- Texas Department of Insurance Adopts NAIC Risk-Based Capital Formulas, Instructions
- June 24, 2015
- Law Firm: Colodny Fass P.A. - Fort Lauderdale Office
- The Texas Department of Insurance ("TDI") advised yesterday, June 18, 2015, that it has adopted amendments to 28 Texas Administrative Code §7.402 concerning risk-based capital ("RBC") and surplus requirements for insurers and health maintenance organizations ("HMOs").
The amendments establish the sources of information insurers and HMOs will use in determining RBC requirements, including requiring use of the most current version of RBC formulas and RBC instructions adopted by the National Association of Insurance Commissioners ("NAIC") except as provided by statute or TDI Rule.
The NAIC RBC requirement is a method of ensuring that an insurer or HMO has an appropriate level of policyholder surplus after taking into account the underwriting, financial and investment risks of a carrier.
The TDI explained that the NAIC RBC formulas and RBC instructions provide the agency with a widely used regulatory tool to identify the minimum amount of capital and surplus appropriate for a carrier to support its overall business operations, considering its size and risk exposure.