(a) Under Insurance Code §843.156 and for purposes of this section, the term "insurance company" includes a health maintenance organization as defined in Insurance Code §843.002.

(b) An insurer not organized under the laws of Texas (foreign insurance company) must pay the costs of an examination as specified in this subsection.

(1) Under Insurance Code §401.152, a foreign insurance company must reimburse the department for the salary and examination expenses of each examiner and other department employee participating in an examination of the insurance company allocable to an examination of the company. To determine the allocable salary for each examiner and other department employee, the department divides the average annual examiner's and other department employee's salary by the number of working hours in a year. The department assesses the company the part of the annual salary attributable to each working hour the examiner and other department employee examines the company during a year. The expenses the department assesses are those actually incurred by the examiner and other department employee to the extent permitted by law.

(2) Under Insurance Code §401.152(a-1), a foreign insurance company examined entirely in a single year, or an exam beginning in one year and completed in the next year will be assessed using the rate for the year the exam began, and must pay an annual assessment in an amount sufficient to meet all other expenses and disbursements necessary to comply with the laws of this state relating to the examination of insurers. The amount imposed must be computed in the same manner as the amount imposed for domestic insurers as applicable under subsection (c) of this section.

(3) A foreign insurance company must pay the reimbursements and payments required by this subsection to the department as specified in each itemized bill the department provides to the foreign insurance company.

(c) Under Insurance Code §401.151, §401.155, and Chapter 803, a domestic insurance company must pay examination expenses and rates of overhead assessment in accordance with this subsection.

(1) A domestic insurance company must pay the salaries and expenses of the examiners and other department employees allocable to an examination of the company. The department divides the average annual examiner's and other department employee's salary by the number of working hours in a year, and assesses the company the part of the annual salary attributable to each working hour the examiner and other department employee examines the company during a year. The expenses assessed must be those actually incurred by the examiner and other department employee to the extent permitted by law.

(2) Except as provided in paragraphs (3) and (4) of this subsection, the overhead assessment to cover administrative departmental expenses attributable to examination of companies is: (A) a percentage, as specified in the Commissioner order addressed in subsection (e) of this section, of the admitted assets of the company as of December 31 each relevant year, taking into consideration the annual admitted assets that are not attributable to 90 percent of pension plan contracts as defined in §818(a) of the Internal Revenue Code of 1986 (26 U.S.C. §818(a)); and (B) a percentage, as specified in the Commissioner order addressed in subsection (e) of this section, of the gross premium receipts of the company for each relevant year, taking into consideration the annual premium receipts that are not attributable to 90 percent of pension plan contracts as defined in §818(a) of the Internal Revenue Code of 1986 (26 U.S.C. §818(a)).

(3) Except as provided in paragraph (4) of this subsection, if a company was a domestic insurance company for less than a full year during a calendar year, the overhead assessment for the company is the overhead assessment required under paragraph (2)(A) and (B) of this subsection divided by 365 and multiplied by the number of days the company was a domestic insurance company during that calendar year.

(4) If the overhead assessment required under paragraph (2)(A) and (B) of this subsection or paragraph (3) of this subsection produces an overhead assessment of less than $25, a domestic insurance company must pay a minimum overhead assessment of $25.

(5) The department will base the overhead assessments on the assets and premium receipts, including direct written and assumed premiums, reported in the annual statements.

(6) For the purpose of applying paragraph (2)(B) of this subsection, the term "gross premium receipts" does not include insurance premiums for insurance contracted for by a state or federal government entity to provide welfare benefits to designated welfare recipients or contracted for in accordance with or in furtherance of the Human Resources Code, Title 2, or the federal Social Security Act (42 U.S.C. §§301 et seq.).

(d) Under Labor Code §407A.252, a workers' compensation self-insurance group must pay the salaries and expenses of the examiners and other department employees allocable to an examination of the group. To determine the allocable salary for each examiner and other department employee, the department divides the average annual examiner's and other department employee's salary by the number of working hours in a year. The department assesses the group the part of the annual salary attributable to each working hour the examiner and other department employee examines the company during a year. The expenses the department assesses are those actually incurred by the examiner and other department employee to the extent permitted by law.

(e) The Commissioner will set the average annual examiner's and other department employee's salary rate and overhead assessment rates for each year by Commissioner order.

(f) The overhead assessment rates set in the Commissioner order addressed in subsection (e) of this section are calculated as described in paragraphs (1) and (2) of this subsection.

(1) Overhead assessment revenue need is calculated as the amount of revenue needed to reach the targeted year-end fund balance, taking into account the beginning balance, expected direct billing revenues, and estimated expenditures.

(2) To calculate the assessment rates, the department allocates a percentage of the revenue need to admitted assets and a percentage to gross premium receipts, the assessment bases. Then the department divides the revenue need allocated to each assessment base by the assessment base.

(g) A domestic insurance company must pay the overhead assessment required under subsection (c) of this section to the Texas Department of Insurance as provided in the invoice not later than 30 days from the invoice date.

Source Note: The provisions of this §7.1001 adopted to be effective February 1, 2012, 37 TexReg 329; amended to be effective January 30, 2013, 38 TexReg 378; amended to be effective January 6, 2014, 39 TexReg 84; amended to be effective January 6, 2015, 40 TexReg 70; amended to be effective January 5, 2016, 41 TexReg 256; amended to be effective January 4, 2017, 41 TexReg 10622; amended to be effective January 3, 2018, 42 TexReg 7716; amended to be effective January 3, 2019, 43 TexReg 8601; amended to be effective January 5, 2020, 45TexReg159; amended to be effective December 29, 2020, 45 TexReg 9570