Texas Administrative Code › Title 28 - INSURANCE › Part 1 - TEXAS DEPARTMENT OF INSURANCE › Chapter 5 - PROPERTY AND CASUALTY INSURANCE › Subchapter G - WORKERS' COMPENSATION INSURANCE › Division 2 - GROUP SELF-INSURANCE COVERAGE › Section 5.6405 - Excess Insurance

Current through Reg. 49, No. 28; July 12, 2024
(a) Unless
					 otherwise approved by the commissioner, a group shall obtain excess insurance
					 for losses that exceed a group's retention in an amount that will pay all
					 benefits required under the Labor Code and rules adopted thereunder for a
					 compensable claim.
(b) The group
					 shall obtain and maintain excess insurance coverage from an insurer that has a
					 certificate of authority from the Texas Department of Insurance or from an
					 eligible surplus lines insurer in compliance with Chapter 981 of the Texas
					 Insurance Code and related provisions of the Texas Administrative Code,
					 provided that:
(1) the surplus lines insurer
					 is also certified as a trusteed reinsurer by the Texas Department of Insurance,
					 in accordance with Insurance Code, Article 5.75-1(b)(3) (effective April 1,
					 2007, Article 5.75-1(b)(3) is repealed and re-adopted as Insurance Code
					 §§
												493.102,
					 493.152 -
					 493.155,
					 and 495 157);
(2) the surplus lines
					 insurer maintains a financial strength rating of ''A-'' or better, as
					 determined by A.M. Best Company;
(3) the surplus lines insurer provides a
					 clean, irrevocable, and unconditional letter of credit in favor of the group as
					 beneficiary and held by the group, subject to withdrawal solely by and under
					 the exclusive control of the group, to secure the payment of losses, including
					 losses, loss adjustment expenses, incurred but not reported losses, and any
					 other obligation of the surplus lines insurer under the terms and conditions of
					 the excess insurance policy, whether paid or unpaid by the group:
(A) in no less than the greater of:
(i) the amount of actuarially projected
					 losses to ultimate; or
(ii) the
					 amount of actual losses to ultimate;
(B) issued by a qualified United States
					 financial institution as defined in Insurance Code, Article 5.75-1(e)
					 (effective April 1, 2007, Article 5.75-1(e) is repealed and re-adopted as
					 Insurance Code §§
													493.002,
					 493.102,
					 and
					 493.104);
					 and
(C) provided the letter of
					 credit is in a form acceptable to the Texas Department of Insurance and meets
					 the requirements in 28 TAC §
													7.610,
					 except for those requirements that apply solely to reinsurance
					 agreements;
(4) the
					 group timely collects recoverables and receivables from the surplus lines
					 insurer, but in no event, later than 90 days, including, if needed, drawing
					 down on the letter of credit;
(5)
					 the group submits the surplus lines policy forms, renewal forms, certificates,
					 endorsements and amendments applicable thereto, and any agreements between the
					 surplus lines insurer and the group to the Texas Department of Insurance for
					 review prior to use and the group may not accept or enter into any agreement or
					 arrangement with the surplus lines insurer that has not been reviewed by the
					 Texas Department of Insurance;
(6)
					 the group demonstrates to the satisfaction of the Texas Department of Insurance
					 that the group meets the requirements of subsection (b) of this section before
					 obtaining and in order to maintain excess insurance coverage from an eligible
					 surplus lines insurer; and
(7) the
					 group notifies the Commissioner in writing no less than five calendar days
					 after receiving notice of cancellation or nonrenewal of the excess insurance
					 policy and no less than 30 calendar days prior to the effective date of any
					 proposed change in the excess insurance policy, by endorsement or
					 otherwise.