73R1282 DLF-F By Cuellar of Hidalgo H.B. No. 648 A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to the creation, operation, and funding of the Texas Motor 1-3 Vehicle Insurance Program. 1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-5 SECTION 1. The Insurance Code is amended by adding Chapter 1-6 26 to read as follows: 1-7 CHAPTER 26. TEXAS MOTOR VEHICLE INSURANCE PROGRAM 1-8 SUBCHAPTER A. GENERAL PROVISIONS 1-9 Art. 26.001. DEFINITIONS. In this chapter: 1-10 (1) "Association" means the Industry Motor Vehicle 1-11 Insurance Association created under Article 26.091 of this code. 1-12 (2) "Board of directors" means the board of directors 1-13 of the association. 1-14 (3) "Board of trustees" means the board of trustees of 1-15 the program. 1-16 (4) "Executive director" means the executive director 1-17 of the program. 1-18 (5) "Financial management committee" means the 1-19 financial management committee of the program. 1-20 (6) "Fund" means the Texas motor vehicle insurance 1-21 fund established under Article 26.081 of this code. 1-22 (7) "Insufficiency assessment reserve account" means 1-23 the account established under Article 26.093 of this code. 1-24 (8) "Member insurer" means an insurer who is a member 2-1 of the association. 2-2 (9) "Motor vehicle insurer" means any insurance 2-3 company, interinsurance exchange, mutual, reciprocal, association, 2-4 Lloyd's plan, or other insurer writing motor vehicle insurance in 2-5 this state. 2-6 (10) "Program" means the Texas motor vehicle insurance 2-7 program established under Article 26.002 of this code. 2-8 (11) "Traffic safety law violation" means an offense 2-9 defined in the Uniform Act Regulating Traffic on Highways (Article 2-10 6701d, Vernon's Texas Civil Statutes) except Sections 34, 76, 78, 2-11 80, 81, 93, 94, 95, 96, 97, and 107A, and Articles 14 and 15 of 2-12 that Act. 2-13 Art. 26.002. TEXAS MOTOR VEHICLE INSURANCE PROGRAM. The 2-14 Texas motor vehicle insurance program is established to write motor 2-15 vehicle liability insurance and provide payment for damages caused 2-16 by unknown, uninsured, and missing motor vehicle owners and 2-17 operators in accordance with this chapter. 2-18 Art. 26.003. MEMBERSHIP IN GUARANTY ASSOCIATION. The 2-19 program is a member of the Texas Property and Casualty Insurance 2-20 Guaranty Association established under Article 21.28-C of this 2-21 code. 2-22 Art. 26.004. AUDIT. The state auditor may audit the program 2-23 and the fund in accordance with Chapter 321, Government Code. 2-24 Art. 26.005. DENIAL OF COVERAGE BECAUSE OF PRIOR PROGRAM 2-25 COVERAGE PROHIBITED; NOTICE. (a) A motor vehicle insurer may not 2-26 refuse to issue motor vehicle insurance to an applicant solely 2-27 because the applicant previously obtained coverage from the 3-1 program. 3-2 (b) On issuance of a private passenger motor vehicle policy 3-3 to an insured, the program shall include with the policy a written 3-4 notice notifying the insured: 3-5 (1) of the provisions of Subsection (a) of this 3-6 article; and 3-7 (2) that, in the event of a violation of Subsection 3-8 (a) of this article, the insured may file a complaint with the 3-9 commissioner. 3-10 Art. 26.006. RECORDING OF TELEPHONE CALLS. Notwithstanding 3-11 any other law, the executive director may authorize employees of 3-12 the program to record any telephone conversation with any 3-13 individual if: 3-14 (1) the conversation is relevant to an accident or 3-15 claim; 3-16 (2) the individual is advised that the conversation 3-17 will be recorded; and 3-18 (3) the individual consents to the recording. 3-19 SUBCHAPTER B. BOARD OF TRUSTEES AND EXECUTIVE DIRECTOR 3-20 Art. 26.011. APPOINTMENT OF BOARD OF TRUSTEES. (a) The 3-21 board of trustees of the program is composed of: 3-22 (1) five members appointed by the governor with the 3-23 advice and consent of the senate; and 3-24 (2) five members appointed by the board of directors 3-25 of the Industry Motor Vehicle Insurance Association, at least two 3-26 of whom must be residents of this state. 3-27 (b) The executive director shall serve as an ex officio 4-1 member of the board of trustees. 4-2 (c) Appointments to the board of trustees shall be made 4-3 without regard to the race, color, disability, sex, religion, age, 4-4 or national origin of the appointees. 4-5 (d) Appointed members of the board of trustees serve 4-6 staggered six-year terms expiring February 1 of the applicable 4-7 odd-numbered year. 4-8 (e) If there is a vacancy during the term of a member 4-9 appointed by the governor, the governor shall appoint a replacement 4-10 to fill the unexpired term. 4-11 (f) If there is a vacancy during the term of a member 4-12 appointed by the board of directors, the board of directors shall 4-13 appoint a replacement to fill the unexpired term. 4-14 Art. 26.012. PRESIDING OFFICER. (a) The board of trustees 4-15 shall elect a presiding officer for the board for each year. The 4-16 presiding officer for each odd-numbered year shall be elected from 4-17 the members appointed by the governor and the presiding officer for 4-18 each even-numbered year shall be elected from the members appointed 4-19 by the board of directors. 4-20 (b) The executive director may not serve as presiding 4-21 officer of the board of trustees. 4-22 Art. 26.013. DUTIES OF BOARD OF TRUSTEES; RULES. (a) The 4-23 board of trustees shall: 4-24 (1) formulate policy for the program; and 4-25 (2) advise the executive director regarding the 4-26 executive director's powers and duties under this chapter. 4-27 (b) The board of trustees shall adopt rules as necessary to 5-1 implement this chapter, including rules governing any notice or 5-2 hearing required by this chapter. 5-3 Art. 26.014. COMPENSATION OF BOARD OF TRUSTEES. A member of 5-4 the board of trustees, other than the executive director, is not 5-5 entitled to compensation but is entitled to reimbursement for 5-6 actual and necessary expenses incurred in performing the member's 5-7 duties at the rate provided by the General Appropriations Act. 5-8 Art. 26.015. EMPLOYMENT OF EXECUTIVE DIRECTOR. (a) The 5-9 board of trustees shall employ an executive director for the 5-10 program and shall compensate the executive director as provided by 5-11 legislative appropriation. 5-12 (b) An incumbent executive director, in the capacity of ex 5-13 officio member of the board of trustees, may not vote as a member 5-14 of the board of trustees on the employment of a successor executive 5-15 director. 5-16 Art. 26.016. POWERS AND DUTIES OF EXECUTIVE DIRECTOR. (a) 5-17 The executive director is the administrative head of the program 5-18 and is responsible for the exercise of all of the powers and duties 5-19 of the program under this chapter, except for the powers and duties 5-20 conferred on the board of trustees under this chapter. 5-21 (b) The executive director may settle or defend claims made 5-22 against the program. 5-23 (c) The executive director may employ or contract for 5-24 personnel, including claims adjusters and attorneys. The executive 5-25 director shall compensate personnel as provided by legislative 5-26 appropriation. 5-27 SUBCHAPTER C. ISSUANCE OF MOTOR VEHICLE 6-1 LIABILITY INSURANCE THROUGH PROGRAM 6-2 Art. 26.021. PROGRAM SHALL ISSUE POLICIES. (a) Except as 6-3 provided by this subchapter, the program shall issue and deliver a 6-4 policy of motor vehicle insurance to a resident of this state who: 6-5 (1) applies for motor vehicle liability coverage and 6-6 pays the required premium; 6-7 (2) owns a motor vehicle in this state or is licensed 6-8 to operate a motor vehicle by this state; 6-9 (3) has either: 6-10 (A) attempted in good faith to obtain a policy 6-11 of motor vehicle liability insurance from at least one 6-12 rate-regulated motor vehicle insurer, other than the program, and 6-13 has been denied a policy for a reason other than nonpayment of 6-14 premiums; or 6-15 (B) had a policy of motor vehicle liability 6-16 insurance canceled or refused for renewal by a motor vehicle 6-17 insurer, other than the program, for a reason other than nonpayment 6-18 of premiums; and 6-19 (4) does not owe the program unpaid premium with 6-20 respect to any prior expired or canceled motor vehicle liability 6-21 insurance policy. 6-22 (b) A policy issued by the program to a person who does not 6-23 qualify under Subsection (a) of this article is void. 6-24 (c) If a negotiable instrument issued for an applicant's 6-25 initial payment to the program is not honored, any policy or 6-26 endorsement issued in reliance on that payment is void. 6-27 Art. 26.022. POLICY PROVISIONS. (a) A motor vehicle 7-1 liability insurance policy issued by the program must provide the 7-2 minimum coverage required by the Texas Motor Vehicle 7-3 Safety-Responsibility Act (Article 6701h, Vernon's Texas Civil 7-4 Statutes). 7-5 (b) A motor vehicle liability insurance policy issued by the 7-6 program is subject to Subchapter A, Chapter 5, Insurance Code, 7-7 except that premium rates shall be set as provided in this 7-8 subchapter. 7-9 (c) The policy may include other provisions as determined by 7-10 the executive director and approved by the board of trustees and 7-11 the commissioner. 7-12 (d) A commercial motor vehicle liability insurance policy 7-13 issued by the program may include coverage in addition to and in 7-14 excess of the minimum coverage required by the Texas Motor Vehicle 7-15 Safety-Responsibility Act (Article 6701h, Vernon's Texas Civil 7-16 Statutes) if reinsurance acceptable to the executive director is 7-17 available to the program for the additional or excess coverage. 7-18 Art. 26.023. COVERAGE FOR MOTORCYCLES PROHIBITED. The 7-19 program may not issue a policy providing coverage for the 7-20 maintenance, operation, or use of a motorcycle, as that term is 7-21 defined by Section 2, Uniform Act Regulating Traffic on Highways 7-22 (Article 6701d, Vernon's Texas Civil Statutes). 7-23 Art. 26.024. PREMIUMS FOR POLICY ISSUED BY PROGRAM. (a) 7-24 The executive director shall establish the rate to be charged for a 7-25 policy issued by the program, subject to approval by the board. 7-26 (b) In approving a rate under Subsection (a) of this 7-27 article, the board shall consider the purposes of this chapter. 8-1 (c) The premium charged to a particular insured may reflect 8-2 the prior claims experience of the insured and any convictions of 8-3 the insured for a traffic safety law violation. 8-4 (d) The executive director may not consider amounts held in 8-5 the insufficiency assessment reserve account in determining the 8-6 amount of premiums under this article. 8-7 Art. 26.025. GOOD DRIVER RATES. (a) A policyholder who has 8-8 completed three continuous years as a policyholder in the program 8-9 during which the policyholder has not been convicted of a traffic 8-10 safety law violation and has not been found at fault in a motor 8-11 vehicle accident, is entitled to renewal coverage from the program 8-12 for a premium comparable to the premium charged by rate-regulated 8-13 insurers, as approved by the commissioner. 8-14 (b) In determining whether a policyholder has completed 8-15 three continuous years as a policyholder in the program the program 8-16 may not consider a lapse in coverage of less than 31 days. 8-17 Art. 26.026. FINANCING OF PREMIUMS. The program may 8-18 directly or indirectly provide for the financing of premiums and 8-19 may accept premiums on an installment basis. 8-20 Art. 26.027. DENIAL OR CANCELLATION IF LICENSE OR 8-21 REGISTRATION SUSPENDED OR REVOKED. (a) The executive director may 8-22 deny an application for or cancel or refuse to renew insurance 8-23 coverage for an applicant or insured whose driver's license is 8-24 canceled, suspended, or revoked. This subsection does not apply to 8-25 the suspension of a license in connection with the first conviction 8-26 of the applicant or insured of an offense under Article 6701l-1, 8-27 Revised Statutes, or Section 19.05(a)(2), Penal Code. 9-1 (b) The executive director may deny an application for or 9-2 may cancel or refuse to renew insurance coverage for an applicant 9-3 or insured if a motor vehicle that is covered by the policy is not 9-4 registered as required by the laws of this state. 9-5 (c) The executive director shall notify the applicant or 9-6 insured of the denial, cancellation, or nonrenewal. Cancellation 9-7 or nonrenewal may not take effect before the 10th day after the 9-8 date on which the notice is sent to the insured. 9-9 Art. 26.028. APPEAL OF CANCELLATION OR DENIAL; APPEALS 9-10 BOARD. (a) Not later than the 10th day after the date on which a 9-11 notice of denial or cancellation is sent under Article 26.027(c) of 9-12 this chapter, an applicant or insured may appeal the denial or 9-13 cancellation to the appeals board. 9-14 (b) The appeals board is composed of two members of the 9-15 board of trustees and the commissioner or the commissioner's 9-16 designee. The executive director may not serve on the appeals 9-17 board. 9-18 (c) The appeals board may affirm, reverse, or modify the 9-19 cancellation or denial on the written record or after hearing. A 9-20 hearing under this subsection may not be held before the 10th day 9-21 after the date on which written notice of the hearing is sent to 9-22 the applicant or insured. 9-23 (d) An insured's coverage remains in effect pending the 9-24 decision of the appeals board. 9-25 (e) An insured may not appeal cancellation for nonpayment of 9-26 premium to the appeals board. 9-27 Art. 26.029. CHARGEABLE ACCIDENTS; NOTICE TO DEPARTMENT OF 10-1 PUBLIC SAFETY; CANCELLATION OR NONRENEWAL OF COVERAGE. (a) The 10-2 executive director shall notify the Department of Public Safety if 10-3 an insured who has been insured by the program for at least 10 10-4 months during any 18-month period has had three or more accidents 10-5 which resulted in payment by the program of at least $300 for each 10-6 accident to persons other than the insured. The executive director 10-7 may report any other matter concerning an insured's driving record 10-8 to the Department of Public Safety. The executive director may 10-9 request that the director of the Department of Public Safety 10-10 cancel, suspend, or revoke the driver's license of the insured 10-11 under Chapter 173, Acts of the 47th Legislature, Regular Session, 10-12 1941 (Article 6687b, Vernon's Texas Civil Statutes). 10-13 (b) If the director of the Department of Public Safety 10-14 cancels, suspends, or revokes the driver's license of the insured, 10-15 the executive director shall cancel or refuse to renew the 10-16 insured's policy in accordance with Article 26.027 of this code. 10-17 (c) If the director of the Department of Public Safety does 10-18 not cancel, suspend, or revoke the driver's license of the insured, 10-19 the executive director may not cancel or refuse to renew the 10-20 insured's policy because of the insured's driving record. 10-21 Art. 26.030. DENIAL OR CANCELLATION; NOTICE TO DEPARTMENT OF 10-22 PUBLIC SAFETY. The executive director shall notify the Department 10-23 of Public Safety of any denial or cancellation of a policy under 10-24 this subchapter. 10-25 Art. 26.031. NOTICE TO DESIGNATED DEPARTMENT EMPLOYEE. The 10-26 notice required by Articles 26.029 and 26.030 of this code shall be 10-27 made to an employee of the Department of Public Safety designated 11-1 to receive the notice by the director of the Department of Public 11-2 Safety. 11-3 Art. 26.032. CANCELLATION OR NONRENEWAL OF POLICY; COVERAGE 11-4 OF OTHER INDIVIDUALS. If the executive director cancels or refuses 11-5 to renew a policy under this subchapter because of the conduct of 11-6 an individual insured, coverage for another individual covered by 11-7 the policy may not be canceled and the program shall reclassify the 11-8 rate of risk for the remaining insured for premium purposes. 11-9 SUBCHAPTER D. SALE OF POLICY THROUGH PRODUCER 11-10 Art. 26.041. DEFINITION. In this subchapter, "producer" 11-11 means a person licensed to act as motor vehicle insurance agent or 11-12 solicitor in this state who may accept applications for motor 11-13 vehicle insurance and bind the program under this subchapter. 11-14 Art. 26.042. AUTHORIZED PRODUCER. (a) Except as provided 11-15 in this article, the program shall issue a certificate of authority 11-16 to act as a producer to a person who: 11-17 (1) applies to the program for certification to act as 11-18 a producer; 11-19 (2) is licensed to act as a motor vehicle insurance 11-20 agent or solicitor; and 11-21 (3) files with the program the bond required by 11-22 Article 26.043 of this code. 11-23 (b) The program may refuse to issue a certificate of 11-24 authority to a person who: 11-25 (1) previously held a certificate of authority that 11-26 was revoked; or 11-27 (2) permits a person subject to Subdivision (1) of 12-1 this subsection to participate in that person's operations or 12-2 management contrary to the requirements of this subchapter or an 12-3 order of the commissioner. 12-4 Art. 26.043. BOND. (a) Not later than December 31 of each 12-5 year, a producer shall file with the program: 12-6 (1) a bond, issued for the benefit of the fund and 12-7 covering the following calendar year, that complies with Subsection 12-8 (b) of this article; or 12-9 (2) a certificate of a motor vehicle insurer that 12-10 complies with Subsection (c) of this article. 12-11 (b) A bond filed under Subsection (a) of this article must 12-12 be: 12-13 (1) in the amount of $10,000; 12-14 (2) issued by an insurer authorized to act as a surety 12-15 in this state; and 12-16 (3) conditioned that the producer will account for and 12-17 pay to the program or another entitled person money in the 12-18 possession of the producer in accordance with rules adopted under 12-19 Article 26.047 of this code. 12-20 (c) Instead of filing a bond under Subsection (b) of this 12-21 article, the producer may file a certificate executed by an 12-22 authorized representative of a motor vehicle insurer certifying 12-23 that: 12-24 (1) the insurer has a bond in effect that covers the 12-25 producer and complies with the requirements of Subsection (b) of 12-26 this article; and 12-27 (2) the bond coverage extends to the program for 13-1 persons who apply to the program for coverage through the producer. 13-2 (d) The producer continuously shall maintain the bond 13-3 coverage required under Subsection (b) or (c) of this article 13-4 throughout each calendar year. 13-5 (e) The program may terminate the right of a producer to 13-6 bind coverage under the program if the producer fails to comply 13-7 with this article. Termination takes effect on the 10th day after 13-8 the date on which the program mails notice of the termination to 13-9 the producer. Not later than the 30th day after notice is mailed 13-10 to the producer, the producer may request a hearing on the 13-11 termination. 13-12 Art. 26.044. AUTHORITY TO BIND PROGRAM. (a) Subject to 13-13 this subchapter and rules adopted under Article 26.047 of this 13-14 code, a producer may bind the minimum coverage required under the 13-15 Texas Motor Vehicle Safety-Responsibility Act (Article 6701h, 13-16 Vernon's Texas Civil Statutes) for an applicant on application to 13-17 the producer and payment to the producer of the required premium. 13-18 (b) The program is liable for coverage bound under 13-19 Subsection (a) of this article from the date that the producer 13-20 binds the coverage. 13-21 (c) Not later than the 60th day after the date the producer 13-22 binds the coverage, the program may cancel the coverage and refuse 13-23 to issue a policy if the program finds: 13-24 (1) the applicant is not qualified for insurance from 13-25 the program; 13-26 (2) the required premium has not been paid; or 13-27 (3) the fund is authorized to deny the application 14-1 under Article 26.027 of this code. 14-2 (d) The program shall notify the applicant, the producer, 14-3 and the Department of Public Safety of each cancellation. Except 14-4 as provided by Subsection (e) of this article, cancellation takes 14-5 effect on the 10th day after the date on which the notice is mailed 14-6 to the applicant. 14-7 (e) If cancellation of the coverage under Subsection (c) of 14-8 this article is due to nonpayment of premiums, the program may not 14-9 cancel the coverage if the applicant pays the required premiums 14-10 before the 10th day after the date on which notice of the 14-11 cancellation is mailed to the applicant. 14-12 (f) An applicant may appeal, in accordance with Article 14-13 26.028 of this code, a cancellation under this article. 14-14 Art. 26.045. COMMISSION ON SALE OF POLICY. (a) The program 14-15 shall pay to a producer of a policyholder to whom a policy of motor 14-16 vehicle insurance is issued by the fund a commission equal to: 14-17 (1) 10 percent of the policy premium for a policy of 14-18 private passenger motor vehicle insurance; or 14-19 (2) an amount set by the executive director, but not 14-20 to exceed 10 percent of the policy premium, for a policy not 14-21 governed by Subdivision (1) of this subsection. 14-22 (b) The program may not pay a commission on a fully earned 14-23 basis. 14-24 (c) The program may not pay a commission if: 14-25 (1) an applicant fails to qualify for a policy under 14-26 Article 26.027 of this code; or 14-27 (2) a negotiable instrument issued for the applicant's 15-1 initial payment to the program or to the producer is not honored. 15-2 (d) If a policy issued by the program is canceled, the 15-3 producer shall refund to the fund any unearned commission. 15-4 Art. 26.046. COMMISSION ON TRANSFER TO PRIVATE COMPANY. (a) 15-5 If coverage of a person insured under the program is transferred to 15-6 a private company, the company shall pay to the agent or broker who 15-7 originally placed the insured with that company and who is the 15-8 producer of record a commission equal to 10 percent of the premium 15-9 on transfer or first renewal of the coverage only if another 15-10 agent's commission is not paid. 15-11 (b) A commission on future renewals may not be paid under 15-12 this section. 15-13 Art. 26.047. RULES GOVERNING BINDING OF COVERAGE; VIOLATION. 15-14 The board of trustees shall adopt rules relating to the authority 15-15 of producers to bind coverage under this article, including rules 15-16 governing: 15-17 (1) the amount of premiums to be collected; 15-18 (2) the evidence necessary to establish the 15-19 applicant's qualifications to be insured by the program; 15-20 (3) the time within which the producer is required to 15-21 notify the program of the binding of coverage; and 15-22 (4) the procedures for notifying the program of the 15-23 binding of coverage. 15-24 Art. 26.048. SALE OF ADD-ON COVERAGES. (a) In this 15-25 article, "add-on coverage" means any coverage other than coverage 15-26 authorized to be offered by the program under Article 26.022 of 15-27 this code or described by Subsection (b) of this article, 16-1 including: 16-2 (1) rental reimbursement coverage; 16-3 (2) personal effects theft coverage; 16-4 (3) collision and comprehensive deductible waiver 16-5 coverage; 16-6 (4) uninsured or underinsured motorist coverage in 16-7 excess of the minimum amounts required to be offered under Article 16-8 5.06-1 of this code; 16-9 (5) personal injury protection coverage in excess of 16-10 the minimum amounts required to be offered under Article 5.06-3 of 16-11 this code; 16-12 (6) emergency living expense coverage; 16-13 (7) vehicle towing coverage; and 16-14 (8) emergency vehicle repair service coverage. 16-15 (b) This article does not apply to: 16-16 (1) comprehensive and collision coverage, other than 16-17 collision and comprehensive deductible waiver coverage, provided by 16-18 the program or by a motor vehicle insurer; or 16-19 (2) fire, life, or health insurance coverages that 16-20 are: 16-21 (A) not directly related to the underlying motor 16-22 vehicle insurance coverage; and 16-23 (B) written by an insurance company authorized 16-24 to write the coverage. 16-25 (c) Before a producer who has bound coverage under the 16-26 program may sell add-on coverage to the program insured, the 16-27 producer must provide a written notice that: 17-1 (1) clearly discloses that the premium for the add-on 17-2 coverage is not part of the premium for the insurance policy issued 17-3 by the program; 17-4 (2) provides an itemized list of all add-on coverage 17-5 to be sold to the insured; and 17-6 (3) states that the add-on coverage is optional and is 17-7 not required under the Texas Motor Vehicle Safety-Responsibility 17-8 Act (Article 6701h, Vernon's Texas Civil Statutes). 17-9 (d) The notice required by Subsection (c) of this article 17-10 must be in a form approved by the commissioner, and must be signed 17-11 by the program insured before the add-on coverage may be sold to 17-12 the insured. 17-13 (e) A producer may not require an insured or a prospective 17-14 insured, as a condition of purchasing an insurance policy issued by 17-15 the program, to purchase add-on coverage. 17-16 (f) A producer is not required to provide the notice 17-17 required by Subsection (c) of this article to an insured on renewal 17-18 of a policy or coverage if: 17-19 (1) the number and type of coverages under the renewal 17-20 do not change from the policy or coverages being renewed; and 17-21 (2) the notice was signed by the insured on original 17-22 issuance of the policy or coverages. 17-23 Art. 26.049. FIDUCIARY DUTIES OF PRODUCER. (a) A producer 17-24 is a fiduciary of the program for any money received by the 17-25 producer in connection with a policy or policy application issued 17-26 by, to be issued by, or bound in the program. 17-27 (b) A producer shall deposit any money held by the producer 18-1 to be paid to the program into a trust account. 18-2 Art. 26.050. FAILURE TO PERFORM PRODUCER'S DUTIES. (a) The 18-3 program, after notice and an opportunity for hearing, may refuse to 18-4 accept further applications for coverage from a producer or may 18-5 terminate the right of the producer to bind coverage if the program 18-6 finds that: 18-7 (1) the producer has engaged in the practice of 18-8 binding coverage through the program in violation of the rules 18-9 adopted under Article 26.047 of this code; 18-10 (2) the producer failed, after a demand made by the 18-11 program, to pay money due to the program as a result of the binding 18-12 or change of coverage or as a result of a commission paid to the 18-13 producer that is canceled after the effective date of coverage; or 18-14 (3) the producer has repeatedly violated Article 18-15 26.048 of this code. 18-16 (b) If the program determines that there is a likelihood of 18-17 substantial and immediate harm to the program, the program 18-18 policyholders, or any other person because of a violation described 18-19 by Subsection (a) of this article, the program may refuse to accept 18-20 further applications for coverage from the producer or may 18-21 terminate the right of the producer to bind coverage, effective on 18-22 receipt of notice by the producer. The program shall hold a 18-23 hearing on action taken under this subsection not later than the 18-24 10th day after the date on which the action is scheduled to take 18-25 effect. 18-26 SUBCHAPTER E. CLAIMS NOT COVERED BY INSURANCE 18-27 Art. 26.061. UNKNOWN OWNER OR OPERATOR; UNKNOWN PERSON 19-1 OPERATING VEHICLE WITHOUT OWNER'S CONSENT. (a) The fund shall pay 19-2 a claim made against the fund in accordance with this subchapter if 19-3 the claim is for the death or personal injury of an individual or 19-4 for damage to property arising out of the ownership, maintenance, 19-5 or use of a motor vehicle and: 19-6 (1) the identity of the motor vehicle and of the 19-7 operator and owner of the motor vehicle cannot be ascertained; or 19-8 (2) at the time of the accident, the motor vehicle was 19-9 being operated by an individual other than the owner without the 19-10 owner's consent and the identity of that individual cannot be 19-11 ascertained. 19-12 (b) The fund may pay a claim under this article only if: 19-13 (1) the claimant has a cause of action against the 19-14 operator or owner of the motor vehicle; 19-15 (2) all reasonable efforts have been made to ascertain 19-16 the identity of the motor vehicle and of the owner and operator of 19-17 the motor vehicle; and 19-18 (3) at the time of the accident, the motor vehicle was 19-19 uninsured or it is impossible to ascertain, after all reasonable 19-20 efforts have been made, whether the motor vehicle was insured. 19-21 Art. 26.062. MISSING OWNER OR OPERATOR. (a) The fund shall 19-22 pay a claim made against the fund in accordance with this 19-23 subchapter if the claim is for the death or personal injury of an 19-24 individual or for damage to property arising out of the ownership, 19-25 maintenance, or use of a motor vehicle and the operator or owner of 19-26 the motor vehicle cannot be located. 19-27 (b) The fund may pay a claim under this article only if: 20-1 (1) the claimant has a cause of action against the 20-2 operator or owner of the motor vehicle; 20-3 (2) all reasonable efforts have been made to ascertain 20-4 the whereabouts of the owner or operator of the motor vehicle; and 20-5 (3) at the time of the accident, the motor vehicle was 20-6 uninsured or it is impossible to ascertain, after all reasonable 20-7 efforts have been made, whether the motor vehicle was insured. 20-8 Art. 26.063. UNINSURED OWNER OR OPERATOR. (a) The fund 20-9 shall pay a claim made against the fund in accordance with this 20-10 subchapter if the claim is for the death or personal injury of an 20-11 individual or for damage to property arising out of the ownership, 20-12 maintenance, or use of a motor vehicle and the injury or damage was 20-13 caused by an uninsured owner or operator. 20-14 (b) The fund may pay a claim under this article only if: 20-15 (1) the claimant has a cause of action against the 20-16 operator or owner of the motor vehicle; 20-17 (2) the individual who suffered the death, personal 20-18 injury, or property damage is not a spouse or a member of the 20-19 family residing in the household of the uninsured owner or 20-20 operator; and 20-21 (3) the claim is not being made for damage or 20-22 destruction of an uninsured motor vehicle owned wholly or in part 20-23 by the uninsured operator. 20-24 Art. 26.064. QUALIFIED CLAIMANTS. The fund may pay a claim 20-25 under this subchapter only if the claim is for death, personal 20-26 injury, or property damage suffered by: 20-27 (1) a resident of this state; 21-1 (2) the owner of a motor vehicle registered in this 21-2 state; or 21-3 (3) a resident of another state, territory, or federal 21-4 district of the United States, a province of Canada, or a foreign 21-5 country that provides recourse to residents of this state that is 21-6 substantially similar to the recourse provided under this 21-7 subchapter. 21-8 Art. 26.065. CERTAIN CLAIMS EXCLUDED. The program may not 21-9 pay a claim under this article if: 21-10 (1) the individual who suffered the personal injury, 21-11 death, or property damage was, at the time of the accident, 21-12 operating or riding in an uninsured motor vehicle owned by the 21-13 individual or a member of the individual's family residing in the 21-14 same household as the individual; 21-15 (2) the individual who suffered the personal injury, 21-16 death, or property damage was, at the time of the accident, 21-17 operating a motor vehicle in violation of an order suspending or 21-18 revoking the certificate of registration of the motor vehicle or of 21-19 the individual's operator's license; 21-20 (3) the claimant is a motor vehicle insurer seeking to 21-21 recover as a subrogee an amount paid for damage to a motor vehicle 21-22 under an insurance coverage, including collision, fire, theft, or 21-23 uninsured motorist coverage; or 21-24 (4) the claimant is a holder of a certificate of 21-25 self-insurance. 21-26 Art. 26.066. UNINSURED CLAIMS ONLY. (a) The fund may pay a 21-27 claim under this subchapter only if the claim is not covered under 22-1 a policy of motor vehicle liability insurance. 22-2 (b) The fund may not pay a claim under this subchapter if 22-3 the claim is a covered claim subject to payment by the Texas 22-4 Property and Casualty Insurance Guaranty Association under Article 22-5 21.28-C of this code. 22-6 Art. 26.067. NOTICE OF CLAIM; TIME FOR FILING. (a) A 22-7 claimant must notify the program of a claim under this subchapter 22-8 not later than the 180th day after the date of the accident that is 22-9 the basis of the claim. The executive director may accept a claim 22-10 after the date specified in this subsection only for good cause. 22-11 (b) The notice of claim must state that the claimant meets 22-12 the requirements of this subchapter for payment of the claim and 22-13 must include: 22-14 (1) the amount of damages claimed for lost wages, 22-15 certified by the claimant's employer; 22-16 (2) the amount of damages claimed for medical 22-17 expenses, together with all reports of medical treatment and 22-18 consultation for injuries sustained in the accident; 22-19 (3) all available police or other accident reports; 22-20 and 22-21 (4) any other information required by the executive 22-22 director. 22-23 (c) The board of trustees may adopt rules governing 22-24 procedures for filing a claim with the program under this 22-25 subchapter. The program is not liable for payment of a claim 22-26 unless the claimant complies with the rules adopted under this 22-27 subsection. 23-1 Art. 26.068. SUIT ON CLAIMS. (a) Except as provided by 23-2 Subsection (c) of this article, the program may pay a claim under 23-3 this subchapter only if a suit brought against the unknown, 23-4 missing, or uninsured owner or operator establishes: 23-5 (1) that the owner or operator is liable for the 23-6 claim; and 23-7 (2) the amount for which the owner or operator is 23-8 liable. 23-9 (b) The program may intervene in any action brought under 23-10 Subsection (a) and may raise any defense that could have been 23-11 raised by the unknown, missing, or uninsured owner or operator. 23-12 (c) The program may settle a claim for payment under this 23-13 subchapter. The settlement may be made without the approval of the 23-14 court. The board of trustees shall adopt rules governing the 23-15 procedure for settling claims under this subsection. 23-16 Art. 26.069. SUBROGATION. (a) To the extent of any amount 23-17 paid under this subchapter, the program is subrogated to the rights 23-18 of the claimant against the unknown, missing, or uninsured owner or 23-19 operator. 23-20 (b) The program may bring suit to enforce its rights under 23-21 this section against an owner or operator if the owner or operator 23-22 is uninsured or if the identity or location of an unknown or 23-23 missing owner or operator is discovered. 23-24 (c) Notwithstanding the limitation imposed by Section 23-25 16.003, Civil Practice and Remedies Code, the program must bring 23-26 suit against an unknown or missing owner or operator not later than 23-27 the 180th day after the date the identity or location of the owner 24-1 or operator is discovered by the program. 24-2 (d) In any suit brought by the program against an owner or 24-3 operator to enforce its subrogation rights under this section, the 24-4 program is entitled to recover all costs incurred by the program in 24-5 bringing the action or otherwise collecting the amount owed to the 24-6 program, including attorney's fees. 24-7 Art. 26.070. MAXIMUM PAYMENT. The maximum amount the 24-8 program may pay for a claim filed under this subchapter is: 24-9 (1) $20,000, excluding interest and court costs, for 24-10 an injury to or death of one individual in any one accident; 24-11 (2) $40,000, excluding interest and court costs, for 24-12 an injury to or death of two or more individuals in any one 24-13 accident; and 24-14 (3) $10,000, excluding interest and court costs, for 24-15 damages to property in any one accident. 24-16 Art. 26.071. PROPERTY DAMAGE MINIMUM. The fund may not pay 24-17 a claim for property damage under this subchapter unless the amount 24-18 of the claim exceeds $100. 24-19 Art. 26.072. PAYMENT OF JUDGMENT; REDUCTION IN AMOUNT PAID 24-20 TO CLAIMANT. (a) Unless the program settles the claim in 24-21 accordance with Article 26.068(c) of this code and subject to 24-22 Article 26.070 of this code and Subsection (b) of this article, the 24-23 program shall pay the claimant the amount for which the owner or 24-24 operator is found liable in accordance with Article 26.068(a) of 24-25 this code. 24-26 (b) The program shall reduce the amount to be paid to a 24-27 claimant under Subsection (a) of this article by: 25-1 (1) $100 for any amount representing damages to 25-2 property; 25-3 (2) any amount that the claimant has received or is 25-4 likely to receive from any source toward payment of the judgment or 25-5 settlement of a claim against the unknown, missing, or uninsured 25-6 owner or operator; 25-7 (3) any amount that the claimant has received or is 25-8 likely to receive toward payment of a judgment or settlement of a 25-9 claim against a person other than the unknown, missing, or 25-10 uninsured owner or operator that arises out of the same accident; 25-11 (4) any amount the claimant has received or is likely 25-12 to receive as a result of the accident on which the claim is based 25-13 under an insurance policy providing coverage for damage to or 25-14 destruction of property; and 25-15 (5) any amount the claimant paid to or on behalf of 25-16 the claimant or that is likely to be paid to or on behalf of the 25-17 claimant as a result of the accident on which the claim is based 25-18 under a workers' compensation insurance policy. 25-19 SUBCHAPTER F. TEXAS MOTOR VEHICLE INSURANCE FUND 25-20 Art. 26.081. TEXAS MOTOR VEHICLE INSURANCE FUND. (a) The 25-21 Texas motor vehicle insurance fund is a special fund outside the 25-22 state treasury. The fund is composed of premiums and other money 25-23 received by the program under this chapter. Interest that accrues 25-24 on money in the fund shall be credited to the fund. 25-25 (b) The operating expenses of the program shall be paid from 25-26 the fund. 25-27 (c) The legislature may not provide general revenue 26-1 appropriations to the fund and an obligation of the fund is not an 26-2 obligation of the state or a pledge of the credit of the state. 26-3 Art. 26.082. SEPARATE RECORDS OF INCOME AND EXPENSES 26-4 RELATING TO UNINSURED AND COMMERCIAL CLAIMS. The program shall 26-5 keep separate records of income and expenses directly attributable 26-6 to processing and paying: 26-7 (1) claims under Subchapter E; and 26-8 (2) commercial motor vehicle insurance claims. 26-9 Art. 26.083. USE OF FUND; MONEY FROM PREMIUMS. Money in the 26-10 fund may be used for the purposes of the program. Money in the 26-11 fund attributable to premiums and interest accruing on that money 26-12 may only be used for the payment of claims arising under policies 26-13 issued by the fund and for the administrative expenses of the fund. 26-14 Art. 26.084. RESERVES. (a) The executive director shall 26-15 establish and maintain reasonable and adequate reserves for the 26-16 payment of claims against the fund. In determining the amount of 26-17 reserves, the executive director shall use the same criteria a 26-18 motor vehicle insurer uses to determine the amount of its required 26-19 reserves. 26-20 (b) At least annually, the board of trustees shall review 26-21 the reasonableness and adequacy of the reserves. 26-22 Art. 26.085. FINANCIAL MANAGEMENT COMMITTEE. (a) The 26-23 financial management committee of the program is composed of: 26-24 (1) the executive director; 26-25 (2) one person selected by the board of trustees from 26-26 the members of the board of trustees appointed by the governor; and 26-27 (3) one person selected by the board of trustees from 27-1 the members of the board of trustees appointed by the board of 27-2 directors. 27-3 (b) The financial management committee shall manage and 27-4 invest the money in the fund in accordance with Article 26.086 of 27-5 this code. 27-6 Art. 26.086. INVESTMENT OF FUND. (a) If the executive 27-7 director determines that there is money in the fund that is not 27-8 required for immediate use, the financial management committee may 27-9 invest the money in investments legal for casualty insurance 27-10 companies in this state. 27-11 (b) If the executive director determines that the use of any 27-12 part of the money invested under Subsection (a) of this article is 27-13 necessary or expedient, the financial management committee shall 27-14 liquidate the investment, as necessary. 27-15 SUBCHAPTER G. INDUSTRY MOTOR VEHICLE INSURANCE ASSOCIATION 27-16 Art. 26.091. MEMBERSHIP. (a) The Industry Motor Vehicle 27-17 Insurance Association is created. The association is composed of 27-18 all motor vehicle insurers. The program is not a member of the 27-19 association. 27-20 (b) An insurer who is not a member of the association may 27-21 not write motor vehicle insurance in this state. 27-22 Art. 26.092. BOARD OF DIRECTORS. (a) The board of 27-23 directors of the association shall administer the association. 27-24 (b) The board of directors is composed of nine individuals 27-25 elected annually by the members of the association and must 27-26 include: 27-27 (1) two individuals nominated by the National 28-1 Association of Independent Insurers or its successor organization; 28-2 (2) two individuals nominated by the American 28-3 Insurance Association or its successor organization; 28-4 (3) two individuals nominated by the American Mutual 28-5 Insurance Alliance or its successor organization; 28-6 (4) one individual associated with a member insurer 28-7 that is chartered in Texas and that is not affiliated with an 28-8 organization listed in Subdivisions (1), (2), and (3) of this 28-9 subsection; and 28-10 (5) two individuals who are not associated with a 28-11 member insurer that is affiliated with an organization listed in 28-12 Subdivisions (1), (2), and (3) of this subsection and who are not 28-13 associated with a member insurer who is otherwise represented on 28-14 the board. 28-15 (c) If an organization mentioned in Subdivisions (1), (2), 28-16 and (3) of Subsection (b) does not submit nominations before the 28-17 10th day before the date of an election, the requirement that two 28-18 members of the board of directors be nominated by that organization 28-19 does not apply to that election. 28-20 Art. 26.093. INSUFFICIENCY ASSESSMENT RESERVE ACCOUNT. (a) 28-21 The association shall establish the insufficiency assessment 28-22 reserve account as an interest-bearing account in a financial 28-23 institution in this state. 28-24 (b) The association shall deposit to the credit of the 28-25 account: 28-26 (1) insufficiency assessments collected by the 28-27 association under Subchapter H of this chapter; and 29-1 (2) any surplus recoupment paid to the association 29-2 under Subchapter I of this chapter. 29-3 (c) Money in the insufficiency assessment reserve account is 29-4 held in trust for the use of the program and shall be paid to the 29-5 program in accordance with this chapter. 29-6 (d) The association may authorize the financial institution 29-7 to invest all or part of the insufficiency assessment reserve 29-8 account in investments legal for casualty companies in this state, 29-9 and any income from the investments shall be deposited to the 29-10 credit of the account. 29-11 SUBCHAPTER H. INSUFFICIENCY ASSESSMENT 29-12 Art. 26.101. CERTIFICATION OF OPERATING LOSS. (a) In this 29-13 article, "statutory basis accounting" means an accounting based on 29-14 accounting practices prescribed or permitted by the commissioner. 29-15 (b) Not later than March 15 of each year the board of 29-16 trustees shall certify to the board of directors the actual 29-17 operating loss, if any, sustained by the fund for the preceding 29-18 calendar year. The certification of operating loss must be 29-19 reported as a statutory basis accounting and must separately 29-20 identify: 29-21 (1) commercial motor vehicle loss; 29-22 (2) private passenger motor vehicle loss; and 29-23 (3) the aggregate of both commercial and private 29-24 passenger motor vehicle loss. 29-25 Art. 26.102. COMPUTATION OF ASSESSMENT ALLOCATION 29-26 PERCENTAGE. (a) The board of directors shall compute separately 29-27 the assessment allocation percentage for private passenger motor 30-1 vehicle insurance loss and for commercial motor vehicle insurance 30-2 loss for each calendar year. 30-3 (b) The board of directors shall compute the assessment 30-4 allocation percentage for motor vehicle insurance loss for a 30-5 calendar year by dividing the applicable certified operating loss 30-6 by the total of: 30-7 (1) the aggregate net direct written premiums of all 30-8 member companies during the preceding year, as determined by the 30-9 commissioner; and 30-10 (2) the fund's total net direct written premium for 30-11 the same period. 30-12 (c) The board of directors shall adjust the assessment 30-13 allocation percentage for commercial motor vehicle insurance and 30-14 for private passenger motor vehicle insurance to reflect any money 30-15 paid to the insufficiency assessment reserve account because of a 30-16 recoupment surplus or shortfall experienced by a member insurer for 30-17 any preceding year in which an assessment was made. 30-18 (d) The assessment allocation percentage for private 30-19 passenger motor vehicle insurance may not exceed 3 percent. 30-20 Art. 26.103. ASSESSMENT. (a) Not later than April 30 of 30-21 each year in which an assessment is to be made, the board of 30-22 directors shall notify each member insurer of the assessment 30-23 allocation percentage for commercial motor vehicle insurance and 30-24 for private passenger motor vehicle insurance for that year. 30-25 (b) Not later than May 31 of each year in which an 30-26 assessment is to be made, each member insurer shall pay the 30-27 association an amount equal to the sum of: 31-1 (1) the assessment allocation percentage for 31-2 commercial motor vehicle insurance multiplied by the member's net 31-3 direct written premium for commercial motor vehicle insurance for 31-4 the preceding calendar year; and 31-5 (2) the assessment allocation percentage for private 31-6 passenger motor vehicle insurance multiplied by the member's net 31-7 direct written premium for private passenger motor vehicle 31-8 insurance for the preceding calendar year. 31-9 Art. 26.104. ASSESSMENT NOT DEDUCTIBLE. A member insurer 31-10 may not deduct a payment made by the insurer under Article 26.103 31-11 of this code from any other assessment or tax required by law. 31-12 Art. 26.105. PAYMENT TO FUND. Not later than July 1 of each 31-13 year in which an assessment is made, the board of directors shall 31-14 pay the amount of the certified operating loss reported under 31-15 Article 26.101 of this code to the fund. 31-16 SUBCHAPTER I. RECOUPMENT SURCHARGE 31-17 Art. 26.111. AUTHORIZATION FOR ASSESSMENT SURCHARGE; 31-18 ELECTION. (a) The commissioner shall review the assessment 31-19 allocation percentages computed by the association and, unless the 31-20 computation is determined to be inaccurate, shall authorize each 31-21 member insurer to impose a recoupment surcharge on commercial or 31-22 private passenger motor vehicle liability insurance policyholders, 31-23 as appropriate. 31-24 (b) Not later than June 30 of the year in which the 31-25 assessment is made, each member insurer shall notify the 31-26 commissioner and the association as to whether the insurer will 31-27 collect the recoupment surcharge. 32-1 (c) An insurer that notifies the commissioner that it will 32-2 not collect the recoupment surcharge waives its option to recover 32-3 any part of the assessment made against the insurer. 32-4 Art. 26.112. COMPUTATION OF RECOUPMENT SURCHARGE; 32-5 APPLICABILITY TO POLICY. (a) The recoupment surcharge applicable 32-6 to a policy is equal to the appropriate allocation assessment 32-7 percentage multiplied by the premium for issuance or renewal of the 32-8 policy. 32-9 (b) The recoupment surcharge is applicable to each motor 32-10 vehicle liability insurance policy delivered, issued for delivery, 32-11 or renewed by the insurer during the one-year period following June 32-12 30 of the year in which the insufficiency assessment was made. 32-13 Art. 26.113. COLLECTION OF RECOUPMENT SURCHARGE. (a) Each 32-14 member insurer that elects to collect a recoupment surcharge shall 32-15 clearly identify, in a form approved by the commissioner, the 32-16 recoupment surcharge on the premium billing of each policyholder. 32-17 (b) A member insurer may cancel the policy of a policyholder 32-18 who fails to pay the recoupment surcharge as if the policyholder 32-19 failed to pay the policy premium. 32-20 (c) A recoupment surcharge paid by a policyholder may not be 32-21 adjusted or refunded. 32-22 (d) Each member insurer that collects a recoupment surcharge 32-23 under this subchapter shall report quarterly to the association 32-24 concerning the amounts billed and collected. The report must be in 32-25 the form required by the board of directors and must be certified 32-26 as true and accurate in the manner required by the board of 32-27 directors. 33-1 Art. 26.114. SHORTFALL OR SURPLUS. (a) If the total of all 33-2 recoupment surcharges collected by a member insurer in a recoupment 33-3 year is less than the amount of the assessment paid by the insurer, 33-4 the commissioner shall adjust the amount of the recoupment 33-5 surcharge for the next assessment made against the insurer. 33-6 (b) If the total of all recoupment surcharges collected by a 33-7 member insurer in a recoupment year is greater than the amount of 33-8 the assessment paid by the insurer, the insurer shall pay the 33-9 amount of the surplus to the association for deposit to the credit 33-10 of the insufficiency assessment reserve account. 33-11 Art. 26.115. PROGRAM SHALL COLLECT SURCHARGE. The program 33-12 shall collect the amount of the recoupment surcharge from its 33-13 policyholders in the same manner as a member insurer, except that 33-14 amounts collected by the program shall be deposited to the credit 33-15 of the fund. 33-16 Art. 26.116. RECOUPMENT SURCHARGE NOT PREMIUM. A recoupment 33-17 surcharge is not a premium for purposes of premium tax or for 33-18 purposes of computing an agent's commission. 33-19 SUBCHAPTER J. REVENUE BONDS 33-20 Art. 26.131. DEFINITIONS. In this subchapter: 33-21 (1) "Authority" means the Texas Public Finance 33-22 Authority. 33-23 (2) "Bond resolution" means the resolution or order 33-24 authorizing the bonds to be issued under this article. 33-25 Art. 26.132. BONDS AUTHORIZED. On behalf of the program, 33-26 the Texas Public Finance Authority shall issue revenue bonds to: 33-27 (1) establish the initial surplus of the fund; 34-1 (2) establish and maintain reserves; 34-2 (3) pay initial operating costs; 34-3 (4) pay costs related to issuance of the bonds; and 34-4 (5) pay other costs related to the bonds as may be 34-5 determined by the board of directors of the authority. 34-6 Art. 26.133. APPLICABILITY OF OTHER STATUTES. The following 34-7 Acts apply to bonds issued under this article to the extent 34-8 consistent with this article: 34-9 (1) the Texas Public Finance Authority Act (Article 34-10 601d, Vernon's Texas Civil Statutes); 34-11 (2) Chapter 656, Acts of the 68th Legislature, Regular 34-12 Session, 1983 (Article 717q, Vernon's Texas Civil Statutes); 34-13 (3) Chapter 3, Acts of the 61st Legislature, Regular 34-14 Session, 1969 (Article 717k-2, Vernon's Texas Civil Statutes); 34-15 (4) the Bond Procedures Act of 1981 (Article 717k-6, 34-16 Vernon's Texas Civil Statutes); 34-17 (5) Chapter 1078, Acts of the 70th Legislature, 34-18 Regular Session, 1987 (Article 717k-7, Vernon's Texas Civil 34-19 Statutes); 34-20 (6) Article 3, Chapter 53, Acts of the 70th 34-21 Legislature, 2nd Called Session, 1987 (Article 717k-8, Vernon's 34-22 Texas Civil Statutes); 34-23 (7) Article 717k-9, Revised Statutes; and 34-24 (8) Chapter 400, Acts of the 66th Legislature, 1979 34-25 (Article 717m-1, Vernon's Texas Civil Statutes). 34-26 Art. 26.134. LIMITS. The authority may issue, on behalf of 34-27 the fund, bonds in a total amount not to exceed $200 million. 35-1 Art. 26.135. CONDITIONS. (a) Bonds may be issued at public 35-2 or private sale. 35-3 (b) Bonds may mature not more than 20 years after the date 35-4 issued. 35-5 (c) Bonds must be issued in the name of the program. 35-6 Art. 26.136. ADDITIONAL COVENANTS. In a bond resolution, 35-7 the board of directors of the authority may make additional 35-8 covenants with respect to the bonds and the designated income and 35-9 receipts of the fund pledged to their payment and may provide for 35-10 the flow of funds and the establishment, maintenance, and 35-11 investment of funds and accounts with respect to the bonds. 35-12 Art. 26.137. SPECIAL ACCOUNTS. (a) A bond resolution may 35-13 establish special accounts in the fund including an interest and 35-14 sinking fund account, reserve account, and other accounts. 35-15 (b) The executive director shall administer the accounts in 35-16 accordance with Subchapter F of this chapter. 35-17 Art. 26.138. SECURITY. (a) Bonds are payable only from the 35-18 maintenance tax surcharge established in Article 26.139 of this 35-19 code or other sources the program is authorized to levy, charge, 35-20 and collect in connection with paying any portion of the bonds. 35-21 (b) Bonds are obligations solely of the program. Bonds do 35-22 not create a pledging, giving, or lending of the faith, credit, or 35-23 taxing authority of this state. 35-24 (c) Each bond must include a statement that the state is not 35-25 obligated to pay any amount on the bond and that the faith, credit, 35-26 and taxing authority of this state are not pledged, given, or lent 35-27 to those payments. 36-1 (d) Each bond issued under this article must state on its 36-2 face that the bond is payable solely from the revenues pledged for 36-3 that purpose and that the bond does not and may not constitute a 36-4 legal or moral obligation of the state. 36-5 Art. 26.139. MAINTENANCE TAX SURCHARGE. (a) A maintenance 36-6 tax surcharge is assessed against: 36-7 (1) each motor vehicle insurer; and 36-8 (2) the program. 36-9 (b) The maintenance tax surcharge shall be set in an amount 36-10 sufficient to pay all debt service on the bonds. The maintenance 36-11 tax surcharge is set by the board in the same time and shall be 36-12 collected on behalf of the fund in the same manner as provided 36-13 under Article 4.10 of this code. 36-14 (c) The program and each insurance company may pass through 36-15 the maintenance tax surcharge to each of its policyholders. 36-16 (d) As a condition of engaging in the business of insurance 36-17 in this state, a motor vehicle insurer in this state agrees that if 36-18 the company leaves the motor vehicle insurance market in this state 36-19 it remains obligated to pay, until the bonds are retired, the 36-20 company's share of the maintenance tax surcharge assessed under 36-21 this article in an amount proportionate to that company's share of 36-22 the motor vehicle insurance market in this state as of the last 36-23 complete reporting period before the date on which the company 36-24 ceases to engage in the insurance business in this state. The 36-25 proportion assessed against the company shall be based on the 36-26 insurer's motor vehicle insurance gross premiums for the company's 36-27 last reporting period. The insurer is not required to pay the 37-1 proportionate amount in any year in which the surcharge assessed 37-2 against motor vehicle insurers continuing to write motor vehicle 37-3 insurance in this state is sufficient to service the bond 37-4 obligation. The abolition of the program under this chapter does 37-5 not affect the liability of an insurer for a maintenance tax 37-6 surcharge assessed under this section. 37-7 Art. 26.140. TAX EXEMPT. The bonds issued under this 37-8 subchapter, and any interest from the bonds, and all assets pledged 37-9 to secure the payment of the bonds are free from taxation by the 37-10 state or a political subdivision of this state. 37-11 Art. 26.141. AUTHORIZED INVESTMENTS. The bonds issued under 37-12 this article constitute authorized investments under Article 2.10 37-13 and Subpart A, Part I, Article 3.39, of this code. 37-14 Art. 26.142. STATE PLEDGE. The state pledges to and agrees 37-15 with the owners of any bonds issued in accordance with this 37-16 subchapter that the state will not limit or alter the rights vested 37-17 in the program to fulfill the terms of any agreements made with the 37-18 owners of the bonds or in any way impair the rights and remedies of 37-19 those owners until the bonds, any premium or interest, and all 37-20 costs and expenses in connection with any action or proceeding by 37-21 or on behalf of those owners are fully met and discharged. The 37-22 program may include this pledge and agreement of the state in any 37-23 agreement with the owners of the bonds. 37-24 Art. 26.143. ENFORCEMENT BY MANDAMUS. A writ of mandamus 37-25 and all other legal and equitable remedies are available to any 37-26 party at interest to require the fund and any other party to carry 37-27 out agreements and to perform functions and duties under this 38-1 subchapter, the Texas Constitution, or a bond resolution. 38-2 SECTION 2. Section 35, Texas Motor Vehicle 38-3 Safety-Responsibility Act (Article 6701h, Vernon's Texas Civil 38-4 Statutes), is repealed. 38-5 SECTION 3. (a) Except as provided by Subsection (b) of this 38-6 section, this Act takes effect September 1, 1993. 38-7 (b) Section 2 of this Act takes effect January 1, 1995. 38-8 SECTION 4. (a) The Texas Motor Vehicle Insurance Program 38-9 established under Chapter 26, Insurance Code, as added by this Act, 38-10 may not issue motor vehicle insurance liability coverage before 38-11 January 1, 1995. 38-12 (b) A motor vehicle insurer may not provide motor vehicle 38-13 liability insurance through the assigned risk plan established 38-14 under Section 35, Texas Motor Vehicle Safety-Responsibility Act 38-15 (Article 6701h, Vernon's Texas Civil Statutes), that provides 38-16 coverage that is effective after December 31, 1994. 38-17 (c) The Texas Motor Vehicle Insurance Program established 38-18 under Chapter 26, Insurance Code, as added by this Act, may not pay 38-19 a claim under Subchapter E of that chapter if the claim results 38-20 from an accident that occurred before January 1, 1995. 38-21 SECTION 5. (a) In making initial appointments to the board 38-22 of trustees of the Texas Motor Vehicle Insurance Program 38-23 established under Chapter 26, Insurance Code, as added by this Act: 38-24 (1) the governor shall appoint: 38-25 (A) two members for terms expiring February 1, 38-26 1995; 38-27 (B) two members for terms expiring February 1, 39-1 1997; and 39-2 (C) one member for a term expiring February 1, 39-3 1999; and 39-4 (2) the board of directors of the Industry Motor 39-5 Vehicle Insurance Association established by Chapter 26, Insurance 39-6 Code, as added by this Act, shall appoint: 39-7 (A) two members for terms expiring February 1, 39-8 1995; 39-9 (B) two members for terms expiring February 1, 39-10 1997; and 39-11 (C) one member for a term expiring February 1, 39-12 1999. 39-13 (b) The commissioner of insurance shall adopt rules as 39-14 necessary to implement the initial election of members of the board 39-15 of directors of the Industry Motor Vehicle Insurance Association 39-16 established by Chapter 26, Insurance Code, as added by this Act. 39-17 The initial election shall take place not later than February 1, 39-18 1994. 39-19 SECTION 6. The importance of this legislation and the 39-20 crowded condition of the calendars in both houses create an 39-21 emergency and an imperative public necessity that the 39-22 constitutional rule requiring bills to be read on three several 39-23 days in each house be suspended, and this rule is hereby suspended.