By: Cuellar, Renato H.B. No. 648
73R1282 DLF-F
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.