(a) Each small employer carrier must file with the commissioner, no later than with the first filing of a small employer health benefit plan, notification of whether the carrier elects to operate as a risk-assuming or reinsured carrier.
  (1) A small employer carrier's operation as a risk-assuming carrier is subject to approval by the commissioner, and each small employer carrier electing to operate as a risk-assuming carrier must file an application with the commissioner contemporaneously with its election to operate as a risk-assuming carrier. A risk-assuming carrier's application, in addition to the financial information already on file with TDI, must include a:
    (A) history of rating and underwriting small employer groups, including a description of underwriting experience to identify high risks and the percentage of aggregate rate increases for the past three years for small employer groups for Texas and nationwide;
    (B) description of the carrier's commitment to fairly market to all small employers in Texas or in the small employer carrier's established geographic service areas, including sample material used, or planned to be used, to market to small employers;
    (C) description of experience in managing the risk of small groups, including;
      (i) the number of years, volume of business, results, etc.;
      (ii) a list of other states with guaranteed issue requirements where the carrier provides small employer group coverage;
      (iii) the total number of lives currently covered under those guaranteed issue plans; and
      (iv) a list of other states where the carrier voluntarily participates in reinsurance programs;
    (D) description of plans to manage the risk of guaranteed issue as a risk-assuming carrier;
    (E) list of affiliated small employer carriers and whether they have been approved as either a risk-assuming or reinsured carrier;
    (F) list of any other affiliated small employer carrier applicants, indicating their requested designation as either a risk-assuming or reinsured carrier; and
    (G) the name, title, and signature of the chief executive officer, attorney, or actuary for the named health carrier.
  (2) A reinsured carrier's notification must include:
    (A) a statement of the carrier's election to operate as a reinsured carrier; and
    (B) the name, title, and signature of the chief executive officer, attorney, or actuary of the named health carrier.
(b) A small employer carrier seeking to change its status as a risk-assuming or reinsured carrier must file an application with the commissioner. If the carrier is requesting a change to be a:
  (1) risk-assuming carrier, the filing must include:
    (A) the information requested in subsection (a) of this section;
    (B) information demonstrating good cause for the request to change status; and
    (C) the name, title, and signature of the chief executive officer, attorney, or actuary for the named health carrier; or
  (2) reinsured carrier, the filing must include:
    (A) information demonstrating good cause for the request to change status; and
    (B) the name, title, and signature of the chief executive officer, attorney, or actuary for the named health carrier.
(c) A small employer carrier's election is effective until the fifth anniversary of the election. A small employer carrier seeking to maintain its status after that date must file with the commissioner, at least 90 days before the fifth anniversary of its election, the same information required by subsection (a)(1) and (2) of this section.
(d) A form fulfilling the requirements of this section is available at www.tdi.texas.gov/forms/form10smgroup.html through the link for Election and Application to be a Risk-Assuming or Reinsured Carrier.

Source Note: The provisions of this §26.18 adopted to be effective April 9, 1996, 21 TexReg 2648; amended March 5, 1998, 23 TexReg 2297; amended to be effective April 6, 2005, 30 TexReg 1931; amended to be effective May 17, 2017, 42 TexReg 2539