SECTION 5.4111. Operation of the Catastrophe Reserve Trust Fund

(a) In general.

(1) The comptroller must administer the CRTF in accordance with Insurance Code Chapter 2210 and this subchapter.

(2) The comptroller must ensure that all money received from the association under subsection (b) of this section is deposited with the trust company in the CRTF.

(3) The trust company must receive, disburse, invest, hold, and manage all money deposited in the CRTF.

(4) All money, including investment income, deposited in the CRTF constitutes state funds to be held by the comptroller outside the state treasury on behalf of, and with legal title in, the department until disbursed as provided by Insurance Code Chapter 2210 and this subchapter.

(b) Payment of funds to the CRTF.

(1) Except as provided by statute, on an annual basis, the association must pay the net gain from operations of the association directly to the comptroller for deposit with the trust company in the CRTF.

(2) In a period acceptable to the trust company and the comptroller, but not more frequently than monthly, the association must pay all premium surcharges collected under Insurance Code §2210.259 during the preceding period, and accumulated investment income on those premium surcharges, directly to the comptroller for deposit with the trust company in the CRTF. Premium surcharges the association collects under Insurance Code §2210.259 and investment income on those funds are not gross premium or other revenue of the association and must be accounted for separately from the association's gross premium and other revenue.

(3) As necessary, the association must pay directly to the comptroller for deposit with the trust company in the CRTF all:

(A) excess public security proceeds resulting from Insurance Code §2210.608; and

(B) excess premium surcharges resulting from Insurance Code §2210.611 and §5.4144 of this title (relating to Excess Premium Surcharge Revenue).

(4) All deposits received by the trust company under this subsection must be deposited in the CRTF immediately on receipt.

(c) Maintenance of the CRTF.

(1) In maintaining and managing the CRTF, the trust company has the same duty of care that applies to the comptroller as trustee of funds in the treasury.

(2) The department will pay the trust company an amount sufficient to reimburse the trust company for the actual monthly costs of administering and maintaining the CRTF. The trust company must deduct the appropriate amount directly from the CRTF's earnings and advise the department monthly in writing of the amount of these costs.

(3) The trust company must submit to the department a report of all transactions relating to the CRTF promptly after the end of each month. The trust company must furnish other information relating to the CRTF as the department may reasonably request from time to time.

(4) The trust company must keep a book of records in which the complete and correct entries are made of all transactions relating to the receipts, disbursements, deposits, withdrawals, and transfers in the CRTF in accordance with generally accepted accounting principles. The records must be available for inspection by an authorized representative of the department at all reasonable hours of the business day and under reasonable conditions.

Source Note: The provisions of this §5.4111 adopted to be effective February 3, 2011, 36 TexReg 551; amended to be effective May 16, 2019, 44 TexReg 2361