Institute of Certified Public Accountants Code of Professional Conduct, the statements of that institute, and the rules of professional conduct adopted by the Texas State Board of Public Accountancy, or a similar code;
(C)  understands that:
(i)  the audited financial report and the accountant's opinion on the report will be filed in compliance with this subchapter; and
(ii)  the commissioner will rely on the report and opinion in monitoring and regulating the insurer's or health maintenance organization's financial position; and
(D)  consents to the requirements of Section 401.020 and agrees to make the accountant's work papers available for review by the department or the department's designee.
(b)  Subsection (a)(2) does not prohibit an accountant from using any staff the accountant considers appropriate if use of that staff is consistent with generally accepted auditing standards.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle A - General Provisions › Chapter 401 - Audits and Examinations › Subchapter A. Independent Audit of Financial Statements › Section 401.014. Registration of Accountant

Sec. 401.014.  REGISTRATION OF ACCOUNTANT.  (a)  Not later than December 31 of the calendar year to be covered by an audited financial report required by this subchapter, an insurer or health maintenance organization must register in writing with the commissioner the name and address of the accountant retained to prepare the report.
(b)  The insurer or health maintenance organization must include with the registration a statement signed by the accountant:
(1)  indicating that the accountant is aware of the requirements of this subchapter and of the rules of the insurance department of the insurer's or health maintenance organization's state of domicile that relate to accounting and financial matters; and
(2)  affirming that the accountant will express the accountant's opinion on the financial statements in terms of the statements' conformity to the statutory accounting practices prescribed or otherwise permitted by the insurance department described by Subdivision (1) and specifying any exceptions the accountant believes are appropriate.
(c)  The commissioner may not accept an audited financial report prepared by an accountant who is not registered under this section.
(d)  The commissioner may not accept the registration of a person who does not qualify under Section 401.011 or does not comply with the other requirements of this subchapter.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle A - General Provisions › Chapter 401 - Audits and Examinations › Subchapter A. Independent Audit of Financial Statements › Section 401.015. Resignation or Dismissal of Accountant; Statement Concerning Disagreements

Sec. 401.015.  RESIGNATION OR DISMISSAL OF ACCOUNTANT; STATEMENT CONCERNING DISAGREEMENTS.  (a)  If an accountant who signed an audited financial report for an insurer or health maintenance organization resigns as accountant for the insurer or health maintenance organization or is dismissed by the insurer or health maintenance organization after the report is filed, the insurer or health maintenance organization shall notify the department not later than the fifth business day after the date of the resignation or dismissal.
(b)  Not later than the 10th business day after the date the insurer or health maintenance organization notifies the department under Subsection (a), the insurer or health maintenance organization shall file a written statement with the commissioner advising the commissioner of any disagreements between the accountant and the insurer's or health maintenance organization's personnel responsible for presenting the insurer's or health maintenance organization's financial statements that:
(1)  relate to accounting principles or practices, financial statement disclosure, or auditing scope or procedures;
(2)  occurred during the 24 months preceding the date of the resignation or dismissal; and
(3)  would have caused the accountant to note the disagreement in connection with the audited financial report if the disagreement were not resolved to the satisfaction of the accountant.
(c)  The statement required by Subsection (b) must include a description of disagreements that were resolved to the accountant's satisfaction and those that were not resolved to the accountant's satisfaction.
(d)  The insurer or health maintenance organization shall file with the statement required by Subsection (b) a letter signed by the accountant stating whether the accountant agrees with the insurer's or health maintenance organization's statement and, if not, the reasons why the accountant does not agree.  If the accountant fails to provide the letter, the insurer or health maintenance organization shall file with the commissioner a copy of a written request to the accountant for the letter.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle A - General Provisions › Chapter 401 - Audits and Examinations › Subchapter A. Independent Audit of Financial Statements › Section 401.016. Audited Combined or Consolidated Financial Statements

Sec. 401.016.  AUDITED COMBINED OR CONSOLIDATED FINANCIAL STATEMENTS.  (a)  An insurer or health maintenance organization described by Section 401.001(3) or (4) that is required to file an audited financial report under this subchapter may apply in writing to the commissioner for approval to file audited combined or consolidated financial statements instead of separate audited financial reports if the insurer or health maintenance organization:
(1)  is part of a group of insurers or health maintenance organizations that uses a pooling arrangement or 100 percent reinsurance agreement that affects the solvency and integrity of the insurer's or health maintenance organization's reserves; and
(2)  cedes all of the insurer's or health maintenance organization's direct and assumed business to the pool.
(b)  An insurer or health maintenance organization must file an application under Subsection (a) not later than December 31 of the calendar year for which the audited combined or consolidated financial statements are to be filed.
(c)  An insurer or health maintenance organization that receives approval from the commissioner under this section shall file a columnar combining or consolidating worksheet for the audited combined or consolidated financial statements that includes:
(1)  the amounts shown on the audited combined or consolidated financial statements;
(2)  the amounts for each insurer or health maintenance organization stated separately;
(3)  the noninsurance operations shown on a combined or individual basis;
(4)  explanations of consolidating and eliminating entries; and
(5)  a reconciliation of any differences between the amounts shown in the individual insurer or health maintenance organization columns of the worksheet and comparable amounts shown on the insurer's or health maintenance organization's annual statements.
(d)  An insurer or health maintenance organization that does not receive approval from the commissioner to file audited combined or consolidated financial statements for the insurer or health maintenance organization and any of the insurer's or health maintenance organization's subsidiaries or affiliates shall file a separate audited financial report.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle A - General Provisions › Chapter 401 - Audits and Examinations › Subchapter A. Independent Audit of Financial Statements › Section 401.017. Notice of Adverse Financial Condition or Misstatement of Financial Condition

Sec. 401.017.  NOTICE OF ADVERSE FINANCIAL CONDITION OR MISSTATEMENT OF FINANCIAL CONDITION.  (a)  An insurer or health maintenance organization required to file an audited financial report under this subchapter shall require the insurer's or health maintenance organization's accountant to immediately notify the board of directors of the insurer or health maintenance organization or the insurer's or health maintenance organization's audit committee in writing of any determination by that accountant that:
(1)  the insurer or health maintenance organization has materially misstated the insurer's or health maintenance organization's financial condition as reported to the commissioner as of the balance sheet date being audited; or
(2)  the insurer or health maintenance organization does not meet the minimum capital and surplus requirements prescribed by this code for the insurer or health maintenance organization as of that date.
(b)  An insurer or health maintenance organization that receives a notice described by Subsection (a) shall:
(1)  provide to the commissioner a copy of the notice not later than the fifth business day after the date the insurer or health maintenance organization receives the notice; and
(2)  provide to the accountant evidence that the notice was provided to the commissioner.
(c)  If the accountant does not receive the evidence required by Subsection (b)(2) on or before the fifth business day after the date the accountant notified the insurer or health maintenance organization under Subsection (a), the accountant shall file with the commissioner a copy of the accountant's written notice not later than the 10th business day after the date the accountant notified the insurer or health maintenance organization.
(d)  An accountant is not liable to an insurer or health maintenance organization or the insurer's or health maintenance organization's policyholders, shareholders, officers, employees, directors, creditors, or affiliates for a statement made under this section if the statement was made in good faith to comply with this section.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle A - General Provisions › Chapter 401 - Audits and Examinations › Subchapter A. Independent Audit of Financial Statements › Section 401.018. Information Discovered After Date of Audited Financial Report

Sec. 401.018.  INFORMATION DISCOVERED AFTER DATE OF AUDITED FINANCIAL REPORT.  If, after the date of an audited financial report filed under this subchapter, the accountant becomes aware of facts that might have affected the report, the accountant must take action as prescribed in Volume 1, AU Section 561, Professional Standards of the American Institute of Certified Public Accountants.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle A - General Provisions › Chapter 401 - Audits and Examinations › Subchapter A. Independent Audit of Financial Statements › Section 401.019. Report on Significant Deficiencies in Internal Control

Sec. 401.019.  REPORT ON SIGNIFICANT DEFICIENCIES IN INTERNAL CONTROL.  (a)  In addition to the audited financial report required by this subchapter, each insurer or health maintenance organization shall provide to the commissioner a written report of significant deficiencies required and prepared by an accountant in accordance with the Professional Standards of the American Institute of Certified Public Accountants.
(b)  The insurer or health maintenance organization shall annually file with the commissioner the report required by this section not later than the 60th day after the date the audited financial report is filed.  The insurer or health maintenance organization shall also provide a description of remedial actions taken or proposed to be taken to correct significant deficiencies, if the actions are not described in the accountant's report.
(c)  The report must follow generally the form for communication of internal control structure matters noted in an audit described in Statement on Auditing Standard (SAS) No. 60, AU Section 325, Professional Standards of the American Institute of Certified Public Accountants.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle A - General Provisions › Chapter 401 - Audits and Examinations › Subchapter A. Independent Audit of Financial Statements › Section 401.020. Accountant Work Papers

Sec. 401.020.  ACCOUNTANT WORK PAPERS.  (a)  In this section, "work papers" means the records kept by an accountant of the procedures followed, the tests performed, the information obtained, and the conclusions reached that are pertinent to the accountant's audit of an insurer's or health maintenance organization's financial statements.  The term includes work programs, analyses, memoranda, letters of confirmation and representation, abstracts of company documents and schedules, and commentaries prepared or obtained by the accountant in the course of auditing the financial statements that support the accountant's opinion.
(b)  An insurer or health maintenance organization required to file an audited financial report under this subchapter shall require the insurer's or health maintenance organization's accountant to make available for review by the department's examiners the work papers and any record of communications between the accountant and the insurer or health maintenance organization relating to the accountant's audit that were prepared in conducting the audit.  The insurer or health maintenance organization shall require that the accountant retain the work papers and records of communications until the earlier of:
(1)  the date the department files a report on the examination covering the audit period; or
(2)  the seventh anniversary of the date of the last day of the audit period.
(c)  The department may copy and retain the copies of pertinent work papers when the department's examiners conduct a review under Subsection (b).  The review is considered an investigation, and work papers obtained during that investigation may be made confidential by the commissioner, unless the work papers are admitted as evidence in a hearing before a governmental agency or in a court.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle A - General Provisions › Chapter 401 - Audits and Examinations › Subchapter A. Independent Audit of Financial Statements › Section 401.021. Penalty for Failure to Comply

Sec. 401.021.  PENALTY FOR FAILURE TO COMPLY.  (a)  If an insurer or health maintenance organization fails to comply with this subchapter, the commissioner shall order that the insurer's or health maintenance organization's annual audit be performed by a qualified independent certified public accountant.
(b)  The commissioner shall assess against the insurer or health maintenance organization the cost of auditing the insurer's or health maintenance organization's financial statement under this section.
(c)  The insurer or health maintenance organization shall pay to the commissioner the amount of the assessment not later than the 30th day after the date the commissioner issues the notice of assessment to the insurer or health maintenance organization.
(d)  Money collected under this section shall be deposited to the credit of the Texas Department of Insurance operating account for use by the commissioner and the department to pay the expenses incurred under this subchapter.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle A - General Provisions › Chapter 401 - Audits and Examinations › Subchapter B. Examination of Carriers › Section 401.051. Duty to Examine Carriers

Sec. 401.051.  DUTY TO EXAMINE CARRIERS.  (a)  The department or an examiner appointed by the department shall visit at the carrier's principal office:
(1)  each carrier that is organized under the laws of this state; and
(2)  each other carrier that is authorized to engage in business in this state.
(b)  The department or an examiner appointed by the department may visit the carrier for the purpose of investigating the carrier's affairs and condition.  The department or an examiner appointed by the department shall examine the carrier's financial condition and ability to meet the carrier's liabilities and compliance with the laws of this state that affect the conduct of the carrier's business.
(c)  The department or an examiner appointed by the department may conduct the visit and examination of a carrier described by Subsection (a)(2) alone or with representatives of the insurance supervising departments of other states.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle A - General Provisions › Chapter 401 - Audits and Examinations › Subchapter B. Examination of Carriers › Section 401.052. Frequency of Examination

Sec. 401.052.  FREQUENCY OF EXAMINATION.  (a)  Subject to Subsection (b) and except as provided by the rules adopted under that subsection, the department shall visit and examine a carrier as frequently as the department considers necessary.  At a minimum, the department shall examine a carrier not less frequently than once every five years.
(b)  The commissioner shall adopt rules governing the frequency of examinations of carriers that have been organized or incorporated for less than five years.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
Amended by:
Acts 2007, 80th Leg., R.S., Ch. 188 (S.B. 1253), Sec. 1, eff. September 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle A - General Provisions › Chapter 401 - Audits and Examinations › Subchapter B. Examination of Carriers › Section 401.053. Examination Period

Sec. 401.053.  EXAMINATION PERIOD.  Unless the department requests that an examination cover a longer period, the examination must cover the period beginning on the last day covered by the most recent examination and ending on December 31 of the year preceding the year in which the examination is being conducted.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle A - General Provisions › Chapter 401 - Audits and Examinations › Subchapter B. Examination of Carriers › Section 401.054. Powers Related to Examination

Sec. 401.054.  POWERS RELATED TO EXAMINATION.  The department or the examiner appointed by the department:
(1)  has free access, and may require the carrier or the carrier's agent to provide free access, to all books and papers of the carrier or the carrier's agent that relate to the carrier's business and affairs; and
(2)  has the authority to summon and examine under oath, if necessary, an officer, agent, or employee of the carrier or any other person in relation to the carrier's affairs and condition.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle A - General Provisions › Chapter 401 - Audits and Examinations › Subchapter B. Examination of Carriers › Section 401.055. Effect of Subchapter on Authority to Use Information

Sec. 401.055.  EFFECT OF SUBCHAPTER ON AUTHORITY TO USE INFORMATION.  This subchapter does not limit the commissioner's authority to use a final or preliminary examination report, an examiner's or company's work papers or other documents, or any other information discovered or developed during an examination in connection with a legal or regulatory action that the commissioner, in the commissioner's sole discretion, considers appropriate.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle A - General Provisions › Chapter 401 - Audits and Examinations › Subchapter B. Examination of Carriers › Section 401.056. Rules Related to Reports and Hearings

Sec. 401.056.  RULES RELATED TO REPORTS AND HEARINGS.  The commissioner by rule shall adopt:
(1)  procedures governing the filing and adoption of an examination report;
(2)  procedures governing a hearing to be held under this subchapter; and
(3)  guidelines governing an order issued under this subchapter.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle A - General Provisions › Chapter 401 - Audits and Examinations › Subchapter B. Examination of Carriers › Section 401.057. Use of Audit and Work Papers

Sec. 401.057.  USE OF AUDIT AND WORK PAPERS.  (a)  In this section, "work papers" has the meaning assigned by Section 401.020(a).
(b)  In conducting an examination under this subchapter, the department shall use audits and work papers that the carrier makes available to the department and that are prepared by an accountant or accounting firm meeting the qualifications of Section 401.011.  The department may conduct a separate audit of the carrier if necessary.  Work papers developed in the audit shall be maintained in the manner provided by Sections 401.020(b) and (c).
(c)  The carrier shall provide the department with:
(1)  the work papers of an accountant or accounting firm or the carrier; and
(2)  a record of any communications between the accountant or accounting firm and the carrier that relate to an audit.
(d)  The accountant or accounting firm shall deliver the information described by Subsection (c) to the examiner.  The examiner shall retain the information during the department's examination of the carrier.
(e)  Information obtained under this section is confidential and may not be disclosed to the public except when introduced as evidence in a hearing.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle A - General Provisions › Chapter 401 - Audits and Examinations › Subchapter B. Examination of Carriers › Section 401.058. Confidentiality of Reports and Related Information

Sec. 401.058.  CONFIDENTIALITY OF REPORTS AND RELATED INFORMATION.  (a)  A final or preliminary examination report and any information obtained during an examination are confidential and privileged for all purposes.  This information is not subject to:
(1)  disclosure under Chapter 552, Government Code;
(2)  a subpoena, other than a grand jury subpoena; or
(3)  discovery or admissibility in evidence in a civil action.
(b)  Subsection (a) applies if the examined carrier is under supervision or conservatorship.  Subsection (a) does not apply to an examination conducted in connection with a liquidation or receivership under this code or another insurance law of this state.
(c)  Subsection (a) does not limit the commissioner's authority to use a final or preliminary examination report and any information obtained during an examination in the furtherance of any legal or regulatory action relating to the administration of this code that the commissioner, in the commissioner's sole discretion, considers appropriate.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
Amended by:
Acts 2017, 85th Leg., R.S., Ch. 164 (H.B. 2437), Sec. 1, eff. May 26, 2017.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle A - General Provisions › Chapter 401 - Audits and Examinations › Subchapter B. Examination of Carriers › Section 401.059. Determination of Value

Sec. 401.059.  DETERMINATION OF VALUE.  In determining the value or market value of an investment in or on real estate or an improvement to real estate by a carrier authorized to engage in business in this state, the department, in administering this code, may consider any factor or matter that the department considers proper and material, including:
(1)  an appraisal by a real estate board or other qualified person;
(2)  an affidavit by another person familiar with those  values;
(3)  a  tax valuation;
(4)  the cost of acquisition after deducting for depreciation and obsolescence;
(5)  the cost of replacement;
(6)  sales of other comparable property;
(7)  enhancement in value from any cause;
(8)  income received or to be received; and
(9)  any improvements made.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle A - General Provisions › Chapter 401 - Audits and Examinations › Subchapter B. Examination of Carriers › Section 401.060. Right to Information Relating to Determination of Value or Market Value

Sec. 401.060.  RIGHT TO INFORMATION RELATING TO DETERMINATION OF VALUE OR MARKET VALUE.  (a)  If the department determines the value or market value of an insurer's investment in or on real estate or an improvement to real estate, the insurer is entitled to make a written request for a written finding by the commissioner in relation to that determination.
(b)  Not later than the 10th day after the date the commissioner receives a request under Subsection (a), the commissioner shall enter a  written order or finding that:
(1)  states separately the department's findings on  each factor or matter on which the department relied in making the determination; and
(2)  includes the name and address of each person who provided evidence relating to a factor or matter on which the department relied in making the determination.
(c)  The commissioner shall provide to the insurer that requested a written finding under this section a copy of the finding or order.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle A - General Provisions › Chapter 401 - Audits and Examinations › Subchapter B. Examination of Carriers › Section 401.061. Disciplinary Action for Failure to Comply With Subchapter

Sec. 401.061.  DISCIPLINARY ACTION FOR FAILURE TO COMPLY WITH SUBCHAPTER.  A carrier is subject to disciplinary action under Chapter 82 if the carrier or the carrier's agent fails or refuses to comply with:
(1)  this subchapter or a rule adopted under this subchapter; or
(2)  a request by the department or an appointed examiner to be examined or to provide information requested as part of an examination.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle A - General Provisions › Chapter 401 - Audits and Examinations › Subchapter B. Examination of Carriers › Section 401.062. Stay of Rule, Order, Decision, or Finding

Sec. 401.062.  STAY OF RULE, ORDER, DECISION, OR FINDING.  The filing of a petition under Subchapter D, Chapter 36, for judicial review of a rule, order, decision, or finding of the commissioner or department under this subchapter operates as a stay of the rule, order, decision, or finding until the court directs otherwise.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle A - General Provisions › Chapter 401 - Audits and Examinations › Subchapter C. Examiners and Actuaries › Section 401.101. Use of Department Examiner or Other Qualified Person or Firm

Sec. 401.101.  USE OF DEPARTMENT EXAMINER OR OTHER QUALIFIED PERSON OR FIRM.  The department may use a salaried department examiner or may appoint a qualified person or firm to perform an examination of an insurance organization as provided by law or to assist in the performance of an examination.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle A - General Provisions › Chapter 401 - Audits and Examinations › Subchapter C. Examiners and Actuaries › Section 401.102. Legislative Intent as to Appointment or Employment of Examiners and Actuaries

Sec. 401.102.  LEGISLATIVE INTENT AS TO APPOINTMENT OR EMPLOYMENT OF EXAMINERS AND ACTUARIES.  (a)  The legislature recognizes that experienced, highly qualified examiners and actuaries are necessary for the department to effectively monitor and regulate the solvency of insurers in this state.  It is the intent of the legislature that the department, in appointing or employing an examiner or actuary, select a person who:
(1)  has substantial experience in financial matters relating to insurance or other areas of financial activity that are compatible with the business of insurance; and
(2)  is recognized for the outstanding quality of the person's work in relation to areas of responsibility typically assigned to an examiner or actuary in the insurance field.
(b)  The legislature pledges to provide to the department the necessary funding to implement this section and to support the department in the department's efforts to attract the highly qualified persons necessary to fulfill regulatory responsibilities relating to insurer solvency assigned to those persons under the insurance laws of this state.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle A - General Provisions › Chapter 401 - Audits and Examinations › Subchapter C. Examiners and Actuaries › Section 401.103. Appointment of Examiners and Actuaries

Sec. 401.103.  APPOINTMENT OF EXAMINERS AND ACTUARIES.  (a)  The department shall appoint:
(1)  a chief examiner and the number of assistant examiners the department considers necessary to conduct examinations of insurance companies, corporations, and associations at the expense of the insurance company, corporation, or association as provided by law; and
(2)  the number of actuaries the department considers necessary to:
(A)  advise the department in connection with the performance of the department's duties; and
(B)  otherwise aid and counsel the department in connection with the examinations.
(b)  The department may increase or decrease the number of  examiners or actuaries as needed for examination duties.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle A - General Provisions › Chapter 401 - Audits and Examinations › Subchapter C. Examiners and Actuaries › Section 401.104. Appointment of Examiners, Actuaries, and Other Persons for Certain Examinations

Sec. 401.104.  APPOINTMENT OF EXAMINERS, ACTUARIES, AND OTHER PERSONS FOR CERTAIN EXAMINATIONS.  (a)  The department may  commission a department actuary, the chief examiner, another department examiner or employee, or any other person to conduct or assist in the examination of a company that is not organized under the laws of this state.
(b)  The department may compensate a person described by Subsection (a).  If the department compensates the person, the person may not receive any other compensation while the person is assigned to the examination.
(c)  Except as provided by this section and Section 401.152, a department actuary or examiner may not continue to serve in that capacity if the person directly or indirectly accepts employment or compensation for a service rendered or to be rendered from any insurance company for any reason.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle A - General Provisions › Chapter 401 - Audits and Examinations › Subchapter C. Examiners and Actuaries › Section 401.105. Oath of Examiners and Assistants

Sec. 401.105.  OATH OF EXAMINERS AND ASSISTANTS.  Before entering into the duties of appointment as an examiner or assistant examiner, an individual must take and file in the office of the secretary of state an oath to:
(1)  support the constitution of this state;
(2)  faithfully conduct the individual's duties of office;
(3)  make fair and impartial examinations;
(4)  not accept, directly or indirectly, as a gift or emolument any pay for the discharge of the individual's duty, other than the compensation to which the individual is entitled by law; and
(5)  not reveal the condition of a corporation, firm, or person or any information secured while examining a corporation, firm, or person to anyone other than:
(A)  the department or an authorized representative of the department; or
(B)  as required when testifying in an administrative hearing under this code or another insurance law of this state or in court.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle A - General Provisions › Chapter 401 - Audits and Examinations › Subchapter C. Examiners and Actuaries › Section 401.106. Right of Action on Bond

Sec. 401.106.  RIGHT OF ACTION ON BOND.  If an examiner or assistant examiner knowingly makes a false report or gives any information in violation of law that relates to an examination of a corporation, firm, or person, the corporation, firm, or person has a right of action on a bond authorized under Chapter 653, Government Code, for the entity's injuries in a suit brought in the name of the state at the relation of the entity.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.