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, 1999, or later.

3. (c) Deferment of regular examination. Two years following each carrier's regular examination, the Financial Program of the Texas Department of Insurance shall review the carrier's financial information 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 a period not to exceed five years from that carrier's previous regular examination, provided the following conditions are met at the time such deferral is considered:

   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, and has filed, on or before June 30th, an audit of its financial condition conducted by an independent certified public accountant which does 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 1.32, 21.28-A, or §83.051 within the previous five year period; and

   4. (4) meets one of the following:

      1. (A) the carrier is subject to risk-based capital and surplus requirements and, if the carrier is a life or accident and health insurer, has at least 400% of the authorized control level as calculated in accordance with the risk-based capital and surplus requirements contained in §7.401 of this title (relating to Minimum Risk-Based Capital and Surplus Requirements for Life, Accident, and Health Insurers), or if the carrier is a property and casualty insurer, has at least 400% of the authorized control level as calculated in accordance with the risk-based capital and surplus requirements contained in §7.410 (relating to Minimum Risk-Based Capital and Surplus Requirements for Property and Casualty Insurers); or
      2. (B) the carrier is subject to the requirements of Insurance Code Article 2.20(f) and reinsures substantially all of its business to one or more affiliates, as defined by Insurance Code Article 21.49-1, if the assuming affiliates have at least 400% of the authorized control level as required by §7.610 of this title (relating to Letters of Credit); or
      3. (C) the carrier is subject to the requirements of Insurance Code Article 2.20(f) and maintains free surplus or guaranty fund and free surplus in an amount equal to 400% of the authorized control level that would be required if the carrier was subject to §7.610 of this title. Further, to qualify for an examination deferral under this subparagraph, a carrier must first calculate the amount of risk-based capital that would be required if the carrier was subject to §7.610 of this title and report the results in the five year historical exhibit of its annual statement in accordance with the NAIC Annual Statement Instructions, as adopted by the Department.
4. (d) This section does not apply to health maintenance organizations.
5. (e) 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; amended to be effective December 12, 2000, 25 TexReg 12176.