Stop-Loss Coverage Issued to Benefit Plans is 'Reinsurance,' Court Rules

AUSTIN, Texas - Stop-loss coverage issued to self-funded employee benefit plans is "reinsurance" under Texas law and cannot be regulated by the state insurance department, a Texas appellate court has ruled. American National Insurance Co. v. Texas Department of Insurance, No. 03-08-00535-CV (Tex. App., 3rd Dist.).

In an April 22 opinion, the Texas 3rd District Court of Appeals determined that the self-funded plans are "insurers" as defined by the Texas Insurance Code because they perform the functions of insurers. Therefore the coverage issued to the plans can be defined as "reinsurance," the court explained.

American National Insurance Co. and American …