28 TAC §7.28
The Commissioner of Insurance adopts the repeal of §7.28 concerning the regulation of accounting of reinsurance agreements by insurers. The repeal of the section is adopted without changes to the proposal as published in the November 8, 2002 of the Texas Register (27 TexReg 10558) and will not be republished.
The repeal of the section is necessary to eliminate a redundancy between the repealed section and §7.18, and the potential for conflicting interpretations. The substantive provisions of the repealed section are contained in §7.18 which is the adoption of the National Association of Insurance Commissioners´ Accounting Practices and Procedures Manual, and includes Appendix A-791. The repeal of §7.28 furthers the objective of §7.18 to codify statutory accounting guidance into a single source in order to improve consistency in the regulations applicable to the accounting standards, treatments, and practices of insurers dong business in Texas. The substantive portions of the reinsurance requirements contained in the repealed section are contained in §7.18.
The repeal of the section provides consistency in the regulations applicable to the accounting standards, treatments and practices of insurers doing business in Texas. As a result of the repeal of the section there will be more efficient and standardized accounting by insurers licensed to do business in Texas.
Comment: Commenters raised concerns that the exemptions for assumption reinsurance and for certain 100% coinsurance transaction provided in §7.28(b)(3)(A) and (B) would no longer be available if the section is repealed and contend that the provisions are not carried forward in §7.18.
Agency Response: The department disagrees. The department notes that the rule applied to ceding insurers and not assuming insurers, and exemptions are continued through §7.18 and the accompanying appendixes.
For: Texas Association of Life and Health Insurers and Central United Life Insurance Company.
The repeal of the section is adopted under the Insurance Code Articles 1.11, 1.32, 3.10, 3.28, 5.75-1, 21.39-B, and 21.49-1 and §36.001. These articles authorize the Commissioner of Insurance to adopt rules to establish or set standards for the evaluation of the financial condition of insurers and health maintenance organizations, including reinsurance transactions, reserves and insurance holding company system transactions. Section 36.001 authorizes the Commissioner of Insurance to adopt rules for the conduct and execution of the duties and functions of the department as authorized by statute.
Subchapter A. Examination and Financial Analysis.
§7.28. Regulation of Accounting for Reinsurance Agreements by Certain Insurers.