REVIEW OF AGENCY RULES

Adopted Rule Reviews

Credit Union Department

Title 7, Part 6

The Credit Union Commission (Commission) has completed its review of Chapter 91, Subchapter A (relating to General Rules), of the Texas Administrative Code, Title 7, Part 6, consisting of §§91.101, 91.103, 91.104, 91.105, 91.110, 91.115, 91.120, 91.121 and 91.125.

The rules were reviewed as a result of the Department's quadrennial rule review under Texas Government Code §2001.039.

Notice of the review of 7 TAC, Part 6, Chapter 91, Subchapter A, was published in the March 26, 2021, issue of the Texas Register (46 TexReg 2049). The Department received no comments on the notice of intention to review.

After reviewing these rules, the Commission finds that the reasons for initially adopting these rules continue to exist, and readopts Chapter 91, Subchapter A, §§91.101, 91.103, 91.104, 91.105, 91.110, 91.115, 91.120, 91.121 and 91.125 in their entirety in accordance with the requirements of Texas Government Code, §2001.039.

The Department hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

TRD-202102171

John J. Kolhoff

Commissioner

Credit Union Department

Filed: June 4, 2021


The Credit Union Commission (Commission) has completed its review of Chapter 91, Subchapter B (relating to Organization Procedures), of the Texas Administrative Code, Title 7, Part 6, consisting of §§91.203, 91.205, 91.206, 91.208, 91.209 and 91.210.

The rules were reviewed as a result of the Department's quadrennial rule review under Texas Government Code §2001.039.

Notice of the review of 7 TAC, Part 6, Chapter 91, Subchapter B, was published in the March 26, 2021, issue of the Texas Register (46 TexReg 2049). The Department received no comments on the notice of intention to review.

After reviewing these rules, the Commission finds that the reasons for initially adopting these rules continue to exist, and readopts Chapter 91, Subchapter B, §§91.203, 91.205, 91.206, 91.208, 91.209 and 91.210 in their entirety in accordance with the requirements of Texas Government Code, §2001.039.

The Department hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

TRD-202102172

John J. Kolhoff

Commissioner

Credit Union Department

Filed: June 4, 2021


The Credit Union Commission (Commission) has completed its review of Chapter 91, Subchapter J (relating to Changes in Corporate Status), of the Texas Administrative Code, Title 7, Part 6, consisting of §§91.1003, 91.1005, 91.1006, 91.1007, 91.1008 and 91.1010.

The rules were reviewed as a result of the Department's quadrennial rule review under Texas Government Code §2001.039.

Notice of the review of 7 TAC, Part 6, Chapter 91, Subchapter J, was published in the March 26, 2021, issue of the Texas Register (46 TexReg 2049). The Department received no comments on the notice of intention to review.

After reviewing these rules, the Commission finds that the reasons for initially adopting these rules continue to exist, and readopts Chapter 91, Subchapter J, §§91.1003, 91.1005, 91.1006, 91.1007, 91.1008 and 91.1010 in their entirety in accordance with the requirements of Texas Government Code, §2001.039.

The Department hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

TRD-202102173

John J. Kolhoff

Commissioner

Credit Union Department

Filed: June 4, 2021


The Credit Union Commission (Commission) has completed its review of Chapter 91, Subchapter L (relating to Submission of Comments by Interested Parties), of the Texas Administrative Code, Title 7, Part 6, consisting of §91.3001 and §91.3002.

The rules were reviewed as a result of the Department's quadrennial rule review under Texas Government Code §2001.039.

Notice of the review of 7 TAC, Part 6, Chapter 91, Subchapter L, was published in the March 26, 2021, issue of the Texas Register (46 TexReg 2049). The Department received no comments on the notice of intention to review.

After reviewing these rules, the Commission finds that the reasons for initially adopting these rules continue to exist, and readopts Chapter 91, Subchapter J, §91.3001 and §91.3002 in their entirety in accordance with the requirements of Texas Government Code, §2001.039.

The Department hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

TRD-202102177

John J. Kolhoff

Commissioner

Credit Union Department

Filed: June 4, 2021


Texas State Library and Archives Commission

Title 13, Part 1

The Texas State Library and Archives Commission (commission) has completed its review of Title 13 Texas Administrative Code, Part 1, Chapter 6, State Records. The commission published its Notice of Intent to Review these rules in the March 12, 2021, issue of the Texas Register (46 TexReg 1663).

As a result of the review, the commission finds that the reasons for adopting the rules in Chapter 6 continue to exist and readopts this chapter without changes in accordance with the requirements of Government Code, §2001.039. Rules considered during this review may be subsequently revised in accordance with the Texas Administrative Procedure Act.

TSLAC: 02-19-21

TRD-202102242

Sarah Swanson

General Counsel

Texas State Library and Archives Commission

Filed: June 9, 2021


Texas Department of Insurance

Title 28, Part 1

The Texas Department of Insurance (TDI) has completed its review of Texas Administrative Code, Title 28, Part 1, Chapters 5, 6, 7, 9, 13, 19, 21, 22, 25, 26, 28, 33, and 34 under Texas Government Code §2001.039, which directs state agencies to review and consider for readoption each of their rules. The proposed rule review was published in the November 27, 2020, issue of the Texas Register (45 TexReg 8529).

SUMMARY OF COMMENTS ON CHAPTERS UNDER REVIEW AND AGENCY RESPONSE.

Commenters: TDI received written comments from the American Property and Casualty Insurance Association, the Insurance Council of Texas, the Association of Fire and Casualty Companies of Texas, the Texas Association of Life and Health Insurers, and the Texas Captive Insurance Companies Association. The commenters commented in support of readopting the chapters under review, with amendment to or repeal of specific sections within the chapters.

Comments on Chapter 5

Comment. Two commenters suggest updating outdated statutory citations and references to the term "State Board of Insurance" in Chapter 5.

Agency Response. TDI agrees that outdated statutory citations and references to the "State Board of Insurance" should be amended. TDI intends to make the necessary changes in future rulemaking projects.

Comment. Two commenters suggest repealing the following sections:

- §§5.101 - 5.103, 5.202, and 5.1101 - 5.1103, because automobile insurance rates and procedures are no longer promulgated;

- §5.201, because it was adopted before the implementation of the Administrative Procedures Act and the references in it are outdated;

- §5.206, because it was adopted under the benchmark system, but rate and form freedom have allowed competition that did not exist under that system;

- §5.1201, because of the adoption of Filings Made Easy rules;

- §§5.1501 - 5.1503, because the rules are unnecessary, and the statutory references are outdated;

- §5.3104, because it is no longer necessary, and the relevant statutes have been repealed or replaced;

- §5.3501, because other provisions in law allow for reporting of statistical plan data;

- §5.3700, because some of the provisions may no longer be applicable due to the existence of the Texas FAIR Plan and the Texas Windstorm Insurance Association;

- §5.6501, because it implements part of the TDI Workers' Compensation Manual that has generally been repealed by statute and other changes adopting the NCCI Manual; and

- Chapter 5, Subchapter N, because the Market Assistance Program, which is addressed by this subchapter, was eliminated.

Three commenters also suggest repealing §5.401. Two suggest this because automobile insurance rates and procedures are no longer promulgated, and one suggests it because insurers should be allowed to price insurance based on risk, including lack of prior insurance or lapse in insurance.

In addition, one commenter suggests repealing §5.7005 because it places Texas out of line with many states and an insurer should not be forced to retain a policyholder for longer than the terms of the policy without regard to claims or payment history, which are indicative of higher future losses.

Agency Response. TDI agrees that the repeal of §§5.101 - 5.103; 5.206; 5.3501; 5.6501; and Chapter 5, Subchapter N may be appropriate. TDI will further review these rules to determine whether to propose their repeal in future rulemakings.

The reasons for adopting §§5.201. 5.202, 5.401, 5.1101 - 5.1103, 5.1501 - 5.1503, 5.3104, 5.3700, or 5.7005 continue to exist. TDI will, however, take the comments into consideration when determining whether any amendments to the rules are warranted in future rulemaking projects.

Section 5.1201 has been proposed for repeal. The proposed repeal was published in the April 16, 2021, edition of the Texas Register (46 TexReg 2554).

Comment. Two commenters suggest amending §5.203 to make the required disclosure consistent with current law.

Agency Response. The reasons for adopting §5.203 continue to exist and the rule is consistent with Insurance Code §1811.051.

Comment. One commenter suggests repealing or amending §5.204 to provide for simpler compliance with the Texas Liability Insurance Card requirements. Two commenters suggested amending the rule to comply with changes in law that eliminated named driver policies.

Agency Response. The reasons for adopting §5.204 continue to exist. The rule was amended in 2020 to make it consistent with current law, including Texas Liability Insurance Card requirements. In addition, the 2020 amendment removed the named driver requirements. The amendments to §5.204 became effective September 15, 2020.

Comment. Two commenters suggest updating §5.205 to comply with changes in law made by Senate Bill 604, 86th Legislature, 2019, and House Bill 2048, 86th Legislature, 2019.

Agency Response. The reasons for adopting §5.205 continue to exist, and the rule was updated for consistency with SB 604 and HB 2048, effective March 16, 2021.

Comment. A commenter suggests amending §5.207 to place emphasis on the TDI website and electronic distribution of the materials, with print materials being made available only on request.

Agency Response. The reasons for adopting §5.207 continue to exist. The rule states the requirements for the Financial Responsibility Consumer Outreach Program (Program), as required by Transportation Code §601.072, and those requirements already state that Program materials must be available on TDI's website. The Program materials are on TDI's website, and include electronic media, such as webpages that address specific topics, downloadable PDF files, and videos.

Comment. Two commenters suggest repealing or amending the requirement in §5.303 for a loss control audit every two years because this is not required in any other state or required by statute. The commenters say that if inspections are needed, they can be done as part of market conduct exams. The commenters also request that TDI repeal or amend the requirements for audits every two years under §5.1703 (the commenter may have meant to cite §5.1713, as there is not an audit requirement in §5.1703) and §5.1723 because these are not necessary and unique to only Texas insurers. The commenters also suggest amending §5.9923 to update procedures on recoupment and surcharges to be consistent with statutory accounting.

Three commenters suggest repealing or amending §5.6302 because the disclosures it requires have been applied broadly rather than specifically to policies for which the rule was intended.

Agency Response. The reasons for adopting §§5.303, 5.1713, 5.1723, 5.6302, and 5.9923 continue to exist. TDI will, however, take the comments into consideration when determining whether any amendments to the rules are warranted in future rulemaking projects.

Comment. Two commenters note that proposed updates to §5.4162 were published on June 19, 2020. The commenters request repeal or amendment of the section if the proposal was not adopted within the time required by law.

Agency Response. The amendments to §5.4162 were adopted with an effective date of January 6, 2021. The adoption order was published in the January 1, 2021, edition of the Texas Register (46 TexReg 162).

Comment on Chapter 6

Comment. A commenter recommends multiple amendments for Chapter 6.

In §6.1, the commenter suggests changing the definition of "administrative services" by striking "claims adjustment," "accounting," and "investment advice" from the definition, because those terms are not required by statute and cause confusion. Also in §6.1, the commenter advises revising the definitions of "captive management company" and "service providers" by moving the words "and individuals or entities providing legal, actuarial, or auditing services" from the former to the latter because the words are more appropriate in this location.

The commenter suggests revising §6.102 to allow a captive management company 360 days before its registration expires, rather than the 180 days currently provided for in subsection (c) of the section.

The commenter asks that §6.202(a)(11)(G) be revised to provide that an applicant seeking to domesticate an existing captive insurance company or form a new captive insurance company include in its plan of operation a copy of the applicant's investment "policy," rather than "strategy."

The commenter suggests striking the requirement in §6.301 that a captive insurance company write an annual premium amount of at least $100,000 because a company should be allowed to exist for some period without current premium, as in a run-off or repurposing of the company.

Finally, the commenter notes that many companies maintain records in the cloud only until the information needs to be accessed or downloaded. Because of this, the commenter suggests revising §6.306(a) to include the provision, "Books and records that are electronically accessible at the Company's designated office in Texas are considered located in the state for purposes of this rule."

Agency Response. The reasons for adopting §§6.1, 6.102, 6.202, 6.301, and 6.306 continue to exist. TDI will, however, take the comments into consideration when determining whether any amendments to the rules are warranted in future rulemaking projects.

Comments on Chapter 7

Comment. Three commenters request that TDI update outdated statutory citations and forms, and references to the "State Board of Insurance" in Chapter 7.

The three commenters suggest that TDI review §§7.402 - 7.404 to determine whether the most recent National Association of Insurance Commissioners (NAIC) formula has been properly adopted, to avoid problems with incorporation by reference.

Finally, one of the commenters says that §§7.501 - 7.507, which concerns the admission procedures for foreign insurance companies, should be updated to be consistent with forms, procedures, and checklists on TDI's website.

Agency Response. TDI agrees that outdated statutory citations and forms, and references to the "State Board of Insurance" should be amended in a future rulemaking project.

The reasons for adopting §§7.402 - 7.404 and 7.501 - 7.507 continue to exist. TDI will, however, take the comments into consideration when determining whether any amendments to the rules are warranted in future rulemaking projects.

Comment. Three commenters say that §7.83 should be amended to update titles and confidentiality provisions and to establish clear procedures for examination appeals.

Agency Response. The reasons for adopting §7.83 continue to exist. The rule was amended on February 7, 2019 (44 TexReg 480), and it remains consistent with statute.

Comment. Two commenters recommend that TDI update §§7.201 - 7.205 and 7.209 - 7.214, which contain regulations applicable to the Insurance Holding Company System, to clarify recent interpretations that suggest broader applications for filings by persons that own more than 10% but less than 50%.

Agency Response. The reasons for adopting §§7.201 - 7.205 and 7.209 - 7.214 continue to exist. TDI is not aware of the interpretations referenced by the commenters.

Comment. Three commenters suggest that TDI repeal §7.5, which addresses discrimination in certain health policies. The commenters say that the section is no longer necessary and that retaining it can cause confusion for insurers and consumers. The commenters further state that the section is out of date and the anti-discrimination language in it no longer applies only to health insurance.

The commenters also suggest that TDI repeal §§7.65 - 7.70, which relate to the annual statement blanks. The commenters say that these sections are not necessary because TDI no longer adopts them by rule.

In addition, the commenters suggest that TDI repeal §7.901, which addresses insider trading and proxy solicitation. The commenters say that it should be repealed because it was a State Board of Insurance rule, and one of the commenters adds that federal and state securities laws should govern and says that TDI should adopt a new rule if one is necessary.

Agency Response. TDI agrees that repeal of §§7.65 - 7.67, 7.69, 7.70, and 7.901 may be appropriate, and will further review the rules to determine whether their repeal is warranted in a future rulemaking project.

The reasons for adopting §§7.5 and 7.68 continue to exist. TDI will, however, take the comments into consideration when determining whether any amendments to the rules are warranted in future rulemaking projects.

Comment. Three commenters say that TDI should clarify that §7.1001 does not apply to market conduct examinations under Insurance Code Chapter 751 because the section has been applied to some foreign insurers that have undergone only market conduct examinations.

Agency Response. The reasons for adopting §7.1001 continue to exist. The rule was recently amended, effective December 29, 2020 (45 TexReg 9570).

Comments. Three commenters suggest that TDI update §7.1301 to address procedures and filings under SERFF. The commenters say life and health insurers often have situations where a filing is closed on SERFF without opportunity for hearing or ability to cure legitimate objections. Once closed, an insurer must make a new filing and submit an additional filing fee, which is inefficient and not in compliance with other TDI rules of procedure.

Agency Response. The reasons for adopting §7.1301 continue to exist. The rule was recently amended, effective February 2, 2021 (46 TexReg 823).

Comment. Three commenters suggest that TDI repeal §19.1 and §19.2, which relate to disciplinary hearings of licensed insurance agents. The commenters say these sections are confusing and are not necessary.

The commenters also suggest that TDI amend the definition of "assumed name" in §19.901 because it is inconsistent with definitions within the Business and Commerce Code and has caused confusion in market conduct exams.

Agency Response. The reasons for adopting §§19.1, 19.2, and 19.901 continue to exist. TDI will, however, take the comments into consideration when determining whether any amendments to the rules are warranted in future rulemaking projects.

Comment on Chapter 21

Comment. Two commenters suggest updating outdated statutory citations and references to the term "State Board of Insurance" in Chapter 21. The commenters also request that TDI revise §§21.101 - 21.122 using NAIC model regulations.

In addition, one of the commenters says that §§21.2201 - 21.2214 should be amended and updated for consistency with other model regulations relating to illustrations. The commenter says Texas is the only state to require both a numeric summary and an extended numeric summary in an in-force illustration and that the current regulations create confusion. According to the commenter, §21.2210 and legislation from 2019 that requires an in-force illustration to be provided at the policy owner's request in certain situations do not specifically require a numeric summary, except for the reference to §21.2206 that requires the extended numeric summary. The commenter states that §21.2207 requires an extended numeric summary when used in conjunction with a numeric summary. The commenter requests the sections be amended to require only one type of summary with an in-force illustration.

Agency Response. TDI agrees that outdated statutory citations and references to the "State Board of Insurance" should be amended. TDI has addressed these updates in a rule proposal published elsewhere in this issue of the Texas Register.

The reasons for adopting §§21.101 - 21.122 and 21.2201 - 21.2214 continue to exist. TDI will, however, take the comments into consideration when determining whether any amendments to the rules are warranted in future rulemaking projects.

Comment on Chapter 28

Comment. A commenter suggests updating outdated statutory citations in Chapter 28 and review §§28.1, 28.2, and 28.3 to determine whether updates are needed to current procedures.

Agency Response. TDI agrees that outdated statutory citations should be amended in a future rulemaking project.

The reasons for adopting §§28.1, 28.2, and 28.3 continue to exist. TDI will, however, take the comments into consideration when determining whether any amendments to the rules are warranted in future rulemaking projects.

READOPTION OF CHAPTERS

TDI finds that the reasons for adopting these chapters continue to exist. TDI readopts the following chapters:

- Chapter 5, Property and Casualty Insurance;

- Chapter 6, Captive Insurance;

- Chapter 7, Corporate and Financial Regulation;

- Chapter 9, Title Insurance;

- Chapter 13, Miscellaneous Insurers and Other Regulated Entities;

- Chapter 19, Licensing and Regulation of Insurance Professionals;

- Chapter 21, Trade Practices;

- Chapter 22, Privacy;

- Chapter 25, Insurance Premium Finance;

- Chapter 26, Employer-Related Health Benefit Plan Regulations;

- Chapter 28, Supervision and Conservation;

- Chapter 33, Continuing Care Providers; and

- Chapter 34, State Fire Marshal.

As part of the review, TDI determined that it will further review for repeal or amendment certain rule sections in the chapters subject to this rule review. TDI will formally propose all repeals and amendments under the Texas Administrative Procedures Act, Texas Government Code Chapter 2001.

TRD-202102232

James Person

General Counsel

Texas Department of Insurance

Filed: June 8, 2021