Texas Register, Volume 30, Number 43, Pages 6973-7094, October 28, 2005 Page: 7,001
6973-7094 p. ; 28 cm.View a full description of this periodical.
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7.68. Requirements for Filing the 1998 Annual and 1999 Quarterly
Statements, Other Reporting Forms, and Diskettes or electronic filings
with the NAIC via the Internet.
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal author-
ity to adopt.
Filed with the Office of the Secretary of State on October 12,
2005.
TRD-200504592
Gene C. Jarmon
General Counsel and Chief Clerk
Texas Department of Insurance
Earliest possible date of adoption: November 27, 2005
For further information, please call: (512) 463-6327
28 TAC 7.68
The Texas Department of Insurance proposes new 7.68 con-
cerning the adoption by reference of reporting forms, electronic
data filings with the National Association of Insurance Commis-
sioners (NAIC) and instructions to be used by insurers, health
maintenance organizations (HMOs), nonprofit legal service
corporations, Texas Health Insurance Risk Pool, Texas Fair Plan
Association and Texas Windstorm Insurance Association. The
reporting forms include the 2005 annual and quarterly state-
ment blanks, stockholder information supplement, management
discussion and analysis, supplemental compensation exhibit,
overhead assessment for insurance company examination
expenses, analysis of surplus, separate accounts, supple-
mental information for county mutuals and HMOs, release of
contributions, reserve summary, inventory of insurance in force,
and summary of insurance in force. The insurers and other
regulated entities will use these forms to report their financial
condition and business operations and activities during the 2005
calendar year. The information provided by the completion of
the forms is necessary to allow the department to monitor the
solvency, business activities, and statutory compliance of the
insurers and the other entities regulated by the department. The
proposed new section defines terms relevant to the statement
blanks and reporting forms; provides the dates by which certain
reports are to be filed; and proposes to adopt by reference
the NAIC 2005 annual and quarterly statement blanks, other
reporting forms and instructions for reporting the financial
condition and business operations and activities and require
insurance companies and other regulated entities to file such
annual and quarterly statements and other reporting forms
with the department and/or the NAIC as directed. Proposed
subsection (a) explains the purpose of the section and adopts
by reference the forms described in the section. Proposed
subsection (b) provides that the term "Texas Edition" refers
to the blanks and forms promulgated by the commissioner.
Proposed subsection (c) specifies the hierarchy of laws in the
event of a conflict between the Insurance Code, this new section
and other department regulations and the NAIC instructions
specified in the new section. Proposed subsections (d) - (I)
describe the forms, instructions and filing requirements for the
various types of insurers and other regulated entities. Proposed
subsection (m) provides that the department may request
financial reports other than those specified in this section.
The forms and instructions are available for inspection in the
office of the Financial Analysis and Examinations Activity ofthe Texas Department of Insurance, William P. Hobby Jr. State
Office Building, 333 Guadalupe, Building 3, Third Floor, Austin,
Texas. The NAIC forms and instructions may also be reviewed
at www.naic.org. The new section will replace the existing
7.68 concerning the adoption of the 1998 annual and 1999
quarterly statements, other reporting forms, and diskettes or
alternative electronic method of filing which is proposed for
repeal elsewhere in this issue of the Texas Register.
Betty Patterson, Senior Associate Commissioner, Financial Pro-
gram, has determined that, for the first five years the proposed
section will be in effect, there will be no fiscal implications for
state or local government as a result of enforcing or administer-
ing the section. There will be no effect on local employment or
the local economy as a result of the proposal.
Ms. Patterson has also determined that, for each year of the first
five years the proposed section is in effect, the public benefits
anticipated as a result of enforcing this section are the ability of
the department to provide financial information to the public and
other regulatory bodies as requested, and to monitor the finan-
cial condition of insurers and other regulated entities licensed
in Texas to better assure financial solvency. The probable eco-
nomic cost to persons required to comply with the section de-
pends on several factors. Generally, insurers and other regulated
entities are required by statute to provide the department with an-
nual reports on their operations. Insurance Code 802.055 pro-
vides that an insurance company shall pay all costs of preparing
and furnishing to the NAIC the information required under In-
surance Code 802.052, including any related filing fees. The
fees associated with each company to file electronically with the
NAIC database can range from $260 to $65,000 per company
depending on the amount of premium base, with a limit for in-
surer groups of $195,000. To that extent, the cost of preparing
and filing the annual statement is attributable to statute and not
the proposed section. Additionally, the reports and forms gener-
ally request information that is already captured or created by the
insurer or other regulated entity as necessary to its business op-
erations; therefore, the only cost involved is the transfer of that in-
formation from the company's records to the report or form. The
cost of software to prepare the financial statements is approxi-
mately $2,000 for a single company. The cost of software may
be greater or less depending on the amount charged by the ven-
dor and any extra services that are agreed to between the com-
pany and the vendor. Such estimated cost may be lower based
upon factors such as the type of company (e.g., life, accident and
health, or property and casualty); the size of the company (e.g.,
large or small); and the type of business written by a company.
The department assumes that micro, small and large businesses
will utilize employees who are familiar with the records of the in-
surer or health maintenance organization and accounting prac-
tices in general. Such individuals are compensated from $17 to
$30 per hour based on information obtained by the department.
On the basis of cost per hour of labor, there is no expected dif-
ference in cost of compliance between micro, small and larger
businesses affected by this section. The department finds that it
is neither legal nor feasible to reduce the effect of the proposed
section on micro or small insurers subject to the section since the
information required by the forms is necessary to effectively reg-
ulate and monitor the activities of insurers and other regulated
entities licensed in Texas, regardless of their size.
To be considered, written comments on the proposal must be
submitted no later than 5:00 p.m. on November 28, 2005, to
Gene C. Jarmon, General Counsel and Chief Clerk, Mail Code
113-2A, Texas Department of Insurance, P. O. Box 149104,PROPOSED RULES October 28, 2005 30 TexReg 7001
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Texas. Secretary of State. Texas Register, Volume 30, Number 43, Pages 6973-7094, October 28, 2005, periodical, October 28, 2005; Austin, Texas. (https://texashistory.unt.edu/ark:/67531/metapth97316/m1/28/: accessed July 16, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu; crediting UNT Libraries Government Documents Department.