1. (a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.

   1. (1) Carrier--A domestic insurer subject to the examination frequency provided for in Insurance Code, Article 1.15.
   2. (2) Regular examination--The examination required by the Insurance Code, Article 1.15, §1.
2. (b) Applicability. This section applies only to those carriers that have been incorporated or organized for more than three years and are due for a regular examination as of December 31, 1993, or later.

3. (c) Deferment of regular examination. Annually, each carrier due for a regular examination to be conducted in the following year shall be reviewed by the associate commissioner for the Financial Program of the Texas Department of Insurance to determine whether the carrier's financial strength justifies a deferment of the regular examination. The commissioner may defer the regular examination of a carrier for one year if the carrier has undergone a regular examination within the preceding four years and the following conditions have been met at all times subsequent to that last regular examination:

   1. (1) the carrier's actuarial opinions required by the Insurance Code, Articles 1.11 and 3.28, were not adverse or qualified;
   2. (2) the carrier is subject to the requirements of the Insurance Code, Article 1.15A, or otherwise provides annually to the department an audit of its financial condition conducted by an independent certified public accountant, and the annual audits by its accountant did not indicate the existence of any material adverse financial conditions in the carrier;
   3. (3) the carrier has not been the subject of administrative or regulatory actions taken by the Texas Department of Insurance as provided by the Insurance Code, Articles 1.10A, 1.32, or 21.28-A, or similar actions taken by any other regulatory body;
   4. (4) all changes in control of the carrier have been properly approved by the Texas Department of Insurance as required by the Insurance Code, Article 21.49-1;
   5. (5) the carrier has the amount of minimum risk-based capital and surplus required by §7.401 of this title (relating to Minimum Risk-Based Capital and Surplus Requirements for Life, Accident and Health Insurers) or §7.410 of this title (relating to Minimum Risk-Based Capital and Surplus Requirements for Stock Property and Casualty Insurers), or meets the requirements of the Insurance Code, Article 2.20, §(f) (concerning Requirements for Non-stock Property and Casualty Insurers);
   6. (6) the carrier's unassigned funds (surplus) account is a positive balance;
   7. (7) the carrier has not experienced an operational (net) loss for any calendar year equal to or greater than 10% of its capital and surplus accounts at the beginning of such calendar year;
   8. (8) the carrier's capital and surplus accounts have not decreased 15% or more during any calendar year;
   9. (9) the carrier's investment in bonds designated as Class 3, 4, 5, or 6 by the Securities Valuation Office of the National Association of Insurance Commissioners is less than 200% of the carrier's capital and surplus accounts;
   10. (10) the carrier's net written accident and health insurance premiums (annualized) are less than 350% of its capital and surplus accounts;
   11. (11) the net written premiums (annualized) of a property and casualty carrier are less than 250% of its capital and surplus accounts;
   12. (12) the National Association of Insurance Commissioners has not deemed the carrier to be a priority one company; and
   13. (13) the carrier has not appeared as one of the top 10 insurers on the complaint ratio listing maintained by the department at any time during the year of the annual review provided for in this subsection.
4. (d) Nothing in this section shall be construed to limit the commissioner's authority to examine a carrier as frequently as the commissioner deems necessary.

Source Note:The provisions of this §7.84 adopted to be effective April 6, 1994, 19 TexReg 2065.