Texas May Raise Custodian Net Worth Minimum

By Allison Bell

September 10, 2002 at 08:00 PM

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NU Online News Service, Sept. 10, 6:10 p.m. – The Texas Department of Insurance is tightening the rules that Texas insurers and health maintenance organizations must follow when safeguarding their securities.

Proposed changes to Title 28 of the Texas Administrative Code would affect carriers that leave securities in the custody of securities brokerage firm.

The brokerage firms would now have to have audited financial statements showing tangible net worth of at least $250 million, up from $100 million under the old regulations.

The brokerage firms would still have to be members of the Securities Investor Protection Corp., a nonprofit agency that protects investors against the collapse of brokerage firms.

Carriers could also continue to leave securities in the custody of banks that belong to the Federal Deposit Insurance Corp.

The proposed amendments would change Section 11.803 of Title 28, which deals with insurers, and Section 7.86, which deals with HMOs.

"The public benefit anticipated as a result of compliance with the section will be improved financial safeguards," according to an analysis prepared by Betty Patterson, a senior associate commissioner at the Texas department.

Insurers, HMOs and other parties interested in the proposed changes have until Oct. 7 to submit public comments.

More information about the proposed changes is available at http://www.tdi.state.tx.us/commish/parules.html

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