1. (a) Except for withdrawing HMOs, which are addressed under subsection (b) of this section, a withdrawing insurer shall file a plan of orderly withdrawal with the Commissioner that is constructed to protect the interests of the people of this state. The plan must be signed by at least one officer of the insurer and, for each line of insurance being withdrawn or having total annual premium volume reduced by 75% or more, must contain the following:

   1. (1) identification, in accordance with the line of insurance designations in §7.1803 of this title (relating to What Constitutes a Line of Insurance), of the line or lines of insurance being totally withdrawn or affected by having total annual premium volume reduced by 75% or more;
   2. (2) identification of the policy forms by number and type affected by the withdrawal;
   3. (3) the dates the insurer intends to begin and complete its withdrawal;
   4. (4) an explanation of the reasons for the withdrawal;

   5. (5) provisions for notifying all of the affected Texas policyholders and certificateholders of the dates of the beginning and completion of the total or substantial withdrawal and how the withdrawal will affect them, including, but not limited to:

      1. (A) a copy of the notice and an explanation of the manner in which the notice will be provided to policyholders and certificateholders; and
      2. (B) either affirmation that such notice will be provided within 30 days of the approval of the withdrawal plan or a request to provide the notice at some other specified date or time, and such request must be approved by the Commissioner;
      3. (C) identification of any provision of the Insurance Code or Texas Administrative Code under which notice is mandated.

   6. (6) provisions for meeting all of the insurer's contractual obligations, including, but not limited to:

      1. (A) notification of all affected agents of the insurer of the date the insurer intends to begin and complete the withdrawal;
      2. (B) for fire and casualty insurers, a statement affirming the insurer's compliance with the provisions of the Insurance Code, Article 21.11-1, relating to cancellation of agency contracts;
      3. (C) for insurers writing liability coverage as specified in the Insurance Code, Article 21.49-2A, a statement affirming the insurer's compliance with the provisions of Article 21.49-2A, relating to cancellation and nonrenewal of certain liability insurance coverage; and
      4. (D) for insurers writing property and casualty coverage as specified in the Insurance Code, Article 21.49-2B, a statement affirming the insurer's compliance with the provisions of Article 21.49-2B, relating to cancellation and nonrenewal of certain property and casualty policies;
   7. (7) provisions for providing service to the insurer's Texas policyholders and claimants;

   8. (8) information on Texas business, including:

      1. (A) for insurers filing total withdrawal plans, the total annual premium volume and the number of policies and certificates and covered persons in Texas for each line to be withdrawn;
      2. (B) for insurers filing substantial withdrawal plans, the total annual premium volume and number of policies and certificates and covered persons in Texas before substantial withdrawal is effected and the estimated total annual premium volume and number of policies and certificates and covered persons in Texas after substantial withdrawal is effected for each line to be substantially withdrawn;
      3. (C) estimate of what percentage of the Texas market the withdrawal constitutes;

      4. (D) any information necessary to assist the Commissioner in determining whether a market availability problem is created by the total or substantial withdrawal, the extent of the problem, and what market assistance may be needed to alleviate the problem, including, but not limited to, the following:

         1. (i) type of location and geographic area subject to the withdrawal if not statewide (identify type of area such as suburban, urban, rural, or list specific rating territories) and zip codes if entire state not included in withdrawal; and
         2. (ii) if applicable, types of risks no longer being covered (for example, if no longer writing private passenger auto insurance coverage for single-car families or for persons without supporting business; or if no longer providing homeowner's insurance coverage for low-value homes, or in areas with high loss-ratios, or in areas with historically high exposure to natural disasters). The information listed in this clause is provided for purposes of example only and is not intended to be a comprehensive or exhaustive list.
      5. (E) if an insurer is unable to provide the exact number of policies and certificates and covered persons, the insurer shall provide estimates and explain how the estimates were determined;
   9. (9) provisions for identifying policyholders or certificateholders of special circumstances;
   10. (10) identification of any third party contracts which may provide for the continuity of care to enrollees of special circumstances;
   11. (11) number of and estimated amount of all losses outstanding in Texas, including claims incurred but not reported;

   12. (12) a plan to handle the losses specified in paragraph (11) of this subsection, including, but not limited to:

       1. (A) identification of what assets will be available for paying outstanding incurred but not reported claims, claims in the course of settlement, and associated loss adjustment expenses;
       2. (B) identification of who specifically will administer the run-off of the business; and
       3. (C) an actuarial opinion certifying that adequate reserves are available to pay outstanding claims.
   13. (13) if Texas policyholders or certificateholders are to be reinsured, the filing of a reinsurance agreement pursuant to all statutory and regulatory requirements and, when applicable, the filing of an assumption certificate;

   14. (14) provisions for meeting any applicable statutory obligations, including, but not limited to:

       1. (A) payment of any guaranty fund assessments;
       2. (B) participation in any assigned risk plan, pool, fund, facility, or joint underwriting arrangement; and
       3. (C) payment of any taxes.
   15. (15) a list of any other products the insurer will continue to offer in Texas; and
   16. (16) for insurers filing total withdrawal plans, affirmation that no new business will be solicited by the insurer in this state during or following the withdrawal period unless the insurer first complies with §7.1808 of this title (relating to Requirements To Resume Writing Insurance).

2. (b) A withdrawing HMO shall file a plan of orderly withdrawal with the Commissioner that is constructed to protect the interests of the people of this state. The plan must be signed by at least one officer of the HMO and, for each line of insurance being withdrawn or having total annual premium reduced by 75% or more, must contain the following:

   1. (1) identification, in accordance with the line of insurance designations in §7.1803 of this title, of the line or lines of insurance being totally withdrawn or affected by having total annual premium volume reduced by 75% or more;
   2. (2) identification by form number of the evidences of coverage affected by withdrawal;
   3. (3) the dates the HMO intends to begin and complete its withdrawal;
   4. (4) an explanation of the reasons for the withdrawal;

   5. (5) provisions for notifying all of the affected Texas enrollees and contractholders of the dates of the beginning and completion of the total or substantial withdrawal and how the withdrawal will affect them, including, but not limited to:

      1. (A) a copy of the notice and an explanation of the manner in which the notice will be provided to enrollees or contractholders;
      2. (B) either an affirmation that such notice will be provided within 30 days of the approval of the withdrawal plan or a request to provide the notice at some other specified date or time, and such request must be approved by the Commissioner; and
      3. (C) identification of any provisions of the Insurance Code or the Texas Administrative Code under which notice is mandated;
   6. (6) provisions for meeting all of the HMO's contractual obligations, including, but not limited to, notification to all affected agents of the HMO of the dates the HMO intends to begin and complete the withdrawal;
   7. (7) provisions for providing service to the HMO's Texas enrollees and providers;

   8. (8) information on Texas business, including:

      1. (A) for HMOs filing total withdrawal plans, the total annual premium volume and the number of affected contractholders and enrollees in Texas for each line to be withdrawn;
      2. (B) for HMOs filing substantial withdrawal plans, the total annual premium volume and the number of affected enrollees and contractholders in Texas before substantial withdrawal is effected and the estimated total annual premium volume and number of enrollees and contractholders in Texas after substantial withdrawal is effected for each line to be substantially withdrawn;
      3. (C) an estimate of what percentage of the Texas HMO market the withdrawal constitutes, as measured by enrollee;
      4. (D) an estimate of what percentage of the HMO's service area or service areas the withdrawal constitutes and the counties affected by the withdrawal; and
      5. (E) any information necessary to assist the Commissioner in determining whether a market availability problem is created by the total or substantial withdrawal, the extent of the problem, and what market assistance may be needed to alleviate the problem;
   9. (9) provisions for identifying enrollees of special circumstance;
   10. (10) identification of any third party contracts which may provide for the continuity of care to enrollees of special circumstance;
   11. (11) number of and estimated amount of all losses outstanding in Texas, including claims incurred but not reported;

   12. (12) a plan to handle the losses specified in paragraph (11) of this subsection, including, but not limited to:

       1. (A) identification of what assets will be available for paying outstanding incurred but not reported claims, claims in the course of settlement, and associated loss adjustment expenses;
       2. (B) identification of who specifically will administer the run-off of the business, if any; and
       3. (C) an actuarial opinion certifying that adequate reserves are available to pay outstanding claims;
   13. (13) provisions for meeting any applicable statutory obligations;
   14. (14) for HMOs filing total withdrawal plans, an affirmation that no new business will be solicited by the HMO in this state during or following the withdrawal period unless the HMO first complies with §7.1808 of this title;
   15. (15) a list of any other products the HMO will continue to sell in Texas in each service area; and

   16. (16) for HMOs filing total withdrawal plans, quarterly financial projections from the beginning of the withdrawal to the completion of the withdrawal. The quarterly financial projections shall include:

       1. (A) a balance sheet;
       2. (B) an income statement;
       3. (C) a statement of cash flows; and
       4. (D) members.
3. (c) The filing of a single consolidated withdrawal plan for all withdrawing insurance companies or HMOs in the same holding company system, as defined in the Insurance Holding Company System Regulatory Act, the Texas Insurance Code Article 21.49-1, §2, does not meet the requirements of this subchapter. A separate withdrawal plan must be filed for each insurance company or HMO intending to totally or substantially withdraw from a line or lines of insurance.

Source Note:The provisions of this §7.1805 adopted to be effective July 22, 1993, 18 TexReg 4504; amended to be effective January 30, 2002, 27 TexReg 610.