- (a) A provider must maintain financial security to ensure the faithful performance of a provider's obligations to its service contract holders and for the benefit of those service contract holders who suffer actual financial loss due to the provider's failure to perform those obligations.
(b) A provider must submit proof of one of the following three forms of financial security that meets the requirements of Texas Occupations Code §1304.151 and/or §1304.152:
- (1) a reimbursement insurance policy;
- (2) a funded reserve account and a security deposit; or
- (3) net worth of at least $100 million.
- (c) All forms of financial security must be maintained by the provider for the entire time the provider continues to do business in this state or is registered to do business in this state.
(d) All forms of financial security must be kept in effect until the later of:
- (1) two years after the provider ceases to do business in this state;
- (2) two years after the provider's registration expires; or
- (3) the executive director receives satisfactory proof from the provider and determines that the provider has discharged or otherwise adequately met all obligations to its service contract holders in this state.
- (e) If any form of financial security is canceled or lapses during the term of the provider's registration, the provider may not issue a new service contract after the effective date of the cancellation or lapse, unless and until the provider files with the executive director a copy of a new form of financial security that meets the financial security requirements provided by Texas Occupations Code, Chapter 1304 and this chapter and that provides coverage after that date.
- (f) Cancellation or lapse of the financial security does not affect the provider's liability for a service contract issued by the provider before or after the effective date of the cancellation or lapse.
Source Note:The provisions of this §77.40 adopted to be effective November 16, 2009, 34 TexReg 7791.