What is the role of the Texas Insurance Code in regulating insurer financial solvency?

• A. Regulates only advertising.
• B. Does not regulate solvency.
• C. Sets requirements and enforcement to ensure solvency and consumer protection.
• D. Sets rates for policies.

Answer: (C)

Solvency regulation means ensuring insurers have enough financial resources to pay claims. The Texas Insurance Code lays out the requirements and powers regulators use to keep insurers solvent and to protect consumers. It sets minimums for capital and surplus, reserves, and other financial condition standards, and it requires regular financial reporting and annual statements the department supervises. It authorizes the Texas Department of Insurance to examine insurer finances, issue corrective orders, and take action such as rehabilitation, conservation, or liquidation when solvency is at risk. It also supports ongoing oversight and consumer protection through enforcement and the ability to require remedial actions and through guaranty funds. So the role is to require, monitor, and enforce solvency standards, not merely regulate advertising or set policy rates.