CHAPTER 751. MARKET CONDUCT SURVEILLANCE - Texas Statutes

INSURANCE CODE

TITLE 5. PROTECTION OF CONSUMER INTERESTS

SUBTITLE G. REGULATION OF INSURER MARKET CONDUCT

CHAPTER 751. MARKET CONDUCT SURVEILLANCE

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 751.001. SHORT TITLE. This chapter may be cited as the

Insurance Market Conduct Surveillance Act.

Added by Acts 2005, 79th Leg., Ch.

291, Sec. 3, eff. September 1, 2005.

Sec. 751.002. PURPOSE AND SCOPE. (a) The purpose of this

chapter is to establish a framework for department market conduct

actions, including:

(1) processes and systems for identifying, assessing, and

prioritizing market conduct problems that have a substantial

adverse impact on consumers, policyholders, and claimants;

(2) development of appropriate market conduct actions by the

commissioner as required to:

(A) substantiate market conduct problems; and

(B) remedy significant market conduct problems; and

(3) procedures to communicate and coordinate market conduct

actions with other states to foster the most efficient and

effective use of resources.

(b) Notwithstanding any other law of this state, the department

or commissioner, as applicable, may undertake market analysis or

market conduct action only as provided by this chapter.

Added by Acts 2005, 79th Leg., Ch.

291, Sec. 3, eff. September 1, 2005.

Sec. 751.003. DEFINITIONS. (a) In this chapter:

(1) "Complaint" means a written or documented oral

communication, the primary intent of which is to express a

grievance or an expression of dissatisfaction.

(2) "Desk examination" means a targeted examination conducted by

an examiner at a location other than an insurer's premises. The

term includes an examination performed at the department's

offices during which the insurer provides requested documents for

department review by hard copy or by microfiche, disk, or other

electronic media.

(3) "Market analysis" means a process under which market conduct

surveillance personnel collect and analyze information from filed

schedules, surveys, required reports, and other sources as

necessary to:

(A) develop a baseline understanding of the marketplace; and

(B) identify insurer patterns or practices that:

(i) deviate significantly from the norm; or

(ii) pose a potential risk to the insurance consumer.

(4) "Market analysis handbook" means the outline of the elements

and objectives of market analysis as developed and adopted by the

National Association of Insurance Commissioners, and used to

establish a uniform process by which states may establish and

implement market analysis programs.

(5) "Market conduct action" means any activity that the

commissioner may initiate to assess and address insurer market

practices before conducting a targeted examination. The term

does not include a commissioner action taken to resolve:

(A) an individual consumer complaint; or

(B) another report relating to a specific instance of insurer

misconduct.

(6) "Market conduct examination" means a review of one or more

lines of business of an insurer domiciled in this state that is

not conducted for cause. The term includes a review of rating,

tier classification, underwriting, policyholder service, claims,

marketing and sales, producer licensing, complaint handling

practices, or compliance procedures and policies.

(7) "Market conduct examiners handbook" means the set of

guidelines, developed and adopted by the National Association of

Insurance Commissioners, that document established practices to

be used by market conduct surveillance personnel in developing

and executing an examination under this chapter.

(8) "Market conduct surveillance personnel" means those

individuals employed by or under contract with the department who

collect, analyze, review, or act on information regarding insurer

patterns or practices.

(9) "Market conduct uniform examination procedures" means the

set of guidelines developed and adopted by the National

Association of Insurance Commissioners designed to be used by

market conduct surveillance personnel in conducting an

examination under this chapter.

(10) "On-site examination" means a targeted examination that is

conducted at:

(A) the insurer's home office; or

(B) another location at which the records under review are

stored.

(11) "Qualified contract examiner" means a person qualified by

education, experience, and any applicable professional

designations who is under contract with the commissioner to

perform market conduct actions.

(12) "Standard data request" means the set of field names and

descriptions developed and adopted by the National Association of

Insurance Commissioners for use by market conduct surveillance

personnel in an examination.

(13) "Targeted examination" means a limited review and analysis,

conducted through a desk examination or an on-site examination

and in accordance with the market conduct uniform examination

procedures, of specific insurer conduct, practices, or risks

identified through market analysis that have not been remedied by

the insurer, including:

(A) underwriting and rating;

(B) marketing and sales;

(C) complaint handling operations and management;

(D) advertising materials;

(E) licensing;

(F) policyholder services;

(G) claims handling;

(H) policy forms and filings; or

(I) tier classification.

(14) "Third-party model or product" means a model or product

provided by an entity that is separate from and not under direct

or indirect corporate control of the insurer using the model or

product.

(b) In this chapter, "affiliate" and "subsidiary" have the

meanings described by Section 823.003.

Added by Acts 2005, 79th Leg., Ch.

291, Sec. 3, eff. September 1, 2005.

Sec. 751.004. IMMUNITY. (a) A cause of action does not arise,

and liability may not be imposed, for any statements made or

conduct performed in good faith while implementing this chapter,

against:

(1) the commissioner;

(2) an authorized representative of the commissioner; or

(3) an examiner appointed by the commissioner.

(b) A cause of action does not arise, and liability may not be

imposed, against any person for the act of communicating or

delivering information or data to the commissioner or the

commissioner's authorized representative or examiner under an

examination made under this chapter, if the act of communication

or delivery was performed in good faith and without fraudulent

intent or the intent to deceive.

(c) A person identified in Subsection (a) is entitled to

attorney's fees and costs if the person is the prevailing party

in a civil cause of action for libel, slander, or any other

relevant tort arising out of activities conducted in implementing

this chapter, and the party bringing the action was not

substantially justified in doing so. For purposes of this

subsection, an action is "substantially justified" if the action

had a reasonable basis in law or fact at the time that it was

initiated.

(d) This section does not abrogate or modify any common law or

statutory privilege or immunity.

Added by Acts 2005, 79th Leg., Ch.

291, Sec. 3, eff. September 1, 2005.

SUBCHAPTER B. GENERAL POWERS AND DUTIES OF COMMISSIONER

Sec. 751.051. PARTICIPATION IN NATIONAL MARKET CONDUCT

DATABASES. (a) The commissioner shall collect and report market

data to the National Association of Insurance Commissioners'

market information systems, including the complaint database

system, the examination tracking system, the regulatory

information retrieval system, or other successor systems of that

association, as determined by the commissioner.

(b) Information collected and maintained by the department shall

be compiled in a manner that meets the requirements of the

National Association of Insurance Commissioners.

Added by Acts 2005, 79th Leg., Ch.

291, Sec. 3, eff. September 1, 2005.

Sec. 751.052. COORDINATION WITH OTHER STATES; REGISTRATION OF

CONTRACT EXAMINER. (a) The commissioner shall coordinate the

department's market analysis and examination efforts with other

states through the National Association of Insurance

Commissioners.

(b) A person with whom another state contracts to perform any

market analysis or examination initiated by the other state of an

insurer domiciled in this state shall register with and provide

the following information to the department's chief examiner:

(1) the person's name;

(2) if the person is not an individual, the identity of each

examiner or other person who will perform any part of the market

analysis or examination;

(3) the name of the state that contracted with the person;

(4) the identity of the insurer to be examined; and

(5) a description of each issue that the person has been

contracted to examine.

(c) It is a violation of this code for a person to accept

compensation from multiple states for the same examination, if

doing so results in duplicative costs to the insurer being

examined. It is not a violation of this code for:

(1) an examiner to conduct an examination of an insurer for the

benefit of multiple states in a coordinated examination; and

(2) the examiner to accept compensation from the states

participating in the coordinated examination to reduce the

examination costs to the insurer being examined.

Added by Acts 2005, 79th Leg., Ch.

291, Sec. 3, eff. September 1, 2005.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

1030, Sec. 1, eff. June 19, 2009.

Sec. 751.053. INFORMATION FROM COMMISSIONER. (a) At least once

annually or more frequently if determined necessary by the

commissioner, the commissioner shall provide in an appropriate

manner to insurers and other entities subject to this code

information regarding new laws and rules, enforcement actions,

and other information the commissioner considers relevant to

ensure compliance with market conduct requirements.

(b) The commissioner may provide the notice required under

Subsection (a) in an electronic format that is designed to give

insurers and other entities adequate notice.

(c) Failure by the commissioner to provide the information

described by Subsection (a) does not constitute a defense for an

insurer who fails to comply with an insurance law of this state.

Added by Acts 2005, 79th Leg., Ch.

291, Sec. 3, eff. September 1, 2005.

Sec. 751.054. REPORT OF VIOLATIONS. (a) The commissioner shall

designate an individual within the department whose

responsibilities shall include the receipt of information from

employees of insurers and other entities regulated by the

department regarding violations of laws or rules by their

employers. The commissioner's designee shall be properly trained

in the handling of that information.

(b) Information received under this section is a confidential

communication and is not public information.

Added by Acts 2005, 79th Leg., Ch.

291, Sec. 3, eff. September 1, 2005.

Sec. 751.055. EXERCISE OF SUBPOENA AUTHORITY. The commissioner

has the subpoena power authorized by Subchapter C, Chapter 36,

for the production of documents under this chapter and

enforcement of this subtitle.

Added by Acts 2005, 79th Leg., Ch.

291, Sec. 3, eff. September 1, 2005.

SUBCHAPTER C. RELATIONS WITH OTHER STATES

Sec. 751.101. COMMISSIONER AUTHORITY; INTERACTIONS WITH OTHER

INSURANCE COMMISSIONERS OF OTHER STATES. (a) The commissioner

has responsibility for conducting market conduct examinations on

domestic insurers. The commissioner may delegate that

responsibility to the insurance commissioner of another state, if

that insurance commissioner agrees to accept the delegated

responsibility. If the commissioner elects to delegate

responsibility for examining an insurer, the commissioner shall

accept a report of the examination prepared by the insurance

commissioner to whom the responsibility has been delegated.

(b) If the insurer to be examined is part of an insurance

holding company system, the commissioner may also seek to

simultaneously examine any affiliate of the insurer that is

authorized to write the same types of insurance in this state as

the insurer if the insurance commissioner of the state in which

the affiliate is organized consents and delegates responsibility

for that examination.

(c) In lieu of conducting a targeted examination of an insurer

that holds a certificate of authority in this state but is not a

domestic insurer, the commissioner shall accept a report of a

market conduct examination regarding that insurer prepared by the

insurance commissioner of the state in which the insurer is

organized or by another state if:

(1) the laws of the examining state that are applicable to the

subject of the examination are substantially similar to those of

this state; and

(2) the examining state has a market conduct surveillance system

that the commissioner deems comparable to the market conduct

surveillance system required under this chapter.

(d) The commissioner's determination under Subsection (c)(2) is

discretionary with the commissioner and is not subject to appeal.

(e) Subject to a determination under Subsection (c), if a market

conduct examination conducted by another state results in a

finding that an insurer should modify a specific practice or

procedure, the commissioner shall accept documentation that the

insurer has made a similar modification in this state in lieu of

initiating a market conduct action or examination related to that

practice or procedure. The commissioner may require other or

additional practice or procedure modifications.

Added by Acts 2005, 79th Leg., Ch.

291, Sec. 3, eff. September 1, 2005.

SUBCHAPTER D. MARKET ANALYSIS PROCEDURES

Sec. 751.151. COLLECTION OF INFORMATION; COMMISSIONER ANALYSIS.

(a) Subject to Subsection (d), the commissioner shall gather

insurance market information from:

(1) data available to the department, including survey results

and information required to be reported to the department;

(2) information collected by the National Association of

Insurance Commissioners and other public and private sources; and

(3) information from within and outside the insurance industry.

(b) The commissioner shall analyze the information compiled

under Subsection (a) as necessary to:

(1) develop a baseline understanding of the insurance

marketplace; and

(2) identify for further review insurers or insurance practices

that deviate significantly from the norm or that pose a potential

risk to the insurance consumer.

(c) The commissioner shall use the market analysis handbook as a

resource in performing the analysis required under this section.

(d) Except as otherwise specifically provided, the department or

the commissioner, as applicable, may not require an insurer to

report information in a manner that is inconsistent with the

records the insurer maintains in the ordinary course of business

or can create at a reasonable expense or effort.

Added by Acts 2005, 79th Leg., Ch.

291, Sec. 3, eff. September 1, 2005.

Sec. 751.152. ADDITIONAL ANALYSIS OF MARKET ACTIONS. (a) If,

as a result of the market analysis, the commissioner determines

that further inquiry into a particular insurer or insurance

practice is needed, the commissioner shall consider taking one or

more of the market conduct actions described by Subsection (b)

before conducting a targeted examination. If a market conduct

action selected by the commissioner requires the participation of

or a response by the affected insurer, the commissioner shall

notify the insurer of the action selected in writing.

(b) Market conduct actions described by Subsection (a) may

include:

(1) correspondence with the insurer;

(2) insurer interviews;

(3) information gathering;

(4) policy and procedure reviews;

(5) interrogatories; and

(6) review of insurer self-evaluation and compliance programs,

including insurer membership in a best-practice organization.

(c) The commissioner shall select market conduct actions that

are efficient and cost-effective for the department and the

insurer while protecting the interests of the insurance consumer.

(d) The commissioner shall take steps reasonably necessary to:

(1) eliminate requests for information that duplicates or

conflicts with information provided as part of an insurer's

annual financial statement, the annual market conduct statement

of the National Association of Insurance Commissioners, or other

required schedules, surveys, or reports that are regularly

submitted to the commissioner, or with data requests made by

other states if that information is available to the

commissioner, unless the information is state specific; and

(2) coordinate the market conduct actions and findings of this

state with those of other states.

Added by Acts 2005, 79th Leg., Ch.

291, Sec. 3, eff. September 1, 2005.

Sec. 751.153. PROTOCOLS FOR MARKET CONDUCT ACTIONS. (a) Each

market conduct action taken as a result of a market analysis:

(1) must focus on the general business practices and compliance

activities of insurers, rather than identifying infrequent or

unintentional random errors that do not cause significant

consumer harm; and

(2) may not result in a market conduct examination, unless the

head of the insurance regulatory agency in the insurer's state of

domicile determines that a market conduct examination is needed.

(b) The commissioner may determine the frequency and timing of

the market conduct actions. The timing of an action depends on

the specific market conduct action to be initiated unless

extraordinary circumstances indicating a risk to consumers

require immediate action.

(c) If the commissioner has information that more than one

insurer is engaged in practices that may violate statutes or

rules, the commissioner may schedule and coordinate multiple

examinations simultaneously.

(d) The commissioner shall provide an insurer with an

opportunity to resolve to the satisfaction of the commissioner

any matter that arises as a result of a market analysis before

any additional market conduct actions are taken against the

insurer. If the insurer has modified a practice or procedure as

a result of a market conduct action taken or examination

conducted by the insurance commissioner of another state, and the

commissioner deems that state's market conduct surveillance

system comparable to the system required under this chapter, the

commissioner may accept the modified practice or procedure and

may require other or additional practice or procedure

modifications.

(e) For an application by the department of a handbook,

guideline, or other product referenced in this chapter that is

the work product of the National Association of Insurance

Commissioners that changes the way in which market conduct

actions are conducted, the commissioner shall give notice and

provide interested parties with an opportunity for a public

hearing as provided by Chapter 2001, Government Code, if the

change:

(1) necessitates a change in a statute or rule; or

(2) deviates from the applicable handbook, guideline, or other

product most recently adopted by the National Association of

Insurance Commissioners.

(f) Except as otherwise provided by law, each insurer or person

from whom information is sought, and each officer, director, or

agent of that insurer or person, shall provide the commissioner

with convenient and free access to all books, records, accounts,

papers, documents, and any computer or other recordings relating

to the property, assets, business, and affairs of the insurer or

person.

(g) Each officer, director, employee, insurance producer, and

agent of an insurer or person described by Subsection (f) shall,

to the extent of that individual's ability, facilitate and aid in

a department market conduct action.

Added by Acts 2005, 79th Leg., Ch.

291, Sec. 3, eff. September 1, 2005.

SUBCHAPTER E. EXAMINATIONS

Sec. 751.201. EXAMINATION. (a) If the commissioner determines

that a market conduct action described by Section 751.152(b) is

not appropriate, the commissioner may conduct a targeted

examination in accordance with the market conduct uniform

examination procedures and the market conduct examiners handbook.

(b) A targeted examination may be conducted through a desk

examination or an on-site examination. To the extent feasible,

the department shall conduct a market conduct examination through

desk examinations and data requests before conducting an on-site

examination.

(c) The department shall conduct an examination in accordance

with the market conduct examiners handbook and the market conduct

uniform examinations procedures.

(d) The department shall use the standard data request or a

successor product that is substantially similar to the standard

data request as adopted by the commissioner by rule.

(e) If the insurer to be examined is not a domestic insurer, the

commissioner shall coordinate the examination with the insurance

commissioner of the state in which the insurer is organized.

Added by Acts 2005, 79th Leg., Ch.

291, Sec. 3, eff. September 1, 2005.

Sec. 751.202. WORK PLAN. Before beginning an examination,

market conduct surveillance personnel shall prepare a work plan

that includes:

(1) the name and address of the insurer to be examined;

(2) the name and contact information of the examiner-in-charge;

(3) a statement of the reasons for the examination;

(4) a description of the scope of the examination;

(5) the date the examination is scheduled to begin;

(6) notice to any non-insurance department personnel who will

assist in the examination;

(7) a time estimate for the examination; and

(8) if the cost of the examination is billed to the affected

insurer:

(A) a budget for the examination; and

(B) an identification of factors that will be included in the

billing.

Added by Acts 2005, 79th Leg., Ch.

291, Sec. 3, eff. September 1, 2005.

Sec. 751.203. NOTICE OF EXAMINATION. (a) Unless the

examination is conducted in response to extraordinary

circumstances as described by Section 751.153(b), the department

shall notify an affected insurer of an examination not later than

the 60th day before the scheduled date of the beginning of the

examination. The notice must include the examination work plan

and a request that the insurer name an examination coordinator

for the insurer.

(b) In addition to the notice required under Subsection (a), the

commissioner shall post notice that a market conduct examination

has been scheduled on the National Association of Insurance

Commissioners examination tracking system.

(c) If a targeted examination is expanded beyond the reasons

provided to the insurer in the notice of the examination required

under Subsection (a), the commissioner shall provide written

notice to the insurer, explaining the extent of the expansion and

the reasons for the expansion. The department shall provide a

revised work plan to the insurer before the beginning of any

significantly expanded examination.

Added by Acts 2005, 79th Leg., Ch.

291, Sec. 3, eff. September 1, 2005.

Sec. 751.204. PRE-EXAMINATION CONFERENCE. Not later than the

30th day before the scheduled date of the examination, the

commissioner shall conduct a pre-examination conference with the

insurer's examination coordinator and key personnel to clarify

expectations.

Added by Acts 2005, 79th Leg., Ch.

291, Sec. 3, eff. September 1, 2005.

Sec. 751.205. EXIT CONFERENCE. Before the conclusion of an

examination, the member of the market conduct surveillance

personnel who is designated as the examiner-in-charge shall

schedule an exit conference with the insurer.

Added by Acts 2005, 79th Leg., Ch.

291, Sec. 3, eff. September 1, 2005.

Sec. 751.206. EXAMINATION REPORT. (a) Unless the commissioner

and the insurer agree to a different schedule, the commissioner

shall follow the time line established under this section.

(b) The commissioner shall deliver the draft examination report

to the insurer not later than the 60th day after the date the

examination is completed. For purposes of this section, the date

the examination is completed is the date on which the exit

conference is conducted.

(c) Not later than the 30th day after the date on which the

insurer receives the draft examination report, the insurer shall

provide any written comments regarding the report to the

department.

(d) The department shall make a good faith effort to resolve

issues with the insurer informally and shall prepare a final

examination report not later than the 30th day after the date of

receipt of the insurer's written comments on the draft report

unless a mutual agreement is reached to extend the deadline.

(e) The department shall include the insurer's responses in the

final examination report. The responses may be included as an

appendix or in the text of the examination report. An insurer is

not obligated to submit a response. An individual involved in

the examination may not be named in either the report or the

insurer response except to acknowledge the individual's

involvement.

(f) The commissioner may make corrections and other changes to

the final examination report as appropriate, and shall issue the

report to the insurer. Not later than the 30th day after receipt

of the final examination report under this subsection, the

insurer shall accept the report, accept the findings of the

report, or request a hearing. The commissioner and the insurer

by mutual agreement may extend the period for an additional 30

days. A request for a hearing must be made in writing and must

follow the requirements of Chapter 2001, Government Code.

Added by Acts 2005, 79th Leg., Ch.

291, Sec. 3, eff. September 1, 2005.

Sec. 751.207. CONFIDENTIALITY OF EXAMINATION REPORT INFORMATION.

(a) A final or preliminary market conduct examination report,

and any information obtained during the course of an examination,

is confidential and is not subject to disclosure under Chapter

552, Government Code. This section may not be construed to limit

the commissioner's authority to use any final or preliminary

market conduct examination report, any examiner or company work

papers or other documents, or any other information discovered or

developed during the course of an examination in the furtherance

of any legal or regulatory action that the commissioner, in the

commissioner's sole discretion, may deem appropriate.

(b) This chapter does not prevent the commissioner from

disclosing at any time the contents of a final market conduct

examination report to the department, the insurance department of

any other state, or an agency of the federal government, if the

department or agency receiving the report agrees in writing to

maintain the information as confidential and in a manner

consistent with this chapter.

(c) The commissioner shall provide to an insurer subject to a

final market conduct examination a written agreement described by

Subsection (b) not later than the fifth day after the date the

final market conduct examination is released under Subsection

(b).

Added by Acts 2005, 79th Leg., Ch.

291, Sec. 3, eff. September 1, 2005.

Sec. 751.208. ASSESSMENT OF COSTS OF EXAMINATION. (a) Subject

to Subsection (d), if the reasonable and necessary cost of a

market conduct examination is to be assessed against the affected

insurer, fees for that cost must be consistent with those

otherwise authorized by law. The fees must be itemized and bills

for the fees must be provided to the insurer on a monthly basis

for review prior to submission for payment.

(b) The commissioner shall actively manage and oversee

examination costs, including costs associated with the use of

department examiners and with retaining qualified contract

examiners necessary to perform an on-site examination. To the

extent the commissioner retains outside assistance, the

commissioner shall adopt by rule written protocols that:

(1) clearly identify the types of functions to be subject to

outsourcing;

(2) provide specific time lines for completion of the outsourced

review;

(3) require disclosure of recommendations made by contract

examiners;

(4) establish and use a dispute resolution or arbitration

mechanism to resolve conflicts with insurers regarding

examination fees; and

(5) require disclosure of the terms of contracts entered into

with outside consultants, and specifically terms regarding the

fees or hourly rates that may be charged by those consultants.

(c) The commissioner must review and affirmatively endorse

detailed billings made by a qualified contract examiner before

the detailed billings are sent to the insurer.

(d) An insurer may not be required to provide reimbursement for

examiner fees under Subsection (a), whether those fees are

incurred by market conduct surveillance personnel or qualified

contract examiners, to the extent that those fees exceed the fees

prescribed in the market conduct examiners handbook and any

successor documents to that handbook, unless the commissioner

demonstrates that the fees prescribed in the handbook are

inadequate under the circumstances of the examination.

Added by Acts 2005, 79th Leg., Ch.

291, Sec. 3, eff. September 1, 2005.

Sec. 751.209. LIMIT ON CERTAIN EXAMINATIONS. The commissioner

may not conduct a market conduct examination more frequently than

once every three years. The commissioner may defer conducting a

market conduct examination for longer than once every three

years.

Added by Acts 2005, 79th Leg., Ch.

291, Sec. 3, eff. September 1, 2005.

SUBCHAPTER F. CONFIDENTIALITY REQUIREMENTS

Sec. 751.251. NO WAIVER. (a) The disclosure to the

commissioner under this subchapter of a document, material, or

information does not constitute the waiver of any applicable

privilege or claim of confidentiality regarding the document,

material, or information.

(b) Notwithstanding Subsection (a), an insurer may not be

compelled to disclose a self-audit document or waive any

statutory or common law privilege. An insurer may, however,

voluntarily disclose a document described by this subsection to

the commissioner in response to any market conduct action or

examination.

(c) For the purposes of Subsection (b), "self-audit document"

means a document that is prepared as a result of or in connection

with an insurance compliance audit.

Added by Acts 2005, 79th Leg., Ch.

291, Sec. 3, eff. September 1, 2005.

Sec. 751.252. AUTHORITY OF COMMISSIONER. (a) The commissioner

may share documents, materials, or other information obtained by

or disclosed to the commissioner under this chapter with other

state, federal, and international regulatory agencies and law

enforcement authorities if the recipient agrees to and has the

legal authority to maintain the confidentiality and privileged

status of the document, material, or other information.

(b) The commissioner may receive documents, materials, or

information, including otherwise confidential and privileged

documents, materials, or information, from the National

Association of Insurance Commissioners and that association's

affiliates or subsidiaries, and from regulatory and law

enforcement officials of other foreign or domestic jurisdictions.

The commissioner shall maintain as confidential or privileged

any document, material, or information received with notice or

the understanding that the document, material, or information is

confidential or privileged under the laws of the jurisdiction

that is the source of the document, material, or information.

(c) Consistent with this section, the commissioner may enter

into agreements governing the sharing and use of information.

Added by Acts 2005, 79th Leg., Ch.

291, Sec. 3, eff. September 1, 2005.

SUBCHAPTER G. MARKET CONDUCT SURVEILLANCE PERSONNEL

Sec. 751.301. PERSONNEL; QUALIFICATIONS. (a) To conduct market

conduct surveillance under this chapter, the commissioner may

designate department staff to perform duties under this chapter,

and may supplement that staff with qualified outside professional

assistance if the commissioner determines that that assistance is

necessary.

(b) Market conduct surveillance personnel must be qualified by

education and experience and, if applicable, must hold

appropriate professional designations.

Added by Acts 2005, 79th Leg., Ch.

291, Sec. 3, eff. September 1, 2005.

Sec. 751.302. CONFLICT OF INTEREST. (a) An individual who is a

member of the market conduct surveillance personnel has a

conflict of interest, either directly or indirectly, if the

individual is affiliated with the management of, has been

employed by, or owns a pecuniary interest in an insurer subject

to an examination conducted under this chapter.

(b) This section may not be construed to automatically preclude

the individual from being:

(1) a policyholder or claimant under an insurance policy;

(2) a grantee of a mortgage or similar instrument on the

individual's residence from a regulated entity if done under

customary terms and in the ordinary course of business;

(3) an investment owner in shares of regulated diversified

investment companies; or

(4) a settlor or beneficiary of a blind trust into which any

otherwise permissible holdings have been placed.

Added by Acts 2005, 79th Leg., Ch.

291, Sec. 3, eff. September 1, 2005.

Sec. 751.303. ACCESS TO INFORMATION. (a) Except as otherwise

provided by law, market conduct surveillance personnel shall, as

practicable, have free and full access to all books and records,

and all employees, officers, and directors, of the insurer during

regular business hours.

(b) On the request of market conduct surveillance personnel, an

insurer that uses a third-party model or product for any of the

activities under examination shall make the details of those

models or products available to that personnel.

Added by Acts 2005, 79th Leg., Ch.

291, Sec. 3, eff. September 1, 2005.

Sec. 751.304. AUTHORITY OF MARKET CONDUCT SURVEILLANCE

PERSONNEL. Market conduct surveillance personnel may examine

insurance company personnel under oath if that action is ordered

by the commissioner under Subchapter C, Chapter 36.

Added by Acts 2005, 79th Leg., Ch.

291, Sec. 3, eff. September 1, 2005.

SUBCHAPTER H. SANCTIONS

Sec. 751.351. SANCTIONS. (a) The commissioner may impose

sanctions under Chapter 82 against an insurer determined, as a

result of a market conduct action or other action under this

chapter, to have violated this code, a rule adopted under this

code, or another insurance law of this state.

(b) In determining an appropriate sanction under Subsection (a)

the commissioner shall consider:

(1) any actions taken by the insurer to maintain membership in,

and comply with the standards of, best-practice organizations

that promote high ethical standards of conduct in the insurance

marketplace; and

(2) the extent to which the insurer maintains regulatory

compliance programs to self-assess, self-report, and remediate

problems detected by the insurer.

Added by Acts 2005, 79th Leg., Ch.

291, Sec. 3, eff. September 1, 2005.