In November 2021, the Texas Department of Insurance adopted new administrative reinsurance regulations relating to reciprocal reinsurers. The rules took effect on January 1, 2022.
Section 7.615 (28 Tex. Admin. Code § 7.615) largely mirrors NAIC Model Regulation #786, and adds a new way for ceding insurers to receive credit for reinsurance ceded to non-U.S. assuming reinsurers domiciled in a “reciprocal jurisdiction,” as defined by Texas Annotated Insurance Code section 493.108, which also became effective on January 1, 2022. The ceding reinsurer is eligible to receive the credit if it meets certain requirements and conditions, including satisfying minimum capital, surplus, and solvency requirements; agreeing to submit to jurisdiction in the state of Texas; and various other rules set forth in section 493.108 and section 7.615(c).
Section 7.616 (28 Tex. Admin. Code § 7.616) is substantially similar to NAIC Model Regulation #787, the purpose of which is to establish standards governing reserve financing arrangements for certain life insurance policies. Certain types of reinsurance treaties are exempt from the new rule, as set forth in section 7.616(c).