SECTION 13.532. Application Requirements

(a) Organizational information. An applicant must provide the following information and documentation about its structure and operations:

(1) its name, federal employer identification number, location, and a means for contacting its representative for purposes of the application;

(2) the physical location of the plan and trust's books and records, and its means of maintaining the books and records;

(3) the name of the applicant's ultimate controlling person or persons;

(4) the documents or instruments describing the rights and obligations between the applicant and its clients, including but not limited to all forms of its professional employer services agreement;

(5) a description of the applicant's basic organizational structure, including organizational charts or lists that show:

(A) the relationships and contracts between the applicant and any affiliates of the applicant that affect the plan; and

(B) the internal organizational structure of the applicant's management and administrative staff;

(6) disclosure of any suit or judgment filed in a matter involving dishonesty, breach of trust, or a financial dispute within the last 10 years against the applicant, an ultimate controlling person, or any other persons from whom biographical information is provided under paragraph (10) of this subsection;

(7) a copy of its most recent TDLR license;

(8) a financial statement of the applicant covering a period ending not more than 180 days prior to the date of the application, that is prepared using generally accepted accounting principles of the United States and includes:

(A) a balance sheet that reflects a solvent financial position;

(B) an income statement;

(C) a cash flow statement; and

(D) the sources and uses of all funds;

(9) evidence that the applicant has engaged or will engage a sufficient number of competent persons to:

(A) administer the plan; and

(B) provide claims adjusting and underwriting services to the plan;

(10) evidence of the PEO's fidelity coverage that complies with §13.542 of this title (relating to PEO's Fidelity Coverage); and

(11) for all plans sponsored by the applicant, whether operating in Texas or in any other state, a list of and access to all reports for the last three years created and filed with the United States Department of Labor in compliance with Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§1021(g), concerning Reporting by Certain Arrangements; 1023, concerning Annual Reports; and 1024, concerning Filing and Furnishing of Information.

(b) Plan and trust information and documentation. An applicant must provide the following information and documentation about its plan and trust:

(1) proof of deposit or letter of credit satisfying the financial solvency requirements of Division 6 of this subchapter;

(2) financial projections of the trust covering three full years of operation that are prepared using generally accepted accounting principles of the United States and include:

(A) a balance sheet that reflects a solvent financial position;

(B) an income statement;

(C) a cash flow statement; and

(D) the sources and uses of all funds;

(3) a written investment plan in compliance with Insurance Code §425.105, concerning Written Investment Plan;

(4) an actuarial opinion supporting the structure of the plan meeting the requirements of §13.533 of this title (relating to Actuarial Opinion Requirements);

(5) a description of the applicant's plan to service plan billings, claims, and underwriting;

(6) the name and Texas license number of each contracted regulated entity the trust proposes to engage to service the plan, and a copy of each agreement or proposed agreement with a contracted regulated entity;

(7) each organizational document of the plan and trust, including:

(A) the plan document;

(B) the plan's summary plan description, created in compliance with ERISA, 29 U.S.C. §1022, concerning Summary Plan Description; and

(C) the trust agreement;

(8) the name of the named fiduciary or fiduciaries who jointly or severally will have authority to control and manage the operation and administration of the plan, as required by ERISA, 29 U.S.C. §1102(a), concerning Establishment of Plan;

(9) the name of the administrator designated by the terms of the instrument under which the plan is operated, as defined by ERISA, 29 U.S.C. §1002(16)(A);

(10) biographical information about each person who governs or manages the affairs of the applicant or the plan and trust, accompanied by information sufficient to allow the commissioner to determine the competence, fitness, and reputation of each officer or director of the applicant or other controlling person, and including disclosure of whether the person is prohibited from serving in any capacity under ERISA, 29 U.S.C. §1111, (concerning Persons Prohibited from Holding Certain Positions). An applicant must provide the required biographical information on TDI form number FIN311, Biographical Affidavit, available on TDI's website, and must list the full name and address of the PEO where the form requires "Full Name and Address of Company/HMO;"

(11) a complete set of fingerprints for the individuals described in paragraph (10) of this subsection using the procedures set out in Chapter 1, Subchapter D of this title (relating to Effect of Criminal Conduct), unless the individual meets the exemption in that subchapter or provides evidence that the individual has successfully completed the fingerprinting process conducted during the applicant's licensing or license renewal process through TDLR;

(12) evidence of the trustees' fidelity coverage and errors and omissions policy that comply with §13.556 of this title (relating to Protection of Plan and Trust Assets); and

(13) an attestation that the plan and trust have been established in compliance with §13.550 and §13.551 of this title (relating to Plan Formation and Trust Formation).

(c) Officers' attestation. An applicant must provide a written attestation signed by two principal officers of the applicant who have submitted biographical affidavits that the information and documentation provided in compliance with subsections (a) and (b) of this section is true and correct and complies with applicable federal and state laws and regulations, including this subchapter, to the best of their knowledge and belief.

(d) Service of Process. An applicant must appoint the commissioner as its resident agent for purposes of service of process as provided in Insurance Code Chapter 804, concerning Service of Process, in the same manner as a domestic company.

Source Note: The provisions of this §13.532 adopted to be effective May 17, 2016, 41 TexReg 3479