Self-Funded Plans Are Classified As Reinsurance Under Texas Law

American Nat’l Ins. Co. v. Texas Dep’t. of Ins.

Ct. App. TX, December 16, 2009


This dispute involves the appeal of insurers against a ruling by the Texas Department of Insurance finding that stop-loss insurance policies that were sold to self-funded employee benefit plans should have been characterized as direct insurance instead of reinsurance.


The insurers contend that the self-funded plans are insurers as defined by the insurance code and thus qualify under the contextual definition of former article 3.10(a) to buy reinsurance like any other insurer, allowing the insurers to classify the insurance they sold to the plans as reinsurance. 


The Court of Appeals held that by selling the stop-loss policies at issue in this case to self-funded benefits plans and reporting their sale to the Texas Department of Insurance as a sale of assumed reinsurance, the insurers did not violate the insurance code and self-funded plans are classified as reinsurance under Texas Law.


For a copy of the decision click here


Sarah Fang and Jeffrey Kingsley

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