Texas General Lines — Life, Accident, Health and HMOTexas Statutes and Rules Common to Life, Accident, Health and HMOEasy
An insurance company operating in Texas wishes to offer a new type of accident insurance policy. Before issuing this policy to the public, what is the primary action the company must take regarding the policy form?
- AFile the policy form with the National Association of Insurance Commissioners (NAIC).
- BConduct an internal review and self-certify compliance with Texas laws.
- CSubmit the policy form to the Texas Department of Insurance (TDI) for approval.
- DObtain approval from a third-party actuarial firm to ensure solvency.
Show answer & explanationAnswer & explanation
Correct answer: C. Submit the policy form to the Texas Department of Insurance (TDI) for approval.
In Texas, all insurance policy forms, including new types of accident insurance, must be submitted to and approved by the Texas Department of Insurance (TDI) before they can be used or issued to the public. This ensures compliance with state laws and consumer protection.
Why the other options are wrong
- A. The NAIC develops model laws, but individual states like Texas have their own regulatory bodies for form approval.
- B. While internal review is good practice, it does not replace the mandatory TDI approval process.
- D. Actuarial firms may review forms for soundness, but the ultimate regulatory approval rests with the TDI.
Policy Form Approval (Texas)
All insurance policy forms, endorsements, and applications intended for use in Texas must be submitted to and approved by the Texas Department of Insurance (TDI) before being issued to the public.
- Mandatory for all new policy forms.
- Ensures compliance with Texas insurance laws.
- Protects consumers from unfair or misleading provisions.
- Approval required BEFORE public issuance.
Memory trick: New forms need TDI's 'stamp of approval' before they 'fly'!