The Texas Department of Insurance (“TDI”) adopted new administrative rules for reciprocal reinsurers that took effect on January 1, 2022. According to TDI, the goal of the new reinsurance regulations is to “ensure TDI retains its authority to regulate credit for reinsurance matters associated with covered agreements, align TDI’s rules with the current approach to regulate reserve financing arrangements for certain life insurance policies, and align TDI’s rules with updates to the National Association of Insurance Commissioners’ (NAIC) accreditation requirements.” See TDI Commissioner’s Order 2021-7060 (Nov. 8, 2021). The new rules can be found in Sections 7.614 – 7.16 of Title 28 of the Texas Administrative Code.
The new rules add an additional option for Texas domestic insurers to receive credit for reinsurance ceded to non-U.S. assuming reinsurers domiciled in a “reciprocal jurisdiction,” as defined by Texas Insurance Code section 493.108. The new rules also:
- establish minimum capital and surplus, or equivalent, amounts and minimum solvency or capital ratios;
- prescribe a form for assuming insurers to use to provide adequate assurance that they meet certain standards; and
- require the Commissioner to prescribe and publish a list of reciprocal jurisdictions and a list of eligible assuming insurers.
In addition, Section 7.616 of the new rules establishes standards governing reserve financing arrangements for certain life insurance policies.
A copy of TDI’s order adopting the new rules can be found here.