After a department examination of a Texas insurer uncovers information showing violations of the Insurance Code, the insurer argues that the examination report and work papers may be used only to report on solvency, not in an enforcement action. What is the effect of TIC 401.055?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Under TIC 401.055, the examination subchapter does not limit the commissioner's authority to use a final or preliminary examination report, an examiner's or the company's work papers or other documents, or any other information discovered or developed during an examination, in connection with a legal or regulatory action the commissioner, in the commissioner's sole discretion, considers appropriate. In practice this means evidence gathered in a solvency examination can support a Chapter 82 sanction or a Chapter 84 administrative penalty. TIC 401.056 separately requires the commissioner to adopt rules governing the filing and adoption of the examination report and the related hearing procedures.
Why the other options are wrong
- B) Work papers are retained and may be used; adoption of the report does not require their destruction.
- C) The statute does not open examination material to private litigants; it addresses the commissioner's own use of it.
- D) TIC 401.055 says the opposite; examination material is not confined to solvency reporting.
Memory hook
Work papers found in an exam can power an enforcement case.