Texas Administrative Code › Title 28 - INSURANCE › Part 1 - TEXAS DEPARTMENT OF INSURANCE › Chapter 13 - MISCELLANEOUS INSURERS AND OTHER REGULATED ENTITIES › Subchapter A - STATEWIDE MUTUAL ASSESSMENT COMPANIES, LOCAL MUTUAL AID ASSOCIATIONS, AND BURIAL ASSOCIATIONS › Section 13.18 - Reinsurance Agreements under the Insurance Code, Article 14.62

Current through Reg. 49, No. 28; July 12, 2024
Each contract of reinsurance entered into by companies or
					 associations operating under the Insurance Code, Chapter 14, with legal reserve
					 companies under the provisions of the Insurance Code, Article 14.62, shall
					 become effective only after such contract has been approved by the commissioner
					 of insurance. The commissioner of insurance shall not approve any such contract
					 of reinsurance unless it be shown at a public hearing that the following
					 conditions exist:
(1) that the legal
				  reserve company is authorized to write life, health, and accident insurance in
				  Texas and that such company has capital or surplus of at least
				  $100,000;
(2) that such contract
				  will be to the benefit of the members of the company operating under the
				  provisions of the Insurance Code, Chapter 14;
(3) that upon cancellation of such contract
				  the cancellation thereof shall not apply to risks theretofore assumed by the
				  reinsurer for which premiums have been paid or become due;
(4) that reinsurance premiums may be paid
				  from the mortuary fund or expense fund, or both; however, any premium paid from
				  the mortuary fund shall not exceed the amount of premium currently received in
				  the mortuary fund from the policies being reinsured but calculated separately
				  upon each individual policy, and, additionally, the amount of such premium so
				  paid from the mortuary fund shall not exceed the percentage of the total
				  mortuary fund premium so individually calculated as the percentage of the risk
				  reinsured applies to the total of the risk insured by the mutual assessment
				  company. For example, if the mortuary fund portion of the annual premium of $10
				  for a $1,000 mutual assessment policy and one-half of the risk ($500) is
				  reinsured, only $5.00 annually may be paid from the mortuary fund for the
				  reinsurance;
(5) that the ceding
				  company or association will set up and maintain current and adequate records
				  which will reflect the true status of all policies or risks
				  reinsured;
(6) that no officer,
				  director, agent, or employee of the ceding company shall receive any commission
				  or remuneration in any manner for procuring a reinsurance agreement between the
				  ceding company and a reinsurer, except that dividends or profit sharing
				  agreements may be effected whereby the mortuary or claim fund shall be the
				  recipient; and
(7) that no credit
				  shall be allowed to any ceding insurer for reinsurance made, ceded or renewed,
				  as an admitted asset or as a reduction of liability, unless by the terms of the
				  written reinsurance agreement the reinsurance is payable by the assuming
				  insurer on the basis of the liability of the ceding insurer under any policy or
				  contract reinsured without diminution because of the insolvency of the ceding
				  insurer, nor unless under the contract or contracts of reinsurance the
				  liability of such reinsurance is assumed by the assuming insurer or insurers as
				  of the same effective date.