The department's financial review of a Texas-authorized life insurer shows a condition that could make the insurer's continued operation hazardous to its policyholders. What may the Commissioner do under TIC 404.003?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Under TIC 404.003, if the insurer's financial condition, reviewed as the statute requires, indicates a condition that might make the insurer's continued operation hazardous to its policyholders, creditors, or the public, the commissioner may, after notice and hearing, order the insurer to take any action reasonably necessary to remedy the condition, up to and including suspending or canceling the insurer's certificate of authority. The notice-and-hearing prerequisite is the exam point: this remedial power is not summary. Available remedies include requiring reinsurance, reducing new business, cutting expenses, or increasing capital and surplus by contribution.
Why the other options are wrong
- A) The Guaranty Association steps in only upon insolvency and liquidation, not merely because a hazardous condition exists.
- B) Cancellation or revocation of an authorization requires notice and an opportunity for a hearing under TIC 82.051; it is not immediate.
- D) The statute targets insurer-level remedies such as reinsurance, limiting new business, or capital contributions, not commission clawbacks from agents.
Memory hook
Hazardous condition means notice plus hearing first, then remedy.