Texas Administrative Code › Title 28 - INSURANCE › Part 1 - TEXAS DEPARTMENT OF INSURANCE › Chapter 3 - LIFE, ACCIDENT, AND HEALTH INSURANCE AND ANNUITIES › Subchapter GG - MINIMUM RESERVE STANDARDS FOR INDIVIDUAL AND GROUP ACCIDENT AND HEALTH INSURANCE › Section 3.7001 - Introduction

Current through Reg. 49, No. 28; July 12, 2024
(a) Scope and general standards.
(1) Pursuant to Insurance Code §
											425.072,
				  all individual and group accident and health insurance coverages, including
				  single premium credit accident and health insurance contracts, issued on and
				  after January 1, 2017, are required to follow the standards and reserve
				  requirements provided in the valuation manual adopted by the department
				  pursuant to Insurance Code §
											425.073.
(2) In establishing claim reserves for all
				  individual and group accident and health insurance coverages issued before
				  January 1, 2017, and single premium credit accident and health insurance
				  contracts issued on or after January 1, 2009, and before January 1, 2017, the
				  provisions of this paragraph apply. An insurer may use applicable requirements
				  in the valuation manual for claim reserves for valuations after December 31,
				  2016, and before January 1, 2019, and must use applicable requirements in the
				  valuation manual for claim reserves for valuations after December 31,
				  2018.
(3) Unless paragraph (1) or
				  (2) of this subsection applies, the standards in this subchapter apply to all
				  individual and group accident and health insurance coverages issued before
				  January 1, 2017, as well as single premium credit accident and health insurance
				  contracts issued on or after January 1, 2009, and before January 1, 2017. All
				  other credit insurance is not subject to the requirements provided by this
				  paragraph.
(4) When an insurer
				  determines that adequacy of its health insurance reserves requires reserves in
				  excess of the minimum standards specified in this subchapter, such increased
				  reserves must be held and must be considered the minimum reserves for that
				  insurer.
(5) With respect to any
				  block of contracts, or with respect to an insurer's health business as a whole,
				  a prospective gross premium valuation is the ultimate test of reserve adequacy
				  as of a given valuation date. Such a gross premium valuation would take into
				  account, for contracts in force, in a claims status, or in a continuation of
				  benefits status on the valuation date, the present value as of the valuation
				  date of: all expected benefits unpaid, all expected expenses unpaid, and all
				  unearned or expected premiums, adjusted for future premium increases reasonably
				  expected to be put into effect.
(6)
				  Such a gross premium valuation must be performed whenever a significant doubt
				  exists as to reserve adequacy with respect to any major block of contracts, or
				  with respect to the insurer's health business as a whole. In the event
				  inadequacy is found to exist, immediate loss recognition must be made and the
				  reserves restored to adequacy. Adequate reserves (inclusive of claim, premium,
				  and contract reserves, if any) must be held with respect to all contracts,
				  regardless of whether contract reserves are required for such contracts under
				  the standards required under this subchapter.
(7) Whenever minimum reserves, as defined in
				  this subchapter, exceed reserve requirements as determined by a prospective
				  gross premium valuation, such minimum reserves remain the minimum requirement
				  under these standards.