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Texas Department of Insurance

An Audit Report on Management Controls of the Texas Property and Casualty Insurance Guaranty Association

Report Number 95-136

Overall, management controls at the Texas Property and Casualty Insurance Guaranty Association (Association) are generally effective. The Board of Directors and management of the Association should continue to strengthen specific management controls to improve accountability and control costs.

The Board of Directors should approve limits on investment risks that are compatible with the Association's overall mission in order to lessen the risk of future investment losses. The Association lost $3.3 million on sales of investments in 1994, primarily due to interest sensitive investments. Investment earnings of $13.3 million offset investment losses.

Management can improve accountability and control costs by:

  • Improving performance measures for claims processing.
  • Taking a more active role in planning and monitoring automation projects. The Association abandoned automation projects costing $282,582 in 1994.

The Association's purpose is to pay, fairly and in a timely manner, valid insurance claims involving insolvent property and casualty insurance companies, according to Texas laws.

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