1. (a) Definitions. In addition to the definitions found in §7.1601 of this title (relating to Definitions) in this subchapter, the following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.

   1. (1) Contracting entity--Any person, corporation, association, or agency statutorily recognized to administer policies and claims of impaired insurance companies, including, but not limited to the Texas Life, Accident, Health and Hospital Services Insurance Guaranty Association.
   2. (2) Multi-jurisdictional impaired insurance company--An impaired insurance company which holds assets and issues policies in two or more states, including Texas.
2. (b) Eligibility. A TPA not currently licensed in Texas is eligible to apply for a limited certificate of authority under this section if it holds certificates of authority or licenses to conduct business as a TPA in at least two other states that have licensing requirements that are comparable to those of this state. A TPA is not eligible for a limited certificate of authority under this section if the TPA does not hold a current certificate of authority, or is not currently licensed, in any other states.
3. (c) Limited Certificate. An application for a limited certificate of authority under this section shall be limited to administration of a specific, identifiable, and single multi-jurisdictional impaired insurance company.

4. (d) Application Requirements. Any eligible TPA must submit an application for a limited certificate of authority on TPA Form 8, which is adopted and incorporated by reference. The application shall include a $500 application fee. The application shall be made in the name of the corporation, partnership, or sole proprietor. The application shall include the following information:

   1. (1) a copy of all licenses or certificates of authority held by applicant to transact business as a TPA in all states of the United States and provinces of Canada, and a statement of whether the applicant's license or certificate is in good standing with each such state or province;
   2. (2) the name under which the applicant will transact business under the limited certificate of authority. If the name under which the applicant desires to transact business is so similar to that of another administrator or insurer that it is likely to mislead the public, the applicant must reserve a trade name under which it will operate in Texas, using TPA Form 1, which is adopted and incorporated by reference;
   3. (3) the principal place of business at which the applicant will transact business as a TPA, including the street and mailing addresses, and telephone number;
   4. (4) a description of the TPA and its services, facilities, personnel, and its ability to perform the duties required under the contract;
   5. (5) a designation of a person domiciled in this state upon whom process may be served in any legal action or proceeding based on a cause of action arising in this state against the TPA arising out of the administration of the policies for which the certificate is being sought;
   6. (6) the name and description of the multi-jurisdictional impaired insurance company for which the limited certificate of authority is sought;
   7. (7) a letter of intent, draft contract, or executed contract between the TPA and the contracting entity for the administration of the multi-jurisdictional impaired insurance company for which the limited certificate of authority is sought and the type of policies to be administered;
   8. (8) proof that the TPA has obtained a fidelity bond in an amount not more than 10% of the dollar volume of annual claim payments, but not less than $10,000; and
   9. (9) any other information requested by the Commissioner.

5. (e) Minimum Contract Provisions. The letter of intent, draft contract, or executed contract between the TPA and the contracting entity shall contain the following minimum contractual safeguards:

   1. (1) contractual definitions of "payment" as required in the Insurance Code, Article 21.07-6, §12;
   2. (2) specific provisions for payment of various administrative fees;
   3. (3) contractual performance standards for accounting practices and processing claims;
   4. (4) the TPA must obtain and maintain a fidelity bond in an amount not more than 10% of the dollar volume of annual claim payments, but not less than $10,000;
   5. (5) the TPA must agree to on-site examination by the contracting entity, the Department, the Receiver, or the Special Deputy Receiver (SDR) of the multi-jurisdictional impaired insurance company. If the Department conducts an on-site examination, the TPA shall pay a $250 examination fee;
   6. (6) the TPA shall file an annual report on Form 8A with the Department, the contracting entity, and the Receiver or SDR, regarding the multi-jurisdictional impaired insurance company estate. Form 8A is adopted and incorporated by reference. The annual report shall include a $100 filing fee. The report shall contain general information about the TPA's administration of all policies and claims, as well as specific information regarding Texas policyholders and claims. The TPA shall provide any other information requested periodically by the Department, the contracting entity, and the Receiver or SDR of the multi-jurisdictional impaired insurance company;
   7. (7) the TPA shall provide written notice to all Texas policyholders of the TPA's name, address, and telephone number, with prior approval by the contracting entity of the form and content of notice;
   8. (8) the TPA shall provide separate accounting of premiums or contributions provided by Texas policyholders;
   9. (9) the TPA shall not use or disclose information in its custody or control without the prior approval of the contracting entity unless the information is sought by the Department, the Receiver, or the SDR of the multi-jurisdictional impaired insurance company, in which event the TPA shall promptly notify the contracting entity of the request and of the information disclosed; and
   10. (10) the TPA shall comply with all advertising requirements contained in the Insurance Code, Article 21.07-6, §15.

6. (f) Criteria of Approval of Application. The Commissioner may approve an application for a limited certificate of authority to conduct business in this state as an administrator for the specific multi-jurisdictional impaired insurance company named if the Commissioner is satisfied that the application meets the criteria established in this section. The Commissioner may also consider the following criteria:

   1. (1) the applicant's standing in other states in which it currently holds a certificate of authority or license to transact business as a TPA;
   2. (2) the size and nature of the multi-jurisdictional impaired insurance company, in conjunction with the applicant's qualifications to perform all necessary duties in the administration of the policies and claims;
   3. (3) the TPA's financial condition is such that granting the limited certificate of authority would not be adverse to the public interest; and
   4. (4) the contracting entity's qualifications, expertise, and ability to monitor and to ensure the TPA's compliance with the contractual provisions for the administration of the policies and claims.
7. (g) Expedited Approval Process. The Commissioner will approve or take action on the application filed pursuant to this section within 45 days of the date the Department determines the application is complete. If the Commissioner does not act to suspend the application within the 45-day period, the application will be granted for the limited purpose of this section and will continue in existence for the duration of the insolvency proceedings of the multi-jurisdictional impaired insurance company, unless sooner revoked by the Commissioner.
8. (h) Enforcement. If the TPA defaults under or breaches any provisions of the contract in force for the administration of the policies issued by the multi-jurisdictional impaired insurance company, or if the TPA's license or certificate of authority is suspended or terminated in any other state for any reason, then either the Department or the contracting entity, or both, may pursue any and all available legal remedies against the TPA so as to protect the interests of the Texas policyholders. If an enforcement action is brought by the Department or the contracting entity against the TPA, venue for any lawsuit shall be in Travis County, Texas. Any enforcement action taken by either the Department or the contracting entity shall not require prior approval of the Department or the contracting entity. However, the Department or the contracting entity shall notify the other party of any default in the contract provisions and of any suspension or termination of a license or certificate of authority held by the TPA in Texas or in other states.
9. (i) Denial or Revocation of Limited Certificate. After notice and opportunity for a hearing, the Commissioner may deny, cancel, or revoke the limited certificate of authority if the license holder is found to be in violation of, or to have failed to comply with a specific provision of the Insurance Code, any duly promulgated rule or regulation of the Department, or any provision of the contract in force for the administration of the policies issued by the multi-jurisdictional impaired insurance company.

Source Note:The provisions of this §7.1616 adopted to be effective September 29, 1995, 20 TexReg 7282.