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80C56(2) PB

CHAPTER 406. SPECIAL DEPOSITS REQUIRED UNDER POTENTIALLY HAZARDOUS CONDITIONS

Revised Law

406.001.

DEFINITION.

In this chapter, "insurer" includes:

a capital stock insurance company;

a reciprocal or interinsurance exchange;

a Lloyd's plan;

a fraternal benefit society;

a mutual company, including a mutual assessment company;

a statewide mutual assessment company;

a local mutual aid association;

a burial association;

a county mutual insurance company;

a farm mutual insurance company;

a fidelity, guaranty, or surety company;

a title insurance company;

a stipulated premium company;

a group hospital service corporation;

a health maintenance organization;

a risk retention group; and

any other organization or person engaged in the business of insurance.

(V.T.I.C. Art. 1.33,

Sec. 1.)

Source Law

In this article, "insurer" includes:

a capital stock insurance company;

a reciprocal or interinsurance exchange;

a Lloyd's plan;

a fraternal benefit society;

a mutual company, including a mutual assessment company;

a statewide mutual assessment company;

a local mutual aid association;

a burial association;

a county mutual insurance company;

a farm mutual insurance company;

a fidelity, guaranty, or surety company;

a title insurance company;

a stipulated premium company;

a group hospital service corporation;

a health maintenance organization;

a risk retention group; and

any other organization or person engaged in the business of insurance.

Revised Law

406.002.

APPLICABILITY OF CHAPTER.

This

chapter

applies to a person or organization engaged in the business of insurance without regard to whether the person or organization is listed in

Section 406.001, unless another statute specifically cites this

chapter and exempts the person or organization from this chapter.

(V.T.I.C. Art. 1.33,

Sec. 2.)

Source Law

This

article applies to a person or organization engaged in the business of insurance without regard to whether the person or organization is listed in

Section 1 of this article, unless another statute specifically cites this

article and exempts the person or organization from this article.

Revised Law

406.003.

REQUIRED DEPOSIT: STANDARDS AND CRITERIA.

The commissioner, in the commissioner's sole discretion, may require an insurer to make a deposit under this

chapter if the commissioner determines that one of the following conditions, if not rectified, may potentially be hazardous to the insurer's policyholders, enrollees, or creditors, or to the public:

the insurer's financial or operating condition, reviewed in conjunction with the kinds and nature of risks insured;

the insurer's method of operation;

the insurer's relationship with affiliates;

the nature and amount of the insurer's investments;

the insurer's contracts that may lead to a contingent liability; or

the insurer's agreements with respect to guaranty and surety.

(V.T.I.C. Art. 1.33,

Sec. 3.)

Source Law

The commissioner, in the commissioner's sole discretion, may require an insurer to make a deposit under this

article if the commissioner determines that one of the following conditions, if not rectified, may potentially be hazardous to the insurer's policyholders, enrollees, or creditors, or to the public:

the financial or operating condition of the insurer, when reviewed in conjunction with the kinds and nature of risks insured;

the insurer's method of operation;

the insurer's relationship with affiliates;

the nature and amount of the insurer's investments;

the insurer's contracts that may lead to a contingent liability; or

the insurer's agreements with respect to guaranty and surety.

Revised Law

406.004.

REQUIRED DEPOSIT: FORM OF SECURITY.

A deposit required under

Section 406.003 must be made with the comptroller and approved by the commissioner.

The deposit must be made in:

securities authorized under this code to be a legal investment for the insurer that:

are readily marketable over a national exchange with a maturity date of not more than one year, are listed by the Securities Valuation Office of the National Association of Insurance Commissioners, and qualify as admitted assets; or

are clean, irrevocable, and unconditional letters of credit issued or confirmed by a financial institution organized and licensed under the laws of the United States or a state of the United States; or

another form of security acceptable to the commissioner.

(V.T.I.C. Art. 1.33,

Sec. 4.)

Source Law

A deposit required under

Section 3 of this

article must be made with the comptroller and approved by the commissioner.

The deposit must be made in:

securities authorized under this code to be a legal investment for the insurer that:

are readily marketable over a national exchange with a maturity date of not more than one year, are listed by the Securities Valuation Office of the National Association of Insurance Commissioners, and qualify as admitted assets; or

are clean, irrevocable, unconditional letters of credit, issued or confirmed by a financial institution organized and licensed under the laws of the United States or a state of the United States; or

another form of security acceptable to the commissioner.

Revised Law

406.005.

DURATION OF DEPOSIT.

Subject to

Section 406.006, the comptroller shall hold a deposit required under this

chapter until the commissioner issues a written order finding that the condition for which the deposit was required no longer exists.

(V.T.I.C. Art. 1.33,

Sec. 5.)

Source Law

Subject to

Section 6 of this article, the comptroller shall hold a deposit required under this

article until the commissioner issues a written order finding that the condition for which the deposit was required no longer exists.

Revised Law

406.006.

SUBSTITUTION OR WITHDRAWAL OF DEPOSIT. (

a) An insurer may file a written application with the commissioner requesting:

withdrawal of all or part of the deposit held by the comptroller under this chapter; or

substitution of all or part of the deposited securities held by the comptroller under this chapter.

The application must state the basis for the request to withdraw the deposit or to substitute the deposited security.

An insurer's application for the substitution of a deposited security must provide specific information regarding the security to be deposited as a substitute for the security held by the comptroller.

The commissioner shall issue an order approving or denying an application under this

section not later than the 30th day after the date the department receives the application.

If the commissioner does not approve or deny the application within that period, the application is denied.

The commissioner may, in the commissioner's sole discretion, approve an application to withdraw a deposit or substitute a deposited security if the commissioner determines that the withdrawal or substitution will not be hazardous to the insurer's policyholders, enrollees, or creditors, or to the public.

The comptroller may not release a deposit made under this chapter, or any part of the deposit, and may not accept a substitute for a deposited security unless the commissioner issues an order approving the withdrawal or substitution.

(V.T.I.C. Art. 1.33,

Sec. 6.)

Source Law

An insurer may file a written application with the commissioner requesting:

withdrawal of all or a portion of the deposit held by the comptroller under this article; or

substitution of all or a part of the deposited securities held by the comptroller under this article.

The application must state the basis for the request to withdraw the deposit or to substitute the deposited security.

If the application is for the substitution of a deposited security, the insurer's application must provide specific information regarding the security to be deposited as a substitute for the security held by the comptroller.

The commissioner shall issue an order approving or denying an application under thi