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Texas Insurance Code - INS § 404.003. Order to Remedy Condition

Current as of January 01, 2024 | Updated by Findlaw Staff

(a) If the financial condition of an insurer, when reviewed as provided by Subsection (b), indicates a condition that might make the insurer's continued operation hazardous to the insurer's policyholders or creditors or to the public, the commissioner may, after notice and hearing, order the insurer to take action reasonably necessary to remedy the condition.

(b) The insurer's financial condition must be reviewed under Subsection (a) in conjunction with one or more of the following:

(1) the kinds and nature of risks insured;

(2) the loss experience and ownership of the insurer;

(3) the ratio of total annual premium and net investment income to commission expenses, general insurance expenses, policy benefits paid, and required policy reserve increases;

(4) the insurer's method of operation, affiliations, or investments;

(5) any contracts that lead or may lead to contingent liability;  or

(6) agreements in respect to guaranty and surety.

(c) In an order issued under Subsection (a), the commissioner may take any action the commissioner considers reasonably necessary to remedy the condition described by Subsection (a), including:

(1) requiring an insurer to:

(A) reduce the total amount of present and potential liability for policy benefits by reinsurance;

(B) reduce the volume of new business accepted;

(C) suspend or limit writing new business for a period;

(D) reduce general insurance and commission expenses by specified methods;  or

(E) increase the insurer's capital and surplus by contribution;  or

(2) suspending or canceling the insurer's certificate of authority.

(d) The commissioner may use the remedies available under Subsection (c) in conjunction with the provisions of Chapter 83 if the commissioner determines that the financial condition of the insurer is hazardous and can be reasonably expected to cause significant and imminent harm to the insurer's policyholders or the public.

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Cite this article: FindLaw.com - Texas Insurance Code - INS § 404.003. Order to Remedy Condition - last updated January 01, 2024 | https://codes.findlaw.com/tx/insurance-code/ins-sect-404-003/

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