73R10104 DLF/PB-F
By Counts H.B. No. 1461
1-1 Substitute the following for H.B. No. 1461:
1-2 By Rudd C.S.H.B. No. 1461
1-3 AN ACT
1-4 relating to insurance regulation and to the continuation, powers,
1-5 and duties of the Texas Department of Insurance and the office of
1-6 public insurance counsel; providing administrative penalties.
1-7 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-8 ARTICLE 1. ORGANIZATION OF TEXAS DEPARTMENT OF INSURANCE;
1-9 FUNCTIONS OF COMMISSIONER AND STATE BOARD OF INSURANCE
1-10 SECTION 1.01. Article 1.02, Insurance Code, is amended to
1-11 read as follows:
1-12 Art. 1.02. Operation of Department<; Board>. (a) A
1-13 provision of this code or another insurance law, including an
1-14 enactment or reenactment of a provision of this code or another
1-15 insurance law by the 73rd Legislature, Regular Session, 1993, that
1-16 references the State Board of Insurance or the Commissioner of
1-17 Insurance is not intended to conflict with this article. A
1-18 reference in this code or another insurance law to the State Board
1-19 of Insurance or the Commissioner of Insurance means the Texas
1-20 Insurance Rate Board, the Commissioner of Insurance, or the Texas
1-21 Department of Insurance, as consistent with the respective powers
1-22 and duties of those persons or entities under this article. <The
1-23 State Board of Insurance is composed of three members, all of whom
1-24 shall be citizens of Texas. They shall be appointed by the
2-1 Governor, by and with the advice and consent of the Senate of
2-2 Texas. The term of office of each member shall be as provided in
2-3 this Code. Each member of the Board shall be a person with at
2-4 least ten (10) years of successful experience in business,
2-5 professional or governmental activities, or a total of at least ten
2-6 (10) years in any combination of two or more of such activities.
2-7 Each member shall be available at all reasonable times for the
2-8 discharge of the duties and functions delegated to the members of
2-9 the Board by law, but the members shall act as a unit, and in no
2-10 event shall the individual members divide or confine their
2-11 activities to special fields of insurance regulation or attempt to
2-12 administer the functions hereinafter assigned to the Commissioner.>
2-13 (b) The powers, functions, authority, prerogatives, duties,
2-14 obligations, and responsibilities vested in the department shall be
2-15 exercised, performed, carried out, and administered by the
2-16 Commissioner as the chief executive and administrative officer of
2-17 the department in accordance with the pertinent laws of this state
2-18 and the rules and regulations for uniform application adopted by
2-19 the Commissioner and the Rate Board <and subject to the general
2-20 supervision and direction of the Board>. The Rate <duties of the
2-21 State> Board <of Insurance> shall promulgate rates in accordance
2-22 with this code or other insurance laws of this state and may adopt
2-23 rules and procedures for ratemaking. As relates to title
2-24 insurance, the Rate Board shall promulgate rates, rate rules, and
2-25 other rules and forms for which rates may be promulgated, in
2-26 accordance with Chapter 9 of this code and may adopt rules and
2-27 procedures for ratemaking. The Rate Board may not perform any
3-1 function that is not related to the promulgation of rates <be
3-2 primarily in a supervisory capacity, and the carrying out and
3-3 administering the details of the Insurance Code, other insurance
3-4 laws of this state, and other laws providing jurisdiction in or
3-5 applicable to the department or the Commissioner shall be primarily
3-6 the duty and responsibility of the Commissioner acting under the
3-7 general supervision and direction of the Board>.
3-8 (c) <On February 10th of each odd-numbered year, the
3-9 Governor shall appoint from among the membership of the Board a
3-10 Chairman who shall be known and designated as the Chairman of the
3-11 State Board of Insurance.>
3-12 <(d)> The Texas Department of Insurance is subject to
3-13 Chapter 325, Government Code (Texas Sunset Act). Unless continued
3-14 in existence as provided by that chapter, the department is
3-15 abolished September 1, 2005 <1993>.
3-16 <(e) Appointments to the board shall be made without regard
3-17 to the race, creed, sex, religion, or national origin of the
3-18 appointees. In making appointments under this section, the
3-19 governor shall attempt to appoint members of different minority
3-20 groups including females, African-Americans, Hispanic-Americans,
3-21 Native Americans, and Asian-Americans.>
3-22 <(f) In addition to grounds provided by other applicable law
3-23 providing for removal from office, it is a ground for removal from
3-24 the board that a member:>
3-25 <(1) does not have at the time of appointment the
3-26 qualifications required by this article for appointment to the
3-27 board;>
4-1 <(2) does not maintain during the service on the board
4-2 the qualifications required by this article for appointment to the
4-3 board; or>
4-4 <(3) violates a prohibition established by Article
4-5 1.06A of this code.>
4-6 <(g) The validity of an action of the board is not affected
4-7 by the fact that it was taken when a ground for removal of a member
4-8 of the board existed.>
4-9 (d) <(h)> The Commissioner or the Commissioner's designee
4-10 <board> shall prepare and maintain a written policy statement
4-11 <plan> to ensure <assure> implementation of a program of equal
4-12 employment opportunity under which <whereby> all personnel
4-13 transactions are made without regard to race, color, disability,
4-14 sex, religion, age, or national origin. The policy statement
4-15 <plan> must include:
4-16 (1) personnel policies, including policies relating to
4-17 <a comprehensive analysis of all employees by race, sex, ethnic
4-18 origin, class of position, and salary or wage;>
4-19 <(2) plans for> recruitment, evaluation, selection,
4-20 appointment, training, and promotion of<, and other> personnel that
4-21 are in compliance with the Commission on Human Rights Act (Article
4-22 5221k, Vernon's Texas Civil Statutes) <policies>;
4-23 (2) a comprehensive analysis of the department work
4-24 force that meets federal and state guidelines;
4-25 (3) procedures by which a determination can be made of
4-26 significant underuse in the department work force of all persons
4-27 for whom federal or state guidelines encourage a more equitable
5-1 balance; and
5-2 (4) reasonable methods to appropriately address those
5-3 areas of significant underuse
5-4 <(3) steps reasonably designed to overcome any
5-5 identified underutilization of minorities and women in the
5-6 department's work force; and>
5-7 <(4) objectives and goals, timetables for the
5-8 achievement of those objectives and goals, and assignments of
5-9 responsibility for their achievement>.
5-10 (e) A policy statement prepared under Subsection (d) of this
5-11 article must cover an annual period, be updated annually, be
5-12 reviewed by the Commission on Human Rights for compliance with
5-13 Subsection (d)(1) of this article, and be filed with the governor's
5-14 office.
5-15 (f) The governor's office shall deliver a biennial report to
5-16 the legislature based on the information received under Subsection
5-17 (e) of this article. The report may be made separately or as a
5-18 part of other biennial reports made to the legislature.
5-19 (g) The Commissioner shall develop and implement policies
5-20 that clearly define the respective responsibilities of the
5-21 Commissioner, the Rate Board, and the staff of the department.
5-22 (h) The Commissioner shall provide to Rate Board members and
5-23 department employees, as often as necessary, information regarding
5-24 their qualification for office or employment under this code and
5-25 their responsibilities under applicable laws relating to standards
5-26 of conduct for state officers or employees.
5-27 <(i) The plan required by Section (h) of this article shall
6-1 be filed with the governor's office within 60 days after the
6-2 effective date of that section, cover an annual period, and be
6-3 updated at least annually. Progress reports shall be submitted to
6-4 the governor's office within 30 days before November 1 and April 1
6-5 of each year and shall include the steps the department has taken
6-6 within the reporting period to comply with those requirements.>
6-7 SECTION 1.02. Article 1.01A, Insurance Code, is amended to
6-8 read as follows:
6-9 Art. 1.01A. Creation and Structure of the Texas Department
6-10 of Insurance. (a) In this code and other insurance laws:
6-11 (1) <"Board" means the three-member State Board of
6-12 Insurance.>
6-13 <(2)> "Department" means the Texas Department of
6-14 Insurance.
6-15 (2) <(3)> "Commissioner" means the Commissioner of
6-16 Insurance appointed under Article 1.09 of this code.
6-17 (3) "Rate board" means the Texas Insurance Rate Board.
6-18 (b) The Texas Department of Insurance is created to regulate
6-19 the business of insurance in this state. The department is
6-20 composed of the rate board, the Commissioner, and other officers
6-21 and employees required to efficiently implement the purpose of this
6-22 code, other insurance laws of this state, and other laws providing
6-23 jurisdiction in or applicable to the department, rate board, or
6-24 Commissioner.
6-25 (c) Except as otherwise provided by law, all references in
6-26 this code and other statutes of this state to the board, the Board
6-27 of Insurance Commissioners, the State Board of Insurance, or
7-1 individual commissioners mean the department, the rate board, or
7-2 the Commissioner as consistent with the respective duties of those
7-3 persons or entities under this code and other laws relating to the
7-4 business of insurance in this state.
7-5 SECTION 1.03. Chapter 1, Insurance Code, is amended by
7-6 amending Articles 1.03 and 1.04 and adding Articles 1.03A, 1.04A,
7-7 1.04B, and 1.04C to read as follows:
7-8 Art. 1.03. TEXAS INSURANCE RATE BOARD; APPOINTMENT; TERMS OF
7-9 OFFICE. (a) The Texas Insurance Rate Board is composed of six
7-10 members. Each member of the Rate Board must:
7-11 (1) be a citizen of this state; and
7-12 (2) have at least 10 years of successful experience in
7-13 business, professional, or governmental activities.
7-14 (b) Each member of the Rate Board shall be available at all
7-15 reasonable times for the discharge of the duties and functions
7-16 delegated to the members of the Rate Board by law, but the members
7-17 shall act as a unit, and individual members may not divide or
7-18 confine their activities to a special field of insurance rate
7-19 regulation or attempt to administer the functions assigned to the
7-20 Commissioner.
7-21 (c) In each odd-numbered year, the Governor shall appoint,
7-22 by and with the advice and consent of the Senate of Texas, two
7-23 members <a member> to the Texas Insurance Rate Board <State Board
7-24 of Insurance> for terms <a term> of six years which <term> shall
7-25 begin on the first day of February of each such year <years>. Each
7-26 member shall serve until the member's successor has qualified<;
7-27 provided that the Governor may remove from office any member of the
8-1 Board who fails for any reason to attend a meeting of the Board for
8-2 three consecutive months, and the Governor shall remove from office
8-3 any member of the Board who for any reason fails to attend a
8-4 meeting of the Board for six months. Such removal shall be by an
8-5 instrument in writing filed with the Secretary of State and the
8-6 State Board of Insurance, and the office of the member so removed
8-7 shall be deemed vacant the same as if the member had died or
8-8 resigned>.
8-9 (d) Effective February 10 of each odd-numbered year, the
8-10 governor shall appoint a chairman of the Rate Board from among the
8-11 members of the Rate Board.
8-12 (e) <(b)> Vacancies occurring in any such office on the Rate
8-13 Board during any term shall, with the advice and consent of the
8-14 Senate, be filled by appointment by the Governor, which appointment
8-15 shall extend only to the end of the unexpired term.
8-16 (f) A person is not eligible for appointment to the Rate
8-17 Board if the person, the person's spouse, or any person that
8-18 resides in the same household as the person:
8-19 (1) is registered, certified, or licensed by the
8-20 department;
8-21 (2) is employed by or participates in the management
8-22 of a business entity or other organization regulated by the
8-23 department or receiving funds from the department;
8-24 (3) owns or controls, directly or indirectly, more
8-25 than a 10 percent interest in a business entity or other
8-26 organization regulated by the department or receiving funds from
8-27 the department; or
9-1 (4) uses or receives a substantial amount of tangible
9-2 goods, services, or funds from the department, other than
9-3 compensation or reimbursement authorized by law for Rate Board
9-4 membership, attendance, or expenses.
9-5 (g) Appointments to the Rate Board shall be made without
9-6 regard to the race, color, disability, sex, religion, age, or
9-7 national origin of the appointees. In making appointments under
9-8 this section, the Governor shall attempt to appoint members of
9-9 different minority groups, including women, African Americans,
9-10 Hispanic Americans, Native Americans, and Asian Americans.
9-11 (h) It is a ground for removal from the Rate Board if a
9-12 member:
9-13 (1) does not have at the time of appointment the
9-14 qualifications required by Subsection (a) of this article;
9-15 (2) does not maintain during service on the Rate Board
9-16 the qualifications required by Subsection (a) of this article;
9-17 (3) violates a prohibition established by Article
9-18 1.06, 1.06A, or 1.06B of this code;
9-19 (4) cannot discharge the member's duties for a
9-20 substantial part of the term for which the member is appointed
9-21 because of illness or disability; or
9-22 (5) is absent from more than half of the regularly
9-23 scheduled Rate Board meetings that the member is eligible to attend
9-24 during a calendar year unless the absence is excused by majority
9-25 vote of the Rate Board.
9-26 (i) The validity of an action of the Rate Board is not
9-27 affected by the fact that it is taken when a ground for removal of
10-1 a Rate Board member exists.
10-2 (j) If the Commissioner has knowledge that a potential
10-3 ground for removal exists, the Commissioner shall notify the
10-4 chairman of the Rate Board of the ground. The chairman shall then
10-5 notify the Governor that a potential ground for removal exists.
10-6 Art. 1.03A. RULES FOR GENERAL APPLICATION. The Commissioner
10-7 may adopt <1.04. ><Duties and Organization of the State Board of
10-8 Insurance><. (a) The State Board of Insurance shall operate and
10-9 function as one body or a unit and a majority vote of the members
10-10 of the Board shall be necessary to transact any of its official
10-11 business. The Board shall maintain one official set of records of
10-12 its proceedings and actions.>
10-13 <(b) The State Board of Insurance shall determine policy for
10-14 the department, rules, rates, forms, and appeals as provided by
10-15 law, and shall assume other duties that are expressly assigned to
10-16 the Board by law, but otherwise the Board shall execute its duties
10-17 through the Commissioner as provided by law, in accordance with the
10-18 laws of this state and the rules and regulations for uniform
10-19 application as made by the Board.>
10-20 <(c) All> rules and regulations for the conduct and
10-21 execution of the duties and functions of the department, which
10-22 shall be rules for general and uniform application and shall be
10-23 <adopted and> published by the Commissioner <Board> on the basis of
10-24 a systematic organization of such rules by their subject matter and
10-25 content. <The Commissioner may make recommendations to the Board
10-26 regarding such rules and regulations, including amendments, changes
10-27 and additions.> Such published rules shall be kept current and
11-1 shall be available in a form convenient to all interested persons.
11-2 Art. 1.04. APPEAL OF DECISION OF RATE BOARD OR COMMISSIONER.
11-3 (a) <(d) Any person or organization, private or public, that is
11-4 affected by any ruling or action of the Commissioner shall have the
11-5 right to have such ruling or action reviewed by the State Board of
11-6 Insurance by making an application to the Board. Such application
11-7 shall state the identities of the parties, the ruling or action
11-8 complained of, the interests of the parties in such ruling, the
11-9 grounds of such objections, the action sought of the Board and the
11-10 reasons and grounds for such action by the Board. The original
11-11 shall be filed with the Chief Clerk of the Board together with a
11-12 certification that a true and correct copy of such application has
11-13 been filed with the Commissioner. Within thirty (30) days after
11-14 the application is filed, and after ten (10) days written notice to
11-15 all parties of record, the Board shall review the action complained
11-16 of in a public hearing and render its decision at the earliest
11-17 possible date thereafter. The Board shall make such other rules
11-18 and regulations with regard to such applications and their
11-19 consideration as it deems advisable, not inconsistent with this
11-20 Article. Said application shall have precedence over all other
11-21 business of a different nature pending before the Board.>
11-22 <In the public hearing, any and all evidence and matters
11-23 pertinent to the appeal may be submitted to the Board, whether
11-24 included in the application or not.>
11-25 <(f)> If any insurance company or other party at interest be
11-26 dissatisfied with any ruling, action, decision, regulation, order,
11-27 <rate,> rule, form, act, or administrative ruling adopted by the
12-1 Commissioner or a decision, rate, or rule adopted by the Rate
12-2 <State> Board <of Insurance>, such dissatisfied company or party at
12-3 interest after failing to get relief from the Commissioner or the
12-4 Rate <State> Board <of Insurance>, as applicable, may file a
12-5 petition setting forth the particular objection to such ruling,
12-6 action, decision, regulation, order, rate, rule, form, act, or
12-7 administrative ruling, or to either or all of them, in the District
12-8 Court of Travis County, Texas, and not elsewhere, against the
12-9 Commissioner or the Rate <State> Board, as applicable, <of
12-10 Insurance> as defendant. Judicial review of a ruling, action,
12-11 decision, regulation, order, rate, rule, form, act, or
12-12 administrative ruling of the Commissioner or the Rate Board is
12-13 subject to the substantial evidence rule and shall be conducted
12-14 under the Administrative Procedure and Texas Register Act (Article
12-15 6252-13a, Vernon's Texas Civil Statutes). The filing of a petition
12-16 for judicial review of a ruling, action, decision, regulation,
12-17 order, rate, rule, form, act, or administrative ruling of the
12-18 Commissioner or the Rate Board under this subsection does not
12-19 vacate a decision of the Commissioner or the Rate Board. After
12-20 notice and hearing, the court may vacate the decision of the
12-21 Commissioner or the Rate Board if the court finds it would serve
12-22 the interest of justice to do so. Any party to the action may
12-23 appeal to the Appellate Court having jurisdiction of the cause and
12-24 the appeal shall be at once returnable to the Appellate Court
12-25 having jurisdiction of the cause and the action so appealed shall
12-26 have precedence in the Appellate Court over all causes of a
12-27 different character therein pending.
13-1 (b) The Commissioner or the Rate Board is not required to
13-2 give any appeal bond in any cause arising under this article
13-3 <hereunder>.
13-4 Art. 1.04A. SALARIED EXAMINERS. <(g)> In making
13-5 examinations of any insurance organization as provided by law, the
13-6 department may use its own salaried examiners or may use the
13-7 services of persons or firms qualified to perform such examinations
13-8 or assist in the performance of such examinations. Such
13-9 examination shall cover the period of time that the department
13-10 requests. In the event the department does not specify a longer
13-11 period of time, such examination shall be from the time of the last
13-12 examination theretofore made by the department to December 31st of
13-13 the year preceding the examination then being made. All fees paid
13-14 to those persons or firms whose services are used shall be paid at
13-15 the usual and customary rates charged for the performance of those
13-16 services, subject to the right of the Commissioner <Board> to
13-17 disapprove for payment any fees that are excessive in relation to
13-18 the services actually performed. Such payment shall be made by the
13-19 insurance organization being examined and all such examination fees
13-20 so paid shall be allowed as a credit on the amount of premium or
13-21 other taxes to be paid by any such insurance organization for the
13-22 taxable year during which examination fees are paid just as
13-23 examination fees are credited when the department uses its own
13-24 salaried examiners.
13-25 Art. 1.04B. POLICY HOLDER COMPLAINTS. <(h)> The department
13-26 shall establish a program to facilitate resolution of policy holder
13-27 complaints.
14-1 Art. 1.04C. PUBLIC ACCESS. (a) The Commissioner shall
14-2 prepare and maintain a written plan that describes how a person who
14-3 does not speak English can be provided reasonable access to the
14-4 department's programs. The department shall also comply with
14-5 federal and state laws for program and facility accessibility.
14-6 (b) The Commissioner shall develop and implement policies
14-7 that provide the public with a reasonable opportunity to appear
14-8 before the Commissioner and to speak on any issue under the
14-9 jurisdiction of the Commissioner. The Rate Board shall develop and
14-10 implement policies that provide the public with a reasonable
14-11 opportunity to appear before the Rate Board and to speak on any
14-12 issue under the jurisdiction of the Rate Board.
14-13 SECTION 1.04. Chapter 1, Insurance Code, is amended by
14-14 amending Articles 1.06A and 1.06B, and adding Article 1.06AA to
14-15 read as follows:
14-16 Art. 1.06A. Conflict of Interest; Trade Associations.
14-17 (a) An <A member of the State Board of Insurance, the
14-18 commissioner, or an employee of the department may not be an>
14-19 officer, employee, or paid consultant of a trade association in the
14-20 field of insurance may not be commissioner, a member of the rate
14-21 board, or an employee of the department who is exempt from the
14-22 state's position classification plan or is compensated at or above
14-23 the amount prescribed by the General Appropriations Act for step 1,
14-24 salary group 17, of the position classification salary schedule
14-25 <industry>.
14-26 (b) A person who is the spouse of an officer, manager, or
14-27 paid consultant of a trade association in the field of insurance
15-1 may not be commissioner, a rate board member, or a department
15-2 employee who is exempt from the state's position classification
15-3 plan or is compensated at or above the amount prescribed by the
15-4 General Appropriations Act for step 1, salary group 17, of the
15-5 position classification salary schedule.
15-6 (c) For purposes of this article, a trade association is a
15-7 nonprofit, cooperative, and voluntarily joined association of
15-8 business or professional competitors designed to assist its members
15-9 and its industry or profession in dealing with mutual business or
15-10 professional problems and in promoting their common interest.
15-11 Art. 1.06AA. CONFLICT OF INTEREST; EXEMPT EMPLOYEES. A
15-12 <Any> person <whose employment commences after the effective date
15-13 of this Act> may not be <appointed as a member of the State Board
15-14 of Insurance or> employed in an exempt salary position as defined
15-15 by the General Appropriations Act who at the time of <appointment
15-16 or> employment resides in the same household as a person who is an
15-17 officer, managerial employee, or paid consultant in the insurance
15-18 industry.
15-19 Art. 1.06B. Lobbying Activities. A person may not serve as
15-20 commissioner or as a member of the rate board or act as the general
15-21 counsel to the commissioner or to the rate board if the person
15-22 <who> is required to register as a lobbyist under Chapter 305,
15-23 Government Code, because of the person's <by virtue of his>
15-24 activities for compensation <in or> on behalf of a profession
15-25 related to the operation of the department <may not serve as a
15-26 member of the board or act as the general counsel to the board>.
15-27 SECTION 1.05. Article 1.09, Insurance Code, is amended by
16-1 amending Subsections (a), (b), (f), (g), and (h) and by adding
16-2 Subsections (i), (j), and (k) to read as follows:
16-3 (a) The Commissioner of Insurance is <Board shall appoint a
16-4 commissioner of insurance, who shall be> the department's chief
16-5 executive and administrative officer charged with the primary
16-6 responsibility of administering, enforcing, and carrying out the
16-7 provisions of the Insurance Code, other insurance laws of this
16-8 state, and other laws providing jurisdiction in or applicable to
16-9 the department or commissioner, except for responsibilities
16-10 relating to the reporting, collection, enforcement, and
16-11 administration of taxes and certain fees as described under this
16-12 code or another insurance law of this state that are assigned to
16-13 the comptroller of public accounts <under the general supervision
16-14 and direction of the Board. He shall hold his position at the
16-15 pleasure of the Board and may be discharged at any time>.
16-16 (b) The governor, with the advice and consent of the senate,
16-17 shall appoint the commissioner for a two-year term ending on
16-18 February 1 of each odd-numbered year. The commissioner must
16-19 <Commissioner of Insurance shall be a resident citizen of Texas,
16-20 for at least one (1) year immediately prior to his/her appointment
16-21 and shall> be a competent and experienced administrator, <who
16-22 shall> be well informed and qualified in the field of insurance and
16-23 insurance regulation,<. He/she shall> have had at least 10 <ten
16-24 (10)> years of <administrative or professional> experience as an
16-25 executive in the administration of business or government, or as a
16-26 practicing attorney or certified public accountant, and at least
16-27 five years of that <shall have had training and> experience in the
17-1 field of insurance administration or insurance regulation. The
17-2 appointment of the commissioner shall be made without regard to the
17-3 race, color, disability, sex, religion, age, or national origin of
17-4 the appointee. No former or present member of the rate board or
17-5 the State Board of Insurance or former commissioner shall be
17-6 appointed commissioner <Commissioner of Insurance>. A person is
17-7 not eligible for appointment as commissioner if the person, the
17-8 person's spouse, or any person that resides in the same household
17-9 as the person:
17-10 (1) is registered, certified, or licensed by the
17-11 department;
17-12 (2) is employed by or participates in the management
17-13 of a business entity or other organization regulated by the
17-14 department or receiving funds from the department;
17-15 (3) owns or controls, directly or indirectly, more
17-16 than a 10 percent interest in a business entity or other
17-17 organization regulated by the department or receiving funds from
17-18 the department; or
17-19 (4) uses or receives a substantial amount of tangible
17-20 goods, services, or funds from the department, other than
17-21 compensation or reimbursement authorized by law.
17-22 (f) The commissioner shall appoint such deputies,
17-23 assistants, and other personnel as are necessary to carry out the
17-24 duties and functions devolving upon the commissioner <him> and the
17-25 department under the Insurance Code, other insurance laws of this
17-26 state, and other laws providing jurisdiction in or applicable to
17-27 the department or the commissioner, subject to the authorization by
18-1 the Legislature in its appropriations bills or otherwise<, and to
18-2 the rules of the Board>. A person appointed under this subsection
18-3 must have the professional, administrative, and insurance
18-4 experience necessary to qualify for the particular position held.
18-5 An associate commissioner or deputy commissioner must have at least
18-6 five years of the administrative or professional experience
18-7 required for appointment as commissioner, and at least two years of
18-8 that experience must be in the field of insurance or insurance
18-9 regulation.
18-10 (g) The commissioner or the commissioner's <his> designee
18-11 shall develop an intra-agency <intraagency> career ladder program.
18-12 The program shall require intra-agency posting of all nonentry
18-13 level positions concurrently with any public posting<, one part of
18-14 which shall be the intraagency posting of each nonentry level
18-15 classified position for at least five days before the position is
18-16 filled. Notwithstanding any other law to the contrary, a posting
18-17 of a position is not required in the case of:>
18-18 <(1) a lateral intraagency transfer; or>
18-19 <(2) the promotion of a present employee to a position
18-20 in a higher pay group because of the employee's ability to assume
18-21 greater job responsibilities or additional duties or the employee's
18-22 greater expertise rather than for the mere purpose of filling an
18-23 existing vacancy>.
18-24 (h) The commissioner or the commissioner's <his> designee
18-25 shall develop a system of annual performance evaluations <reviews
18-26 that evaluate both the quality and quantity of the job tasks
18-27 performed>. All merit pay for department employees must be based
19-1 on the system established under this subsection <section>.
19-2 (i) It is a ground for removal from office if the
19-3 commissioner:
19-4 (1) does not have at the time of appointment the
19-5 qualifications required by Subsection (b) of this section;
19-6 (2) does not maintain during service as commissioner
19-7 the qualifications required by Subsection (b) of this section;
19-8 (3) violates a prohibition established by Subsection
19-9 (b) of this section or Article 1.06, 1.06A, or 1.06B of this code;
19-10 or
19-11 (4) cannot discharge the commissioner's duties for a
19-12 substantial part of the term for which the commissioner is
19-13 appointed because of illness or disability.
19-14 (j) The validity of an action of the commissioner or the
19-15 department is not affected by the fact that it is taken when a
19-16 ground for removal of the commissioner exists.
19-17 (k) The commissioner shall create the position of, and
19-18 appoint a person to serve as, the chief operating officer of the
19-19 department, who shall have direct responsibility for running the
19-20 day-to-day operations of the department.
19-21 SECTION 1.06. Article 1.09-1(b), Insurance Code, is amended
19-22 to read as follows:
19-23 (b) <In all rate hearings and policy form proceedings before
19-24 the Board, except for those rate hearings and proceedings as
19-25 provided in Subsections (g) and (h), Article 1.35A, of this code,
19-26 the Attorney General may intervene in the public interest.> The
19-27 Board or Commissioner, as appropriate, shall have and exercise the
20-1 power of subpoena and subpoena duces tecum for witnesses,
20-2 documents, and other evidence to the extent of the jurisdiction of
20-3 this state for such hearings and proceedings on its own motion <or
20-4 upon application of the Attorney General>.
20-5 SECTION 1.07. Article 1.10, Insurance Code, is amended to
20-6 read as follows:
20-7 Art. 1.10. DUTIES OF THE DEPARTMENT <BOARD>. In addition to
20-8 the other duties required of the Department, the Department <Board,
20-9 it> shall perform duties as follows:
20-10 1. Shall Execute the Laws. See that all laws
20-11 respecting insurance and insurance companies are faithfully
20-12 executed.
20-13 2. File Articles of Incorporation and Other Papers.
20-14 File and preserve in its office all acts or articles of
20-15 incorporation of insurance companies and all other papers required
20-16 by law to be deposited with the Department <Board> and, upon
20-17 application of any party interested therein, furnish certified
20-18 copies thereof upon payment of the fees prescribed by law.
20-19 3. Shall Calculate Reserve. For every company
20-20 transacting any kind of insurance business in this State, for which
20-21 no basis is prescribed by law, the Department <Board> shall
20-22 calculate the reinsurance reserve upon the same basis prescribed in
20-23 Article 6.01 of this code as to companies transacting fire
20-24 insurance business.
20-25 4. To Calculate Re-insurance Reserve. On the
20-26 thirty-first day of December of each and every year, or as soon
20-27 thereafter as may be practicable, the Department <Board> shall have
21-1 calculated in the Department <its office> the re-insurance reserve
21-2 for all unexpired risks of all insurance companies organized under
21-3 the laws of this state, or transacting business in this state,
21-4 transacting any kind of insurance other than life, fire, marine,
21-5 inland, lightning or tornado insurance, which calculation shall be
21-6 in accordance with the provisions of Paragraph 3 hereof.
21-7 5. When a Company's Surplus is Impaired. No
21-8 impairment of the capital stock of a stock company shall be
21-9 permitted. No impairment of the surplus of a stock company, or of
21-10 the minimum required aggregate surplus of a mutual, Lloyd's, or
21-11 reciprocal insurer, shall be permitted in excess of that provided
21-12 by this section. Having charged against a company other than a
21-13 life insurance company, the reinsurance reserve, as prescribed by
21-14 the laws of this State, and adding thereto all other debts and
21-15 claims against the company, the Commissioner shall, (i) if it is
21-16 determined that the surplus required by Article 2.02 or 2.20 of
21-17 this code of a stock company doing the kind or kinds of insurance
21-18 business set out in its Certificate of Authority is impaired to the
21-19 extent of more than fifty (50%) per cent of the required surplus
21-20 for a capital stock insurance company, or is less than the minimum
21-21 level of surplus required by Commissioner <Board> promulgated
21-22 risk-based capital and surplus regulations, or (ii) if it is
21-23 determined that the required aggregate surplus of a reciprocal or
21-24 mutual company, or the required aggregate of guaranty fund and
21-25 surplus of a Lloyd's company, other than a life insurance company,
21-26 doing the kind or kinds of insurance business set out in its
21-27 Certificate of Authority is impaired to the extent of more than
22-1 twenty-five per cent (25%) of the required aggregate surplus, or is
22-2 less than the minimum level of surplus required by Commissioner
22-3 <Board> promulgated risk-based capital and surplus regulations, the
22-4 Commissioner shall order the company to remedy the impairment of
22-5 surplus to acceptable levels specified by the Commissioner or to
22-6 cease to do business within this State. The Commissioner shall
22-7 thereupon immediately institute such proceedings as may be
22-8 necessary to determine what further actions shall be taken in the
22-9 case.
22-10 6. Shall Publish Results of Investigation. The
22-11 Department <Board> shall publish the result of an <its> examination
22-12 of the affairs of any company whenever the Commissioner <Board>
22-13 deems it for the interest of the public.
22-14 7. May Order Sanctions. (a) After notice and
22-15 opportunity for a hearing, the Commissioner <State Board of
22-16 Insurance> may cancel or revoke any permit, license, certificate of
22-17 authority, certificate of registration, or other authorization
22-18 issued or existing under its authority or the authorization of this
22-19 Code if the holder or possessor of same is found to be in violation
22-20 of, or to have failed to comply with, a specific provision of the
22-21 Code or any duly promulgated rule or regulation of the Commissioner
22-22 or the Rate <State> Board <of Insurance>. In lieu of such
22-23 cancellation or revocation, the Commissioner <State Board of
22-24 Insurance> may order one or more of the following sanctions if it
22-25 determines from the facts that such would be more fair, reasonable,
22-26 or equitable:
22-27 (1) Suspend such authorization for a time
23-1 certain, not to exceed one year;
23-2 (2) Order the holder or possessor of such
23-3 authorization to cease and desist from the specified activity
23-4 determined to be in violation of specific provisions of this Code
23-5 or rules and regulations of the Commissioner or the Rate <State>
23-6 Board <of Insurance> or from failure to comply with such provisions
23-7 of this Code or such rules and regulations;
23-8 (3) Direct the holder or possessor of such
23-9 authorization to pay an administrative penalty in accordance with
23-10 Article 1.10E of this code <remit within a specified time, not to
23-11 exceed sixty (60) days, a specified monetary forfeiture not to
23-12 exceed Twenty-five Thousand ($25,000) Dollars for such violation or
23-13 failure to comply>; or
23-14 (4) Direct the holder or possessor of such
23-15 authorization to make complete restitution to all Texas residents,
23-16 Texas insureds, and entities operating in Texas harmed by the
23-17 violation or failure to comply.
23-18 (b) Restitution under Subdivision (4) of
23-19 Subsection (a) must be made in the form and amount and within the
23-20 period determined by the Commissioner <State Board of Insurance>.
23-21 (c) <Any monetary forfeiture paid as a result of
23-22 an order issued pursuant to Subdivision (3) of Subsection (a) shall
23-23 be deposited with the State Treasurer to the credit of the General
23-24 Revenue Fund.>
23-25 <(d)> If it is found after hearing that any
23-26 holder or possessor has failed to comply with an order issued
23-27 pursuant to Subsection (a), the Commissioner <State Board of
24-1 Insurance> shall, unless its order is lawfully stayed, cancel all
24-2 authorizations of such holder or possessor.
24-3 (d) <(e)> The Commissioner may <State Board of
24-4 Insurance shall have authority to> informally dispose of any matter
24-5 specified in this section by consent order, agreed settlement,
24-6 stipulations, or default. An informal disposition or consent order
24-7 may include a provision under which the holder or possessor agrees
24-8 to a sanction under this section with the express reservation that:
24-9 (1) the holder or possessor is not
24-10 admitting any violation of this code or of a rule or regulation;
24-11 and
24-12 (2) the existence of a violation is in
24-13 dispute.
24-14 (e) <(f)> The Commissioner <Board> shall give
24-15 notice of any action taken pursuant to this section to the
24-16 Insurance Commissioner or other similar officer of every state.
24-17 (f) <(g)> The authority vested in the
24-18 Commissioner <State Board of Insurance> in this Article shall be in
24-19 addition to and not in lieu of any other authority to enforce or
24-20 cause to be enforced any sanctions, penalties, fines, forfeitures,
24-21 denials, suspensions, or revocations otherwise authorized by law,
24-22 and shall be applicable to every form of authorization to any
24-23 person or entity holding or possessing the same.
24-24 (g) <(h)> This section applies to all companies
24-25 regulated by the Commissioner, <State Board of Insurance> including
24-26 but not limited to domestic and foreign, stock and mutual life,
24-27 health, and accident insurance companies; domestic and foreign,
25-1 stock and mutual, fire and casualty insurance companies; Mexican
25-2 casualty companies; domestic and foreign Lloyd's plan insurers;
25-3 domestic and foreign reciprocal or interinsurance exchanges;
25-4 domestic and foreign fraternal benefit societies; domestic and
25-5 foreign title insurance companies; attorney's title insurance
25-6 companies; stipulated premium insurance companies; nonprofit legal
25-7 service corporations; health maintenance organizations; statewide
25-8 mutual assessment companies; local mutual aid associations; local
25-9 mutual burial associations; exempt associations under Article 14.17
25-10 of this Code; nonprofit hospital, medical, or dental service
25-11 corporations including but not limited to companies subject to
25-12 Chapter 20 of this Code; county mutual insurance companies; and
25-13 farm mutual insurance companies. Also, this section applies to all
25-14 agents of those companies and generally to all other individuals,
25-15 corporations, associations, partnerships, and other natural or
25-16 artificial persons engaged in the business of insurance or that
25-17 hold a permit, certificate, registration, license, or other
25-18 authority under this Code or that are regulated by the Commissioner
25-19 <State Board of Insurance>.
25-20 8. Report to Attorney General. The Department <It>
25-21 shall report promptly and in detail to the Attorney General any
25-22 violation of law relative to insurance companies or the business of
25-23 insurance.
25-24 9. Shall Furnish Blanks. The Department <It> shall
25-25 furnish to the companies required to report to the Department
25-26 <Board> the necessary blank forms for the statements required.
25-27 10. Shall Keep Records. The Department <It> shall
26-1 preserve in a permanent form a full record of the Department's
26-2 <its> proceedings and a concise statement of the condition of each
26-3 company or agency visited or examined.
26-4 11. Give Certified Copies. At the request of any
26-5 person, and on the payment of the legal fee, the Department <Board>
26-6 shall give certified copies of any record or papers in its office,
26-7 when the Commissioner <it> deems it not prejudicial to public
26-8 interest and shall give such other certificates as are provided for
26-9 by law. The fees collected by the Department <Board> under this
26-10 section shall be deposited in the State Treasury to the credit of
26-11 the Texas Department <State Board> of Insurance operating fund.
26-12 12. Report to Governor and Legislature. The
26-13 Department shall file annually with the Governor and the presiding
26-14 officer of each house of the Legislature a complete and detailed
26-15 written report accounting for all funds received and disbursed by
26-16 the Department during the preceding fiscal year. The annual report
26-17 must be in the form and reported in the time provided by the
26-18 General Appropriations Act. The report shall also contain the
26-19 Commissioner's and the Rate Board's <It shall report annually to
26-20 the Governor the receipts and expenses of its department for the
26-21 year, its> official acts, the condition of companies doing business
26-22 in this State, and such other information as will exhibit the
26-23 affairs of the Department <said department>. Upon specific request
26-24 by the Governor, the Department <Board> shall report the names and
26-25 compensations of the Rate Board's <its> clerks.
26-26 13. Send Copies of Reports To. The Department <Board>
26-27 shall send a copy of the <its> annual report to the Insurance
27-1 Commissioner or other similar officer of every state and, on
27-2 request, shall send a copy to each company doing business in Texas.
27-3 14. Report Laws to Other States. On request, the
27-4 Department <it> shall communicate to the Insurance Commissioner or
27-5 other similar officer of any other state, in which the substantial
27-6 provisions of the law of this State relative to insurance have
27-7 been, or shall be, enacted, any facts which by law it is his duty
27-8 to ascertain respecting the companies of this State doing business
27-9 within such other state.
27-10 15. See That No Company Does Business. The
27-11 Commissioner <It> shall see that no company is permitted to
27-12 transact the business of life insurance in this State whose charter
27-13 authorizes it to do a fire, marine, lightning, tornado, or inland
27-14 insurance business, and that no company authorized to do a life
27-15 insurance business in this State be permitted to take fire, marine
27-16 or inland risks.
27-17 16. Admit Mutual Companies. The Commissioner <Board>
27-18 shall admit into this State mutual insurance companies engaged in
27-19 cyclone, tornado, hail and storm insurance which are organized
27-20 under the laws of other states and which have Two Million
27-21 ($2,000,000.00) Dollars assets in excess of liabilities.
27-22 17. Voluntary Deposits. (a) In the event any
27-23 insurance company organized and doing business under the provisions
27-24 of this Code shall be required by any other state, country or
27-25 province as a requirement for permission to do an insurance
27-26 business therein to make or maintain a deposit with an officer of
27-27 any state, country, or province, such company, at its discretion,
28-1 may voluntarily deposit with the State Treasurer such securities as
28-2 may be approved by the Commissioner of Insurance to be of the type
28-3 and character authorized by law to be legal investments for such
28-4 company, or cash, in any amount sufficient to enable it to meet
28-5 such requirements. The State Treasurer is hereby authorized and
28-6 directed to receive such deposit and hold it exclusively for the
28-7 protection of all policyholders or creditors of the company
28-8 wherever they may be located, or for the protection of the
28-9 policyholders or creditors of a particular state, country or
28-10 province, as may be designated by such company at the time of
28-11 making such deposit. The company may, at its option, withdraw such
28-12 deposit or any part thereof, first having deposited with the
28-13 Treasurer, in lieu thereof, other securities of like class and of
28-14 equal amount and value to those withdrawn, which withdrawal and
28-15 substitution must be approved by the Commissioner of Insurance.
28-16 The proper officer of each insurance company making such deposit
28-17 shall be permitted at all reasonable times to examine such
28-18 securities and to detach coupons therefrom, and to collect interest
28-19 thereon, under such reasonable rules and regulations as may be
28-20 prescribed by the State Treasurer and the Commissioner of
28-21 Insurance. Any deposit so made for the protection of policyholders
28-22 or creditors of a particular state, country or province shall not
28-23 be withdrawn, except by substitution as provided above, by the
28-24 company, except upon filing with the Commissioner of Insurance
28-25 evidence satisfactory to him that the company has withdrawn from
28-26 business, and has no unsecured liabilities outstanding or potential
28-27 policyholder liabilities or obligations in such other state,
29-1 country or province requiring such deposit, and upon the filing of
29-2 such evidence the company may withdraw such deposit at any time
29-3 upon the approval of the Commissioner of Insurance. Any deposit so
29-4 made for the protection of all policyholders or creditors wherever
29-5 they may be located shall not be withdrawn, except by substitution
29-6 as provided above, by the company except upon filing with the
29-7 Commissioner of Insurance evidence satisfactory to him that the
29-8 company does not have any unsecured liabilities outstanding or
29-9 potential policy liabilities or obligations anywhere, and upon
29-10 filing such evidence the company may withdraw such deposit upon the
29-11 approval of the Commissioner of Insurance. For the purpose of
29-12 state, county and municipal taxation, the situs of any securities
29-13 deposited with the State Treasurer hereunder shall be in the city
29-14 and county where the principal business office of such company is
29-15 fixed by its charter.
29-16 (b) Any voluntary deposit <now> held by the
29-17 State Treasurer or the Department <State Board of Insurance>
29-18 heretofore made by any insurance company in this State, and which
29-19 deposit was made for the purpose of gaining admission to another
29-20 state, may be considered, at the option of such company, to be
29-21 hereinafter held under the provisions of this Act.
29-22 (c) When two or more companies merge or
29-23 consolidate or enter a total reinsurance contract by which the
29-24 ceding company is dissolved and its assets acquired and liabilities
29-25 assumed by the surviving company, and the companies have on deposit
29-26 with the State Treasurer two or more deposits made for identical
29-27 purposes under this section <either Section 17 of Article 1.10 of
30-1 the Texas Insurance Code, as amended,> or Article 4739, Revised
30-2 <Civil> Statutes <of Texas (1925)>, as amended, and now repealed,
30-3 all such deposits, except the deposit of greatest amount and value,
30-4 may be withdrawn by the new surviving or reinsuring company, upon
30-5 proper showing of duplication of such deposits and that the company
30-6 is the owner thereof.
30-7 (d) Any company which has made a deposit or
30-8 deposits under this section <Article 1.10, Section 17, Texas
30-9 Insurance Code, as amended,> or Article 4739, Revised <Civil>
30-10 Statutes <of Texas (1925)>, as amended and now repealed, shall be
30-11 entitled to a return of such deposits upon proper application
30-12 therefor and a showing before the Commissioner that such deposit or
30-13 deposits are no longer required under the laws of any state,
30-14 country or province in which such company sought or gained
30-15 admission to do business upon the strength of a certificate of such
30-16 deposit <by the State Board of Insurance or its predecessor>.
30-17 (e) Upon being furnished a certified copy of the
30-18 Commissioner's order issued under Subsection (c) or (d) above, the
30-19 Treasurer of the State of Texas shall release, transfer and deliver
30-20 such deposit or deposits to the owner as directed in said order.
30-21 18. Complaint File. The Department <State Board of
30-22 Insurance> shall keep <maintain> an information file about
30-23 <relating to> each <written> complaint <that is> filed with the
30-24 Department that the Department has authority to resolve <board
30-25 concerning an activity that is regulated by the board>.
30-26 19. Notice of Complaint Status. If a written
30-27 complaint is filed with the Department that the Department has
31-1 authority to resolve, the Department, at least quarterly and until
31-2 final disposition of the complaint, shall notify the parties to the
31-3 complaint of the status of the complaint unless the notice would
31-4 jeopardize an undercover investigation <State Board of Insurance
31-5 relating to an activity that is regulated by the board, the board,
31-6 at least quarterly and until final disposition of the complaint,
31-7 shall notify the person making the complaint and the person
31-8 complained against of the status of the complaint unless:>
31-9 <(A) the complaint relates to an entity in
31-10 supervision, conservatorship, or liquidation; or>
31-11 <(B) giving such notice would jeopardize the
31-12 investigation of a possible violation of a law that is enforceable
31-13 by a criminal penalty>.
31-14 20. Electronic Transfer of Funds. The Commissioner
31-15 <Board> shall adopt rules for the electronic transfer of any taxes,
31-16 fees, guarantee funds, or other money owed to or held for the
31-17 benefit of the state and for which the Department has the
31-18 responsibility to administer under this code or another insurance
31-19 law of this state. The Commissioner <Board> shall require the
31-20 electronic transfer of any amounts held or owed in an amount
31-21 exceeding $500,000.
31-22 SECTION 1.08. Sections 1, 2, 3, 4, and 6, Article 1.31A,
31-23 Insurance Code, are amended to read as follows:
31-24 Sec. 1. Definition <Definitions>. In this article, "fund"<:>
31-25 <(1) "Board" means the State Board of Insurance.>
31-26 <(2) "Commissioner" means the commissioner of
31-27 insurance.>
32-1 <(3) "Fund"> means the Texas Department <State Board>
32-2 of Insurance operating fund.
32-3 Sec. 2. Creation of Fund. The Texas Department <State
32-4 Board> of Insurance operating fund is a fund <created> in the State
32-5 Treasury.
32-6 Sec. 3. Deposit of Revenues in Fund. Money received by the
32-7 commissioner, comptroller, or rate board from taxes and fees that
32-8 are required by this code to be credited to the fund and money
32-9 received by the commissioner or rate board from sales,
32-10 reimbursements, and fees authorized by law other than this code
32-11 shall be deposited in the fund.
32-12 Sec. 4. Certain Money Included. The money received from
32-13 sales, reimbursements, and other fees authorized by law other than
32-14 this code includes money received from the following:
32-15 (1) <fees received by the board for filing charters
32-16 and charter amendments under Article 3914, Revised Statutes, as
32-17 amended;>
32-18 <(2)> fees received by the department <board> for
32-19 providing copies of public records under Chapter 424, Acts of the
32-20 63rd Legislature, Regular Session, 1973, as amended (Article
32-21 6252-17a, Vernon's Texas Civil Statutes);
32-22 <(3) money received by the state fire marshal for
32-23 licenses under Chapter 498, Acts of the 55th Legislature, Regular
32-24 Session, 1957, as amended (Article 9205, Vernon's Texas Civil
32-25 Statutes);>
32-26 (2) <(4)> money or credits received by the department
32-27 <board> for surplus or salvage property under Sections 9.04 and
33-1 9.05, State Purchasing and General Services Act <Chapter 773, Acts
33-2 of the 66th Legislature, Regular Session, 1979> (Article 601b,
33-3 Vernon's Texas Civil Statutes);
33-4 (3) <(5)> money received by the department <board>
33-5 from the sale of publications and other printed material under
33-6 Chapter 248, Acts of the 55th Legislature, Regular Session, 1957
33-7 (Article 4413(33), Vernon's Texas Civil Statutes);
33-8 (4) <(6)> receipts to the department <board> from
33-9 miscellaneous transactions and sources under Section 403.011 or
33-10 403.012, Government Code <Article 4344, Revised Statutes>, as
33-11 amended;
33-12 (5) <(7)> money received by the department <board>
33-13 from charges for postage spent to serve legal process under Section
33-14 17.025, Civil Practice and Remedies Code <Chapter 288, Acts of the
33-15 67th Legislature, Regular Session, 1981 (Article 2041b, Vernon's
33-16 Texas Civil Statutes)>;
33-17 (6) <(8)> receipts to the department <board> for
33-18 furnishing necessary and authorized special or technical services
33-19 under Chapter 741, Government Code <the Interagency Cooperation
33-20 Act,> as amended <(Article 4413(32), Vernon's Texas Civil
33-21 Statutes)>;
33-22 (7) <(9)> receipts to the department <board> from the
33-23 State Treasurer involving warrants for which payment is barred
33-24 under Chapter 404, Government Code <Article 4371, Revised
33-25 Statutes>, as amended;
33-26 (8) <(10)> money received by the department <board>
33-27 from sales or reimbursements authorized by the General
34-1 Appropriations Act; and
34-2 (9) <(11)> money received by the department <board>
34-3 from the sale of any property purchased with money from the <State
34-4 Board of Insurance operating> fund or a predecessor fund.
34-5 Sec. 6. Administration of Fund. (a) The commissioner shall
34-6 administer and may spend money from the fund pursuant to laws of
34-7 the state, rules adopted by the commissioner <of the board>, and
34-8 the General Appropriations Act.
34-9 (b) The commissioner <board> is responsible for the
34-10 development and maintenance of an accounting procedure for the
34-11 receipt, allocation, and disbursement of money deposited in the
34-12 fund. The procedure shall require adequate records for the
34-13 commissioner or comptroller, if applicable, <board> to adjust the
34-14 tax assessments and fee schedules as authorized by this code and
34-15 for the State Auditor to determine the source of all receipts and
34-16 expenditures.
34-17 SECTION 1.09. Articles 1.35 and 1.37, Insurance Code, are
34-18 amended to read as follows:
34-19 Art. 1.35. Notice of Policyholder Complaint Procedures.
34-20 (a) Each insurance policy delivered or issued for delivery in this
34-21 state <on or after September 1, 1984,> shall be accompanied by a
34-22 brief written notice of suggested procedure to be followed by the
34-23 policyholder in the event of a dispute concerning a policyholder's
34-24 claim or premium.
34-25 (b) The notice must include the name and address of the
34-26 department and the toll-free telephone number maintained under
34-27 Article 1.35D of this code <State Board of Insurance>.
35-1 (c) The commissioner <State Board of Insurance> shall
35-2 promulgate the proper wording for the written notice.
35-3 (d) The commissioner by rule may establish other methods by
35-4 which consumers and service recipients are notified of the name and
35-5 mailing address and toll-free telephone number of the department
35-6 for the purpose of directing complaints to the department. The
35-7 commissioner may provide for that notification:
35-8 (1) on each registration form, application, or written
35-9 contract for services of an individual or entity regulated under
35-10 this code or other insurance law of this state other than an
35-11 insurance policy subject to Subsection (a) of this article;
35-12 (2) on a sign prominently displayed in the place of
35-13 business of each individual or entity regulated under this code or
35-14 other insurance law of this state; or
35-15 (3) in a bill for service provided by an individual or
35-16 entity regulated under this code or other insurance law of this
35-17 state.
35-18 Art. 1.37. INFORMATION CONCERNING DEPARTMENT <STATE BOARD>
35-19 OF INSURANCE. The department <State Board of Insurance> shall
35-20 prepare information of public <consumer> interest describing the
35-21 <regulatory> functions of the department <board> and describing the
35-22 department's <board's> procedures by which <consumer> complaints
35-23 are filed with and resolved by the department <board>. The
35-24 department <board> shall make the information available <on
35-25 request> to the <general> public and appropriate state agencies.
35-26 SECTION 1.10. Chapter 1, Insurance Code, is amended by
35-27 adding Article 1.60 to read as follows:
36-1 Art. 1.60. TECHNOLOGY ADVISORY PANEL
36-2 Sec. 1. DEFINITION. In this article, "panel" means the
36-3 technical advisory panel on the application of technology related
36-4 to insurance for the department.
36-5 Sec. 2. COMPOSITION OF PANEL. (a) The panel is composed
36-6 of:
36-7 (1) three members from the insurance or banking
36-8 industry;
36-9 (2) three members from the technology industry;
36-10 (3) two members appointed by the department; and
36-11 (4) one member appointed by the Department of
36-12 Information Resources.
36-13 (b) The select committee on rate and policy form regulation
36-14 shall designate a member of the panel to serve as the presiding
36-15 officer of the panel.
36-16 Sec. 3. PURPOSE; DUTIES; MEETINGS. (a) The panel shall
36-17 study for the department the application of technology as it
36-18 relates to insurance. The panel shall assess:
36-19 (1) the effects changes in rate and policy form
36-20 regulation in the state will have on the policies and procedures
36-21 implemented at the department and their impact on the technology
36-22 currently in use; and
36-23 (2) the application of technology within the
36-24 department directed at:
36-25 (A) streamlining internal management of
36-26 information, solvency monitoring, enforcement and tracking of
36-27 cases, and other related insurance issues; and
37-1 (B) the introduction of technology to increase
37-2 public access and reduce the costs necessary to manage the
37-3 information required from the insurance industry and the public.
37-4 (b) The panel shall meet as needed, but not less than
37-5 quarterly, to carry out its duties under this section.
37-6 Sec. 4. REPORT. (a) Not later than December 1, 1994, the
37-7 panel shall issue a report of its findings. The panel shall file
37-8 copies of the report with the Legislative Reference Library, the
37-9 governor's office, the select committee on rate and policy form
37-10 regulation, the department, and the Department of Information
37-11 Resources.
37-12 (b) The report shall include recommended applications of
37-13 technology within the department.
37-14 Sec. 5. PROGRESS REPORT. Not later than December 1 of each
37-15 year the panel is in existence, the department shall issue a report
37-16 on the department's progress in implementing recommendations or
37-17 changes made by the panel. The panel shall review and forward any
37-18 comments regarding the implementation of technology within the
37-19 department or any new recommendations to the entities designated
37-20 under Section 4 of this article.
37-21 Sec. 6. PANEL ABOLISHED; EXPIRATION OF ARTICLE. (a) The
37-22 panel is abolished on the date the panel issues the report under
37-23 Section 4 of this article.
37-24 (b) This article expires January 1, 1997.
37-25 SECTION 1.11. Section 323.007, Government Code, is amended
37-26 by adding Subsection (d) to read as follows:
37-27 (d) The council shall prepare a revision of the Insurance
38-1 Code and other insurance laws of this state that are included in
38-2 Vernon's Texas Insurance Code for consideration by the 75th
38-3 Legislature during its regular session. This subsection expires
38-4 June 1, 1997.
38-5 SECTION 1.12. Section 3.22(c), Texas Workers' Compensation
38-6 Act (Article 8308-3.22, Vernon's Texas Civil Statutes), is amended
38-7 to read as follows:
38-8 (c) The filing required under this section shall be filed
38-9 with the commission <State Board of Insurance> pursuant to Section
38-10 3.27 of this Act.
38-11 SECTION 1.13. Section 3.25(c), Texas Workers' Compensation
38-12 Act (Article 8308-3.25, Vernon's Texas Civil Statutes), is amended
38-13 to read as follows:
38-14 (c) The notice required under this section shall be filed
38-15 with the commission <State Board of Insurance> pursuant to Section
38-16 3.27 of this Act.
38-17 SECTION 1.14. Section 3.26(d), Texas Workers' Compensation
38-18 Act (Article 8308-3.26, Vernon's Texas Civil Statutes), is amended
38-19 to read as follows:
38-20 (d) The notice required under this section shall be filed
38-21 with the commission <State Board of Insurance> pursuant to Section
38-22 3.27 of this Act.
38-23 SECTION 1.15. Section 3.27, Texas Workers' Compensation Act
38-24 (Article 8308-3.27, Vernon's Texas Civil Statutes), is amended to
38-25 read as follows:
38-26 Art. 8308-3.27. Collecting, Maintaining, and Monitoring and
38-27 Enforcing Compliance <Cooperation between State Board of Insurance
39-1 and Texas Workers' Compensation Commission>. (a) The commission
39-2 <On and after September 1, 1991, the State Board of Insurance>
39-3 shall collect and maintain the information required <to be
39-4 provided> under this chapter and <shall provide this information in
39-5 the time and manner prescribed by the commission. The State Board
39-6 of Insurance> shall monitor compliance with the requirements <and
39-7 notify the commission of possible violations in the time and manner
39-8 prescribed by the commission>. The commission <State Board of
39-9 Insurance> is authorized to adopt rules as necessary to enforce
39-10 this chapter.
39-11 (b) The commission shall enforce the administrative
39-12 penalties established in this chapter according to Article 10 of
39-13 this Act.
39-14 SECTION 1.16. Section 3.28(e), Texas Workers' Compensation
39-15 Act (Article 8308-3.28, Vernon's Texas Civil Statutes), is amended
39-16 to read as follows:
39-17 (e) The notice required under this section shall be filed
39-18 with the commission <State Board of Insurance pursuant to Section
39-19 3.27 of this Act>.
39-20 SECTION 1.17. (a) Sections 3(g) and 4(e), Article 1.10A,
39-21 Insurance Code, are repealed.
39-22 (b) Article 1.06D, Insurance Code, is repealed.
39-23 SECTION 1.18. (a) This article applies to any act of the
39-24 State Board of Insurance performed before the effective date of
39-25 this Act that, after the effective date of this Act, is an act that
39-26 shall or may be performed only by the commissioner of insurance,
39-27 including:
40-1 (1) issuance of a license, certificate, or other
40-2 similar form of permission;
40-3 (2) promulgation of a rule, standard, regulation, or
40-4 order;
40-5 (3) promulgation or approval of policy forms or policy
40-6 form endorsements; or
40-7 (4) adoption or approval of a plan of operation for an
40-8 organization subject to the jurisdiction of the Texas Department of
40-9 Insurance.
40-10 (b) An act governed by this section remains in effect until:
40-11 (1) it expires under its own terms or in accordance
40-12 with applicable law; or
40-13 (2) it is superseded by an act of the commissioner of
40-14 insurance.
40-15 SECTION 1.19. (a) As soon as possible on or after the
40-16 effective date of this Act, but before January 1, 1994, the
40-17 governor shall appoint six persons to serve on the six-member Texas
40-18 Insurance Rate Board in accordance with Article 1.03, Insurance
40-19 Code, as amended by this Act.
40-20 (b) In making the appointments under Subsection (a) of this
40-21 section, the governor shall designate two members for terms ending
40-22 February 1, 1995, two members for terms ending February 1, 1997,
40-23 and two members for terms ending February 1, 1999.
40-24 (c) Until a majority of the six-member Texas Insurance Rate
40-25 Board takes office under Subsection (a) of this section, the
40-26 members serving on the three-member State Board of Insurance
40-27 immediately before the effective date of this Act shall exercise
41-1 the authority granted to the six-member Texas Insurance Rate Board
41-2 under Article 1.02(b), Insurance Code, as amended by this Act, but
41-3 may not exercise any authority granted to the commissioner of
41-4 insurance under that article. On the date that a majority of the
41-5 six-member Texas Insurance Rate Board takes office under Subsection
41-6 (a) of this section, the three-member State Board of Insurance, as
41-7 it existed before the effective date of this Act, is abolished.
41-8 (d) As soon as possible on or after the effective date of
41-9 this Act, the governor shall appoint a commissioner of insurance.
41-10 The initial term of the commissioner ends on February 1, 1995.
41-11 (e) Until the commissioner of insurance takes office under
41-12 Subsection (d) of this section, the commissioner of insurance
41-13 serving immediately before the effective date of this Act shall
41-14 exercise the authority granted to the commissioner under Article
41-15 1.02(b), Insurance Code, as amended by this Act.
41-16 SECTION 1.20. On the effective date of this Act, the
41-17 comptroller shall redesignate the State Board of Insurance
41-18 operating fund (Fund No. 36) as the Texas Department of Insurance
41-19 operating fund. All money in the State Board of Insurance
41-20 operating fund on the effective date of this Act shall remain in
41-21 the Texas Department of Insurance operating fund on the
41-22 redesignation of the fund.
41-23 ARTICLE 2. TRANSFER OF CERTAIN FUNCTIONS TO STATE OFFICE OF
41-24 ADMINISTRATIVE HEARINGS
41-25 SECTION 2.01. Chapter 1, Insurance Code, is amended by
41-26 adding Article 1.33B to read as follows:
41-27 Art. 1.33B. CERTAIN HEARINGS HELD BY STATE OFFICE OF
42-1 ADMINISTRATIVE HEARINGS. (a) Except as provided by Subsections
42-2 (b) and (c) of this article, the State Office of Administrative
42-3 Hearings established under Chapter 591, Acts of the 72nd
42-4 Legislature, Regular Session, 1991 (Article 6252-13f, Vernon's
42-5 Texas Civil Statutes), and its subsequent amendments, shall conduct
42-6 any administrative hearing required to be held or that may be held
42-7 under this code or another insurance law of this state.
42-8 (b) This article applies only to hearings required to be
42-9 held before a decision may be rendered or action taken by the
42-10 commissioner, the rate board, or the department.
42-11 (c) This article does not apply to a hearing or proceeding:
42-12 (1) relating to the promulgation or approval of rates;
42-13 (2) relating to the promulgation of rules;
42-14 (3) relating to the promulgation or approval of a
42-15 policy form or policy form endorsement;
42-16 (4) relating to the adoption or approval of a plan of
42-17 operation for an organization subject to the jurisdiction of the
42-18 department; and
42-19 (5) conducted in accordance with Article 1.33C of this
42-20 code.
42-21 (d) The commissioner and the chief administrative law judge
42-22 of the State Office of Administrative Hearings by rule shall adopt
42-23 a memorandum of understanding governing hearings held by the State
42-24 Office of Administrative Hearings under this code and other
42-25 insurance laws of this state. The memorandum of understanding
42-26 shall require the chief administrative law judge and the
42-27 commissioner to cooperate in conducting hearings under this article
43-1 and may authorize the State Office of Administrative Hearings to
43-2 perform any procedural act, including giving of notice, that is
43-3 required to be performed by the commissioner or the rate board
43-4 under this code or another insurance law of this state.
43-5 (e) Any provision of this code or another insurance law of
43-6 this state that provides that the rate board or commissioner shall
43-7 take an action at a hearing subject to this article means that the
43-8 rate board or commissioner shall take the action after the receipt
43-9 of a report from the State Office of Administrative Hearings
43-10 regarding the hearing conducted by that agency.
43-11 (f) This article governs in the event of a conflict with
43-12 another provision of this code or another insurance law of this
43-13 state, unless the other provision or insurance law states that this
43-14 article does not apply.
43-15 SECTION 2.02. Articles 1.06C(b), (c), and (d), Insurance
43-16 Code, are amended to read as follows:
43-17 (b) A person, other than a person subject to Subsection (a)
43-18 of this section, who is employed by the department or board or who
43-19 is employed by the State Office of Administrative Hearings and who
43-20 is involved in hearing cases under this code or another insurance
43-21 law of this state may not, for a period of two years after the date
43-22 the person terminates service with the department, <or> board, or
43-23 State Office of Administrative Hearings represent any person in a
43-24 matter before the department or State Office of Administrative
43-25 Hearings or receive compensation for services rendered on behalf of
43-26 any person regarding a matter pending before the department or
43-27 State Office of Administrative Hearings. This subsection does
44-1 apply to an employee exempt from the state's position
44-2 classification plan, but does not apply to an employee who was
44-3 compensated at a salary less than the salary prescribed by the
44-4 General Appropriations Act for step 1, salary group 17, of the
44-5 position classification salary schedule.
44-6 (c) A former member of the board, a former commissioner, a
44-7 former general counsel, a former public counsel, a former head of a
44-8 department division, or a former employee of the board, <or>
44-9 department, or State Office of Administrative Hearings described by
44-10 Subsection (b) of this section may not represent any person or
44-11 receive compensation for services rendered on behalf of any person
44-12 regarding a matter with which the former member, commissioner,
44-13 general counsel, public counsel, division head, or employee was
44-14 directly concerned during the period of service or employment on or
44-15 with the board, <or> department, or State Office of Administrative
44-16 Hearings or as commissioner, either through personal involvement or
44-17 because the matter was within the member's, commissioner's, general
44-18 counsel's, public counsel's, division head's, or employee's
44-19 official responsibility while associated with the board or State
44-20 Office of Administrative Hearings.
44-21 (d) A former member or employee of the board, <or>
44-22 department, or State Office of Administrative Hearings or a former
44-23 commissioner, general counsel, or public counsel commits an offense
44-24 if the former member, employee, commissioner, general counsel, or
44-25 public counsel violates this section. An offense under this
44-26 subsection is a Class A misdemeanor.
44-27 SECTION 2.03. Article 1.09-4, Insurance Code, is repealed.
45-1 SECTION 2.04. (a) Not later than December 31, 1993, the
45-2 commissioner of insurance and the chief administrative law judge of
45-3 the State Office of Administrative Hearings shall adopt the
45-4 memorandum of understanding required by Article 1.33B, Insurance
45-5 Code, as added by this Act.
45-6 (b) This article applies only to a hearing that is not held
45-7 before or pending on January 1, 1994. Unless the commissioner of
45-8 insurance and the chief administrative law judge of the State
45-9 Office of Administrative Hearings agree to apply Article 1.33B,
45-10 Insurance Code, as added by this Act, a hearing that is held before
45-11 or pending on January 1, 1994, is governed by the law in effect
45-12 immediately before the effective date of this Act, and that law is
45-13 continued in effect for this purpose.
45-14 ARTICLE 3. TRANSFER OF CERTAIN TAX COLLECTION AND
45-15 AUDIT FUNCTIONS TO OFFICE OF THE COMPTROLLER
45-16 SECTION 3.01. Chapter 1, Insurance Code, is amended by
45-17 adding Article 1.04D to read as follows:
45-18 Art. 1.04D. DUTIES OF COMPTROLLER. (a) Except as otherwise
45-19 expressly provided for in this code or another insurance law of
45-20 this state, the duties of the department, commissioner, and rate
45-21 board relative to the collection, reporting, and administration of
45-22 taxes and certain fees and assessments imposed under this code or
45-23 another insurance law of this state are transferred to the
45-24 comptroller effective September 1, 1993, as specifically provided
45-25 in this code.
45-26 (b) The duties transferred to the comptroller relative to
45-27 taxes, fees, and assessments imposed under this code or another
46-1 insurance law of this state relate to the collection, reporting,
46-2 enforcement, and administration of all such amounts currently
46-3 provided for under this code or another insurance law of this
46-4 state, and also of any taxes, fees, or assessments that have been
46-5 repealed or are otherwise inactive but for which amounts may still
46-6 be owing or refunds may be due on or after the effective date of
46-7 this article.
46-8 (c) The comptroller may adopt rules to carry out the
46-9 collection, reporting, enforcement, and administration
46-10 responsibilities assigned to the comptroller under this code or
46-11 another insurance law of this state. The comptroller may also
46-12 prescribe appropriate report forms, establish or alter tax return
46-13 due dates not otherwise specifically set forth in this code or
46-14 another insurance law of this state, and otherwise adapt the
46-15 functions transferred to the comptroller to increase efficiency and
46-16 cost-effectiveness.
46-17 (d) With respect to the comptroller's performance of the
46-18 duties relative to the taxes, fees, and assessments imposed under
46-19 this code or another insurance law of this state, the comptroller
46-20 has the administrative, enforcement, and collection powers provided
46-21 by Subtitles A and B, Title 2, Tax Code, and their subsequent
46-22 amendments. Except as otherwise expressly provided by this code,
46-23 those powers are granted to the comptroller without limiting and
46-24 exclusive of powers granted to the department, the commissioner,
46-25 and the rate board with respect to other fees and assessments under
46-26 this code.
46-27 SECTION 3.02. Article 1.11(a), Insurance Code, is amended to
47-1 read as follows:
47-2 (a) The Board may, from time to time, make such changes in
47-3 the forms of the annual statements required of insurance companies
47-4 of any kind, as shall seem to it best adapted to elicit a true
47-5 exhibit of their condition and methods of transacting business.
47-6 Such form shall elicit only such information as shall pertain to
47-7 the business of the company.
47-8 If any annual statement, report, financial statement, <tax
47-9 return,> or <tax> payment required to be filed or deposited in the
47-10 offices of the State Board of Insurance, or any report, tax return,
47-11 or payment required to be filed or deposited in the offices of the
47-12 comptroller, is delivered by the United States Postal Service to
47-13 the offices of the State Board of Insurance or comptroller, as
47-14 required, after the prescribed date on which the annual statement,
47-15 report, financial statement, tax return, or <tax> payment is to be
47-16 filed, the date of the United States Postal Service postmark
47-17 stamped on the cover in which the document <annual statement> is
47-18 mailed, or any other evidence of mailing authorized by the United
47-19 States Postal Service reflected on the cover in which the document
47-20 <annual statement> is mailed, shall be deemed to be the date of
47-21 filing, unless otherwise specifically made an exception to this
47-22 general statute.
47-23 SECTION 3.03. Section 11(a), Article 1.14-1, Insurance Code,
47-24 is amended to read as follows:
47-25 (a) Except as to premiums on lawfully procured surplus lines
47-26 insurance and premiums on independently procured insurance on which
47-27 a tax has been paid pursuant to this Article or Article 1.14-2,
48-1 every unauthorized insurer shall pay to the comptroller, on a form
48-2 prescribed by the comptroller, <State Board of Insurance> before
48-3 March 1 next succeeding the calendar year in which the insurance
48-4 was so effectuated, continued or renewed or another date as
48-5 prescribed by the comptroller a premium receipts tax of 4.85
48-6 percent of gross premiums charged for such insurance on subjects
48-7 resident, located or to be performed in this state. Such insurance
48-8 on subjects resident, located or to be performed in this state
48-9 procured through negotiations or an application, in whole or in
48-10 part occurring or made within or from within or outside of this
48-11 state, or for which premiums in whole or in part are remitted
48-12 directly or indirectly from within or outside of this state, shall
48-13 be deemed to be insurance procured, or continued or renewed in this
48-14 state. The term "premium" includes all premiums, membership fees,
48-15 assessments, dues and any other consideration for insurance. Such
48-16 tax shall be in lieu of all other insurance taxes. On default of
48-17 any such unauthorized insurer in the payment of such tax the
48-18 insured shall pay the tax. If the tax prescribed by this
48-19 subsection is not paid within the time stated, Subtitles A and B,
48-20 Title 2, Tax Code, and their subsequent amendments, apply <the tax
48-21 shall be increased by a penalty of 25 percent and by the amount of
48-22 an additional penalty computed at the rate of one percent per month
48-23 or any part thereof from the date such payment was due to the date
48-24 paid>.
48-25 SECTION 3.04. Sections 12(a), (c), and (e), Article 1.14-1,
48-26 Insurance Code, are amended to read as follows:
48-27 (a) Every insured who procures or causes to be procured or
49-1 continues or renews insurance with any unauthorized insurer, or any
49-2 insured or self-insurer who so procures or continues excess loss,
49-3 catastrophe or other insurance, upon a subject of insurance
49-4 resident, located or to be performed within this state, other than
49-5 insurance procured through a surplus lines agent pursuant to the
49-6 surplus lines law of this state shall, within 60 days after the
49-7 date such insurance was so procured, continued or renewed or before
49-8 a date prescribed by the comptroller, file a report of the same
49-9 with the comptroller <State Board of Insurance> in writing and upon
49-10 forms designated by the comptroller <State Board of Insurance> and
49-11 furnished to such an insured upon request. The report shall show
49-12 the name and address of the insured or insureds, name and address
49-13 of the insurer, the subject of the insurance, a general description
49-14 of the coverage, the amount of premium currently charged therefor,
49-15 and such additional pertinent information as is reasonably
49-16 requested by the comptroller <State Board of Insurance>.
49-17 (c) There is hereby levied upon the obligation, chose in
49-18 action, or right represented by the premium charged for such
49-19 insurance, a premium receipts tax of 3.85 percent of gross premiums
49-20 charged for such insurance. The term "premium" shall include all
49-21 premiums, membership fees, assessments, dues and any other
49-22 consideration for insurance. Such tax shall be in lieu of all
49-23 other insurance taxes. The insured shall, before March 1 next
49-24 succeeding the calendar year in which the insurance was so
49-25 procured, continued or renewed or another date prescribed by the
49-26 comptroller, pay the amount of the tax to the comptroller, on a
49-27 form prescribed by the comptroller <State Board of Insurance>. In
50-1 event of cancellation and rewriting of any such insurance contract
50-2 the additional premium for premium receipts tax purposes shall be
50-3 the premium in excess of the unearned premium of the canceled
50-4 insurance contract.
50-5 (e) If the insured fails to withhold from the premium the
50-6 amount of tax herein levied, the insured shall be liable for the
50-7 amount thereof and shall pay the same to the comptroller <State
50-8 Board of Insurance> within the time stated in Paragraph (c). If
50-9 the tax prescribed by this subsection is not paid within the time
50-10 stated in Paragraph (c), Subtitles A and B, Title 2, Tax Code, and
50-11 their subsequent amendments, apply <the tax shall be increased by a
50-12 penalty of 25 percent and by the amount of an additional penalty
50-13 computed at the rate of one percent per month or any part thereof
50-14 from the date such payment was due to the date paid>.
50-15 SECTION 3.05. Section 12A, Article 1.14-1, Insurance Code,
50-16 is amended to read as follows:
50-17 Sec. 12A. Exception in Respect of Filing of Reports of Taxes
50-18 Due. As respects corporations, the amount of taxes due and payable
50-19 to the State of Texas under the provisions or under authority of
50-20 Section 12 of this Article shall be reported directly to the
50-21 comptroller <State Board of Insurance> and shall be due when the
50-22 Franchise Tax Report is due or on another date prescribed by the
50-23 comptroller, any other provision of this Article to the contrary
50-24 notwithstanding. All companies or persons other than corporations
50-25 filing franchise tax returns shall report to the comptroller on or
50-26 before the date prescribed by the comptroller <State Board of
50-27 Insurance>.
51-1 SECTION 3.06. Sections 12(a) and (d), Article 1.14-2,
51-2 Insurance Code, are amended to read as follows:
51-3 (a) The premiums charged for surplus lines insurance are
51-4 subject to a premium receipts tax of 4.85 percent of gross premiums
51-5 charged for such insurance. The term premium includes all
51-6 premiums, membership fees, assessments, dues or any other
51-7 consideration for insurance. Such tax shall be in lieu of all
51-8 other insurance taxes. The surplus lines agent shall collect from
51-9 the insured the amount of the tax at the time of delivery of the
51-10 cover note, certificate of insurance, policy or other initial
51-11 confirmation of insurance, in addition to the full amount of the
51-12 gross premium charged by the insurer for the insurance. No agent
51-13 shall absorb such tax nor shall any agent, as an inducement for
51-14 insurance or for any other reason, rebate all or any part of such
51-15 tax or his commission. The surplus lines agent shall report<,
51-16 under oath,> to the comptroller <State Board of Insurance> within
51-17 30 days from the 1st day of January and July of each year the
51-18 amount of gross premiums paid for such insurance placed through him
51-19 in nonlicensed insurers, and shall pay to the comptroller <Board>
51-20 the tax provided for by this Article. If a surplus lines policy
51-21 covers risks or exposures only partially in this state, the tax
51-22 payable shall be computed on the portions of the premium which are
51-23 properly allocable to the risks or exposures located in this state.
51-24 In determining the amount of premiums taxable in this state, all
51-25 premiums written, procured, or received in this state and all
51-26 premiums on policies negotiated in this state shall be deemed
51-27 written on property or risks located or resident in this state,
52-1 except such premiums as are properly allocated or apportioned and
52-2 reported as taxable premiums of any other state or states. In
52-3 event of cancellation and rewriting of any surplus lines insurance
52-4 contract the additional premium for premium receipts tax purposes
52-5 shall be the premium in excess of the unearned premium of the
52-6 canceled insurance contract.
52-7 (d) The Attorney General, upon request of the State Board of
52-8 Insurance, shall proceed in the courts of this or any other state
52-9 or in any federal court or agency to recover <such> license fees
52-10 <or tax> not paid within the time prescribed in this Article
52-11 <section>. Notwithstanding the preceding sentence, Subtitles A and
52-12 B, Title 2, Tax Code, and their subsequent amendments, apply to a
52-13 tax collected under this article.
52-14 SECTION 3.07. Sections 8 and 9, Article 1.14-3, Insurance
52-15 Code, are amended to read as follows:
52-16 Sec. 8. Maintenance Tax. (a) The board annually shall
52-17 determine the rate of assessment of a maintenance tax to be paid on
52-18 an annual, <or> semiannual, or other periodic basis, as determined
52-19 by the comptroller. The rate of assessment may <basis and shall
52-20 collect a maintenance tax in an amount> not <to> exceed one percent
52-21 of the correctly reported gross premiums on all classes of
52-22 insurance covered by this article and paid through the exchange.
52-23 The comptroller shall collect the maintenance tax.
52-24 (b) After taking into account the unexpended funds produced
52-25 by this tax, if any, the board shall adjust the rate of assessment
52-26 each year to produce the amount of funds that the board estimates
52-27 will be necessary to pay all the expenses of regulating all classes
53-1 of insurance covered by this article during the succeeding year.
53-2 In making an estimate under this subsection, the board shall take
53-3 into account the requirement that the general revenue fund be
53-4 reimbursed under Article 4.19 of this code and its subsequent
53-5 amendments.
53-6 (c) The collected taxes shall be deposited in the State
53-7 Treasury to the credit of the general revenue fund to be
53-8 reallocated to the Texas Department <State Board> of Insurance
53-9 operating fund and shall be spent as authorized by legislative
53-10 appropriation <only> on warrants issued by the comptroller <of
53-11 public accounts> pursuant to duly certified requisitions of the
53-12 board. Amounts reallocated to the Texas Department of Insurance
53-13 operating fund under this subsection may be transferred to the
53-14 general revenue fund in accordance with Article 4.19 of this code
53-15 and its subsequent amendments.
53-16 (d) Not later than the 45th day before the date on which a
53-17 tax return for a period is due, the board shall advise the
53-18 comptroller of the rate of assessment for that period.
53-19 (e) If the board has not advised the comptroller of the rate
53-20 of assessment for a period as required by Subsection (d) of this
53-21 section, the amount of taxes due under this section for that period
53-22 for a taxpayer is an amount equal to 90 percent of the amount paid
53-23 by that taxpayer for the previous tax period. If the board advises
53-24 the comptroller of the rate of assessment for a period after taxes
53-25 are assessed under this subsection, the comptroller shall:
53-26 (1) advise each taxpayer in writing of the amount of
53-27 any additional taxes due; or
54-1 (2) refund any excess taxes paid.
54-2 Sec. 9. Application of This Article and Regulations. This
54-3 article and regulations promulgated by the board or the
54-4 comptroller, as applicable, apply to the exchange, its members, and
54-5 the insurance and reinsurance written through the exchange, except
54-6 to the extent exempt by regulations of the board or the
54-7 comptroller, as applicable. An exemption may not be unfairly
54-8 discriminatory or detrimental to the solvency of licensed insurers.
54-9 SECTION 3.08. Article 1.35B(a), Insurance Code, is amended
54-10 to read as follows:
54-11 (a) To defray the costs of creating, administering, and
54-12 operating the office of public insurance counsel, the comptroller
54-13 <board> shall collect the following assessments annually in
54-14 connection with the collection of other taxes imposed on insurers:
54-15 (1) each property and casualty insurer authorized to
54-16 do business in this state shall pay an annual assessment of 5.7
54-17 cents for each policy of property and casualty insurance in force
54-18 at year end in this state;
54-19 (2) each insurer shall pay an annual assessment of 3
54-20 cents for each individual policy, and for each certificate of
54-21 insurance evidencing coverage under a group policy, of life,
54-22 health, or accident insurance written for delivery and placed in
54-23 force with the initial premium thereon paid in full in this state
54-24 during each calendar year if the insurer is authorized to do
54-25 business in this state under:
54-26 (A) Chapter 3, 10, 11, 14, 20, 22, 23, or 25 of
54-27 this code;
55-1 (B) Chapter 113, Acts of the 53rd Legislature,
55-2 Regular Session, 1953 (Article 3.49-1, Vernon's Texas Insurance
55-3 Code);
55-4 (C) Section 1, Chapter 417, Acts of the 56th
55-5 Legislature, Regular Session, 1959 (Article 3.49-2, Vernon's Texas
55-6 Insurance Code);
55-7 (D) the Texas Employees Uniform Group Insurance
55-8 Benefits Act (Article 3.50-2, Vernon's Texas Insurance Code);
55-9 (E) the Texas State College and University
55-10 Employees Uniform Insurance Benefits Act (Article 3.50-3, Vernon's
55-11 Texas Insurance Code);
55-12 (F) Section 1, Chapter 123, Acts of the 60th
55-13 Legislature, Regular Session, 1967 (Article 3.51-3, Vernon's Texas
55-14 Insurance Code);
55-15 (G) Section 1, Chapter 387, Acts of the 55th
55-16 Legislature, Regular Session, 1957 (Article 3.62-1, Vernon's Texas
55-17 Insurance Code);
55-18 (H) Sections 1 to 3A and 4 to 13, Chapter 397,
55-19 Acts of the 54th Legislature, Regular Session, 1955 (Articles
55-20 3.70-1 to 3.70-3A and 3.70-4 to 3.70-11, Vernon's Texas Insurance
55-21 Code); or
55-22 (I) the Texas Health Maintenance Organization
55-23 Act (Chapter 20A, Vernon's Texas Insurance Code); and
55-24 (3) each title insurance company authorized to do
55-25 business in this state shall pay an annual assessment of 5.7 cents
55-26 for each owner policy and mortgage policy of title insurance
55-27 written for delivery in this state during each calendar year and
56-1 for which the full basic premium is charged.
56-2 SECTION 3.09. Articles 4.05 and 4.07, Insurance Code, are
56-3 amended to read as follows:
56-4 Art. 4.05. TAXES TO BE PAID BEFORE CERTIFICATE IS ISSUED.
56-5 <Upon the receipt of sworn statements showing the gross premium
56-6 receipts of any insurance organization, the Board of Insurance
56-7 Commissioners shall certify to the State Treasurer the amount of
56-8 taxes due by such insurance organization for the preceding year,
56-9 which taxes shall be paid to the State Treasurer for the use of the
56-10 State, by such company. Upon his receipt of such certificate and
56-11 the payment of such tax, the Treasurer shall execute a receipt
56-12 therefor, which receipt shall be evidence of the payment of such
56-13 taxes.> No <such> life insurance company shall receive a
56-14 certificate of authority to do business in this State until all
56-15 <such> taxes imposed under this code or another insurance law of
56-16 this state are paid. If, upon the examination of any company, or
56-17 in any other manner, the Board shall be informed that the gross
56-18 premium receipts of any year exceed in amount those shown by the
56-19 report thereof, theretofore made as above provided, the Board shall
56-20 report this fact to the comptroller. The comptroller shall
56-21 institute a collection action, as the comptroller considers
56-22 appropriate in accordance with Subtitles A and B, Title 2, Tax
56-23 Code, and their subsequent amendments, to collect taxes due on
56-24 unreported gross premium receipts. The comptroller shall deposit
56-25 taxes collected under this article to the credit of the general
56-26 revenue fund <it shall be the duty of such Board to file with the
56-27 State Treasurer a supplemental certificate showing the additional
57-1 amount of taxes due by such company, which shall be paid by such
57-2 company upon notice thereof. The State Treasurer if, within
57-3 fifteen (15) days after the receipt by him of any certificate or
57-4 supplemental certificate provided for by this article, the taxes
57-5 due as shown thereby have not been paid, shall report the facts to
57-6 the Attorney General, who shall immediately institute suit in the
57-7 proper court in Travis County to recover such taxes>.
57-8 Art. 4.07. FEES OF TEXAS DEPARTMENT <STATE BOARD> OF
57-9 INSURANCE. A. With respect to all authorized insurers writing
57-10 classes of insurance in this State <which are covered by Chapter 3
57-11 of this code>, the Texas Department <State Board> of Insurance
57-12 shall charge and receive for the use of the State fees in an amount
57-13 to be determined by the department <Board> not to exceed the
57-14 following:
57-15 (1) <For filing the annual statement, $500.00.>
57-16 <(2)> For filing an amendment to a certificate of
57-17 authority if the charter is not amended, $100.00.
57-18 (2) <(3)> For affixing the official seal and
57-19 certifying to the seal, $20.00.
57-20 (3) <(4)> For reservation of name, $200.00.
57-21 (4) <(5)> For renewal of reservation of name, $50.00.
57-22 (5) <(6)> For filing an application for admission of a
57-23 foreign or alien company, $4,000.00.
57-24 (6) <(7)> For filing an original charter of a company
57-25 including issuance of a certificate of authority, $3,000.00.
57-26 (7) <(8)> For filing an amendment to a charter if a
57-27 hearing is held, $500.00.
58-1 (8) <(9)> For filing an amendment to a charter if a
58-2 hearing is not held, $250.00.
58-3 (9) <(10)> For filing a designation of an attorney for
58-4 service of process or amendment of the designation, $50.00.
58-5 (10) <(11)> For filing a copy of a total reinsurance
58-6 agreement, $1,500.00.
58-7 (11) <(12)> For filing a copy of a partial reinsurance
58-8 agreement, $300.00.
58-9 (12) <(13)> For accepting a security deposit, $200.00.
58-10 (13) <(14)> For substitution or amendment of a
58-11 security deposit, $100.00.
58-12 (14) <(15)> For certification of statutory deposits,
58-13 $20.00.
58-14 (15) <(16)> For filing a notice of intent to relocate
58-15 books and records pursuant to Article 1.28 of this code, $300.00.
58-16 (16) <(17)> For filing a statement pursuant to Section
58-17 5, Article 21.49-1 of this code, for the first $9,900,000.00 of the
58-18 purchase price or consideration, $1,000.00.
58-19 (17) <(18)> For filing a statement pursuant to Section
58-20 5, Article 21.49-1 of this code, if the purchase price or
58-21 consideration exceeds $9,900,000.00, an additional $500.00 for each
58-22 $10,000,000.00 exceeding $9,900,000.00, but not more than
58-23 $10,000.00 total fee under this subdivision and the preceding
58-24 subdivision.
58-25 (18) <(19)> For filing a registration statement
58-26 pursuant to Section 3, Article 21.49-1 of this code, $300.00.
58-27 (19) <(20)> For filing for review pursuant to Section
59-1 4, Article 21.49-1 or Article 22.15 of this code, $500.00.
59-2 (20) <(21)> For filing of a direct reinsurance
59-3 agreement pursuant to Article 22.19 of this code, $300.00.
59-4 (21) <(22)> For filing for approval of a merger
59-5 pursuant to Article 21.25 of this code, $1,500.00.
59-6 (22) <(23)> For filing for approval of reinsurance
59-7 pursuant to Article 21.26 of this code, $1,500.00.
59-8 (23) <(24)> For filing of restated articles of
59-9 incorporation for a <both> domestic, <and> foreign, or alien
59-10 company <companies>, $500.00.
59-11 (24) <(25)> For filing a joint control agreement,
59-12 $100.00.
59-13 (25) <(26)> For filing a substitution or amendment to
59-14 a joint control agreement, $40.00.
59-15 (26) <(27)> For filing a change of attorney in fact,
59-16 $500.00.
59-17 <(28) For valuing policies of life insurance, and for
59-18 each one million of insurance or fraction thereof, $10.00.>
59-19 B. For an authorized insurer writing a class of insurance in
59-20 this state that is subject to Chapter 3 of this code, the Texas
59-21 Department of Insurance shall charge and the comptroller shall
59-22 collect for the use of the state fees in an amount to be determined
59-23 by the Board not to exceed the following:
59-24 (1) For valuing policies of life insurance, and for
59-25 each one million dollars of insurance or fraction thereof, $10.00.
59-26 (2) For filing the annual statement, $500.00.
59-27 The provisions of Subtitles A and B, Title 2, Tax Code, and
60-1 their subsequent amendments, apply to fees collected by the
60-2 comptroller under this section.
60-3 C. The department <Board> shall, within the limits fixed by
60-4 this Article <section>, prescribe the fees to be charged under this
60-5 Article <section>.
60-6 D. Except as provided by Section B of this Article, the
60-7 <The> insurers subject to the fees imposed by this Article
60-8 <section> shall include any and all stock and mutual insurance
60-9 companies, local mutual aid associations, statewide mutual
60-10 assessment companies, group hospital service plan corporations, and
60-11 stipulated premium insurance companies.
60-12 E. <B.> The Texas Department <State Board> of Insurance
60-13 shall set and collect a sales charge for making copies of any paper
60-14 of record in the State Board of Insurance, such charge to be in an
60-15 amount deemed sufficient to reimburse the State for the actual
60-16 expense; provided, however, that the department <State Board of
60-17 Insurance> may make and distribute copies of papers containing
60-18 rating information without charge or for such charge as the Board
60-19 shall deem appropriate to administer the premium rating laws by
60-20 properly disseminating such rating information; and provided
60-21 further that Article 5.29, Texas Insurance Code, shall remain in
60-22 full force and effect without amendment.
60-23 F. <C.> All fees collected by virtue of Section A of this
60-24 Article shall be deposited in the State Treasury to the credit of
60-25 the Texas Department <State Board> of Insurance operating fund and
60-26 appropriated to the use and benefit of the department <State Board
60-27 of Insurance> to be used in the payment of salaries and other
61-1 expenses arising out of and in connection with the examination of
61-2 insurance companies and/or the licensing of insurance companies and
61-3 investigations of violations of the insurance laws of this State in
61-4 such manner as provided in the general appropriation bill.
61-5 G. All fees collected by the comptroller under Section B of
61-6 this Article shall be deposited in the general revenue fund. Those
61-7 amounts are available for appropriation to the Texas Department of
61-8 Insurance for its use in paying salaries and other expenses arising
61-9 out of the examination or licensing of insurance companies and
61-10 investigations of the violations of this code or other insurance
61-11 laws of this State as provided by the General Appropriations Act.
61-12 H. <D.> Notwithstanding any other provision of this article,
61-13 any insurer to which this article applies and whose gross premium
61-14 receipts are less than $450,000.00, according to its annual
61-15 statement for the preceding year ending December 31, shall be
61-16 required to pay only one-half the amount of the fees required to be
61-17 paid under this article and as set by the State Board of Insurance.
61-18 SECTION 3.10. Sections 1, 6, 11, and 14, Article 4.10,
61-19 Insurance Code, are amended to read as follows:
61-20 Sec. 1. Payment of tax. Every insurance carrier, including
61-21 Lloyd's and reciprocal exchanges and any other organization or
61-22 concern receiving gross premiums from the business of fire, marine,
61-23 marine inland, accident, credit, livestock, fidelity, guaranty,
61-24 surety, casualty, workers' compensation, employers' liability, or
61-25 any other kind or character of insurance, except title insurance
61-26 and except as provided in Sections 2, 3, and 4 of this article,
61-27 shall pay to the comptroller <commissioner of insurance> for
62-1 transmittal to the state treasurer a <an annual> tax upon such
62-2 gross premium receipts as provided in this article. Any such
62-3 insurance carrier doing other kinds of insurance business shall pay
62-4 the tax levied upon its gross premiums received from such other
62-5 kinds of business as provided in Articles 4.03 and 4.11 of this
62-6 code <Article 4769 and Article 7064a, Revised Civil Statutes of
62-7 Texas, 1925>.
62-8 Sec. 6. Time of Filing and Payment. (a) A premium tax
62-9 return for each taxable year ending the 31st day of December
62-10 preceding shall be filed and the total amount of the tax due under
62-11 this article shall be paid on or before the 1st day of March of
62-12 each year.
62-13 (b) A periodic <quarterly> prepayment of premium tax must be
62-14 made on March 1st, May 15th, August 1st <15th>, and November 15th
62-15 by all insurers with net tax liability for the previous calendar
62-16 year in excess of $1,000. The tax paid on each date must equal
62-17 one-fourth of the total premium tax paid for the previous calendar
62-18 year. Should no premium tax have been paid during the previous
62-19 calendar year, the quarterly payment shall equal the tax which
62-20 would be owed on the gross premium receipts during the previous
62-21 calendar quarter ending March 31st, June 30th, September 30th, or
62-22 December 31st at the minimum tax rate specified by law. The
62-23 comptroller <State Board of Insurance> is authorized to certify for
62-24 refund to the State Treasurer any overpayment of premium taxes that
62-25 results from the quarterly prepayment system herein established.
62-26 (c) The comptroller by rule may change the dates for
62-27 reporting and payment of taxes to improve operating efficiencies
63-1 within the agency, so long as a system of quarterly prepayment of
63-2 taxes imposed by this article is maintained <The State Board of
63-3 Insurance may establish such rules, regulations, minimum standards,
63-4 or limitations which are fair and reasonable as may be appropriate
63-5 for the augmentation and implementation of this article>.
63-6 Sec. 11. Annual Tax Return. Each insurance carrier which is
63-7 liable under this article for tax on premiums shall file a tax
63-8 return annually<, under oath by two officers of such carrier,> on
63-9 forms prescribed by the comptroller <State Board of Insurance>.
63-10 Sec. 14. No Other Taxes to be Levied or Collected;
63-11 Exceptions. No occupational tax shall be levied on insurance
63-12 carriers or companies herein subjected to this premium receipts tax
63-13 by any county, city, or town. The taxes in this article shall
63-14 constitute all taxes collectible under the laws of Texas against
63-15 any such insurance carrier, except maintenance taxes specifically
63-16 levied under the laws of Texas and assessed by the State Board of
63-17 Insurance and administered by the comptroller <to support the
63-18 various activities of the divisions of the State Board of
63-19 Insurance>.
63-20 No other tax shall be levied or collected from any insurance
63-21 carrier by the state, county, or city or any town, but this law
63-22 shall not be construed to prohibit the levy and collection of
63-23 state, county, and municipal taxes upon the real and personal
63-24 property of such carrier.
63-25 SECTION 3.11. Sections 1, 3, 6, 10, and 13, Article 4.11,
63-26 Insurance Code, are amended to read as follows:
63-27 Sec. 1. Insurance Carriers Required to Pay Premium Tax.
64-1 Every insurance carrier receiving premiums from the business of
64-2 life insurance, accident insurance, health insurance, life and
64-3 accident insurance, life and health insurance, health and accident
64-4 insurance, or life, health, and accident insurance, including
64-5 variable life insurance, credit life insurance, and credit accident
64-6 and health insurance for profit or otherwise or for mutual benefit
64-7 or protection, in this state, shall pay to the comptroller <State
64-8 Board of Insurance> for transmittal to the state treasurer a <an
64-9 annual> tax upon its gross premiums as provided in this article.
64-10 Sec. 3. Date for Filing Return and Paying Tax. A premium
64-11 tax return for each tax year ending the 31st day of December
64-12 preceding shall be filed and the total amount of the tax due under
64-13 this article shall be paid on or before either March 1 of each
64-14 year, <or> the date the annual statement for such carrier is
64-15 required to be filed with the State Board of Insurance, or another
64-16 date prescribed by the comptroller.
64-17 Sec. 6. Annual Sworn Returns; Forms; Additional Information.
64-18 Each insurance carrier which is liable under this article for tax
64-19 on premiums shall file a tax return annually<, under oath by two
64-20 officers of such carrier,> on forms prescribed by the comptroller
64-21 <State Board of Insurance>. The comptroller <commissioner of
64-22 insurance> may require such carrier to file any relevant additional
64-23 information reasonably necessary to verify the amount of tax due.
64-24 Sec. 10. Failure to Pay Taxes. Any insurance carrier
64-25 failing to pay all taxes imposed by this article shall be subject
64-26 to the provisions of Article 4.05, Insurance Code, and of Subtitles
64-27 A and B, Title 2, Tax Code, and their subsequent amendments.
65-1 Sec. 13. Prepayment of Tax; Rules, Regulations, Standards,
65-2 Limitations. (a) A periodic <quarterly> prepayment of premium tax
65-3 must be made on March 1, May 15, August 1 <15>, and November 15 by
65-4 all insurers with net tax liability for the previous calendar year
65-5 in excess of $1,000. The tax paid on each date must equal
65-6 one-fourth of the total premium tax paid for the previous calendar
65-7 year. Should no premium tax have been paid during the previous
65-8 calendar year, the quarterly payment shall equal the tax which
65-9 would be owed on the gross premium receipts during the previous
65-10 calendar quarter ending March 31, June 30, September 30, or
65-11 December 31 at the minimum tax rate specified by law. The
65-12 comptroller <State Board of Insurance> is authorized to certify for
65-13 refund to the state treasurer any overpayment of premium taxes that
65-14 results from the <quarterly> prepayment system herein established.
65-15 (b) The comptroller by rule may change the dates for
65-16 reporting and payment of taxes to improve operating efficiencies
65-17 within the agency, so long as a system of quarterly prepayment of
65-18 taxes imposed by this article is maintained <The State Board of
65-19 Insurance may establish such rules, regulations, minimum standards,
65-20 or limitations which are fair and reasonable as may be appropriate
65-21 for the augmentation and implementation of this article>.
65-22 SECTION 3.12. Sections 2, 3, and 4, Article 4.11C, Insurance
65-23 Code, are amended to read as follows:
65-24 Sec. 2. A reciprocal exchange may elect to be subject to the
65-25 tax imposed under Article 4.10 of this code, or to be subject to
65-26 the tax imposed under Article 4.11B of this code. A reciprocal
65-27 exchange that elects to be taxed under Article 4.10 of this code
66-1 must file with the comptroller <commissioner of insurance> not
66-2 later than the 31st day before the day on which the tax year for
66-3 which the election is to be effective begins a written statement on
66-4 a form adopted by the comptroller <State Board of Insurance>
66-5 stating that an election has been made. If a reciprocal exchange
66-6 does not file an election as provided by this article or has
66-7 withdrawn the election, the reciprocal exchange is subject to the
66-8 tax imposed under Article 4.11B of this code.
66-9 Sec. 3. A reciprocal exchange that elects to be taxed under
66-10 Article 4.10 of this code will continue to be taxed under that
66-11 article for each tax year until written notice is given to the
66-12 comptroller <commissioner> that the election to be taxed under that
66-13 article is withdrawn. The notice of withdrawal must be filed with
66-14 the comptroller <commissioner of insurance> not later than the 31st
66-15 day before the beginning of the tax year for which the withdrawal
66-16 is to be effective.
66-17 Sec. 4. The comptroller <State Board of Insurance> by rule
66-18 may adopt necessary forms and procedures to carry out this article.
66-19 The comptroller by rule may change the dates for reporting and
66-20 payment of taxes to improve operating efficiencies within the
66-21 agency, so long as a system of quarterly prepayment of taxes
66-22 imposed by this article is maintained.
66-23 SECTION 3.13. Article 4.17, Insurance Code, is amended by
66-24 amending Subsections (a), (c), (d), and (e) and adding Subsections
66-25 (g) and (h) to read as follows:
66-26 (a) The State Board of Insurance shall annually determine
66-27 the rate of assessment of a maintenance tax to be paid on an
67-1 annual, <or> semiannual, or other periodic basis, as determined by
67-2 the comptroller. The rate of assessment may <basis and collect a
67-3 maintenance tax in an amount> not <to> exceed .04 percent of the
67-4 correctly reported gross premiums of life, health, and accident
67-5 insurance coverages and the gross considerations for annuity and
67-6 endowment contracts collected by all authorized insurers writing
67-7 life, health, and accident insurance, annuity, or endowment
67-8 contracts in this state. The comptroller shall collect the
67-9 maintenance tax.
67-10 (c) The State Board of Insurance, after taking into account
67-11 the unexpended funds produced by this tax, if any, shall adjust the
67-12 rate of assessment each year to produce the amount of funds that it
67-13 estimates will be necessary to pay all the expenses of regulating
67-14 life, health, and accident insurers during the succeeding year. In
67-15 making an estimate under this subsection, the board shall take into
67-16 account the requirement that the general revenue fund be reimbursed
67-17 under Article 4.19 of this code.
67-18 (d) The taxes collected shall be deposited in the state
67-19 treasury to the credit of the general revenue fund to be
67-20 reallocated to the Texas Department <State Board> of Insurance
67-21 operating fund and shall be spent as authorized by legislative
67-22 appropriation <only> on warrants issued by the comptroller <of
67-23 public accounts> pursuant to duly certified requisitions of the
67-24 State Board of Insurance. Amounts reallocated to the Texas
67-25 Department of Insurance operating fund under this subsection may be
67-26 transferred to the general revenue fund in accordance with Article
67-27 4.19 of this code.
68-1 (e) The comptroller <State Board of Insurance> may collect
68-2 the tax assessed under this article on a semiannual or other
68-3 periodic basis <semiannually> from those insurers whose tax
68-4 liability under this article for the previous year was $2,000 or
68-5 more. <The State Board of Insurance may prescribe and adopt
68-6 reasonable rules to implement these payments that are not
68-7 inconsistent with this article.>
68-8 (g) Not later than the 45th day before the date on which a
68-9 tax return for a period is due, the board shall advise the
68-10 comptroller of the rate of assessment for that period.
68-11 (h) If the board has not advised the comptroller of the rate
68-12 of assessment for a period as required by Subsection (g) of this
68-13 article, the amount of taxes due under this article for that period
68-14 for a taxpayer is an amount equal to 90 percent of the amount paid
68-15 by that taxpayer for the previous tax period. If the board advises
68-16 the comptroller of the rate of assessment for a period after taxes
68-17 are assessed under this subsection, the comptroller shall:
68-18 (1) advise each taxpayer in writing of the amount of
68-19 any additional taxes due; or
68-20 (2) refund any excess taxes paid.
68-21 SECTION 3.14. Chapter 4, Insurance Code, is amended by
68-22 adding Articles 4.18 and 4.19 to read as follows:
68-23 Art. 4.18. TAX ADMINISTRATION FUNCTIONS; COOPERATION BETWEEN
68-24 DEPARTMENT AND COMPTROLLER. (a) The board, the commissioner, and
68-25 the comptroller shall cooperate fully in performing their
68-26 respective duties under this code and other insurance laws of this
68-27 state.
69-1 (b) The department shall comply with all reasonable requests
69-2 of the comptroller relating to the sharing of information gathered
69-3 or compiled in connection with functions carried out under this
69-4 code or other insurance laws of this state.
69-5 (c) The department shall maintain the federal identification
69-6 number of all entities subject to regulation under this code or
69-7 another insurance law of this state and shall include the
69-8 appropriate number in any communication to or information shared
69-9 with the comptroller.
69-10 Art. 4.19. TAX ADMINISTRATION FUNCTIONS; REIMBURSEMENT OF
69-11 GENERAL REVENUE FUND. (a) The department shall reimburse the
69-12 general revenue fund for the amount of expenses incurred by the
69-13 comptroller in administering the taxes imposed under this code or
69-14 another insurance law of this state in accordance with this
69-15 article.
69-16 (b) The comptroller shall certify to the board the total
69-17 amount of expenses estimated to be required to perform the
69-18 comptroller's duties under this code or another insurance law of
69-19 this state for each fiscal biennium. The comptroller shall provide
69-20 copies of the certification to the budget division of the
69-21 governor's office and to the Legislative Budget Board.
69-22 (c) The amount certified by the comptroller under Subsection
69-23 (b) of this article shall be transferred from the Texas Department
69-24 of Insurance operating fund to the general revenue fund. It is the
69-25 intent of the legislature that the money in the department's
69-26 operating fund that is to be transferred into the general revenue
69-27 fund under this subsection should reflect the revenues from the
70-1 various maintenance taxes paid by insurers under this code or other
70-2 insurance laws of this state.
70-3 (d) In setting the maintenance taxes for each fiscal year,
70-4 the commissioner shall ensure that the amount of the taxes imposed
70-5 is sufficient to fully reimburse the general revenue fund for the
70-6 expenses incurred by the comptroller in administering the taxes
70-7 imposed under this code and other insurance laws of this state. If
70-8 the amount of maintenance taxes collected is insufficient to
70-9 reimburse the general revenue fund for the expenses incurred by the
70-10 comptroller in administering the taxes imposed under this code and
70-11 other insurance laws of this state, other money in the department's
70-12 operating fund shall be used to reimburse the general revenue fund
70-13 in accordance with Subsection (b) of this article.
70-14 SECTION 3.15. Articles 5.12, 5.24, 5.49, and 5.68, Insurance
70-15 Code, are amended to read as follows:
70-16 Art. 5.12. Maintenance Tax on Gross Premiums. (a) The
70-17 State of Texas by and through the State Board of Insurance shall
70-18 annually determine the rate of assessment of a maintenance tax to
70-19 be paid <and collect> on an annual or semiannual basis, as
70-20 determined by the comptroller. The rate of assessment may <Board,
70-21 a maintenance tax in an amount> not <to> exceed one-fifth of one
70-22 percent of the correctly reported gross motor vehicle insurance
70-23 premiums of all authorized insurers writing motor vehicle insurance
70-24 in this state. The comptroller shall collect the maintenance tax.
70-25 (b) The tax required by this article is in addition to all
70-26 other taxes now imposed or that may be subsequently imposed and
70-27 that are not in conflict with this article.
71-1 (c) The State Board of Insurance, after taking into account
71-2 the unexpended funds produced by this tax, if any, shall adjust the
71-3 rate of assessment each year to produce the amount of funds that it
71-4 estimates will be necessary to pay all the expenses of regulating
71-5 motor vehicle insurance during the succeeding year. In making an
71-6 estimate under this subsection, the board shall take into account
71-7 the requirement that the general revenue fund be reimbursed under
71-8 Article 4.19 of this code.
71-9 (d) The taxes collected shall be deposited in the State
71-10 Treasury to the credit of the general revenue fund to be
71-11 reallocated to the Texas Department <State Board> of Insurance
71-12 operating fund and shall be spent as authorized by legislative
71-13 appropriation only on warrants issued by the comptroller <of public
71-14 accounts> pursuant to duly certified requisitions of the State
71-15 Board of Insurance. Amounts reallocated to the Texas Department of
71-16 Insurance operating fund under this subsection may be transferred
71-17 to the general revenue fund in accordance with Article 4.19 of this
71-18 code.
71-19 (e) The comptroller <State Board of Insurance> may elect to
71-20 collect on a semiannual or other periodic basis the tax assessed
71-21 under this article only from insurers whose tax liability under
71-22 this article for the previous tax year was $2,000 or more<. The
71-23 State Board of Insurance may prescribe and adopt reasonable rules
71-24 to implement such payments as it deems advisable, not inconsistent
71-25 with this article>.
71-26 (f) Not later than the 45th day before the date on which a
71-27 tax return for a period is due, the board shall advise the
72-1 comptroller of the rate of assessment for that period.
72-2 (g) If the board has not advised the comptroller of the rate
72-3 of assessment for a period as required by Subsection (f) of this
72-4 article, the amount of taxes due under this article for that period
72-5 for a taxpayer is an amount equal to 90 percent of the amount paid
72-6 by that taxpayer for the previous tax period. If the board advises
72-7 the comptroller of the rate of assessment for a period after taxes
72-8 are assessed under this subsection, the comptroller shall:
72-9 (1) advise each taxpayer in writing of the amount of
72-10 any additional taxes due; or
72-11 (2) refund any excess taxes paid.
72-12 Art. 5.24. Maintenance Tax on Gross Premiums. (a) The
72-13 State of Texas by and through the State Board of Insurance shall
72-14 annually determine the rate of assessment of a maintenance tax to
72-15 be paid <and collect> on an annual or semiannual basis, as
72-16 determined by the comptroller. The rate of assessment may <Board,
72-17 a maintenance tax in an amount> not <to> exceed two-fifths of one
72-18 percent of the correctly reported gross premiums of all classes of
72-19 insurance covered by this subchapter of all authorized insurers
72-20 writing those classes of insurance in this state. The comptroller
72-21 shall collect the maintenance tax.
72-22 (b) The tax required by this article is in addition to all
72-23 other taxes now imposed or that may be subsequently imposed and
72-24 that are not in conflict with this article.
72-25 (c) The State Board of Insurance, after taking into account
72-26 the unexpended funds produced by this tax, if any, shall adjust the
72-27 rate of assessment each year to produce the amount of funds that it
73-1 estimates will be necessary to pay all the expenses of regulating
73-2 all classes of insurance covered by this subchapter during the
73-3 succeeding year. In making an estimate under this subsection, the
73-4 board shall take into account the requirement that the general
73-5 revenue fund be reimbursed under Article 4.19 of this code.
73-6 (d) The taxes collected shall be deposited in the State
73-7 Treasury to the credit of the general revenue fund to be
73-8 reallocated to the Texas Department <State Board> of Insurance
73-9 operating fund and shall be spent as authorized by legislative
73-10 appropriation <only> on warrants issued by the comptroller <of
73-11 public accounts> pursuant to duly certified requisitions of the
73-12 State Board of Insurance. Amounts reallocated to the Texas
73-13 Department of Insurance operating fund under this subsection may be
73-14 transferred to the general revenue fund in accordance with Article
73-15 4.19 of this code.
73-16 (e) The comptroller <State Board of Insurance> may elect to
73-17 collect on a semiannual basis the tax assessed under this article
73-18 only from insurers whose tax liability under this article for the
73-19 previous tax year was $2,000 or more<. The State Board of
73-20 Insurance may prescribe and adopt reasonable rules to implement
73-21 such payments as it deems advisable, not inconsistent with this
73-22 article>.
73-23 (f) Not later than the 45th day before the date on which a
73-24 tax return for a period is due, the board shall advise the
73-25 comptroller of the rate of assessment for that period.
73-26 (g) If the board has not advised the comptroller of the rate
73-27 of assessment for a period as required by Subsection (f) of this
74-1 article, the amount of taxes due under this article for that period
74-2 for a taxpayer is an amount equal to 90 percent of the amount paid
74-3 by that taxpayer for the previous tax period. If the board advises
74-4 the comptroller of the rate of assessment for a period after taxes
74-5 are assessed under this subsection, the comptroller shall:
74-6 (1) advise each taxpayer in writing of the amount of
74-7 any additional taxes due; or
74-8 (2) refund any excess taxes paid.
74-9 Art. 5.49. Maintenance tax on gross premiums. (a) The
74-10 State of Texas by and through the State Board of Insurance shall
74-11 annually determine the rate of assessment of a maintenance tax to
74-12 be paid on an annual or semiannual basis, as determined by the
74-13 comptroller. The rate of assessment may <Board, and collect a
74-14 maintenance tax in an amount> not <to> exceed one and one-fourth
74-15 percent of the correctly reported gross premiums of fire,
74-16 lightning, tornado, windstorm, hail, smoke or smudge, cyclone,
74-17 earthquake, volcanic eruption, rain, frost and freeze, weather or
74-18 climatic conditions, excess or deficiency of moisture, flood, the
74-19 rising of the waters of the ocean or its tributaries, bombardment,
74-20 invasion, insurrection, riot, civil war or commotion, military or
74-21 usurped power, any order of a civil authority made to prevent the
74-22 spread of a conflagration, epidemic, or catastrophe, vandalism or
74-23 malicious mischief, strike or lockout, explosion as defined in
74-24 Article 5.52 of this code, water or other fluid or substance
74-25 resulting from the breakage or leakage of sprinklers, pumps, or
74-26 other apparatus erected for extinguishing fires, water pipes, or
74-27 other conduits or containers insurance coverage collected by all
75-1 authorized insurers writing those types of insurance in this state.
75-2 The comptroller shall collect the maintenance tax.
75-3 (b) The tax required by this article is in addition to all
75-4 other taxes now imposed or that may be subsequently imposed and
75-5 that are not in conflict with this article.
75-6 (c) The State Board of Insurance, after taking into account
75-7 the unexpended funds produced by this tax, if any, shall adjust the
75-8 rate of assessment each year to produce the amount of funds that it
75-9 estimates will be necessary to pay all the expenses of regulating
75-10 all classes of insurance specified by this subchapter during the
75-11 succeeding year. In making an estimate under this subsection, the
75-12 board shall take into account the requirement that the general
75-13 revenue fund be reimbursed under Article 4.19 of this code.
75-14 (d) The taxes collected shall be deposited in the State
75-15 Treasury to the credit of the general revenue fund to be
75-16 reallocated to the Texas Department <State Board> of Insurance
75-17 operating fund and shall be spent as authorized by legislative
75-18 appropriation <only> on warrants issued by the comptroller <of
75-19 public accounts> pursuant to duly certified requisitions of the
75-20 State Board of Insurance. Amounts reallocated to the Texas
75-21 Department of Insurance operating fund under this subsection may be
75-22 transferred to the general revenue fund in accordance with Article
75-23 4.19 of this code.
75-24 (e) The comptroller <State Board of Insurance> may elect to
75-25 collect on a semiannual or other periodic basis the tax assessed
75-26 under this article only from insurers whose tax liability under
75-27 this article for the previous tax year was $2,000 or more<. The
76-1 State Board of Insurance may prescribe and adopt reasonable rules
76-2 to implement such payments as it deems advisable, not inconsistent
76-3 with this article>.
76-4 (f) Not later than the 45th day before the date on which a
76-5 tax return for a period is due, the board shall advise the
76-6 comptroller of the rate of assessment for that period.
76-7 (g) If the board has not advised the comptroller of the rate
76-8 of assessment for a period as required by Subsection (f) of this
76-9 article, the amount of taxes due under this article for that period
76-10 for a taxpayer is an amount equal to 90 percent of the amount paid
76-11 by that taxpayer for the previous tax period. If the board advises
76-12 the comptroller of the rate of assessment for a period after taxes
76-13 are assessed under this subsection, the comptroller shall:
76-14 (1) advise each taxpayer in writing of the amount of
76-15 any additional taxes due; or
76-16 (2) refund any excess taxes paid.
76-17 Art. 5.68. Maintenance tax on gross premiums. (a) The
76-18 State of Texas by and through the State Board of Insurance shall<,
76-19 as determined by the Board,> annually determine the rate of
76-20 assessment of a maintenance tax <and collect> on an annual or
76-21 semiannual basis. The comptroller shall collect the maintenance
76-22 tax<,> from each stock company, mutual company, reciprocal or
76-23 interinsurance exchange, and Lloyd's association. The rate of
76-24 assessment may <a maintenance tax in an amount> not <to> exceed
76-25 three-fifths of one percent of the correctly reported gross
76-26 workers' compensation insurance premiums of all authorized insurers
76-27 writing workers' compensation insurance in this state.
77-1 (b) The tax required by this article is in addition to all
77-2 other taxes now imposed or that may be subsequently imposed and
77-3 that are not in conflict with this article.
77-4 (c) The State Board of Insurance, after taking into account
77-5 the unexpended funds produced by this tax, if any, shall adjust the
77-6 rate of assessment each year to produce the amount of funds that it
77-7 estimates will be necessary to pay all the expenses of regulating
77-8 workers' compensation insurance during the succeeding year. In
77-9 making an estimate under this subsection, the board shall take into
77-10 account the requirement that the general revenue fund be reimbursed
77-11 under Article 4.19 of this code.
77-12 (d) The taxes collected shall be deposited in the State
77-13 Treasury to the credit of the general revenue fund to be
77-14 reallocated to the Texas Department <State Board> of Insurance
77-15 operating fund and shall be spent as authorized by legislative
77-16 appropriation <only> on warrants issued by the comptroller <of
77-17 public accounts> pursuant to duly certified requisitions of the
77-18 State Board of Insurance. Amounts reallocated to the Texas
77-19 Department of Insurance operating fund under this subsection may be
77-20 transferred to the general revenue fund in accordance with Article
77-21 4.19 of this code.
77-22 (e) The comptroller <State Board of Insurance> may elect to
77-23 collect on a semiannual basis the tax assessed under this article
77-24 only from insurers whose tax liability under this article for the
77-25 previous tax year was $2,000 or more<. The State Board of
77-26 Insurance may prescribe and adopt reasonable rules to implement
77-27 such payments as it deems advisable, not inconsistent with this
78-1 article>.
78-2 (f) Not later than the 45th day before the date on which a
78-3 tax return for a period is due, the board shall advise the
78-4 comptroller of the rate of assessment for that period.
78-5 (g) If the board has not advised the comptroller of the rate
78-6 of assessment for a period as required by Subsection (f) of this
78-7 article, the amount of taxes due under this article for that period
78-8 for a taxpayer is an amount equal to 90 percent of the amount paid
78-9 by that taxpayer for the previous tax period. If the board advises
78-10 the comptroller of the rate of assessment for a period after taxes
78-11 are assessed under this subsection, the comptroller shall:
78-12 (1) advise each taxpayer in writing of the amount of
78-13 any additional taxes due; or
78-14 (2) refund any excess taxes paid.
78-15 SECTION 3.16. Section 10(b), Article 5.76-5, Insurance Code,
78-16 is amended to read as follows:
78-17 (b) The maintenance tax surcharge shall be set in an amount
78-18 sufficient to pay all debt service on the bonds. The maintenance
78-19 tax surcharge is set by the State Board of Insurance in the same
78-20 time and shall be collected by the comptroller on behalf of the
78-21 fund in the same manner as provided under Article 5.68 of this
78-22 code.
78-23 SECTION 3.17. Articles 5.91 and 9.46, Insurance Code, are
78-24 amended to read as follows:
78-25 Art. 5.91. Maintenance Tax on Gross Premiums. (a) The
78-26 State of Texas by and through the State Board of Insurance shall
78-27 annually determine the rate of assessment of a maintenance tax to
79-1 be paid on an annual or semiannual basis, as determined by the
79-2 comptroller. The rate of assessment may <Board, and collect a
79-3 maintenance tax in an amount> not <to> exceed two-fifths of one
79-4 percent of the correctly reported gross premiums on all classes of
79-5 insurance covered by this subchapter of all authorized insurers
79-6 writing those classes of insurance in this state. The comptroller
79-7 shall collect the maintenance tax.
79-8 (b) The tax required by this article is in addition to all
79-9 other taxes now imposed or that may be subsequently imposed and
79-10 that are not in conflict with this article.
79-11 (c) The State Board of Insurance, after taking into account
79-12 the unexpended funds produced by this tax, if any, shall adjust the
79-13 rate of assessment each year to produce the amount of funds that it
79-14 estimates will be necessary to pay all the expenses of regulating
79-15 all classes of insurance specified by this subchapter during the
79-16 succeeding year. In making an estimate under this subsection, the
79-17 board shall take into account the requirement that the general
79-18 revenue fund be reimbursed under Article 4.19 of this code.
79-19 (d) The taxes collected shall be deposited in the State
79-20 Treasury to the credit of the general revenue fund to be
79-21 reallocated to the Texas Department <State Board> of Insurance
79-22 operating fund and shall be spent as authorized by legislative
79-23 appropriation <only> on warrants issued by the comptroller <of
79-24 public accounts> pursuant to duly certified requisitions of the
79-25 State Board of Insurance. Amounts reallocated to the Texas
79-26 Department of Insurance operating fund under this subsection may be
79-27 transferred to the general revenue fund in accordance with Article
80-1 4.19 of this code.
80-2 (e) The comptroller <State Board of Insurance> may elect to
80-3 collect on a semiannual basis the tax assessed under this article
80-4 only from insurers whose tax liability under this article for the
80-5 previous tax year was $2,000 or more<. The State Board of
80-6 Insurance may prescribe and adopt reasonable rules to implement
80-7 such payments as it deems advisable, not inconsistent with this
80-8 article>.
80-9 (f) Not later than the 45th day before the date on which a
80-10 tax return for a period is due, the board shall advise the
80-11 comptroller of the rate of assessment for that period.
80-12 (g) If the board has not advised the comptroller of the rate
80-13 of assessment for a period as required by Subsection (f) of this
80-14 article, the amount of taxes due under this article for that period
80-15 for a taxpayer is an amount equal to 90 percent of the amount paid
80-16 by that taxpayer for the previous tax period. If the board advises
80-17 the comptroller of the rate of assessment for a period after taxes
80-18 are assessed under this subsection, the comptroller shall:
80-19 (1) advise each taxpayer in writing of the amount of
80-20 any additional taxes due; or
80-21 (2) refund any excess taxes paid.
80-22 Art. 9.46. Maintenance Tax on Gross Premiums. (a) The
80-23 State of Texas by and through the State Board of Insurance shall
80-24 annually determine the rate of assessment of a maintenance tax to
80-25 be paid on an annual, <or> semiannual, or other periodic basis, as
80-26 determined by the comptroller. The rate of assessment may <Board,
80-27 and collect a maintenance tax in an amount> not <to> exceed one
81-1 percent of the correctly reported gross title insurance premiums of
81-2 all authorized insurers writing title insurance in this state. The
81-3 comptroller shall collect the maintenance tax.
81-4 (b) The tax required by this article is in addition to all
81-5 other taxes now imposed or that may be subsequently imposed and
81-6 that are not in conflict with this article.
81-7 (c) The State Board of Insurance, after taking into account
81-8 the unexpended funds produced by this tax, if any, shall adjust the
81-9 rate of assessment each year to produce the amount of funds that it
81-10 estimates will be necessary to pay all the expenses of regulating
81-11 title insurance during the succeeding year. In making an estimate
81-12 under this subsection, the board shall take into account the
81-13 requirement that the general revenue fund be reimbursed under
81-14 Article 4.19 of this code.
81-15 (d) The taxes collected shall be deposited in the State
81-16 Treasury to the credit of the general revenue fund to be
81-17 reallocated to the Texas Department <State Board> of Insurance
81-18 operating fund and shall be spent as authorized by legislative
81-19 appropriation <only> on warrants issued by the comptroller <of
81-20 public accounts> pursuant to duly certified requisitions of the
81-21 State Board of Insurance. Amounts reallocated to the Texas
81-22 Department of Insurance operating fund under this subsection may be
81-23 transferred to the general revenue fund in accordance with
81-24 Article 4.19 of this code.
81-25 (e) The comptroller <State Board of Insurance> may elect to
81-26 collect on a semiannual or other periodic basis the tax assessed
81-27 under this article only from insurers whose tax liability under
82-1 this article for the previous tax year was $2,000 or more<. The
82-2 State Board of Insurance may prescribe and adopt reasonable rules
82-3 to implement such payments as it deems advisable, not inconsistent
82-4 with this article>.
82-5 (f) Not later than the 45th day before the date on which a
82-6 tax return for a period is due, the board shall advise the
82-7 comptroller of the rate of assessment for that period.
82-8 (g) If the board has not advised the comptroller of the rate
82-9 of assessment for a period as required by Subsection (f) of this
82-10 article, the amount of taxes due under this article for that period
82-11 for a taxpayer is an amount equal to 90 percent of the amount paid
82-12 by that taxpayer for the previous tax period. If the board advises
82-13 the comptroller of the rate of assessment for a period after taxes
82-14 are assessed under this subsection, the comptroller shall:
82-15 (1) advise each taxpayer in writing of the amount of
82-16 any additional taxes due; or
82-17 (2) refund any excess taxes paid.
82-18 SECTION 3.18. Sections 1, 3, and 5, Article 9.59, Insurance
82-19 Code, are amended to read as follows:
82-20 Sec. 1. Payment of tax. Each title insurance company
82-21 receiving premiums from the business of title insurance shall pay
82-22 to the comptroller <commissioner of insurance> for transmittal to
82-23 the state treasurer a <an annual> tax on those premiums as provided
82-24 in this article.
82-25 Sec. 3. Time of filing and payment. (a) A premium tax
82-26 return for each taxable year ending on December 31 of the preceding
82-27 year shall be filed and the total amount of the tax due under this
83-1 article shall be paid on or before March 1 of each year or another
83-2 date prescribed by the comptroller.
83-3 (b) A periodic <quarterly> prepayment of premium tax must be
83-4 made on March 1, May 15, August 1 <15>, and November 15, or other
83-5 dates prescribed by the comptroller, by all insurers with net tax
83-6 liability for the previous calendar year of more than $1,000. The
83-7 tax paid on each date must equal one-fourth of the total premium
83-8 tax paid for the previous calendar year or the portion of the total
83-9 tax paid prescribed by the comptroller. If no premium tax has been
83-10 paid during the previous calendar year, the quarterly or other
83-11 periodic payment shall equal the tax that would be owed on the
83-12 gross premium receipts during the previous calendar quarter ending
83-13 March 31, June 30, September 30, or December 31, or other
83-14 applicable periods in the previous calendar year, at the minimum
83-15 tax rate specified by law. The comptroller <commissioner> may
83-16 certify for refund to the state treasurer any overpayment of
83-17 premium taxes that results from the periodic <quarterly> prepayment
83-18 system established by this subsection.
83-19 (c) Without limiting the general authority of the
83-20 comptroller to adopt rules to promote the efficient administration,
83-21 collection, enforcement, and reporting of taxes under this code or
83-22 another insurance law of this state, the <The> State Board of
83-23 Insurance or comptroller, as appropriate, may adopt rules,
83-24 regulations, minimum standards, and limitations that are fair and
83-25 reasonable as may be appropriate for the augmentation and
83-26 implementation of this article.
83-27 Sec. 5. ANNUAL TAX RETURN. Each title insurance company
84-1 that is liable under this article to remit tax on premium shall
84-2 file a tax return annually<, under oath by two officers of the
84-3 title insurance company,> on forms prescribed by the comptroller
84-4 <State Board of Insurance>.
84-5 SECTION 3.19. Section 33, Texas Health Maintenance
84-6 Organization Act (Article 20A.33, Vernon's Texas Insurance Code),
84-7 is amended by amending Subsection (d) and adding Subsections (e),
84-8 (f), (g), (h), (i), and (j) to read as follows:
84-9 (d) The State Board of Insurance shall annually determine
84-10 the rate of assessment of <and collect> a per capita maintenance
84-11 tax to be paid on an annual or semiannual basis, on the correctly
84-12 reported gross revenues for the issuance of health maintenance
84-13 certificates or contracts collected by all authorized health
84-14 maintenance organizations issuing such coverages in this state.
84-15 The rate of assessment may <in an amount> not <to> exceed $2 for
84-16 each enrollee. The rate of assessment may differ between basic
84-17 health care plans and single health care service plans and shall
84-18 equitably reflect any differences in regulatory resources
84-19 attributable to each type of plan. The comptroller shall collect
84-20 the maintenance tax.
84-21 (e) The tax required by this section <article> is in
84-22 addition to all other taxes now imposed or that may be subsequently
84-23 imposed and that are not in conflict with this section.
84-24 (f) The State Board of Insurance, after taking into account
84-25 the unexpended funds produced by this tax, if any, shall adjust the
84-26 rate of assessment each year to produce the amount of funds that it
84-27 estimates will be necessary to pay all the expenses of regulating
85-1 health maintenance organizations during the succeeding year. In
85-2 making an estimate under this subsection, the board shall take into
85-3 account the requirement that the general revenue fund be reimbursed
85-4 under Article 4.19, Insurance Code.
85-5 (g) The taxes collected shall be deposited in the State
85-6 Treasury to the credit of the general revenue fund to be
85-7 reallocated to the Texas Department <State Board> of Insurance
85-8 operating fund and shall be spent as authorized by legislative
85-9 appropriation <only> on warrants issued by the comptroller <of
85-10 public accounts> pursuant to duly certified requisitions of the
85-11 State Board of Insurance. Amounts reallocated to the Texas
85-12 Department of Insurance operating fund under this subsection may be
85-13 transferred to the general revenue fund in accordance with Article
85-14 4.19, Insurance Code.
85-15 (h) The State Board of Insurance may collect the tax
85-16 assessed under this section on a semiannual or other periodic basis
85-17 <semiannually> from those health maintenance organizations whose
85-18 tax liability under this section for the previous year was $2,000
85-19 or more<. The State Board of Insurance may prescribe and adopt
85-20 reasonable rules to implement such payments as it deems advisable,
85-21 not inconsistent with this section>.
85-22 (i) Not later than the 45th day before the date on which a
85-23 tax return for a period is due, the board shall advise the
85-24 comptroller of the rate of assessment for that period.
85-25 (j) If the board has not advised the comptroller of the rate
85-26 of assessment for a period as required by Subsection (i) of this
85-27 section, the amount of taxes due under this section for that period
86-1 for a taxpayer is an amount equal to 90 percent of the amount paid
86-2 by that taxpayer for the previous tax period. If the board advises
86-3 the comptroller of the rate of assessment for a period after taxes
86-4 are assessed under this subsection, the comptroller shall:
86-5 (1) advise each taxpayer in writing of the amount of
86-6 any additional taxes due; or
86-7 (2) refund any excess taxes paid.
86-8 SECTION 3.20. Section 21, Article 21.07-6, Insurance Code,
86-9 is amended by amending Subsections (a), (c), and (d) and adding
86-10 Subsections (e) and (f) to read as follows:
86-11 (a) The board annually shall determine the rate of
86-12 assessment of a maintenance tax to be paid on an annual, <or>
86-13 semiannual, or other periodic basis, as determined by the
86-14 comptroller. The rate of assessment may <and collect a maintenance
86-15 tax in an amount> not <to> exceed one percent of the correctly
86-16 reported administrative or service fees of all administrators that
86-17 are covered by certificates of authority. The comptroller shall
86-18 collect the maintenance tax.
86-19 (c) The board, after taking into account the unexpended
86-20 funds produced by this tax, if any, shall adjust the rate of
86-21 assessment each year to produce the amount of funds that it
86-22 estimates will be necessary to pay all the expenses of regulating
86-23 administrators. In making an estimate under this subsection, the
86-24 board shall take into account the requirement that the general
86-25 revenue fund be reimbursed under Article 4.19 of this code.
86-26 (d) The taxes collected under this section shall be
86-27 deposited in the state treasury to the credit of the general
87-1 revenue fund to be reallocated to the Texas Department <State
87-2 Board> of Insurance operating fund and shall be spent as authorized
87-3 by legislative appropriation <only> on warrants issued by the
87-4 comptroller <of public accounts> pursuant to duly certified
87-5 requisitions of the board. Amounts reallocated to the Texas
87-6 Department of Insurance operating fund under this subsection may be
87-7 transferred to the general revenue fund in accordance with Article
87-8 4.19 of this code.
87-9 (e) Not later than the 45th day before the date on which a
87-10 tax return for a period is due, the board shall advise the
87-11 comptroller of the rate of assessment for that period.
87-12 (f) If the board has not advised the comptroller of the rate
87-13 of assessment for a period as required by Subsection (e) of this
87-14 section, the amount of taxes due under this section for that period
87-15 for a taxpayer is an amount equal to 90 percent of the amount paid
87-16 by that taxpayer for the previous tax period. If the board advises
87-17 the comptroller of the rate of assessment for a period after taxes
87-18 are assessed under this subsection, the comptroller shall:
87-19 (1) advise each taxpayer in writing of the amount of
87-20 any additional taxes due; or
87-21 (2) refund any excess taxes paid.
87-22 SECTION 3.21. Sections 4(e) and (f), Article 21.54,
87-23 Insurance Code, are amended to read as follows:
87-24 (e) A filing fee not to exceed $500 as established by board
87-25 regulation may be imposed for the filing of the financial statement
87-26 under Subdivision (1) of Subsection (d) of this section. Fees
87-27 collected for filing the statement shall be deposited in the State
88-1 Treasury to the credit of the general revenue fund to be
88-2 reallocated to the Texas Department <State Board> of Insurance
88-3 operating fund.
88-4 (f) Such risk retention group shall be liable for the
88-5 payment of premium and maintenance taxes and taxes on premiums of
88-6 direct business for risks located within this state and shall
88-7 report to the commissioner of this state the net premiums written
88-8 for risks located within this state. Such risk retention group
88-9 shall be subject to taxation, and any applicable fines and
88-10 penalties related thereto, on the same basis as a foreign admitted
88-11 insurer pursuant to Chapters 4 and 5 of this code. Groups shall
88-12 provide to the comptroller all information the comptroller may
88-13 request in connection with the reporting, collection, enforcement,
88-14 and administration of taxes due under this article and of the fee
88-15 imposed under Subsection (e) of this section.
88-16 SECTION 3.22. Chapter 23, Insurance Code, is amended by
88-17 amending Article 23.08 and adding Article 23.08A to read as
88-18 follows:
88-19 Art. 23.08. FEES <AND TAXES>. <(a)> The State Board of
88-20 Insurance shall charge a fee determined by the Board in an amount
88-21 not to exceed $400 for filing the annual statement of each
88-22 corporation operating under this chapter; an application fee
88-23 determined by the Board in an amount not to exceed $3,000 for each
88-24 corporation applying under this chapter which includes the fee for
88-25 the issuance of a certificate of authority; and a fee determined by
88-26 the Board in an amount not to exceed $100 for the issuance of each
88-27 additional certificate of authority and amendment of a certificate
89-1 of authority to the corporation. The Board shall, within the
89-2 limits fixed by this article <subsection>, prescribe the fees to be
89-3 charged under this article <subsection>. The fees collected by the
89-4 Board under this article <subsection> shall be deposited in the
89-5 State Treasury to the credit of the Texas Department <State Board>
89-6 of Insurance operating fund, and Article 1.31A of this code applies
89-7 to fees collected under this article <subsection>.
89-8 Art. 23.08A. MAINTENANCE TAX. (a) <(b)> The State of Texas
89-9 by and through the State Board of Insurance shall annually
89-10 determine the rate of assessment of a maintenance tax to be paid
89-11 <and collect as determined by the Board,> on an annual or
89-12 semiannual basis. The rate of assessment may<, a maintenance tax
89-13 in an amount> not <to> exceed one percent of the correctly reported
89-14 gross revenues received by all corporations issuing prepaid legal
89-15 services contracts in this state. The comptroller shall collect
89-16 the maintenance tax.
89-17 (b) The tax required by this article is in addition to all
89-18 other taxes now imposed or that may be subsequently imposed and
89-19 that are not in conflict with this article.
89-20 (c) The State Board of Insurance, after taking into account
89-21 the unexpended funds produced by this tax, if any, shall adjust the
89-22 rate of assessment each year to produce the amount of funds that it
89-23 estimates will be necessary to pay all the expenses of regulating
89-24 nonprofit legal services corporations during the succeeding year.
89-25 In making an estimate under this subsection, the board shall take
89-26 into account the requirement that the general revenue fund be
89-27 reimbursed under Article 4.19 of this code.
90-1 (d) The taxes collected shall be deposited in the State
90-2 Treasury to the credit of the general revenue fund to be
90-3 reallocated to the Texas Department <State Board> of Insurance
90-4 operating fund and shall be spent as authorized by legislative
90-5 appropriation <only> on warrants issued by the comptroller <of
90-6 public accounts> pursuant to duly certified requisitions of the
90-7 State Board of Insurance. Amounts reallocated to the Texas
90-8 Department of Insurance operating fund under this subsection may be
90-9 transferred to the general revenue fund in accordance with Article
90-10 4.19 of this code.
90-11 (e) Article 1.31A of this code applies to taxes collected
90-12 under this article <section>.
90-13 (f) The comptroller <State Board of Insurance> may elect to
90-14 collect on a semiannual basis the tax assessed under this article
90-15 only from insurers whose tax liability under this article for the
90-16 previous tax year was $2,000 or more. The comptroller <State Board
90-17 of Insurance> may prescribe and adopt reasonable rules to implement
90-18 such payments as it deems advisable, not inconsistent with this
90-19 article.
90-20 (g) Not later than the 45th day before the date on which a
90-21 tax return for a period is due, the board shall advise the
90-22 comptroller of the rate of assessment for that period.
90-23 (h) If the board has not advised the comptroller of the rate
90-24 of assessment for a period as required by Subsection (g) of this
90-25 article, the amount of taxes due under this article for that period
90-26 for a taxpayer is an amount equal to 90 percent of the amount paid
90-27 by that taxpayer for the previous tax period. If the board advises
91-1 the comptroller of the rate of assessment for a period after taxes
91-2 are assessed under this subsection, the comptroller shall:
91-3 (1) advise each taxpayer in writing of the amount of
91-4 any additional taxes due; or
91-5 (2) refund any excess taxes paid.
91-6 SECTION 3.23. Section 2.21, Texas Workers' Compensation Act
91-7 (Article 8308-2.21, Vernon's Texas Civil Statutes), is amended to
91-8 read as follows:
91-9 Sec. 2.21. Commission funding. Unless otherwise provided,
91-10 all proceeds, including administrative penalties and advance
91-11 deposits for purchase of services, collected under this Act shall
91-12 be deposited in the General Revenue Fund of the state treasury to
91-13 the credit of the commission. The funds may be spent as authorized
91-14 by legislative appropriation on warrants issued by the comptroller
91-15 <of public accounts> under requisitions made by the commission.
91-16 Proceeds deposited in the General Revenue Fund under this section
91-17 may be used to satisfy the requirements of Article 4.19, Insurance
91-18 Code.
91-19 SECTION 3.24. Section 2.23(a), Texas Workers' Compensation
91-20 Act (Article 8308-2.23, Vernon's Texas Civil Statutes), is amended
91-21 to read as follows:
91-22 (a) The commission shall set and certify to the comptroller
91-23 <State Board of Insurance> the rate of assessment no later than
91-24 October 31 of each year, taking into account the following factors:
91-25 (1) expenditures projected as necessary for the
91-26 commission to administer this Act during the fiscal year for which
91-27 the rate of assessment is set and to reimburse the general revenue
92-1 fund in accordance with Article 4.19, Insurance Code;
92-2 (2) projected employee benefits paid from general
92-3 revenues;
92-4 (3) surpluses or deficits produced by this tax in the
92-5 preceding year; and
92-6 (4) revenue recovered from other sources, including
92-7 reappropriated receipts, grants, payments, fees, gifts, and
92-8 penalties recovered under this Act.
92-9 SECTION 3.25. Section 11.09(c), Texas Workers' Compensation
92-10 Act (Article 8308-11.09, Vernon's Texas Civil Statutes), is amended
92-11 to read as follows:
92-12 (c) Amounts received under this section shall be deposited
92-13 in the state treasury to the credit of a special fund to be used
92-14 for the operation of the research center and to reimburse the
92-15 general revenue fund in accordance with Article 4.19, Insurance
92-16 Code.
92-17 SECTION 3.26. Section 101.003, Tax Code, is amended by
92-18 amending Subdivisions (8) and (11) and adding Subdivision (12) to
92-19 read as follows:
92-20 (8) "Taxpayer" means a person liable for a tax, fee,
92-21 assessment, or other amount imposed by law administered by the
92-22 comptroller <this title>.
92-23 (11) "Report" means a tax return, declaration,
92-24 statement, or other document required to be filed with the
92-25 comptroller <by a provision of this title>.
92-26 (12) "Obligation" means the duty of a person to pay a
92-27 tax, fee, assessment, or other amount or to make, file, or keep a
93-1 report, certificate, affidavit, or other document.
93-2 SECTION 3.27. Subchapter A, Chapter 111, Tax Code, is
93-3 amended by adding Section 111.0022 to read as follows:
93-4 Sec. 111.0022. APPLICATION TO OTHER PROGRAMS. This subtitle
93-5 and Subtitle A apply to the administration of other programs or
93-6 functions assigned to the comptroller by law.
93-7 SECTION 3.28. The following laws are repealed:
93-8 (1) Section 12(f), Article 1.14-1, Insurance Code;
93-9 (2) Sections 12 and 16, Article 4.10, Insurance Code;
93-10 (3) Sections 7 and 11, Article 4.11, Insurance Code;
93-11 (4) Articles 4.13, 4.14, 4.15, and 4.16, Insurance
93-12 Code;
93-13 (5) Sections 6 and 10, Article 9.59, Insurance Code;
93-14 and
93-15 (6) Section 33(b), Texas Health Maintenance
93-16 Organization Act (Article 20A.33, Vernon's Texas Insurance Code).
93-17 SECTION 3.29. (a) The State Board of Insurance, the
93-18 Commissioner of Insurance, and the Texas Department of Insurance
93-19 shall transfer and the comptroller shall assume the duties assigned
93-20 to the comptroller under Article 1.04D, Insurance Code, as added by
93-21 this Act, on September 1, 1993. In assuming these duties, the
93-22 comptroller shall assume responsibility for the collection,
93-23 reporting, enforcement, and administration of any tax, assessment,
93-24 or fee owing on or before September 1, 1993, and for the payment of
93-25 any refund owing on or before September 1, 1993, without regard to
93-26 whether the law on which the tax, assessment, fee, or refund was
93-27 based has been repealed on or before that date.
94-1 (b) The comptroller may modify procedures that had been used
94-2 by the State Board of Insurance or the Texas Department of
94-3 Insurance in performing the functions that are transferred to the
94-4 comptroller under this article to increase efficiency and cost
94-5 effectiveness.
94-6 (c) During the period beginning on September 1, 1993, and
94-7 ending on December 1, 1993, the Commissioner of Insurance shall
94-8 provide Texas Department of Insurance personnel to the comptroller
94-9 through interagency contract if necessary to ensure the performance
94-10 of the functions transferred to the comptroller under this article
94-11 and to facilitate the transfer.
94-12 (d) Rules of the Texas Department of Insurance that are in
94-13 effect on September 1, 1993, and that relate to the functions
94-14 transferred to the comptroller under this article remain in effect
94-15 until repealed or amended by the comptroller.
94-16 SECTION 3.30. (a) The comptroller and the commissioner of
94-17 insurance, by rule, shall adopt a memorandum of understanding
94-18 governing the collection of taxes by the comptroller under this
94-19 article. The memorandum may:
94-20 (1) require the comptroller and the Texas Department
94-21 of Insurance to share financial information and reports of audits
94-22 of any entity regulated by this code or another insurance law of
94-23 this state obtained by the comptroller or the department;
94-24 (2) require the comptroller and the department to
94-25 coordinate in the preparation of materials used to request or
94-26 collect tax information or data and to develop a method for sharing
94-27 that information as necessary;
95-1 (3) authorize the comptroller to collect a tax, fee,
95-2 or assessment that may be collected by the board, commissioner, or
95-3 department; and
95-4 (4) address any other relevant matter.
95-5 (b) Not later than September 1, 1993, the comptroller and
95-6 the commissioner of insurance shall adopt the memorandum of
95-7 understanding required by Subsection (a) of this section. The
95-8 initial memorandum of understanding may be adopted as if it were an
95-9 emergency rule under Section 5(d), Administrative Procedure and
95-10 Texas Register Act (Article 6252-13a, Vernon's Texas Civil
95-11 Statutes), and must take effect September 1, 1993. The initial
95-12 memorandum of understanding must include provisions relating to the
95-13 transfer of information and records in the possession of the Texas
95-14 Department of Insurance to the comptroller and to the collection of
95-15 taxes that are delinquent on the effective date of the memorandum
95-16 of understanding and may address the transfer of department
95-17 employees, and of computers, furniture, and other equipment. Any
95-18 transfers shall be completed as soon as possible but not later than
95-19 January 1, 1994.
95-20 ARTICLE 4. TRANSFER OF CERTAIN FUNCTIONS
95-21 RELATING TO FINANCING OF INSURANCE PREMIUMS TO
95-22 OFFICE OF CONSUMER CREDIT COMMISSIONER
95-23 SECTION 4.01. Chapter 1, Insurance Code, is amended by
95-24 adding Article 1.33D to read as follows:
95-25 Art. 1.33D. FINANCING OF INSURANCE PREMIUMS FUNCTIONS
95-26 PERFORMED BY OFFICE OF CONSUMER CREDIT COMMISSIONER. (a) This
95-27 article applies to any activity, function, or transaction relating
96-1 to the financing of insurance premiums and subject to Article
96-2 24.01, 24.02, 24.03, 24.04, 24.05, 24.06, 24.07, 24.08, 24.09,
96-3 24.10, 24.11, 24.12, 24.13, 24.14, 24.15, 24.16, 24.17, 24.18,
96-4 24.19, 24.20, 24.21, or 24.22 of this code, and any subsequent
96-5 amendments.
96-6 (b) Notwithstanding any other provision of law, any act,
96-7 duty, or function subject to this article shall be performed by the
96-8 Office of Consumer Credit Commissioner. The consumer credit
96-9 commissioner shall perform all functions necessary to regulate the
96-10 financing of insurance premiums and enforce such provisions.
96-11 (c) The commissioner of insurance and the consumer credit
96-12 commissioner by rule shall adopt a memorandum of understanding
96-13 governing the regulation of financing of insurance premiums by the
96-14 consumer credit commissioner under this article. The memorandum of
96-15 understanding shall require the consumer credit commissioner and
96-16 the Texas Department of Insurance to cooperate in the regulation of
96-17 financing of insurance premiums and may:
96-18 (1) authorize the consumer credit commissioner to
96-19 perform any procedural act that the commissioner of insurance or
96-20 the State Board of Insurance is required or authorized to perform
96-21 under this code in connection with the regulation of financing of
96-22 insurance premiums;
96-23 (2) authorize the consumer credit commissioner to
96-24 develop procedures and reports necessary to the effective
96-25 regulation of financing of insurance premiums; or
96-26 (3) address any other relevant matter.
96-27 (d) The consumer credit commissioner may exercise any
97-1 authority granted to the State Board of Insurance or the
97-2 commissioner of insurance under Chapter 24 of this code.
97-3 (e) The consumer credit commissioner shall conduct any
97-4 administrative hearing which may be required in connection with the
97-5 regulation of financing of insurance premiums under this code or
97-6 other insurance law of this state.
97-7 SECTION 4.02. (a) Not later than January 1, 1994, the
97-8 consumer credit commissioner and the commissioner of insurance
97-9 shall adopt the memorandum of understanding required by Article
97-10 1.33D, Insurance Code, as added by this Act. The initial
97-11 memorandum of understanding adopted under this subsection may be
97-12 adopted as if it were an emergency rule under Section 5(d),
97-13 Administrative Procedure and Texas Register Act (Article 6252-13a,
97-14 Vernon's Texas Civil Statutes), and must take effect not later than
97-15 January 1, 1994. The initial memorandum of understanding must
97-16 include provisions relating to the transfer of information and
97-17 records concerning the financing of insurance premiums in the
97-18 possession of the Texas Department of Insurance to the consumer
97-19 credit commissioner, and may address the transfer of department
97-20 employees.
97-21 (b) This article applies only to acts, actions, functions,
97-22 and transactions occurring or performed in connection with the
97-23 regulation of financing of insurance premiums on or after the
97-24 earlier of January 1, 1994, or the adoption of the memorandum of
97-25 understanding required by Article 1.33D, Insurance Code, as added
97-26 by this Act, if that adoption occurs before January 1, 1994.
97-27 ARTICLE 5. TRANSFER OF CERTAIN RECORDS IN THE POSSESSION
98-1 OF THE DEPARTMENT OF INSURANCE
98-2 SECTION 5.01. Section 11(d), Article 21.28, Insurance Code,
98-3 is amended to read as follows:
98-4 (d) Maintenance of Records. The commissioner may transfer
98-5 to the Records Management Division of the Texas State Library and
98-6 Archives Commission for maintenance all records of a delinquent
98-7 insurer that the receiver determines are not necessary for the
98-8 administration of the estate of the delinquent insurer. All
98-9 records received by or in the possession of the receiver on a
98-10 delinquent insurer are state records for purposes of Section
98-11 441.031(5), Government Code. The receiver may devise a method for
98-12 the effective, efficient, and economical maintenance of the records
98-13 of the delinquent insurer and of the liquidator's office including
98-14 maintaining only those records necessary for administration of the
98-15 estate by the receiver on any medium approved by the Records
98-16 Management Division of the Texas State Library and Archives
98-17 Commission. A copy of an original record or any other record that
98-18 is maintained on any medium approved by the Records Management
98-19 Division of the Texas State Library and Archives Commission within
98-20 the scope of this section that is produced by the receiver or his
98-21 authorized representative under this Article shall have the same
98-22 force and effect as the original record and may be used the same as
98-23 the original record in any judicial or administrative proceeding in
98-24 this state.
98-25 If the need exists for the continued maintenance of any
98-26 records of a delinquent insurer after the closing of the
98-27 receivership proceedings, the commissioner <receiver> may transfer
99-1 all of these records to the Texas State Library and Archives
99-2 Commission for continued maintenance. The receiver shall provide
99-3 the Texas State Library and Archives Commission with a schedule for
99-4 the maintenance of the records and shall reserve sufficient assets,
99-5 including cash, to be transferred to the liquidator on closing of
99-6 the receivership for the specific purpose of meeting the reasonable
99-7 cost of maintaining those records. The costs of maintenance of
99-8 these records shall include the proportionate share of the charges
99-9 attributed to or advanced by either the commissioner or the Texas
99-10 State Library and Archives Commission from appropriated funds.
99-11 SECTION 5.02. Section 441.031(5), Government Code, is
99-12 amended to read as follows:
99-13 (5) "State record" means a document, book, paper,
99-14 photograph, sound recording, or other material, regardless of
99-15 physical form or characteristic, made or received by a state
99-16 department or institution according to law or in connection with
99-17 the transaction of official state business or received by or in the
99-18 possession of the receiver of a delinquent insurer under Article
99-19 21.28, Insurance Code. The term does not include library or museum
99-20 material made or acquired and preserved solely for reference or
99-21 exhibition purposes, an extra copy of a document preserved only for
99-22 convenience of reference, or a stock of publications or of
99-23 processed documents.
99-24 ARTICLE 6. ADMINISTRATIVE PENALTIES
99-25 SECTION 6.01. Chapter 1, Insurance Code, is amended by
99-26 adding Article 1.10E to read as follows:
99-27 Art. 1.10E. ADMINISTRATIVE PENALTIES
100-1 Sec. 1. DEFINITION. In this article, "person" means an
100-2 individual, corporation, trust, partnership, association, or any
100-3 other legal entity.
100-4 Sec. 2. PENALTY AUTHORIZED. The commissioner may impose an
100-5 administrative penalty against a person licensed or regulated under
100-6 this code or another insurance law of this state who violates this
100-7 code, another insurance law of this state, or a rule or order
100-8 adopted under this code or another insurance law of this state.
100-9 Sec. 3. AMOUNT OF PENALTY. (a) The penalty for a violation
100-10 may be in an amount not to exceed $25,000, unless a greater or
100-11 lesser penalty is specified by a provision of this code or another
100-12 insurance law of this state.
100-13 (b) The amount of the penalty shall be based on:
100-14 (1) the seriousness of the violation, including the
100-15 nature, circumstances, extent, and gravity of any prohibited acts,
100-16 and the hazard or potential hazard created to the health, safety,
100-17 or economic welfare of the public;
100-18 (2) the economic harm to the public's interests or
100-19 confidences caused by the violation;
100-20 (3) the history of previous violations;
100-21 (4) the amount necessary to deter future violations;
100-22 (5) efforts to correct the violation;
100-23 (6) whether the violation was intentional or
100-24 unintentional; and
100-25 (7) any other matter that justice may require.
100-26 Sec. 4. PROCEDURES FOR ASSESSING PENALTY; HEARING. (a) If
100-27 the department determines that a violation has occurred, the
101-1 department may issue to the commissioner a report that states the
101-2 facts on which the determination is based and the department's
101-3 recommendation on the imposition of a penalty, including a
101-4 recommendation on the amount of the penalty.
101-5 (b) Within 14 days after the date the report is issued, the
101-6 department shall give written notice of the report to the person.
101-7 The notice may be given by certified mail. The notice must include
101-8 a brief summary of the alleged violation and a statement of the
101-9 amount of the recommended penalty and must inform the person that
101-10 the person has a right to a hearing on the occurrence of the
101-11 violation, the amount of the penalty, or both the occurrence of the
101-12 violation and the amount of the penalty.
101-13 (c) Within 20 days after the date the person receives the
101-14 notice, the person in writing may accept the determination and
101-15 recommended penalty of the department or may make a written request
101-16 for a hearing on the occurrence of the violation, the amount of the
101-17 penalty, or both the occurrence of the violation and the amount of
101-18 the penalty.
101-19 (d) If the person accepts the determination and recommended
101-20 penalty of the department, the commissioner by order shall approve
101-21 the determination and impose the recommended penalty.
101-22 (e) If the person requests a hearing or fails to respond
101-23 timely to the notice, the department shall set a hearing and give
101-24 notice of the hearing to the person. The hearing shall be held by
101-25 an administrative law judge of the State Office of Administrative
101-26 Hearings. The administrative law judge shall make findings of fact
101-27 and conclusions of law and promptly issue to the commissioner a
102-1 proposal for a decision about the occurrence of the violation and
102-2 the amount of a proposed penalty. Based on the findings of fact,
102-3 conclusions of law, and proposal for decision, the commissioner by
102-4 order may find that a violation has occurred and impose a penalty
102-5 or may find that no violation occurred.
102-6 (f) The notice of the commissioner's order given to the
102-7 person under the Administrative Procedure and Texas Register Act
102-8 (Article 6252-13a, Vernon's Texas Civil Statutes) and its
102-9 subsequent amendments must include a statement of the right of the
102-10 person to judicial review of the order.
102-11 (g) Within 30 days after the date the commissioner's order
102-12 is final as provided by Section 16(c), Administrative Procedure and
102-13 Texas Register Act (Article 6252-13a, Vernon's Texas Civil
102-14 Statutes), and its subsequent amendments, the person shall:
102-15 (1) pay the amount of the penalty;
102-16 (2) pay the amount of the penalty and file a petition
102-17 for judicial review contesting the occurrence of the violation, the
102-18 amount of the penalty, or both; or
102-19 (3) without paying the amount of the penalty, file a
102-20 petition for judicial review contesting the occurrence of the
102-21 violation, the amount of the penalty, or both the occurrence of the
102-22 violation and the amount of the penalty.
102-23 (h) Within the 30-day period, a person who acts under
102-24 Subsection (g)(3) of this section may:
102-25 (1) stay enforcement of the penalty by:
102-26 (A) paying the amount of the penalty to the
102-27 court for placement in an escrow account; or
103-1 (B) giving the court a supersedeas bond that is
103-2 approved by the court for the amount of the penalty and that is
103-3 effective until all judicial review of the board's order is final;
103-4 or
103-5 (2) request the court to stay enforcement of the
103-6 penalty by:
103-7 (A) filing with the court a sworn affidavit of
103-8 the person stating that the person is financially unable to pay the
103-9 amount of the penalty and is financially unable to give the
103-10 supersedeas bond; and
103-11 (B) giving a copy of the affidavit to the
103-12 commissioner by certified mail.
103-13 (i) If the commissioner receives a copy of an affidavit
103-14 under Subsection (h)(2) of this section, the commissioner may file
103-15 with the court, within five days after the date the copy is
103-16 received, a contest to the affidavit. The court shall hold a
103-17 hearing on the facts alleged in the affidavit as soon as
103-18 practicable and shall stay the enforcement of the penalty on
103-19 finding that the alleged facts are true. The person who files an
103-20 affidavit has the burden of proving that the person is financially
103-21 unable to pay the amount of the penalty and to give a supersedeas
103-22 bond.
103-23 (j) If the person does not pay the amount of the penalty and
103-24 the enforcement of the penalty is not stayed, the commissioner may
103-25 refer the matter to the attorney general for collection of the
103-26 amount of the penalty.
103-27 Sec. 5. JUDICIAL REVIEW. (a) Judicial review of the order
104-1 of the board:
104-2 (1) is instituted by filing a petition as provided by
104-3 Section 19, Administrative Procedure and Texas Register Act
104-4 (Article 6252-13a, Vernon's Texas Civil Statutes); and
104-5 (2) is under the substantial evidence rule.
104-6 (b) If the court sustains the occurrence of the violation,
104-7 the court may uphold or reduce the amount of the penalty and order
104-8 the person to pay the full or reduced amount of the penalty. If
104-9 the court does not sustain the occurrence of the violation, the
104-10 court shall order that no penalty is owed.
104-11 (c) When the judgment of the court becomes final, the court
104-12 shall proceed under this subsection. If the person paid the amount
104-13 of the penalty and if that amount is reduced or is not upheld by
104-14 the court, the court shall order that the appropriate amount plus
104-15 accrued interest be remitted to the person. The rate of the
104-16 interest is the rate charged on loans to depository institutions by
104-17 the New York Federal Reserve Bank, and the interest shall be paid
104-18 for the period beginning on the date the penalty was paid and
104-19 ending on the date the penalty is remitted. If the person gave a
104-20 supersedeas bond and if the amount of the penalty is not upheld by
104-21 the court, the court shall order the release of the bond. If the
104-22 person gave a supersedeas bond and if the amount of the penalty is
104-23 reduced, the court shall order the release of the bond after the
104-24 person pays the amount.
104-25 Sec. 6. DEPOSIT TO GENERAL REVENUE FUND. A penalty
104-26 collected under this section shall be remitted to the comptroller
104-27 for deposit in the general revenue fund.
105-1 Sec. 7. APPLICATION OF ADMINISTRATIVE PROCEDURE AND TEXAS
105-2 REGISTER ACT. All proceedings under this section are subject to
105-3 the Administrative Procedure and Texas Register Act (Article
105-4 6252-13a, Vernon's Texas Civil Statutes) and its subsequent
105-5 amendments.
105-6 Sec. 8. APPLICATION TO OTHER LAWS. This article applies to
105-7 any monetary penalty imposed by the department, commissioner, or
105-8 board under this code or another insurance law of this state.
105-9 SECTION 6.02. Section 17A, Article 1.14-2, Insurance Code,
105-10 is amended to read as follows:
105-11 Sec. 17A. Administrative penalty. <(a)> If a surplus lines
105-12 agent violates Section 8 of this article or a rule, regulation, or
105-13 order adopted under that provision, the State Board of Insurance
105-14 may assess an administrative <a> penalty against that agent as
105-15 provided by Article 1.10E of this code <Section 7, Article 1.10, of
105-16 this code.>
105-17 <(b) In determining the amount of the penalty, the State
105-18 Board of Insurance shall consider:>
105-19 <(1) the nature, circumstances, extent, and gravity of
105-20 the violation;>
105-21 <(2) any economic benefit gained through the
105-22 violation;>
105-23 <(3) the amount necessary to deter future violations;
105-24 and>
105-25 <(4) any other matters that justice may require>.
105-26 SECTION 6.03. Section 19, Managing General Agents' Licensing
105-27 Act (Article 21.07-3, Vernon's Texas Insurance Code), is amended to
106-1 read as follows:
106-2 Sec. 19. Violations of act. Any person, firm, or
106-3 corporation who violates any of the provisions of this Act or any
106-4 rule, regulation, or order adopted under this Act shall be subject
106-5 to sanctions under Section 7, Article 1.10, Insurance Code. <In
106-6 determining the amount of any penalty, the State Board of Insurance
106-7 shall consider:>
106-8 <(1) the nature, circumstances, extent, and gravity of
106-9 the violation;>
106-10 <(2) any economic benefit gained through the
106-11 violation;>
106-12 <(3) the amount necessary to deter future violations;
106-13 and>
106-14 <(4) any other matters that justice may require.>
106-15 SECTION 6.04. Article 21.11-1, Insurance Code, is amended by
106-16 amending Section 6 and adding Section 7 to read as follows:
106-17 Sec. 6. If it is found, after notice and an opportunity to
106-18 be heard as determined by the board, that an insurance company has
106-19 violated this article, the insurance company shall be subject to an
106-20 administrative <a civil> penalty under Article 1.10E of this code
106-21 of not less than $1,000 nor more than $10,000<, and it shall be
106-22 subject to a civil suit by the agent for damages suffered because
106-23 of the premature termination of the contract by the company>.
106-24 Sec. 7. Any agent who has sustained actual damages as a
106-25 result of a company's violation of this article may maintain an
106-26 action against the company, without regard to whether or not there
106-27 has been a finding by the board that there has been a violation of
107-1 this article.
107-2 SECTION 6.05. Sections 7(c) and (d), Article 21.21,
107-3 Insurance Code, are amended to read as follows:
107-4 (c) Any person who violates the terms of a cease and desist
107-5 order under this section is subject to an administrative penalty
107-6 under Article 1.10E of this code. An administrative penalty
107-7 assessed under this subsection may not exceed $1,000 for each
107-8 violation and a total of $5,000 for all violations <shall be given
107-9 notice to appear and show cause, at a hearing to be held in
107-10 conformity with Section 6 of this Article, why he should not
107-11 forfeit and pay to the state a civil penalty of not more than
107-12 $1,000 per violation and not to exceed a total of $5,000>. In
107-13 determining whether or not a cease and desist order has been
107-14 violated, the Board shall take into consideration the maintenance
107-15 of procedures reasonably adapted to insure compliance with the
107-16 order.
107-17 (d) An order of the Board awarding an administrative penalty
107-18 <civil penalties> under Subsection (c) of this section applies only
107-19 to violations of this order incurred prior to the awarding of the
107-20 penalty order.
107-21 SECTION 6.06. Section 5(k), Article 21.49-1, Insurance Code,
107-22 is amended to read as follows:
107-23 (k) Additional Violations. Each director or officer of an
107-24 insurance company subject to this article, or of an insurance
107-25 holding company system subject to this article, who knowingly and
107-26 wilfully violates, participates in, or assents to or who knowingly
107-27 and wilfully permits any of the officers, agents, or employees of
108-1 the insurer or holding company system to engage in transactions or
108-2 make investments that have not been properly reported or submitted
108-3 under this article or that knowingly and wilfully violate this
108-4 article is subject to an administrative penalty under Article 1.10E
108-5 of this code<, shall pay, in the person's individual capacity, a
108-6 civil penalty> of not more than $10,000 for each violation<, after
108-7 notice and an opportunity for hearing before the commissioner. In
108-8 determining the amount of the civil penalty, the commissioner shall
108-9 consider the appropriateness of the penalty with respect to the
108-10 gravity of the violation, the history of previous violations, and
108-11 any other matters that justice requires>.
108-12 SECTION 6.07. Section 17(a), Article 21.49-3b, Insurance
108-13 Code, is amended to read as follows:
108-14 (a) An association that violates this article or any rule or
108-15 order adopted under this article is subject to sanctions under
108-16 Section 7, Article 1.10 of this code. <In determining the amount
108-17 of any penalty, the board shall consider:>
108-18 <(1) the nature, circumstances, extent, and gravity of
108-19 the violation;>
108-20 <(2) any economic benefit gained through the
108-21 violation;>
108-22 <(3) the amount necessary to deter future violations;
108-23 and>
108-24 <(4) any other matters that justice may require.>
108-25 SECTION 6.08. This article applies only to the assessment of
108-26 an administrative penalty on or after September 1, 1993.
108-27 Assessment of an administrative penalty before September 1, 1993,
109-1 is governed by the law in effect immediately before the effective
109-2 date of this Act, and that law is continued in effect for this
109-3 purpose.
109-4 ARTICLE 7. RATE AND POLICY FORM REGULATION
109-5 SECTION 7.01. Chapter 5, Insurance Code, is amended by
109-6 adding Subchapter N to read as follows:
109-7 SUBCHAPTER N. STREAMLINED PROCEDURES FOR RATEMAKING
109-8 Art. 5.121. STUDY AND IMPLEMENTATION. The department shall
109-9 study and the rate board may adopt and implement procedures for
109-10 streamlining insurance rate proceedings under this chapter, this
109-11 code, and other insurance laws of this state. The procedures must
109-12 ensure due process to all affected parties.
109-13 SECTION 7.02. Chapter 1, Insurance Code, is amended by
109-14 adding Article 1.50 to read as follows:
109-15 Art. 1.50. SELECT COMMITTEE ON RATE AND POLICY FORM
109-16 REGULATION
109-17 Sec. 1. DEFINITION. In this article, "committee" means the
109-18 select committee on rate and policy form regulation established
109-19 under this article.
109-20 Sec. 2. COMPOSITION OF COMMITTEE. (a) The select committee
109-21 on rate and policy form regulation is composed of:
109-22 (1) three members, appointed by the governor;
109-23 (2) three members of the senate, appointed by the
109-24 lieutenant governor; and
109-25 (3) three members of the house of representatives,
109-26 appointed by the speaker of the house of representatives.
109-27 (b) The governor shall designate a member of the committee
110-1 to serve as presiding officer of the committee.
110-2 Sec. 3. PURPOSE; DUTIES; MEETINGS. (a) The committee shall
110-3 study insurance rate and policy form regulation in this state. The
110-4 committee shall assess:
110-5 (1) the effects of changes made by the 72nd
110-6 Legislature in insurance regulation to identify whether the purpose
110-7 of the department should be further changed from insurance rate and
110-8 policy form regulation and directed to:
110-9 (A) regulation of the financial conditions of
110-10 companies and market conduct; and
110-11 (B) provision of consumer services;
110-12 (2) the degree of competition in the insurance
110-13 industry in this state;
110-14 (3) the provisions for enforcement of
110-15 insurance-related activities and the procedures for:
110-16 (A) evaluating complaints;
110-17 (B) investigating complaints, market conduct,
110-18 and fraud;
110-19 (C) conditions that require the intervention of,
110-20 or transfer of, investigations to the attorney general's office;
110-21 and
110-22 (D) application of technology to streamline
110-23 enforcement activities;
110-24 (4) the review of the technology advisory panel's
110-25 recommendations regarding the application of technology within the
110-26 department to streamline the internal procedures and business
110-27 practices dictated by this code and department policy;
111-1 (5) the provisions for data collection and analysis
111-2 related to rate setting and the use of the following alternative
111-3 sources of rate information:
111-4 (A) continued use of current services for rate
111-5 assessment and analysis, with a coordinated effort and potential
111-6 cost sharing of auditing those services with other states;
111-7 (B) use of an independent third party service
111-8 agent selected by the department; and
111-9 (C) developing the capability to collect and
111-10 analyze rate data within the department; and
111-11 (6) the role of statistical agents in providing the
111-12 services described under Article 21.69 of this code.
111-13 (b) The committee shall meet monthly or as needed to carry
111-14 out its duties under this section.
111-15 Sec. 4. REPORT. (a) Not later than December 1, 1994, the
111-16 committee shall issue a report of its findings. The committee
111-17 shall file copies of the report with the Legislative Reference
111-18 Library, the governor's office, the secretary of the senate, the
111-19 chief clerk of the house of representatives, the department, and
111-20 the office of public insurance counsel. The department shall make
111-21 copies of the report available to the public at cost.
111-22 (b) The report shall include recommended rule or statutory
111-23 changes to implement the committee's recommendations.
111-24 Sec. 5. STAFF. On request of the committee, the Texas
111-25 Legislative Council, governor's office, senate, and house of
111-26 representatives shall provide staff as necessary to carry out the
111-27 duties of the committee.
112-1 Sec. 6. WITNESSES; PROCESS. The committee may issue a
112-2 subpoena or other process to a witness at any place in this state,
112-3 compel the attendance of the witness, and compel the production of
112-4 a book, record, document, or instrument that the committee
112-5 requires. If necessary to obtain compliance with a subpoena or
112-6 other process, the committee may issue a writ of attachment. A
112-7 subpoena or other process issued by the committee may be addressed
112-8 to and served by any peace officer of this state or a political
112-9 subdivision of this state. The presiding officer shall issue, in
112-10 the name of the committee, a subpoena or other process as the
112-11 committee directs. If the presiding officer is absent, the
112-12 assistant presiding officer or a designee of the presiding officer
112-13 may issue a subpoena or other process in the same manner as the
112-14 presiding officer. A witness attending proceedings of the
112-15 committee under process is entitled to the same mileage and per
112-16 diem payments as a witness before a grand jury in this state. The
112-17 testimony given at any hearing conducted under this article shall
112-18 be given under oath subject to the penalties of perjury.
112-19 Sec. 7. COOPERATION OF OTHER AGENCIES. If necessary to the
112-20 discharge of its duties, the committee may request the assistance
112-21 of a state agency, department, or office. The agency, department,
112-22 or office shall provide the requested assistance.
112-23 Sec. 8. EXPENSES. The operating expenses of the committee
112-24 shall be paid from available funds of the Texas Department of
112-25 Insurance operating fund. A member of the committee appointed
112-26 under Section 2(a)(4) of this article is entitled to reimbursement
112-27 from those funds for expenses incurred in carrying out official
113-1 duties as a member of the committee at the rate specified in the
113-2 General Appropriations Act. Other members of the committee are not
113-3 entitled to reimbursement for their expenses.
113-4 Sec. 9. PROGRESS REPORT. Not later than December 1, 1996,
113-5 the department shall issue a report on the department's progress in
113-6 implementing recommendations for rule changes made by the committee
113-7 and in implementing any changes in law made by the 74th Legislature
113-8 in response to the recommendations of the committee.
113-9 Sec. 10. COMMITTEE ABOLISHED; EXPIRATION OF ARTICLE. (a)
113-10 The committee is abolished effective on the date it issues its
113-11 report under Section 4 of this article.
113-12 (b) This article expires January 1, 1997.
113-13 SECTION 7.03. Article 21.69, Insurance Code, is amended to
113-14 read as follows:
113-15 Art. 21.69. Board may Contract for Premium and Loss Data.
113-16 Except as provided in Article 5.58 of this code and except for a
113-17 finding of malfeasance or misfeasance determined by a district
113-18 court in Travis County, as of April 1, 1993, each organization to
113-19 which an insurer elected to report loss experience or other data as
113-20 required by the board or commissioner or that is acting as a
113-21 statistical agent of the board or commissioner, for the lines of
113-22 insurance regulated by Chapter 5 of this code, shall be allowed to
113-23 collect data from any insurer and to report the data under the
113-24 statistical plans and rules in use on April 1, 1993. The board or
113-25 commissioner may not appoint or contract with additional
113-26 statistical agents or other organizations and may not adopt or
113-27 promulgate new statistical plans until the legislature has had an
114-1 opportunity to receive and act on the report of the select
114-2 committee on rate and policy form regulation created under Article
114-3 1.50 of this code but not sooner than the last day of the regular
114-4 session of the 75th Legislature <the board may contract with any
114-5 qualified entity to collect historical premium and loss data as
114-6 defined by the board and pursuant to statistical plans promulgated
114-7 or approved by the board>.
114-8 SECTION 7.04. Article 5.01(f), Insurance Code, is amended to
114-9 read as follows:
114-10 (f) Notwithstanding Subsections (a) through (d) of this
114-11 article, <on and after March 1, 1992,> rates for personal
114-12 automobile <motor vehicle> insurance in this state are determined
114-13 as provided by the flexible rating program adopted under Subchapter
114-14 M of this chapter, and rates for commercial automobile insurance
114-15 are determined as provided by Article 5.13-2 of this code. The
114-16 term "personal automobile insurance," as used in this chapter,
114-17 means insurance primarily intended to provide coverage for the
114-18 types of motor vehicles eligible to be insured under a personal
114-19 auto policy according to the eligibility criteria in the Texas
114-20 Automobile Rules and Rating Manual promulgated by the Board as of
114-21 January 1, 1993. The term "commercial automobile insurance," as
114-22 used in this chapter, means any form of motor vehicle insurance
114-23 that is not personal automobile insurance. This subsection expires
114-24 December 31, 1995.
114-25 SECTION 7.05. Article 5.03(g), Insurance Code, is amended to
114-26 read as follows:
114-27 (g) Notwithstanding Sections (a) through (e) of this
115-1 article, <on and after March 1, 1992,> rates for personal
115-2 automobile insurance <motor vehicles> are determined as provided by
115-3 Subchapter M of this chapter, and rates for commercial automobile
115-4 insurance are determined as provided by Article 5.13-2 of this
115-5 code. This subsection expires December 31, 1995.
115-6 SECTION 7.06. Article 5.04(c), Insurance Code, is amended to
115-7 read as follows:
115-8 (c) Notwithstanding Subsections (a) and (b) of this article,
115-9 <on and after March 1, 1992,> rates for personal automobile
115-10 insurance <motor vehicles> are determined as provided by Subchapter
115-11 M of this chapter, and rates for commercial automobile insurance
115-12 are determined as provided by Article 5.13-2 of this code. This
115-13 subsection expires December 31, 1995.
115-14 SECTION 7.07. Article 5.06(l), Insurance Code, is amended to
115-15 read as follows:
115-16 (l) The commissioner <Board> shall adopt a policy form and
115-17 endorsements for each type of motor vehicle insurance subject to
115-18 this subchapter other than commercial automobile insurance
115-19 regulated under Article 5.13-2 of this code. The coverage provided
115-20 by a policy form adopted under this subsection is the minimum
115-21 coverage that may be provided under an insurance policy for that
115-22 type of insurance in this State. Each policy form must provide the
115-23 coverages mandated under Articles 5.06-1 and 5.06-3 of this code,
115-24 except that the coverages may be rejected by the named insured as
115-25 provided by those articles.
115-26 SECTION 7.08. Subsection (b), Article 5.09, Insurance Code,
115-27 as added by Section 2.12, Chapter 242, Acts of the 72nd
116-1 Legislature, Regular Session, 1991, and amended by Section 8.07,
116-2 Chapter 12, Acts of the 72nd Legislature, 2nd Called Session, 1991,
116-3 is redesignated as Subsection (c) and amended to read as follows:
116-4 (c) <(b)> Notwithstanding Subsection (a) of this article,
116-5 <on and after March 1, 1992,> rates for personal automobile
116-6 insurance <motor vehicles> are determined as provided by Subchapter
116-7 M of this chapter, and rates for commercial automobile insurance
116-8 are determined as provided by Article 5.13-2 of this code. This
116-9 subsection expires December 31, 1995.
116-10 SECTION 7.09. Article 5.11(c), Insurance Code, is amended to
116-11 read as follows:
116-12 (c) Notwithstanding Subsections (a) and (b) of this article,
116-13 <on and after March 1, 1992,> rates for personal automobile
116-14 insurance <motor vehicles> are determined as provided by Subchapter
116-15 M of this chapter, and rates for commercial automobile insurance
116-16 are determined as provided by Article 5.13-2 of this code. This
116-17 subsection expires December 31, 1995.
116-18 SECTION 7.10. Article 5.13-2, Insurance Code, is amended to
116-19 read as follows:
116-20 Art. 5.13-2. Rates for General Liability and Commercial
116-21 Property Insurance Coverage
116-22 Sec. 1. Purpose; expiration date. (a) This article governs
116-23 the regulation of general liability, <lines and> commercial
116-24 property, commercial automobile, and medical professional liability
116-25 <lines> insurance rates and forms and all commercial casualty
116-26 insurance. It does not govern<, other than> fidelity, surety, or
116-27 guaranty bonds or insurance agents' and brokers' errors and
117-1 omissions insurance. The purposes of this article are to:
117-2 (1) promote the public welfare by regulating insurance
117-3 rates to prohibit excessive, inadequate, or unfairly discriminatory
117-4 rates;
117-5 (2) promote availability of insurance;
117-6 (3) promote price competition among insurers to
117-7 provide rates and premiums that are responsive to competitive
117-8 market conditions;
117-9 (4) prohibit price-fixing agreements and other
117-10 anticompetitive behavior by insurers;
117-11 (5) regulate the insurance forms used for lines of
117-12 insurance subject to this article to ensure that they are not
117-13 unjust, unfair, inequitable, misleading, or deceptive; and
117-14 (6) provide regulatory procedures for the maintenance
117-15 of appropriate information reporting systems.
117-16 (b) This article expires December 31, 1995.
117-17 Sec. 2. <SCOPE. This article applies to all lines of
117-18 general liability or commercial property insurance written under
117-19 policies or contracts of insurance issued by a licensed insurer,
117-20 other than a fidelity, surety, or guaranty bond.>
117-21 <Sec. 3.> Definitions. In this article:
117-22 (1) "Filer" means an insurer that files rates,
117-23 prospective loss costs, or supplementary rating information under
117-24 this article.
117-25 (2) "Insurer" means an insurer to which Article 5.13
117-26 of this code applies, but does not include the Texas Catastrophe
117-27 Property Insurance Association. However, the provisions of
118-1 Sections 4, 5, 6, and 7 of this article shall not apply to Lloyd's
118-2 with respect to commercial property insurance.
118-3 (3) "Prospective loss costs" means that portion of a
118-4 rate that does not include provisions for profit or expenses, other
118-5 than loss adjustment expenses, that is based on historical
118-6 aggregate losses and loss adjustment expenses projected by
118-7 development to their ultimate value and through trending to a
118-8 future point in time.
118-9 (4) "Rate" means the cost of insurance per exposure
118-10 unit, whether expressed as a single number or as a prospective loss
118-11 cost, with an adjustment to account for the treatment of expenses,
118-12 profit, and individual insurer variation in loss experience, before
118-13 any application of individual risk variations based on loss or
118-14 expense considerations. The term does not include a minimum
118-15 premium.
118-16 (5) "Supplementary rating information" means any
118-17 manual, rating schedule, plan of rules, rating rules,
118-18 classification systems, territory codes and descriptions, rating
118-19 plans, and other similar information used by the insurer <required
118-20 by the board> to determine the applicable premium for an insured.
118-21 The term includes factors and relativities, such as increased
118-22 limits factors, classification relativities, deductible
118-23 relativities, or other similar factors.
118-24 (6) "Supporting information" means:
118-25 (A) the experience and judgment of the filer and
118-26 the experience or information of other insurers or advisory
118-27 organizations relied on by the filer;
119-1 (B) the interpretation of any other information
119-2 relied on by the filer;
119-3 (C) descriptions of methods used in making the
119-4 rates; and
119-5 (D) any other information required by the
119-6 commissioner <board> to be filed.
119-7 Sec. 3 <4>. Rate standards. (a) Rates under this article
119-8 shall be made in accordance with the provisions of this section.
119-9 (b) In setting rates, an insurer shall consider:
119-10 (1) past and prospective loss experience inside and
119-11 outside this state;
119-12 (2) any applicable catastrophe hazards;
119-13 (3) operation expenses;
119-14 (4) investment income;
119-15 (5) a reasonable margin for profit and contingencies;
119-16 and
119-17 (6) any other relevant factors inside and outside this
119-18 state.
119-19 (c) The insurer may group risks by classifications for the
119-20 establishment of rates and minimum premiums and may modify
119-21 classification rates to produce rates for individual risks in
119-22 accordance with rating plans that establish standards for measuring
119-23 variations in those risks on the basis of any factor listed in
119-24 Subsection (b) of this section.
119-25 (d) Rates may not be excessive, inadequate, or unfairly
119-26 discriminatory and may not be unreasonable.
119-27 (e) In setting rates applicable solely to policyholders in
120-1 this state, an insurer shall use available premium, loss, claim,
120-2 and exposure information from this state to the full extent of the
120-3 actuarial credibility of that information. The insurer may use
120-4 experience from outside this state as necessary to supplement
120-5 information from this state that is not actuarially credible.
120-6 Sec. 4 <5>. Rate filings; legislative report. (a) Each
120-7 insurer shall file with the department <board> all rates,
120-8 supplementary rating information, and reasonable and pertinent
120-9 supporting information for risks written in this state.
120-10 (b) If the commissioner <board> determines after a hearing
120-11 that an insurer's rates require supervision because of the
120-12 insurer's financial condition or the insurer's rating practices,
120-13 the commissioner <board> may require the insurer to file with the
120-14 commissioner <board> all rates, supplementary rate information, and
120-15 any supporting information prescribed by the commissioner <board>.
120-16 (c) An insured that is aggrieved with respect to any filing
120-17 in effect, or the public insurance counsel, may make a written
120-18 application to the commissioner <board> for a hearing on the
120-19 filing. The application must specify the grounds on which the
120-20 applicant bases the grievance. If the commissioner <board> finds
120-21 that the application is made in good faith, that the applicant
120-22 would be so aggrieved if the grounds in the application are
120-23 established, and that those grounds otherwise justify holding the
120-24 hearing, the commissioner <board> shall hold a hearing not later
120-25 than the 30th day after the date of receipt of the application.
120-26 The commissioner <board> must give at least 10 days' written notice
120-27 to the applicant and to each insurer that made the filing in
121-1 question.
121-2 (d) If, after the hearing, the commissioner <board> finds
121-3 that the filing does not meet the requirements of this article, the
121-4 commissioner <board> shall issue an order specifying how the filing
121-5 fails to meet the requirements of this article and stating the date
121-6 on which, within a reasonable period after the order date, the
121-7 filing is no longer in effect. The commissioner <board> shall send
121-8 copies of the order to the applicant and to each affected insurer.
121-9 (e) The commissioner <board> shall require each insurer
121-10 subject to this article to file information with the board on a
121-11 quarterly basis. Each insurer shall provide the commissioner
121-12 <board> with information relating to changes in losses, premiums,
121-13 and market share since January 1, 1993. The commissioner <board>
121-14 shall report to the governor, lieutenant governor, and speaker of
121-15 the house of representatives on a quarterly basis, relating to the
121-16 information provided by the insurers' reports and to market
121-17 conduct, especially consumer complaints.
121-18 Sec. 5 <6>. Public information. Each filing and any
121-19 supporting information filed under this article is open to public
121-20 inspection as of the date of the filing.
121-21 Sec. 6 <7>. Disapproval. (a) The commissioner <board>
121-22 shall disapprove a rate if the commissioner <board> determines that
121-23 the rate filing made under this article does not meet the standards
121-24 established under that section.
121-25 (b) If the commissioner <board> disapproves a filing, the
121-26 commissioner <board> shall issue an order specifying in what
121-27 respects the filing fails to meet the requirements of this article.
122-1 The filer is entitled to a hearing on written request made to the
122-2 board not later than the 30th day after the effective date of the
122-3 disapproval order.
122-4 (c) If the commissioner <board> disapproves a rate that is
122-5 in effect, the commissioner <board> may issue a disapproval order
122-6 only after a hearing held after at least 20 days' written notice to
122-7 the insurer that made the filing. The disapproval order must be
122-8 issued not later than the 15th day after the close of the hearing
122-9 and must specify how the rate fails to meet the requirements of
122-10 this article. The disapproval order must state the date on which
122-11 the further use of that rate is prohibited. The commissioner
122-12 <board> shall set the date not earlier than the 45th day after the
122-13 date on which the hearing closes.
122-14 Sec. 7 <8>. Forms. (a) An insurance policy or printed
122-15 endorsement form for use in writing the types of insurance subject
122-16 to this article may not be delivered or issued for delivery in this
122-17 state unless the form has been filed with and approved by the
122-18 department <board>.
122-19 (b) Each filing shall be made not later than the 60th day
122-20 before the date of any use or delivery for use. At the expiration
122-21 of the 60-day period a filed form is approved unless, before the
122-22 expiration of the 60 days, the commissioner <board> approves or
122-23 disapproves the form by order. Approval of a form by the
122-24 commissioner <board> constitutes a waiver of any unexpired portion
122-25 of the 60-day period. The commissioner <board> may extend by not
122-26 more than an additional 10 <60> days the period during which it may
122-27 approve or disapprove a form by giving notice to the filer of the
123-1 extension before the expiration of the initial period. At the
123-2 expiration of any extension and in the absence of any earlier
123-3 approval or disapproval, the form shall be considered approved.
123-4 For good cause shown, the commissioner <board> may withdraw the
123-5 commissioner's <its> approval at any time after notice and a
123-6 hearing.
123-7 (c) A commissioner's <An> order <of the board> disapproving
123-8 any form or any notice of the commissioner's <board's> intention to
123-9 withdraw a previous approval must state the grounds for the
123-10 disapproval in enough detail to reasonably inform the filer of the
123-11 grounds. An order of withdrawal of a previously approved form
123-12 takes effect on the expiration of the prescribed period, but not
123-13 sooner than the 30th day after the effective date of the withdrawal
123-14 order, as prescribed by the commissioner <board>.
123-15 (d) An insurer may not use in this state any form after
123-16 disapproval of the form or withdrawal of approval by the
123-17 commissioner <board>.
123-18 (e) The commissioner <board> may promulgate standard
123-19 insurance policy forms, endorsements, and other related forms that
123-20 may be used, at the discretion of the insurer, by an insurer
123-21 instead of the insurer's own forms in writing insurance subject to
123-22 this article. Forms submitted by insurers for approval under this
123-23 section must provide coverage equivalent to that provided in the
123-24 policy forms used for these lines of coverage on the effective date
123-25 of this article. An endorsement may not reduce coverage provided
123-26 under the approved policy form.
123-27 (f) Policy forms for use with large risks are exempt from
124-1 the requirements of Subsections (a) and (b) of this section. For
124-2 purposes of this subsection, "large risk" means:
124-3 (1) an insured that has total insured property values
124-4 of $10 million or more;
124-5 (2) an insured that has total annual gross revenues of
124-6 $20 million or more; or
124-7 (3) an insured that has a total premium of $50,000 or
124-8 more for property insurance, $50,000 or more for general liability
124-9 insurance, or $100,000 or more for multiperil insurance.
124-10 <Sec. 9. BOARD AUTHORITY. If the board determines at any
124-11 time that the implementation of this article or any part thereof is
124-12 contrary to the public interest and has resulted in or may result
124-13 in imminent peril to the insurance consumers of this state, the
124-14 board may issue an order stating the harm to the public and shall
124-15 thereafter rely upon Subchapters A-L of this chapter, or parts
124-16 thereof, in the regulation of property and casualty insurance.>
124-17 Sec. 8 <10>. APPLICABILITY OF OTHER LAW <ADMINISTRATIVE
124-18 PROCEDURE AND TEXAS REGISTER ACT APPLICABLE>. The provisions of
124-19 Article 5.97 of this code <the Administrative Procedure and Texas
124-20 Register Act (Article 6252-13a, Vernon's Texas Civil Statutes),>
124-21 apply to all <rate> hearings conducted under this article.
124-22 SECTION 7.11. Article 5.15(h), Insurance Code, is amended to
124-23 read as follows:
124-24 (h) Notwithstanding Subsections (a)-(g) of this article, <on
124-25 and after October 1, 1991,> rates for general liability, <and>
124-26 commercial property, and all commercial casualty insurance coverage
124-27 under this article, other than errors and omissions coverage, are
125-1 determined, and hearings related to those rates are conducted, as
125-2 provided by Article 5.13-2 of this code. This subsection expires
125-3 December 31, 1995.
125-4 SECTION 7.12. Section 4(a), Article 5.15-1, Insurance Code,
125-5 is amended to read as follows:
125-6 (a) The provisions of Article 5.13-2 of this code <5.15,
125-7 Insurance Code,> shall apply to the filing of rates and rating
125-8 information required under this article.
125-9 SECTION 7.13. Subchapter C, Chapter 5, Insurance Code, is
125-10 amended by adding Article 5.35-2 to read as follows:
125-11 Art. 5.35-2. LIABILITY COVERAGE FOR FAMILY MEMBER. (a) In
125-12 this article "family member" means a resident of the insured's
125-13 household who is:
125-14 (1) related to the insured; or
125-15 (2) under 21 years of age and in the care of:
125-16 (A) the insured; or
125-17 (B) a person who is:
125-18 (i) a resident of the insured's household;
125-19 and
125-20 (ii) related to the insured.
125-21 (b) The commissioner, by rule, shall require that a policy
125-22 form adopted under Article 5.35 of this code for homeowner's or
125-23 farm and ranch owner's insurance exclude coverage for the liability
125-24 of a person insured under the policy for bodily injury to or death
125-25 of the insured or a family member of the insured.
125-26 SECTION 7.14. Subchapter C, Chapter 5, Insurance Code, is
125-27 amended by adding Article 5.35-3 to read as follows:
126-1 Art. 5.35-3. COVERAGE FOR REAL PROPERTY FOUNDATIONS. The
126-2 Board shall adopt an endorsement form and prescribe a rate
126-3 differential for use at an insurer's option on a homeowner's policy
126-4 or fire policy adopted under Article 5.35 of this code that
126-5 excludes coverage for damage to foundations or slabs of covered
126-6 buildings except for loss caused by fire, lightning, smoke,
126-7 windstorm, hurricane, hail, explosion, aircraft, vehicles,
126-8 malicious mischief, riot, civil commotion, and falling objects.
126-9 SECTION 7.15. Section 1(a), Article 5.101, Insurance Code,
126-10 is amended to read as follows:
126-11 (a) The pilot program on flexible rating is created to help
126-12 stabilize the rates charged for insurance in all lines of property
126-13 and casualty insurance covered by Subchapters A through L of this
126-14 chapter, except ocean marine insurance, inland marine insurance,
126-15 fidelity, surety and guaranty bond insurance, errors and omissions
126-16 insurance, directors' and officers' liability insurance, general
126-17 liability insurance, commercial property insurance, commercial
126-18 automobile insurance, commercial casualty insurance, workers'
126-19 compensation insurance, professional liability insurance for
126-20 physicians and health care providers as defined in Article 5.15-1
126-21 of this code, and attorney's professional liability insurance.
126-22 SECTION 7.16. Section 3(c), Article 5.101, Insurance Code,
126-23 is amended to read as follows:
126-24 (c) Each initial flexibility band is based on a benchmark
126-25 rate promulgated by the board. On or before January 1, 1992, and
126-26 annually thereafter, the board shall conduct hearings to determine
126-27 the benchmark rates and flexibility bands by line. The
127-1 determination of the rate shall not include disallowed expenses
127-2 under Subsection (h) of this section. An insurer, the public
127-3 insurance counsel, and any other interested person may present
127-4 testimony at the hearing and may file information for consideration
127-5 by the board. An advisory organization which collects ratemaking
127-6 data shall not be a party to the hearing. A trade association that
127-7 does not collect historical data and that does not provide
127-8 statistical plans, prospective loss costs, or supplementary rating
127-9 information to its members may, on behalf of its members that are
127-10 small or medium-sized insurers, as defined by the commissioner,
127-11 present ratemaking data and make recommendations to the board at
127-12 the hearing. An insurer shall use that benchmark rate and the
127-13 flexibility band to develop rates used for the line for the year
127-14 following the setting of the benchmark rate and the flexibility
127-15 band.
127-16 SECTION 7.17. Article 1.09-5(c), Insurance Code, is amended
127-17 to read as follows:
127-18 (c) An employee of the department may appear before the
127-19 board or its designated hearings officer only as follows:
127-20 (1) a member of the department's legal staff may
127-21 assist the board or its designated hearings officer in the
127-22 prehearing process and in aligning parties to board proceedings;
127-23 (2) one or more employees of the department may appear
127-24 as a party, present evidence, and question witnesses in a
127-25 proceeding in which the public counsel under Section 5(b)(1),
127-26 Article 1.35A<(h)(1)> of this code is not authorized by law to
127-27 appear;
128-1 (3) an employee responsible for collecting and
128-2 compiling rate data may appear and present evidence relating to the
128-3 validity of the compiled data and a licensed attorney employed as
128-4 part of the legal staff of the department may assist such employee
128-5 in making the presentation;
128-6 (4) one or more employees of the department may
128-7 present evidence in any rate filing case under Article 5.13-2,
128-8 5.15, 5.55, or 5.81 of this code;
128-9 (5) <(4)> the general counsel or an assistant general
128-10 counsel may assist the board in any proceeding in which insurance
128-11 rates are set; and
128-12 (6) <(5)> the general counsel or an assistant general
128-13 counsel may be designated by the board and may serve as a hearings
128-14 officer in any proceeding in which insurance rates are set or any
128-15 prehearing proceeding provided that any final decision relating to
128-16 rates to be set must be set by the board.
128-17 SECTION 7.18. Section 5, Article 5.73, Insurance Code, is
128-18 amended to read as follows:
128-19 Sec. 5. The State Auditor shall evaluate the capability of
128-20 the Texas Department of Insurance to provide the products and
128-21 services authorized for advisory organizations under Section 1 of
128-22 this article. The State Auditor shall engage the services of a
128-23 qualified actuarial consulting firm to assist in this evaluation.
128-24 Such evaluation shall be completed by December 31, 1994, and shall
128-25 be sent to the governor, lieutenant governor, and speaker of the
128-26 house. The legislature shall review the results of this report to
128-27 determine whether the insurance department shall provide such
129-1 products and services or whether advisory organizations shall
129-2 continue to provide the products and services authorized under
129-3 Section 1 <The authority granted under this article expires
129-4 September 1, 1993>.
129-5 SECTION 7.19. Article 3.42, Insurance Code, is amended by
129-6 adding Section (k) to read as follows:
129-7 (k) The department shall develop and implement rules to
129-8 improve procedures for approval of policy forms under this article.
129-9 SECTION 7.20. Section 4A, Article 5.15-1, Insurance Code, is
129-10 repealed.
129-11 SECTION 7.21. Rates, supplementary rating information, and
129-12 forms that are, in accordance with the change in law made by this
129-13 article, subject to Article 5.13-2, Insurance Code, as amended by
129-14 this article and that are validly in use on the effective date of
129-15 this Act remain valid until revised by the insurer pursuant to
129-16 Article 5.13-2, Insurance Code, as amended by this article.
129-17 SECTION 7.22. Articles 5.35-2 and 5.35-3, Insurance Code, as
129-18 added by this article, apply only to an insurance policy that is
129-19 delivered, issued for delivery, or renewed on or after January 1,
129-20 1994. An insurance policy that is delivered, issued for delivery,
129-21 or renewed before January 1, 1994, is governed by the law as it
129-22 existed immediately before the effective date of this Act, and that
129-23 law is continued in effect for that purpose.
129-24 ARTICLE 8. FINANCIAL SUPERVISION OF ENTITIES REGULATED
129-25 BY TEXAS DEPARTMENT OF INSURANCE
129-26 SECTION 8.01. Article 1.32, Insurance Code, is amended by
129-27 adding Section 2B to read as follows:
130-1 Sec. 2B. REQUIRED DEPOSIT. In addition to actions that the
130-2 commissioner may take under Section 2 of this article with respect
130-3 to an insurer determined to be in hazardous financial condition,
130-4 the commissioner may require the insurer to deposit and maintain on
130-5 deposit with the state treasury an amount determined by the
130-6 commissioner in cash, or bonds or securities of the United States
130-7 or this state to protect policyholders from potential future
130-8 financial impairment. In making a determination under this
130-9 section, factors considered by the commissioner shall include but
130-10 not be limited to the factors provided by Section 2 of this article
130-11 that focus on the operation of an insurer.
130-12 SECTION 8.02. Section 2A(b), Article 3.28, Insurance Code,
130-13 is amended to read as follows:
130-14 (b) Actuarial Analysis of Reserves and Assets Supporting
130-15 Such Reserves. Every life insurance company, except as exempted by
130-16 or pursuant to rule adopted by the Board, shall also annually
130-17 include in the opinion required by Subsection (a)(1) of this
130-18 section, an opinion of the same person who certifies to the opinion
130-19 under Subsection (a)(1) of this section as to whether the reserves
130-20 and related actuarial items held in support of the policies and
130-21 contracts specified by Board rule, when considered in light of the
130-22 assets held by the company with respect to the reserves and related
130-23 actuarial items, including but not limited to the investment
130-24 earnings on the assets and the considerations anticipated to be
130-25 received and retained under the policies and contracts, make
130-26 adequate provision for the company's obligations under the policies
130-27 and contracts, including but not limited to the benefits under and
131-1 expenses associated with the policies and contracts. The rules
131-2 adopted by the Board under this section may <shall> exempt those
131-3 companies that would be exempted from the requirements stated in
131-4 this subsection (b) according to the most recently adopted
131-5 regulation by the National Association of Insurance Commissioners
131-6 entitled "Model Actuarial Opinion and Memorandum Regulation" or
131-7 its successor regulation if the Board considers the exemption
131-8 appropriate.
131-9 SECTION 8.03. Article 1.15, Insurance Code, is amended by
131-10 adding Sections 8, 9, and 10 to read as follows:
131-11 Sec. 8. (a) In conducting an examination under this
131-12 article, the department shall use audits and work papers prepared
131-13 by an accountant or accounting firm that meets the requirements of
131-14 Section 12, Article 1.15A, of this code that are made available to
131-15 the department by the carrier. If necessary, the department may
131-16 conduct a separate audit of the carrier.
131-17 (b) The carrier shall provide the department with the work
131-18 papers of an accountant or accounting firm or the carrier and a
131-19 record of any communications between the accountant or accounting
131-20 firm and the carrier that relate to the audit. The accountant or
131-21 accounting firm shall deliver that information to the department's
131-22 examiners, who shall retain the information during the course of
131-23 the department's examination of the carrier. Information obtained
131-24 under this section is confidential and may not be disclosed to the
131-25 public except when introduced as evidence in a hearing.
131-26 (c) For purposes of this section, "work papers" has the
131-27 meaning assigned by Section 17(a), Article 1.15A, of this code.
132-1 Work papers developed in an audit conducted under this section
132-2 shall be maintained in the manner provided by Sections 17(b) and
132-3 (c), Article 1.15A, of this code.
132-4 Sec. 9. A final or preliminary examination report, and any
132-5 information obtained during the course of an examination, is
132-6 confidential and is not subject to disclosure under the open
132-7 records law, Chapter 424, Acts of the 63rd Legislature, Regular
132-8 Session, 1973 (Article 6252-17a, Vernon's Texas Civil Statutes),
132-9 and its subsequent amendments. This section applies if the carrier
132-10 examined is under supervision or conservation but does not apply to
132-11 an examination conducted in connection with a liquidation or a
132-12 disciplinary action under this code or another insurance law of
132-13 this state.
132-14 Sec. 10. If the Commissioner determines that the financial
132-15 strength of a carrier justifies less-frequent examinations than are
132-16 required by Section 1 of this article, the Commissioner may conduct
132-17 the examination of a carrier at intervals not to exceed five years.
132-18 The Commissioner shall adopt rules governing the determination of
132-19 whether the financial strength of a carrier justifies examination
132-20 under this section. This section applies only to examination of a
132-21 carrier that has been incorporated or organized for more than three
132-22 years.
132-23 SECTION 8.04. Section 10, Article 1.15A, Insurance Code, is
132-24 amended by adding Subsection (f) to read as follows:
132-25 (f) The audited financial report must also include
132-26 information required by the department to conduct the examination
132-27 of the insurer under Article 1.15 of this code. The commissioner
133-1 shall adopt rules governing the information to be included in the
133-2 report under this subsection.
133-3 SECTION 8.05. Chapter 1, Insurance Code, is amended by
133-4 adding Article 1.15B to read as follows:
133-5 Art. 1.15B. CONFIDENTIALITY OF EARLY WARNING SYSTEM
133-6 INFORMATION. (a) The department's early warning system and any
133-7 information obtained by the department's early warning system is
133-8 confidential and is not subject to disclosure under the open
133-9 records law, Chapter 424, Acts of the 63rd Legislature, Regular
133-10 Session, 1973 (Article 6252-17a, Vernon's Texas Civil Statutes),
133-11 and its subsequent amendments.
133-12 (b) Notwithstanding Subsection (a) of this article,
133-13 information maintained by the department in another area of the
133-14 department outside the department's early warning system that is
133-15 also maintained or used by the early warning system is subject to
133-16 disclosure by the other area of the department, unless a specific
133-17 exemption from the open records law, Chapter 424, Acts of the 63rd
133-18 Legislature, Regular Session, 1973 (Article 6252-17a, Vernon's
133-19 Texas Civil Statutes), and its subsequent amendments is applicable.
133-20 (c) The department's early warning system and information
133-21 obtained by the department's early warning system are not subject
133-22 to a subpoena, except a valid grand jury subpoena, and may be
133-23 released to the public only after reasonable notice to the affected
133-24 insurer and the department, and a determination by a district court
133-25 that the public interest and the functioning of the early warning
133-26 system will not be jeopardized by obeying the subpoena.
133-27 (d) It is the express intention of the legislature that the
134-1 early warning system itself be protected from disclosure to the
134-2 public because of the great public need for preservation of a
134-3 system of early detection of financially troubled insurers.
134-4 SECTION 8.06. Sections 8(b) and (c), Article 1.14-2,
134-5 Insurance Code, are amended to read as follows:
134-6 (b) No surplus lines agent shall place any coverage with an
134-7 unauthorized insurer unless the insurer has met the eligibility
134-8 requirements of this section and the stamping office provides
134-9 evidence that the insurer has met the requirements to the State
134-10 Board of Insurance. An unauthorized insurer shall not be eligible
134-11 unless the insurer has a minimum capital and surplus of $15 million
134-12 <that are not less than the following amounts for the following
134-13 dates:>
134-14 <(1) $4.5 million capital and surplus as of December
134-15 31, 1991; or>
134-16 <(2) $6 million capital and surplus as of December 31,
134-17 1992>.
134-18 (c) An unauthorized insurer may be exempt from the minimum
134-19 capital and surplus requirements provided by Subsection (b) of this
134-20 section if the Commissioner of Insurance finds, after public
134-21 hearing, that the exemption is warranted based on factors such as
134-22 quality of management, capital and surplus of any parent company,
134-23 company underwriting profit and investment income trends,
134-24 reinsurance contracts, company record and reputation within the
134-25 industry, and other information the commissioner requires to make a
134-26 determination. The commissioner, by rule, shall exempt an
134-27 unauthorized insurer from the minimum capital and surplus
135-1 requirements of Subsection (b) of this section if the insurer
135-2 writes less than a minimum level of insurance premium in this
135-3 state. The rules must specify the minimum level of insurance
135-4 premium.
135-5 SECTION 8.07. Article 1.16(b), Insurance Code, is amended to
135-6 read as follows:
135-7 (b) Assessments for the expenses of such domestic
135-8 examination which shall be sufficient to meet all the expenses and
135-9 disbursements necessary to comply with the provisions of the laws
135-10 of Texas relating to the examination of insurance companies and to
135-11 comply with the provisions of this Article and Articles 1.17 and
135-12 1.18 of this Code, shall be made by the State Board of Insurance
135-13 upon the corporations or associations to be examined taking into
135-14 consideration annual premium receipts, and/or admitted assets that
135-15 are not attributable to 90 percent of pension plan contracts as
135-16 defined in Section 818(a) of the Internal Revenue Code of 1986 (26
135-17 U.S.C. Section 818(a)), and/or insurance in force; provided such
135-18 assessments shall be made and collected as follows: (1) expenses
135-19 attributable directly to a specific examination including
135-20 employees' salaries and expenses and expenses provided by Article
135-21 1.28 of this Code shall be collected at the time of examination;
135-22 (2) assessments calculated annually for each corporation or
135-23 association which take into consideration annual premium receipts,
135-24 and/or admitted assets that are not attributable to 90 percent of
135-25 pension plan contracts as defined in Section 818(a) of the Internal
135-26 Revenue Code of 1986 (26 U.S.C. Section 818(a)), and/or insurance
135-27 in force shall be assessed annually for each such corporation or
136-1 association. In computing the assessments, the board may not
136-2 consider insurance premiums for insurance contracted for by a state
136-3 or federal governmental entity to provide welfare benefits to
136-4 designated welfare recipients or contracted for in accordance with
136-5 or in furtherance of Title 2, Human Resources Code, or the federal
136-6 Social Security Act (42 U.S.C. Section 301 et seq.). The <Provided
136-7 further that the> amount of the <all such> assessments paid in each
136-8 taxable year to or for the use of the State of Texas by any
136-9 insurance corporation or association hereby affected shall be
136-10 allowed as a credit on the amount of premium taxes to be paid by
136-11 any such insurance corporation or association for such taxable year
136-12 except as provided by Article 1.28 of this Code.
136-13 SECTION 8.08. Article 1.39, Insurance Code, is amended to
136-14 read as follows:
136-15 Art. 1.39. Subordinated Indebtedness. (a) This article
136-16 applies to an insurer as that term is defined by Article 1.15A of
136-17 this code.
136-18 (b) An insurer may obtain a loan or an advance of cash or
136-19 property, repayable with interest and may assume a subordinated
136-20 liability for repayment of the advance and payment of interest on
136-21 the advance if the insurer and creditor execute a written agreement
136-22 stating that the creditor may be paid only out of that <the>
136-23 portion of the insurer's surplus that exceeds the greater of a
136-24 minimum surplus stated and fixed in the agreement or a minimum
136-25 surplus of $500,000 for that insurer. The department or the
136-26 commissioner may not require the agreement to provide another
136-27 minimum surplus amount.
137-1 (c) <Before an insurer may assume a subordinated liability
137-2 under Subsection (a) of this article, the agreement must be
137-3 approved by the commissioner.>
137-4 <(d) An insurer may not repay principal or pay interest on a
137-5 subordinate liability assumed under this article unless the
137-6 repayment or payment is approved by the commissioner. The
137-7 commissioner may approve the repayment or payment only if satisfied
137-8 that the repayment or payment is appropriate, considering the
137-9 financial condition of the insurer. The commissioner may not deny
137-10 approval of the repayment or payment if the insurer submits
137-11 evidence, satisfactory to the commissioner, that the insurer has at
137-12 least the minimum surplus stated in the agreement.>
137-13 <(e)> A loan or advance made under this article, and any
137-14 interest accruing on the loan or advance, is <not> a legal
137-15 liability and <or> financial statement liability of the insurer
137-16 only to the extent provided by the terms and conditions of the loan
137-17 or advance agreement, and the loan or advance may not otherwise be
137-18 a legal liability or financial statement liability of the insurer.
137-19 <until the commissioner authorizes repayment or payment under
137-20 Subsection (d) of this article. Until the commissioner authorizes
137-21 the repayment or payment, all financial statements published by the
137-22 insurer or filed with the commissioner must show as a liability
137-23 that portion of the insurer's surplus that exceeds the minimum
137-24 surplus as defined in the subordinated agreement to the extent of
137-25 the unpaid balance thereon, and must show the amount of that
137-26 minimum surplus as a special surplus account.>
137-27 (d) If the loan or advance agreement provides for a sinking
138-1 fund out of which the loan or advance is to be repaid, then the
138-2 loan or advance shall be a legal liability and financial statement
138-3 liability of the insurer only to the extent of those funds
138-4 accumulated and held in the sinking fund, and the loan or advance
138-5 may not otherwise be a legal liability or financial statement
138-6 liability of the insurer. By mutual agreement of the parties to
138-7 the agreement, any portion of the accumulated funds in the sinking
138-8 fund may be returned to the surplus of the insurer at any time and
138-9 from time to time and thereafter may not be considered as a legal
138-10 liability or financial statement liability of the insurer.
138-11 SECTION 8.09. Section 4, Article 3.33, Insurance Code, is
138-12 amended to read as follows:
138-13 Sec. 4. AUTHORIZED INVESTMENTS AND LOANS. Subject to the
138-14 limitations and restrictions herein contained, the investments and
138-15 loans described in the following subsections, and none other, are
138-16 authorized for the insurers subject hereto:
138-17 (a) United States Government Bonds. Bonds, evidences
138-18 of indebtedness or obligations of the United States of America, or
138-19 bonds, evidences of indebtedness or obligations guaranteed as to
138-20 principal and interest by the full faith and credit of the United
138-21 States of America, and bonds, evidences of indebtedness, or
138-22 obligations of agencies and instrumentalities of the government of
138-23 the United States of America;
138-24 (b) Other Governmental Bonds. Bonds, evidences of
138-25 indebtedness or obligations of governmental units in the United
138-26 States, Canada, or any province or city of Canada, and of the
138-27 instrumentalities of such governmental units; provided:
139-1 (1) such governmental unit or instrumentality is
139-2 not in default in the payment of principal or interest in any of
139-3 its obligations; and
139-4 (2) investments in the obligations of any one
139-5 governmental unit or instrumentality may not exceed 20 percent of
139-6 the insurer's capital and surplus;
139-7 (c) Obligations of Business Entities. Obligations,
139-8 including bonds or evidences of indebtedness, or participations in
139-9 those bonds or evidences of indebtedness, that are issued, assumed,
139-10 guaranteed, or insured by any business entity, including a sole
139-11 proprietorship, a corporation, an association, a general or limited
139-12 partnership, a joint-stock company, a joint venture, a trust, or
139-13 any other form of business organization, whether for-profit or
139-14 not-for-profit, that is organized under the laws of the United
139-15 States, another state, Canada, or any state, district, province, or
139-16 territory of Canada, subject to all conditions set forth below:
139-17 (1) an insurer may acquire obligations in any
139-18 one business entity rated one or two by the Securities Valuation
139-19 Office of the National Association of Insurance Commissioners, but
139-20 not to exceed 20 percent of the insurer's statutory capital and
139-21 surplus as reported in the most recent annual statement filed with
139-22 the department;
139-23 (2) an insurer may acquire obligations rated
139-24 three or lower by the Securities Valuation Office if, after giving
139-25 effect to such an acquisition, the aggregate amount of all
139-26 obligations rated three or lower then held by the domestic insurer
139-27 does not exceed 20 percent of its admitted assets. Not more than
140-1 10 percent of the admitted assets of that insurer may consist of
140-2 obligations rated four, five, or six by the Securities Valuation
140-3 Office. Not more than three percent of the admitted assets of that
140-4 insurer may consist of obligations rated five or six by the
140-5 Securities Valuation Office. Not more than one percent of the
140-6 admitted assets of that insurer may consist of obligations rated
140-7 six by the Securities Valuation Office. Attaining or exceeding the
140-8 limit in any one category does not preclude an insurer from
140-9 acquiring obligations in other categories, subject to the specific
140-10 and multi-category limits;
140-11 (3) an insurer may not invest more than an
140-12 aggregate of one percent of its admitted assets in obligations
140-13 rated three by the Securities Valuation Office that are issued,
140-14 assumed, guaranteed, or insured by any one business entity, or more
140-15 than one-half percent of its admitted assets in obligations rated
140-16 four, five, or six by the Securities Valuation Office that are
140-17 issued, assumed, guaranteed, or insured by any one business entity.
140-18 An insurer may not invest more than one percent of its admitted
140-19 assets in any obligations rated three, four, five, or six by the
140-20 Securities Valuation Office that are issued, assumed, guaranteed,
140-21 or insured by any one business entity;
140-22 (4) notwithstanding the foregoing, an insurer
140-23 may acquire an obligation of a business entity in which the insurer
140-24 already has one or more obligations if the obligation is acquired
140-25 in order to protect an investment previously made in that business
140-26 entity. Such acquired obligations may not exceed one-half percent
140-27 of the insurer's admitted assets; and
141-1 (5) this subsection does not prohibit an insurer
141-2 from acquiring an obligation as a result of a restructuring of an
141-3 already held obligation that is rated three or lower by the
141-4 Securities Valuation Office;
141-5 <Corporate Bonds. Bonds, evidences of indebtedness or
141-6 obligations of corporations organized under the laws of the United
141-7 States of America or its states or Canada or any state, district,
141-8 province, or territory of Canada; provided:>
141-9 <(1) any such corporation must be solvent with
141-10 at least $1,000,000 of net worth as of the date of its latest
141-11 annual or more recent certified audited financial statement or will
141-12 have at least $1,000,000 of net worth after completion of a
141-13 securities offering which is being subscribed to by the insurer, or
141-14 the obligation is guaranteed as to principal and interest by a
141-15 solvent corporation meeting such net worth requirements which is
141-16 organized under the laws of the United States of America or one of
141-17 its states or Canada or any state, district, province, or territory
141-18 of Canada;>
141-19 <(2) investments in the obligations of any one
141-20 corporation may not exceed 20 percent of the insurer's capital and
141-21 surplus; and>
141-22 <(3) the aggregate of all investments under this
141-23 subsection may not exceed:>
141-24 <(A) one hundred percent of the insurer's
141-25 assets (excluding, however, those assets representing the minimum
141-26 capital required for the insurer), but only if more than 75 percent
141-27 of the total amount invested by the insurer in such bonds,
142-1 evidences of indebtedness, or obligations of any such corporations
142-2 qualifying under Subdivision (1) of this subsection are rated
142-3 either: (i) AA or better by Standard and Poor's Bond Ratings
142-4 service; or (ii) Aa or better by Moody's Bond Ratings service; or>
142-5 <(B) eighty percent of the insurer's
142-6 assets (excluding, however, those assets representing the minimum
142-7 capital required for the insurer), but only if more than 50 percent
142-8 of the total amount invested by the insurer in such bonds,
142-9 evidences of indebtedness or obligations of any such corporations
142-10 qualifying under Subdivision (1) of this subsection are rated
142-11 either: (i) BBB or better by Standard and Poor's Bond Ratings
142-12 service; or (ii) Baa or better by Moody's Bond Ratings service; or>
142-13 <(C) fifty percent of the insurer's
142-14 assets;>
142-15 (d) International Market. Bonds issued, assumed, or
142-16 guaranteed by the Interamerican Development Bank, the International
142-17 Bank for Reconstruction and Development (the World Bank), the Asian
142-18 Development Bank, the State of Israel, the African Development
142-19 Bank, and the International Finance Corporation; provided:
142-20 (1) investments in the bonds of any one of the
142-21 entities specified above may not exceed 20 percent of the insurer's
142-22 capital and surplus; and
142-23 (2) the aggregate of all investments made under
142-24 this subsection may not exceed 20 percent of the insurer's assets;
142-25 (e) Policy Loans. Loans upon the security of the
142-26 insurer's own policies not in excess of the amount of the reserve
142-27 values thereof;
143-1 (f) Time and Savings Deposits. Any type or form of
143-2 savings deposits, time deposits, certificates of deposit, NOW
143-3 accounts, and money market accounts in solvent banks, savings and
143-4 loan associations, and credit unions and branches thereof,
143-5 organized under the laws of the United States of America or its
143-6 states, when made in accordance with the laws or regulations
143-7 applicable to such entities; provided the amount of the deposits in
143-8 any one bank, savings and loan association, or credit union will
143-9 not exceed the greater of:
143-10 (1) twenty percent of the insurer's capital and
143-11 surplus;
143-12 (2) the amount of federal or state deposit
143-13 insurance coverage pertaining to such deposit; or
143-14 (3) ten percent of the amount of capital,
143-15 surplus, and undivided profits of the entity receiving such
143-16 deposits;
143-17 (g) Equipment Trusts. Equipment trust obligations or
143-18 certificates; provided:
143-19 (1) any such obligation or certificate is
143-20 secured by an interest in transportation equipment that is in whole
143-21 or in part within the United States of America <and the amount of
143-22 the obligation or certificate may not exceed 90 percent of the
143-23 value of the equipment>;
143-24 (2) the obligation or certificate provides a
143-25 right to receive determined portions of rental, purchase, or other
143-26 fixed obligatory payments for the use or purchase of the
143-27 transportation equipment;
144-1 (3) the obligation is classified as an
144-2 obligation of a business entity and is subject to the limitations
144-3 on obligations of business entities set forth in Subsection (c) of
144-4 this section <investment in any one equipment trust obligation or
144-5 certificate may not exceed 10 percent of the insurer's capital and
144-6 surplus>; and
144-7 (4) the aggregate of all investments made under
144-8 this subsection may not exceed 10 percent of the insurer's assets;
144-9 (h) Common Stock. Common stock of any corporation
144-10 organized under the laws of the United States of America or any of
144-11 its states, shares of mutual funds doing business under the
144-12 Investment Company Act of 1940 (15 U.S.C. Section 80a-1 et seq.),
144-13 other than money market funds as defined in Subsection (s) of this
144-14 section, and shares in real estate investment trusts as defined in
144-15 the Internal Revenue Code of 1954 (26 U.S.C. Section 856);
144-16 provided:
144-17 (1) any such corporation, other than a mutual
144-18 fund, must be solvent with at least $1,000,000 net worth as of the
144-19 date of its latest annual or more recent certified audited
144-20 financial statement or will have at least $1,000,000 of net worth
144-21 after completion of a securities offering which is being subscribed
144-22 to by the insurer;
144-23 (2) mutual funds, other than money market funds
144-24 as defined in Subsection (s) of this section, and real estate
144-25 investment trusts must be solvent with at least $1,000,000 of net
144-26 assets as of the date of its latest annual or more recent certified
144-27 audited financial statement;
145-1 (3) investments in any one corporation, mutual
145-2 fund, other than a money market fund as defined in Subsection (s)
145-3 of this section, or real estate investment trust may not exceed 10
145-4 percent of the insurer's capital and surplus; and
145-5 (4) the aggregate of all investments made under
145-6 this subsection may not exceed 20 percent of the insurer's assets;
145-7 (i) Preferred Stock. Preferred stock of corporations
145-8 organized under the laws of the United States of America or any of
145-9 its states; provided:
145-10 (1) such corporation must be solvent with at
145-11 least $1,000,000 of net worth as of the date of its latest annual
145-12 or more recent certified audited financial statement or will have
145-13 at least $1,000,000 of net worth after completion of a security
145-14 offering which is being subscribed to by the insurer;
145-15 (2) investments in the preferred stock of any
145-16 one corporation will not exceed 20 percent of the insurer's capital
145-17 and surplus;
145-18 (3) in the aggregate not more than 10 percent of
145-19 the insurer's assets may be invested in preferred stock, the
145-20 redemption and retirement of which is not provided for by a sinking
145-21 fund meeting the standards established by the National Association
145-22 of Insurance Commissioners to value the preferred stock at cost;
145-23 and
145-24 (4) the aggregate of all investments made under
145-25 this subsection may not exceed 40 percent of the insurer's assets;
145-26 (j) Collateral Loans. Collateral loans secured by a
145-27 first lien upon or a valid and perfected first security interest in
146-1 an asset; provided:
146-2 (1) the amount of any such collateral loan will
146-3 not exceed 80 percent of the value of the collateral asset at any
146-4 time during the duration of the loan; and
146-5 (2) the asset used as collateral would be
146-6 authorized for direct investment by the insurer under other
146-7 provisions of this Section 4, except real property in Subsection
146-8 (l);
146-9 (k) Real Estate Loans. Notes, evidences of
146-10 indebtedness, or participations therein secured by a valid first
146-11 lien upon real property or leasehold estate therein located in the
146-12 United States of America; provided:
146-13 (1) the amount of any such obligation secured by
146-14 a first lien upon real property or leasehold estate therein shall
146-15 not exceed 90 percent of the value of such real property or
146-16 leasehold estate therein, but the amount of such obligation:
146-17 (A) may exceed 90 percent but shall not
146-18 exceed 100 percent of the value of such real property or leasehold
146-19 estate therein if the insurer or one or more wholly owned
146-20 subsidiaries of the insurer owns in the aggregate a 10 percent or
146-21 greater equity interest in such real property or leasehold estate
146-22 therein;
146-23 (B) may be 95 percent of the value of such
146-24 real property or leasehold estate therein if it contains only a
146-25 dwelling designed exclusively for occupancy by not more than four
146-26 families for residential purposes, and the portion of the unpaid
146-27 balance of such obligation which is in excess of an amount equal to
147-1 90 percent of such value is guaranteed or insured by a mortgage
147-2 insurance company qualified to do business in the State of Texas;
147-3 or
147-4 (C) may be greater than 90 percent of the
147-5 value of such real property or leasehold estate therein to the
147-6 extent the obligation is insured or guaranteed by the United States
147-7 of America, the Federal Housing Administration pursuant to the
147-8 National Housing Act of 1934, as amended (12 U.S.C. Section 1701 et
147-9 seq.), or the State of Texas; and
147-10 (2) the term of an obligation secured by a first
147-11 lien upon a leasehold estate in real property shall not exceed a
147-12 period equal to four-fifths of the then unexpired term of such
147-13 leasehold estate; provided the unexpired term of the leasehold
147-14 estate must extend at least 10 years beyond the term of the
147-15 obligation, and each obligation shall be payable in an installment
147-16 or installments of sufficient amount or amounts so that at any time
147-17 after the expiration of two-thirds of the original loan term, the
147-18 principal balance will be no greater than the principal balance
147-19 would have been if the loan had been amortized over the original
147-20 loan term in equal monthly, quarterly, semiannual, or annual
147-21 payments of principal and interest, it being required that under
147-22 any method of repayment such obligation will fully amortize during
147-23 a period of time not exceeding four-fifths of the then unexpired
147-24 term of the security leasehold estate; and
147-25 (3) if any part of the value of buildings is to
147-26 be included in the value of such real property or leasehold estate
147-27 therein to secure the obligations provided for in this subsection,
148-1 such buildings shall be covered by adequate property insurance,
148-2 including but not limited to fire and extended coverage insurance
148-3 issued by a company authorized to transact business in the State of
148-4 Texas or by a company recognized as acceptable for such purpose by
148-5 the insurance regulatory official of the state in which such real
148-6 estate is located, and the amount of insurance granted in the
148-7 policy or policies shall be not less than the unpaid balance of the
148-8 obligation or the insurable value of such buildings, whichever is
148-9 the lesser; the loss clause shall be payable to the insurer as its
148-10 interest may appear; and
148-11 (4) to the extent any note, evidence of
148-12 indebtedness, or participation therein under this subsection
148-13 represents an equity interest in the underlying real property, the
148-14 value of such equity interest shall be determined at the time of
148-15 execution of such note, evidence of indebtedness, or participation
148-16 therein and that portion shall be designated as an investment
148-17 subject to the provisions of Subsection (l)(2) of this section; and
148-18 (5) the amount of any one such obligation may
148-19 not exceed 25 percent of the insurer's capital and surplus; and
148-20 (6) a first lien on real property may be
148-21 purchased after its origination if the first lien is insured by a
148-22 mortgagee's title policy issued to the original mortgagee that
148-23 contains a provision that inures the policy to the use and benefit
148-24 of the owners of the evidence of debt indicated in the policy and
148-25 to any subsequent owners of that evidence of debt, and if the
148-26 insurer maintains evidence of assignments or other transfers of the
148-27 first lien on real property to the insurer. An assignment or other
149-1 transfer to the insurer, duly recorded in the county in which the
149-2 real property is located, shall be presumed to create legal
149-3 ownership of the first lien by the insurer;
149-4 (l) Real Estate. Real property fee simple or
149-5 leasehold estates located within the United States of America, as
149-6 follows:
149-7 (1) home and branch office real property or
149-8 participations therein, which must be materially enhanced in value
149-9 by the construction of durable, permanent-type buildings and other
149-10 improvements costing an amount at least equal to the cost of such
149-11 real property, exclusive of buildings and improvements at the time
149-12 of acquisition, or by the construction of such buildings and
149-13 improvements which must be commenced within two years of the date
149-14 of the acquisition of such real property; provided:
149-15 (A) at least 30 percent of the available
149-16 space in such building shall be occupied for the business purposes
149-17 of the insurer and its affiliates; and
149-18 (B) the aggregate investment in such home
149-19 and branch offices shall not exceed 20 percent of the insurer's
149-20 assets; and
149-21 (2) other investment property or participations
149-22 therein, which must be materially enhanced in value by the
149-23 construction of durable, permanent-type buildings and other
149-24 improvements costing an amount at least equal to the cost of such
149-25 real property, exclusive of buildings and improvements at the time
149-26 of acquisition, or by the construction of such buildings and
149-27 improvements which must be commenced within two years of the date
150-1 of acquisition of such real property; provided that such investment
150-2 in any one piece of property or interest therein, including the
150-3 improvements, fixtures, and equipment pertaining thereto may not
150-4 exceed five percent of the insurer's assets; provided, however,
150-5 nothing in this article shall allow ownership of, development of,
150-6 or equity interest in any residential property or subdivision,
150-7 single or multiunit family dwelling property, or undeveloped real
150-8 estate for the purpose of subdivision for or development of
150-9 residential, single, or multiunit family dwellings, except
150-10 acquisitions as provided in Subdivision (4) below, and such
150-11 ownership, development, or equity interests shall be specifically
150-12 prohibited;
150-13 (3) the admissible asset value of each such
150-14 investment in the properties acquired under Subdivisions (1) and
150-15 (2) of this subsection shall be subject to review and approval by
150-16 the Commissioner of Insurance. The commissioner shall have
150-17 discretion at the time such investment is made or any time when an
150-18 examination of the company is being made to cause any such
150-19 investment to be appraised by an appraiser, appointed by the
150-20 commissioner, and the reasonable expense of such appraisal shall be
150-21 paid by such insurance company and shall be deemed to be a part of
150-22 the expense of examination of such company; if the appraisal is
150-23 made upon application of the company, the expense of such appraisal
150-24 shall not be considered a part of the expense of examination of
150-25 such company; no insurance company may hereafter make any write-up
150-26 in the valuation of any of the properties described in Subdivision
150-27 (1) or (2) of this subsection unless and until it makes application
151-1 therefor and such increase in valuation shall be approved by the
151-2 commissioner; and
151-3 (4) other real property acquired:
151-4 (A) in good faith by way of security for
151-5 loans previously contracted or money due; or
151-6 (B) in satisfaction of debts previously
151-7 contracted for in the course of its dealings; or
151-8 (C) by purchase at sales under judgment or
151-9 decrees of court, or mortgage or other lien held by such insurer;
151-10 and
151-11 (5) regardless of the mode of acquisition
151-12 specified herein, upon sale of any such real property, the fee
151-13 title to the mineral estate or any portion thereof may be retained
151-14 by the insurance company indefinitely;
151-15 (m) Oil, Gas, and Minerals. In addition to and
151-16 without limitation on the purposes for which real property may be
151-17 acquired, secured, held, or retained pursuant to other provisions
151-18 of this section, every such insurance company may secure, hold,
151-19 retain, and convey production payments, producing royalties and
151-20 producing overriding royalties, or participations therein as an
151-21 investment for the production of income; provided:
151-22 (1) in no event may such company carry such
151-23 assets in an amount in excess of 90 percent of the appraised value
151-24 thereof; and
151-25 (2) no one investment under this subsection may
151-26 exceed 10 percent of the insurer's capital and surplus in excess of
151-27 statutory minimum capital and surplus applicable to that insurer,
152-1 and the aggregate of all such investments may not exceed 10 percent
152-2 of the insurer's assets as of December 31st next preceding the date
152-3 of such investment; and
152-4 (3) for the purposes of this subsection, the
152-5 following definitions apply:
152-6 (A) a production payment is defined to
152-7 mean a right to oil, gas, or other minerals in place or as produced
152-8 that entitles its owner to a specified fraction of production until
152-9 a specified sum of money, or a specified number of units of oil,
152-10 gas, or other minerals, has been received;
152-11 (B) a royalty and an overriding royalty
152-12 are each defined to mean a right to oil, gas, and other minerals in
152-13 place or as produced that entitles the owner to a specified
152-14 fraction of production without limitation to a specified sum of
152-15 money or a specified number of units of oil, gas, or other
152-16 minerals;
152-17 (C) "producing" is defined to mean
152-18 producing oil, gas, or other minerals in paying quantities,
152-19 provided that it shall be deemed that oil, gas, or other minerals
152-20 are being produced in paying quantities if a well has been "shut
152-21 in" and "shut-in royalties" are being paid;
152-22 (n) Foreign Countries and United States Territories.
152-23 In addition to the investments in Canada authorized in other
152-24 subsections of this section, investments <Investments> in other
152-25 foreign countries or in commonwealths, territories, or possessions
152-26 of the United States <where the insurer conducts an insurance
152-27 business>; provided:
153-1 (1) such investments are similar to those
153-2 authorized for investment within the United States of America or
153-3 Canada by other provisions of this section and are rated one or two
153-4 by the Securities Valuation Office of the National Association of
153-5 Insurance Commissioners; and
153-6 (2) such investments when added to the amount of
153-7 similar investments made within the United States and Canada do not
153-8 result in the combined total of such investments exceeding the
153-9 limitations specified in Subsections (a) through (p) of this
153-10 section; and
153-11 (3) such investments may not exceed the sum of:
153-12 (A) the amount of reserves attributable to
153-13 the business in force in said countries, if any,<;> and any
153-14 additional investments <provided, however, such investments may
153-15 exceed such reserves to the extent> required by any country as a
153-16 condition to doing business therein, <but to the extent such
153-17 investments exceed such reserves said investments shall not be
153-18 considered as admitted assets of the insurer>; and
153-19 (B) five percent of the insurer's assets;
153-20 (o) Investments Not Otherwise Specified. Investments
153-21 which are not otherwise authorized by this article and which are
153-22 not specifically prohibited by statute, including that portion of
153-23 any investments which may exceed the limits specified in
153-24 Subsections (a) through (n) of this section; provided:
153-25 (1) if any aggregate or individual specified
153-26 investment limitation in Subsections (a) through (n) of this
153-27 section is exceeded, then the excess portion of such investment
154-1 shall be an investment under this subsection; and
154-2 (2) the burden of establishing the value of such
154-3 investments shall be upon the insurer; and
154-4 (3) the amount of any one such investment may
154-5 not exceed 10 percent of the insurer's capital and surplus in
154-6 excess of the statutory minimum capital and surplus applicable to
154-7 that insurer; and
154-8 (4) the aggregate of all investments made under
154-9 this subsection may not exceed the lesser of either five percent of
154-10 the insurer's assets or the insurer's capital and surplus in excess
154-11 of the statutory minimum capital and surplus applicable to that
154-12 insurer;
154-13 (p) Other Authorized Investments. Those other
154-14 investments as follows:
154-15 (1) any investment held by an insurer on the
154-16 effective date of this Act, which was legally authorized at the
154-17 time it was made or acquired or which the insurer was authorized to
154-18 hold or possess immediately prior to such effective date, but which
154-19 does not conform to the requirements of the investments authorized
154-20 in Subsections (a) through (o) of this section, may continue to be
154-21 held by and considered as an admitted asset of the insurer;
154-22 provided the investment is disposed of at its maturity date, if
154-23 any, or within the time prescribed by the law under which it was
154-24 acquired, if any; and provided further, in no event shall the
154-25 provisions of this subdivision alter the legal or accounting status
154-26 of such asset; and
154-27 (2) any other investment which may be authorized
155-1 by other provisions of this code or by other laws of this state for
155-2 the insurers which are subject to this article.
155-3 (q) Special Limitations for Certain Fixed Annuity
155-4 Insurers. The quantitative limitations imposed above in
155-5 Subsections (b)(2), (c)(2), (f)(1), (g)(3), (h)(3), (i)(2), and
155-6 (k)(5) of this section shall not apply to any insurer with assets
155-7 in excess of $2,500,000,000 and that receives more than 90 percent
155-8 of its premium income from fixed rate annuity contracts and that
155-9 has more than 90 percent of its assets allocated to its reserves
155-10 held for fixed rate annuity contracts, excluding, however, any
155-11 premium income, assets, and reserves received from, held for, or
155-12 allocated to separate accounts from the computation of the above
155-13 percentages, and in lieu thereof, the following quantitative
155-14 limitations shall apply to such insurers:
155-15 (1) the limitation in Subsection (b)(2) of this
155-16 section shall be two percent of the insurer's assets;
155-17 (2) the limitation in Subsection (c)(2) of this
155-18 section shall be two percent of the insurer's assets;
155-19 (3) the limitation in Subsection (f)(1) of this
155-20 section shall be two percent of the insurer's assets;
155-21 (4) the limitation in Subsection (g)(3) of this
155-22 section shall be one percent of the insurer's assets;
155-23 (5) the limitation in Subsection (h)(3) of this
155-24 section shall be one percent of the insurer's assets;
155-25 (6) the limitation in Subsection (i)(2) of this
155-26 section shall be two percent of the insurer's assets; and
155-27 (7) the limitation in Subsection (k)(5) of this
156-1 section shall be two percent of the insurer's assets.
156-2 (r) Premium Loans. Loans to finance the payment of
156-3 premiums for the insurer's own insurance policies or annuity
156-4 contracts; provided that the amount of any such loan does not
156-5 exceed the sum of: (i) the available cash value of such insurance
156-6 policy or annuity contract; and (ii) the amount of any escrowed
156-7 commissions payable relating to such insurance policy or annuity
156-8 contract for which the premium loan is made; and
156-9 (s) Money Market Funds. (1) Money market funds as
156-10 defined by 17 CFR 270.2a-7 under the Investment Company Act of 1940
156-11 (15 U.S.C. 80a-1 et seq.) that meet the following additional
156-12 conditions:
156-13 (A) the funds invest 100 percent of total
156-14 assets in United States treasury bills, notes, and bonds, and
156-15 collateralized repurchase agreements composed of those obligations
156-16 at all times;
156-17 (B) the funds invest 100 percent of total
156-18 assets in other full faith and credit instruments of the United
156-19 States; or
156-20 (C) the funds invest at least 95 percent
156-21 of total assets in exempt securities, short-term debt instruments
156-22 with a maturity of 397 days or less, class one bonds, and
156-23 collateralized repurchase agreements composed of those securities
156-24 at all times;
156-25 (2) For purposes of complying with Subsection
156-26 (h) of this section, money market funds qualifying for listing
156-27 within these categories must conform to the purpose and procedures
157-1 manual of the valuation of securities manual of the National
157-2 Association of Insurance Commissioners.
157-3 SECTION 8.10. Section 3(d), Article 21.49-1, Insurance Code,
157-4 is amended to read as follows:
157-5 (d) Amendments to Registration Statements. Each registered
157-6 insurer shall keep current the information required to be disclosed
157-7 in its registration statement by reporting all material changes or
157-8 additions within 15 days after the end of the month in which it
157-9 learns of each such change or addition, except that the insurer is
157-10 not required to report a transaction under this subsection that is
157-11 authorized under Subsection 4(d) of this section. In addition,<;
157-12 provided, however, that> subject to Subsection (c) of Section 4,
157-13 each registered insurer shall <so> report all dividends and other
157-14 distributions to shareholders within two business days following
157-15 the declaration thereof<;> and at least 10 days before the date of
157-16 payment. For purposes of determining compliance with those
157-17 deadlines, reports are considered to be made when received by the
157-18 Texas Department of Insurance. Reports under this subsection are
157-19 for informational purposes only. The commissioner shall adopt
157-20 rules that establish procedures to:
157-21 (1) consider the prepayment notices promptly, that
157-22 shall include the standards set forth under Section 4(b), Article
157-23 21.49-1 of this code; and
157-24 (2) review annually all reported ordinary dividends
157-25 paid within the preceding 12 months <provided further that any
157-26 transaction authorized by Section 4(d) hereof need not be reported
157-27 under this subsection>.
158-1 SECTION 8.11. Section 4(b), Article 21.49-1, Insurance Code,
158-2 is amended to read as follows:
158-3 (b) Adequacy of Surplus. For the purposes of this article,
158-4 in determining whether an insurer's surplus as regards
158-5 policyholders is reasonable in relation to the insurer's
158-6 outstanding liabilities and adequate to its financial needs, the
158-7 following factors, among others, shall be considered:
158-8 (1) the size of the insurer as measured by its assets,
158-9 capital and surplus, reserves, premium writings, insurance in
158-10 force, and other appropriate criteria;
158-11 (2) the extent to which the insurer's business is
158-12 diversified among the several lines of insurance;
158-13 (3) the number and size of risks insured in each line
158-14 of business;
158-15 (4) the extent of the geographical dispersion of the
158-16 insurer's insured risks;
158-17 (5) the nature and extent of the insurer's reinsurance
158-18 program;
158-19 (6) the quality, diversification, and liquidity of the
158-20 insurer's investment portfolio;
158-21 (7) the recent past and projected future trend in the
158-22 size of the insurer's surplus as regards policyholders and the
158-23 insurer's investment portfolio;
158-24 (8) the surplus as regards policyholders maintained by
158-25 other comparable insurers;
158-26 (9) the adequacy of the insurer's reserves; <and>
158-27 (10) the quality and liquidity of investments in
159-1 subsidiaries made pursuant to Section 6. The commissioner may
159-2 treat any such investment as a nonadmitted or disallowed asset for
159-3 purposes of determining the adequacy of surplus as regards
159-4 policyholders whenever in his judgment such investment so warrants;
159-5 and
159-6 (11) the quality of the insurer's earnings and the
159-7 extent to which the insurer's reported earnings include
159-8 extraordinary items.
159-9 SECTION 8.12. Section 3A, Article 21.39-A, Insurance Code,
159-10 is amended by adding Subsection (c) to read as follows:
159-11 (c) This Act does not apply to a reinsurance agreement or
159-12 any trust account related to the reinsurance agreement if the
159-13 agreement and trust account meet the requirements of Article 3.10
159-14 or 5.75-1 of this code.
159-15 SECTION 8.13. Section 1, Article 21.39-B, Insurance Code, is
159-16 amended to read as follows:
159-17 Sec. 1. Any director, member of a committee, or officer, or
159-18 any clerk of a domestic company, who is charged with the duty of
159-19 handling or investing its funds, shall not:
159-20 (1) deposit or invest such funds, except in the
159-21 corporate name of such company, provided, however, that securities
159-22 kept under a custodial agreement or trust agreement with a bank,
159-23 federal home loan bank, or trust company may be issued in the name
159-24 of a nominee of such bank, federal home loan bank, or trust company
159-25 if such bank, federal home loan bank, or trust company has
159-26 corporate trust powers and is duly authorized to act as a custodian
159-27 or trustee and is organized under the laws of the United States of
160-1 America or any state thereof and either (i) is a member of the
160-2 Federal Reserve System, (ii) is a member of or is eligible to
160-3 receive deposits which are insured by the Federal Deposit Insurance
160-4 Corporation, <or> (iii) maintains an account with a Federal Reserve
160-5 Bank and is subject to supervision and examination by the Board of
160-6 Governors of the Federal Reserve System, or (iv) is subject to
160-7 supervision and examination by the Federal Housing Finance Board;
160-8 (2) borrow the funds of such company;
160-9 (3) be interested in any way in any loan, pledge,
160-10 security, or property of such company, except as stockholder; or
160-11 (4) take or receive to his own use any fee, brokerage,
160-12 commission, gift, or other consideration for, or on account of, a
160-13 loan made by or on behalf of such company.
160-14 SECTION 8.14. Section 4(a), Article 21.39-B, Insurance Code,
160-15 is amended to read as follows:
160-16 (a) A domestic insurance company may evidence its ownership
160-17 of securities through definitive certificates or uncertificated
160-18 securities as provided by Section 6 of this article, or it may
160-19 deposit or arrange for the deposit of securities held in or
160-20 purchased for its general account or its separate accounts in a
160-21 clearing corporation or the Federal Reserve Book Entry System.
160-22 When securities are deposited with a clearing corporation directly
160-23 or deposited indirectly through a participating custodian bank,
160-24 certificates representing securities of the same class of the same
160-25 issuer may be merged and held in bulk in the name of nominee of
160-26 such clearing corporation with any other securities deposited with
160-27 such clearing corporation by any person, regardless of the
161-1 ownership of such securities, and certificates representing
161-2 securities of small denominations may be merged into one or more
161-3 certificates of larger denominations. The records of member banks
161-4 through which an insurance company holds securities in the Federal
161-5 Reserve Book Entry System and the record of any custodian banks
161-6 through which an insurance company holds securities in a clearing
161-7 corporation shall at all times show that such securities are held
161-8 for such insurance company and for which accounts thereof. To be
161-9 eligible to act as a participating custodian bank under this
161-10 subsection, a bank must enter a custodial agreement with the
161-11 insurance company for which it is to act as a participating
161-12 custodian bank.
161-13 SECTION 8.15. Article 21.39-B, Insurance Code, is amended by
161-14 adding Section 6 to read as follows:
161-15 Sec. 6. The State Board of Insurance shall adopt rules
161-16 authorizing a domestic insurance company to demonstrate ownership
161-17 of a security that is not evidenced by a certificate. The rules
161-18 shall establish:
161-19 (1) standards for the types of uncertificated
161-20 securities that may be held;
161-21 (2) the manner in which ownership of the security may
161-22 be demonstrated; and
161-23 (3) adequate financial safeguards relating to the
161-24 ownership of uncertificated securities.
161-25 SECTION 8.16. Subchapter E, Chapter 21, Insurance Code, is
161-26 amended by adding Article 21.61 to read as follows:
161-27 Art. 21.61. BUSINESS TRANSACTED WITH PRODUCER-CONTROLLED
162-1 INSURER ACT
162-2 Sec. 1. SHORT TITLE. This article may be cited as the
162-3 Business Transacted With Producer-Controlled Insurer Act.
162-4 Sec. 2. DEFINITIONS. In this article:
162-5 (1) "Producer" means an insurance broker or brokers, a
162-6 manager, including a managing general agent, or any other person,
162-7 who, for compensation, solicits, negotiates, or procures, or
162-8 assists or participates in soliciting, negotiating, or procuring,
162-9 an insurance contract on behalf of an insured other than the
162-10 person.
162-11 (2) "Reinsurance intermediary" means a producer who is
162-12 a reinsurance intermediary for purposes of Article 21.07-7 of this
162-13 code.
162-14 (3) "Control," including the terms "controlling,"
162-15 "controlled," "controlled by," and "under common control with,"
162-16 means the possession, direct or indirect, of the power to direct or
162-17 cause the direction of the management and policies of a person,
162-18 whether through the ownership of voting securities, by contract
162-19 other than a commercial contract for goods or nonmanagement
162-20 services, or otherwise, unless the power is the result of an
162-21 official position with or corporate office held by the person.
162-22 Control is presumed to exist if any person, directly or indirectly,
162-23 owns, controls, holds with the power to vote, or holds irrevocable
162-24 proxies representing, 10 percent or more of the voting securities
162-25 or authority of any other person. This presumption may be rebutted
162-26 by a showing that control does not exist in fact. The commissioner
162-27 may determine, after furnishing all persons in interest notice an
163-1 opportunity to be heard and making specific findings of fact to
163-2 support the determination, that control exists in fact,
163-3 notwithstanding the absence of a presumption to that effect, if a
163-4 person exercises directly or indirectly, either alone or under an
163-5 agreement with one or more other persons, such a controlling
163-6 influence over the management or policies of an insurer as to make
163-7 it necessary or appropriate in the public interest or for the
163-8 protection of the policyholders or stockholders of the insurer that
163-9 the person be considered to control the insurer.
163-10 (4) "Insurer" means a person licensed to transact an
163-11 insurance business in this state who issues policies covered by
163-12 Article 21.28-C or Article 21.28-D of this code. The term does not
163-13 include:
163-14 (A) a non-admitted insurer;
163-15 (B) a risk retention group as defined by the
163-16 Superfund Amendments Reauthorization Act of 1986 (Pub. L. No.
163-17 99-499), 15 U.S.C. Section 3901 et seq., and Article 21.54 of this
163-18 code;
163-19 (C) a residual market pool or joint underwriting
163-20 authority or association; and
163-21 (D) a captive insurer, including:
163-22 (i) an insurance company owned by another
163-23 organization whose exclusive purpose is to insure risks of the
163-24 company's parent organization and affiliated companies; and
163-25 (ii) an insurance organization owned by an
163-26 insured that is a group or association whose exclusive purpose is
163-27 to insure risks of member organizations or group members and their
164-1 affiliates.
164-2 (5) "Independent actuary" means an actuary who is a
164-3 member of the American Academy of Actuaries and who is not
164-4 affiliated with, an employee, principal, or direct or indirect
164-5 owner of, or in any way controlled by an insurer or producer.
164-6 (6) "Independent certified public accountant" means a
164-7 certified public accountant who is not affiliated with, an
164-8 employee, principal, or direct or indirect owner of, or in any way
164-9 controlled by an insurer or producer.
164-10 (7) "Person" means an individual, corporation,
164-11 partnership, association, or other private legal entity.
164-12 Sec. 3. LIMITATION ON BUSINESS PLACED WITH CONTROLLED
164-13 INSURER. (a) A producer who has control of a licensed insurer may
164-14 not directly or indirectly place a policy with the insurer in a
164-15 transaction in which the producer, at the time the policy is
164-16 placed, is acting as a producer on behalf of the insured for
164-17 compensation, unless:
164-18 (1) there is a written contract between the producer
164-19 and the insurer that has been approved by the insurer's board of
164-20 directors;
164-21 (2) except as provided by Subsection (e) of this
164-22 section, the producer, before the effective date of the policy,
164-23 delivers written notice to the prospective insured disclosing the
164-24 relationship between the producer and the controlled insurer and
164-25 the disclosure is signed by the insured and retained in the
164-26 underwriting file until the filing of the report on examination
164-27 covering the period in which the coverage is in effect;
165-1 (3) all funds collected for the account of the insurer
165-2 by the producer, net of commissions, cancellations, and other
165-3 adjustments as provided in the contract to the insurer, are paid at
165-4 least quarterly; and
165-5 (4) the insurer complies with Subsections (b), (c),
165-6 and (d) of this section.
165-7 (b) Not later than April 1 of each year, a controlled
165-8 insurer shall file with the commissioner an opinion of an
165-9 independent actuary reporting loss ratios for each line of business
165-10 written by the controlling producer and attesting to the adequacy
165-11 of loss reserves established for losses incurred and outstanding as
165-12 of year end, including incurred but not reported losses on business
165-13 placed by controlling producers. The requirement of this
165-14 subsection is in addition to any other certification of loss
165-15 reserves required to be made by the insurer.
165-16 (c) Annually, a controlled insurer shall report to the
165-17 commissioner:
165-18 (1) the amount of commissions paid to a controlling
165-19 producer;
165-20 (2) the percentage the amount described by Subdivision
165-21 (1) of this section represents of the net premiums written; and
165-22 (3) comparable amounts and percentages paid to
165-23 producers other than controlling producers for placements of the
165-24 same kinds of insurance.
165-25 (d) A controlled insurer shall establish an audit committee
165-26 of the insurer's board of directors composed of independent
165-27 directors. Before the board of directors approves the insurer's
166-1 annual financial statement, the audit committee shall meet with
166-2 management, the insurer's independent certified public accountants,
166-3 and an independent actuary to review the adequacy of the insurer's
166-4 loss reserves.
166-5 (e) If the policy is placed through a subproducer who is not
166-6 a controlling producer, the controlling producer shall retain a
166-7 signed commitment from the subproducer stating that the subproducer
166-8 is aware of the relationship between the producer and the insurer
166-9 and that the subproducer will comply with the notification
166-10 requirement of Subsection (a)(2) of this section on behalf of the
166-11 producer.
166-12 (f) A reinsurance intermediary that has control of an
166-13 assuming insurer may not directly or indirectly place business with
166-14 the insurer in a transaction in which the reinsurance intermediary
166-15 is acting as a broker or manager on behalf of the ceding insurer.
166-16 A reinsurance intermediary that has control of a ceding insurer may
166-17 not directly or indirectly accept business from the insurer in a
166-18 transaction in which the reinsurance intermediary is acting as a
166-19 producer on behalf of the assuming insurer. This subsection does
166-20 not apply to a reinsurance intermediary that makes a full and
166-21 complete written disclosure of its relationship with the assuming
166-22 or ceding insurer to the parties to the transaction before
166-23 completion of the transaction.
166-24 Sec. 4. PROHIBITED ACTS. The commissioner shall find that a
166-25 violation of this article has occurred if the commissioner finds,
166-26 after notice and hearing, that:
166-27 (1) a controlling producer did not substantially
167-1 comply with Section 3 of this article;
167-2 (2) a controlled insurer, with respect to business
167-3 placed by the controlling producer, engaged in a pattern of
167-4 charging premiums that were lower, considering applicable industry
167-5 or actuarial standards at the time the business was written, than
167-6 those charged by that insurer or other insurers for similar risks
167-7 written during the same period and placed by noncontrolling
167-8 producers;
167-9 (3) a controlling producer failed to maintain records
167-10 sufficient to:
167-11 (A) demonstrate that the producer's dealings
167-12 with its controlled insurer were fair and equitable and in
167-13 compliance with Article 21.49-1 of this code; and
167-14 (B) accurately disclose the nature and details
167-15 of its transactions with the controlled insurer, including any
167-16 information necessary to support the charges or fees to the
167-17 respective parties;
167-18 (4) a controlled insurer, with respect to business
167-19 placed by the controlling producer, either failed to establish or
167-20 deviated from its underwriting procedures;
167-21 (5) the controlled insurer's capitalization with
167-22 respect to business placed by a controlling producer was not, at
167-23 the time the business was placed, in compliance with criteria
167-24 established by commissioner rule or with this code or other
167-25 insurance laws of this state; or
167-26 (6) a controlling producer or the controlled insurer
167-27 failed to substantially comply with Article 21.49-1 of this code or
168-1 a rule adopted under that article.
168-2 Sec. 5. PENALTIES AND LIABILITIES. (a) If, after notice
168-3 and hearing, the commissioner determines that a controlling
168-4 producer has violated this article, the commissioner may impose and
168-5 enforce any sanction authorized by law, including the penalties
168-6 imposed under Articles 1.10 and 1.10A of this code.
168-7 (b) If, after notice and hearing, the commissioner
168-8 determines that a controlling producer has violated this article
168-9 and the violation substantially contributed to the insolvency of
168-10 the controlled insurer, the producer is liable to reimburse the
168-11 Texas Property and Casualty Insurance Guaranty Association or the
168-12 Texas Life, Accident, Health and Hospital Service Insurance
168-13 Guaranty Association, as appropriate, for all payments made for
168-14 losses, loss adjustment, and administrative expenses of the
168-15 business placed by the producer that exceed gross earned premiums
168-16 and investment income earned on premiums and loss reserves for the
168-17 business. The commissioner shall request the attorney general to
168-18 bring an action to enforce the liability imposed by this
168-19 subsection.
168-20 (c) Appeal from a final decision by the commissioner under
168-21 this article may be made in accordance with Article 1.04 of this
168-22 code.
168-23 (d) This article does not alter or affect the rights of
168-24 policyholders, claimants, creditors, or other third parties.
168-25 Sec. 6. REPORTING REQUIREMENT. (a) A producer who owns,
168-26 controls, or holds proxies representing more than 10 percent of the
168-27 outstanding voting securities of an insurer, as reported in the
169-1 insurer's most recent financial statement, shall report annually
169-2 the extent of its ownership in that insurer.
169-3 (b) The report required by this section shall be made not
169-4 later than a date specified by the commissioner and shall be made
169-5 on a form promulgated by the commissioner.
169-6 (c) A producer who becomes subject to this section after the
169-7 annual reporting date established by Subsection (b) of this section
169-8 shall make the report not later than the 30th day after the
169-9 producer becomes subject to this section.
169-10 Sec. 7. RULES. The board may adopt reasonable rules to
169-11 implement this article, including rules providing minimum
169-12 requirements for contracts with producer-controlled insurers.
169-13 SECTION 8.17. Notwithstanding Section 8(b), Article 1.14-2,
169-14 Insurance Code, as amended by this Act, each unauthorized insurer
169-15 subject to the minimum capital and surplus requirements of that
169-16 section shall have a minimum capital and surplus of not less than:
169-17 (1) $9 million not later than December 31, 1993;
169-18 (2) $12 million not later than December 31, 1994; and
169-19 (3) $15 million not later than December 31, 1995.
169-20 SECTION 8.18. Article 1.16(b), Insurance Code, as amended by
169-21 this Act, applies only to an assessment made by the State Board of
169-22 Insurance on or after September 1, 1993. An assessment made
169-23 before that date is governed by the law in effect on the date that
169-24 the assessment is made, and the former law is continued in effect
169-25 for that purpose.
169-26 SECTION 8.19. Article 1.39, Insurance Code, as amended by
169-27 this Act, applies only to a subordinated indebtedness created on or
170-1 after the effective date of this Act.
170-2 SECTION 8.20. (a) Section 4(c), Article 3.33, Insurance
170-3 Code, as amended by this Act, does not prohibit an insurer from
170-4 acquiring an obligation that it has committed to acquire within the
170-5 nine months preceding the effective date of this Act if the insurer
170-6 would have been permitted to acquire that obligation under Section
170-7 4, Article 3.33, Insurance Code, as it existed before amendment by
170-8 this Act on the date on which the insurer committed to purchase
170-9 that obligation.
170-10 (b) Section 4(c), Article 3.33, Insurance Code, as amended
170-11 by this Act, does not require an insurer to sell or otherwise
170-12 dispose of any obligation:
170-13 (1) legally acquired before the effective date of this
170-14 Act; or
170-15 (2) if acquired on or after the effective date of this
170-16 Act, that satisfied the conditions of that subsection on the date
170-17 of the acquisition, but that subsequently fails to satisfy those
170-18 conditions.
170-19 SECTION 8.21. Article 21.61, Insurance Code, as added by
170-20 this Act, applies only to conduct occurring on or after January 1,
170-21 1994. Conduct occurring before January 1, 1994, is governed by the
170-22 law in effect immediately before the effective date of this Act,
170-23 and that law is continued in effect for that purpose.
170-24 ARTICLE 9. CONSOLIDATION, LIQUIDATION, REHABILITATION,
170-25 REORGANIZATION, OR CONSERVATION OF INSURERS; GUARANTY ASSOCIATIONS
170-26 SECTION 9.01. Section 8, Article 21.28, Insurance Code, is
170-27 amended by adding Subsection (k) to read as follows:
171-1 (k) Every claim under a separate account established under
171-2 Article 3.75 of this code (providing that the income, gains, and
171-3 losses, realized and unrealized, from assets allocated to the
171-4 separate account shall be credited to or charged against the
171-5 account, without regard to other income, gains, or losses of the
171-6 life insurance company) shall be satisfied out of the assets in the
171-7 separate account equal to the reserves maintained in such account
171-8 for such contracts. To the extent provided under contracts
171-9 established under Article 3.75 of this code, that portion of the
171-10 assets of any such separate account equal to the reserves and other
171-11 contract liabilities with respect to the separate account shall not
171-12 be chargeable with liabilities arising out of any other business of
171-13 the company. To the extent, if any, reserves maintained in such
171-14 separate account are in excess of the amounts needed to satisfy
171-15 claims under such separate account contracts, the excess shall be
171-16 treated as general assets of the life insurance company.
171-17 SECTION 9.02. Section 3, Article 21.28-A, Insurance Code, is
171-18 amended to read as follows:
171-19 Sec. 3. Notice to comply with written requirements of
171-20 commissioner; noncompliance; taking charge as conservator. If upon
171-21 examination or at any other time it appears to or is the opinion of
171-22 the Commissioner of Insurance that any insurance company is
171-23 insolvent, or its condition is such as to render the continuance of
171-24 its business hazardous to the public or to holders of its policies
171-25 or certificates of insurance, or if such company appears to have
171-26 exceeded its powers (as defined herein) or has failed to comply
171-27 with the law, or if such insurance company gives its consent (as
172-1 defined herein), then the Commissioner of Insurance shall upon his
172-2 determination (a) notify the insurance company of his
172-3 determination, and (b) furnish to the insurance company a written
172-4 list of the Commissioner's requirements to abate his determination,
172-5 and (c) if the Commissioner makes a further determination to
172-6 supervise he shall notify the insurance company that it is under
172-7 the supervision of the Commissioner of Insurance and that the
172-8 Commissioner is applying and effecting the provisions of this
172-9 Article. Such insurance company shall comply with the lawful
172-10 requirements of the Commissioner of Insurance. If placed under
172-11 supervision, the insurance company shall have not more than one
172-12 hundred-eighty (180) <sixty (60)> days from the date of the
172-13 Commissioner's notice of supervision to comply with the
172-14 requirements of the Commissioner. <The Commissioner may extend the
172-15 supervision for an additional period not to exceed thirty (30) days
172-16 on written determination by the Commissioner that there is a
172-17 substantial likelihood of rehabilitation. No hearing is required
172-18 before the Commissioner makes the determination.> During the
172-19 period of supervision, the insurance company shall continue to pay
172-20 claims according to terms of the insurance policy, and the
172-21 Commissioner may schedule a hearing relating to the insurance
172-22 company in supervision with not less than ten (10) days' written
172-23 notice to all parties of record on his own motion or that of any
172-24 party of record. However, notice may be waived by the parties of
172-25 record. If after hearing it is determined that the insurance
172-26 company has failed to comply with the lawful requirements of the
172-27 Commissioner, it has not been rehabilitated, it is insolvent, or it
173-1 is otherwise in such a condition as to render the continuance of
173-2 its business hazardous to the public or to holders of its policies
173-3 or certificates of insurance, or if the company appears to have
173-4 exceeded its powers as defined in this Article, the Commissioner of
173-5 Insurance, acting for himself, or through a conservator appointed
173-6 by the Commissioner of Insurance for that purpose, shall take
173-7 charge as conservator of the insurance company and all of the
173-8 property and effects thereof. If after hearing it is determined
173-9 that the insurance company has been rehabilitated or its condition
173-10 has otherwise been remedied such that the continuance of its
173-11 business is no longer hazardous to the public or to holders of its
173-12 policies or certificates of insurance, the Commissioner may release
173-13 that insurance company from supervision. Section 15,
173-14 Administrative Procedure and Texas Register Act (Article 6252-13a,
173-15 Vernon's Texas Civil Statutes), does not apply to hearings held by
173-16 the Commissioner or his representative under this Article.
173-17 SECTION 9.03. Sections 3A(a) and (e), Article 21.28-A,
173-18 Insurance Code, are amended to read as follows:
173-19 (a) All <Notwithstanding any other provision of law,>
173-20 hearings, orders, notices, correspondence, reports, records, and
173-21 other information in the possession of the Texas Department <State
173-22 Board> of Insurance relating to the supervision <or
173-23 conservatorship> of any insurance company are <not> confidential
173-24 <unless the Commissioner of Insurance determines that
173-25 confidentiality> during the <initial> period of supervision. On
173-26 termination of the supervision, the information in the custody of
173-27 the department that relates to the supervision becomes public
174-1 information <is necessary to accomplish the purposes of this
174-2 article. The Commissioner of Insurance shall make this
174-3 determination of confidentiality on the date the first notice of
174-4 supervision is given. The period of confidentiality determined by
174-5 the Commissioner of Insurance may not be for a period that exceeds
174-6 60 days after the date of the Commissioner's determination>.
174-7 (e) An officer or employee of the Texas Department <State
174-8 Board> of Insurance is not liable for release of information
174-9 without a showing that the release of information was accomplished
174-10 with actual malice.
174-11 This section does not apply to information (1) if the
174-12 insureds of the insurance company are not protected by Article
174-13 9.48, 21.28-C, or 21.28-D of this code or by statutes substantially
174-14 similar to those Articles, or (2) on the appointment of a receiver
174-15 for the insurance company by a court of competent jurisdiction.
174-16 SECTION 9.04. Article 21.28-A, Insurance Code, is amended by
174-17 adding Section 9B to read as follows:
174-18 Sec. 9B. REQUIRED DEPOSIT. In addition to actions the
174-19 commissioner may take under Section 9 of this Article with respect
174-20 to any reasonable conditions imposed on management before return of
174-21 a rehabilitated company, the commissioner may require the insurer
174-22 to deposit and maintain on deposit with the State Treasury an
174-23 amount determined by the commissioner in cash or bonds or
174-24 securities of the United States or this state to protect
174-25 policyholders from potential future financial impairment. The
174-26 commissioner by rule shall determine the factors to be considered
174-27 in making a determination of the amount to be deposited by a
175-1 rehabilitated insurer.
175-2 SECTION 9.05. Section 17(a), Article 21.28-D, Insurance
175-3 Code, is amended to read as follows:
175-4 (a) There is no liability on the part of and no cause of
175-5 action of any nature arises against any member insurer or its
175-6 agents or employees, the association or its agents or employees,
175-7 members of the board of directors, the receiver, the special deputy
175-8 or its agents or employees, or the commissioner or the
175-9 commissioner's representatives, for any <good faith> action or
175-10 omission in the performance of powers and duties under this Act.
175-11 This immunity extends to the participation in any organization of
175-12 one or more other state associations of similar purposes and to any
175-13 similar organization and its agents or employees.
175-14 ARTICLE 10. REGULATION OF CERTAIN LICENSE HOLDERS
175-15 SECTION 10.01. Subchapter A, Chapter 21, Insurance Code, is
175-16 amended by adding Article 21.01-2 to read as follows:
175-17 Art. 21.01-2. GENERAL PROVISIONS APPLICABLE TO CERTAIN
175-18 LICENSE HOLDERS
175-19 Sec. 1. APPLICATION. Except as otherwise provided by this
175-20 article, this article applies to licensing of persons under:
175-21 (1) Section 4, Article 1.14-2, Insurance Code;
175-22 (2) Section 7, Article 3.75, Insurance Code;
175-23 (3) Article 9.36, 9.42, or 9.43, Insurance Code;
175-24 (4) Section 6, Article 9.56, Insurance Code;
175-25 (5) Section 15 or 15A, Texas Health Maintenance
175-26 Organization Act (Section 20A.15 or 20A.15A, Vernon's Texas
175-27 Insurance Code);
176-1 (6) Article 21.07, Insurance Code;
176-2 (7) Chapter 213, Acts of the 54th Legislature, Regular
176-3 Session, 1955 (Article 21.07-1, Vernon's Texas Insurance Code);
176-4 (8) Chapter 29, Acts of the 54th Legislature, Regular
176-5 Session, 1955 (Article 21.07-2, Vernon's Texas Insurance Code);
176-6 (9) the Managing General Agents' Licensing Act
176-7 (Article 21.07-3, Vernon's Texas Insurance Code);
176-8 (10) Chapter 407, Acts of the 63rd Legislature,
176-9 Regular Session, 1973 (Article 21.07-4, Vernon's Texas Insurance
176-10 Code);
176-11 (11) Article 21.07-6, Insurance Code;
176-12 (12) Article 21.07-7, Insurance Code;
176-13 (13) Article 21.09, Insurance Code;
176-14 (14) Article 21.11, Insurance Code;
176-15 (15) Article 21.14, Insurance Code;
176-16 (16) Article 21.14-1, Insurance Code;
176-17 (17) Article 21.14-2, Insurance Code; or
176-18 (18) Article 23.23, Insurance Code.
176-19 Sec. 2. RENEWAL OF LICENSES. (a) A person may renew an
176-20 unexpired license by filing a renewal application with the
176-21 department in the form prescribed by the department and paying to
176-22 the department before the expiration date of the license the
176-23 required renewal fee. A renewal fee paid under this section is
176-24 nonrefundable.
176-25 (b) If a person's license has been expired for 90 days or
176-26 less, the person may renew the license by filing a renewal
176-27 application with the department in the form prescribed by the
177-1 department and paying to the department the required renewal fee
177-2 and a fee that is equal to one-half of the license fee, if any, for
177-3 the license.
177-4 (c) If a person's license has been expired for longer than
177-5 90 days, the person may not renew the license. The person may
177-6 obtain a new license by submitting to reexamination, if examination
177-7 is required for original issuance of the license, and complying
177-8 with the requirements and procedures for obtaining an original
177-9 license. However, the department may renew without reexamination
177-10 an expired license of a person who was licensed in this state,
177-11 moved to another state, and is currently licensed and has been in
177-12 practice in the other state for the two years preceding
177-13 application. The person must pay to the department a fee that is
177-14 equal to the license fee.
177-15 (d) At least 30 days before the expiration of a person's
177-16 license, the department shall send written notice of the impending
177-17 license expiration to the person at the person's last known address
177-18 according to the records of the department.
177-19 (e) The commissioner by rule may adopt a system under which
177-20 licenses expire on various dates during a licensing period. For
177-21 the licensing period in which the license expiration is changed,
177-22 license fees shall be prorated on a monthly basis so that each
177-23 license holder shall pay only that portion of the license fee that
177-24 is allocable to the number of months during which the license is
177-25 valid. On renewal of the license on the new expiration date, the
177-26 total license renewal fee is payable. The commissioner shall adopt
177-27 a system under which a person who holds more than one license may
178-1 renew all the licenses held in a single process.
178-2 (f) This section is not applicable to a license issued under
178-3 Article 21.07-6 of this code.
178-4 Sec. 3. LICENSING BY ENDORSEMENT. The department may waive
178-5 any license requirement for an applicant with a valid license from
178-6 another state having license requirements substantially equivalent
178-7 to those of this state.
178-8 Sec. 4. CONTINUING EDUCATION. (a) The department may
178-9 recognize, prepare, or administer continuing education programs for
178-10 persons whose licenses are subject to this article.
178-11 (b) Except as otherwise provided by this code or another
178-12 insurance law of this state, participation in continuing education
178-13 programs is voluntary.
178-14 Sec. 5. DISCIPLINE OF LICENSE HOLDERS. (a) The department
178-15 shall refuse to issue an original license, revoke, suspend, or
178-16 refuse to renew a license, place on probation a person whose
178-17 license has been suspended, assess an administrative penalty, or
178-18 reprimand a license holder for a violation of this code, another
178-19 insurance law of this state, or a rule of the commissioner or the
178-20 board. If a license suspension is probated, the commissioner may
178-21 require the person to:
178-22 (1) report regularly to the department on matters that
178-23 are the basis of the probation;
178-24 (2) limit the person's practice to the areas
178-25 prescribed by the department; or
178-26 (3) continue or review professional education until
178-27 the person attains a degree of skill satisfactory to the
179-1 commissioner in those areas that are the basis of the probation.
179-2 (b) If the department proposes to refuse to issue an
179-3 original license, or to suspend, revoke, or refuse to renew a
179-4 license, the person affected is entitled to a hearing conducted by
179-5 the State Office of Administrative Hearings in accordance with
179-6 Article 1.33B of this code. Notice of the hearing shall be
179-7 provided to the person and to any insurance carrier appearing on
179-8 the application as desiring that the license be issued. The
179-9 commissioner shall prescribe procedures by which all decisions to
179-10 deny, suspend, or revoke a license, or to refuse to renew a
179-11 license, are made by or are appealable to the commissioner.
179-12 Sec. 6. STATUTORY REFERENCES. A reference in this article
179-13 to a statutory provision applies to all reenactments, revisions, or
179-14 amendments of that provision.
179-15 SECTION 10.02. Section 7(f), Article 3.75, Insurance Code,
179-16 is amended to read as follows:
179-17 (f) Licenses which have not expired or which have not been
179-18 suspended or revoked may be renewed by filing with the State Board
179-19 of Insurance a completed renewal application and paying the
179-20 nonrefundable renewal fee set by the board in an amount not to
179-21 exceed $50 on or before the expiration date of the license in
179-22 accordance with Article 21.01-2 of this code. <If a license has
179-23 been expired for not longer than 90 days, the licensee may renew
179-24 the license by paying to the board the required nonrefundable
179-25 renewal fee and a nonrefundable fee that is one-half of the
179-26 original license fee. If a license has been expired for more than
179-27 90 days, the license may not be renewed. A new license may be
180-1 obtained by complying with the requirements and procedures for
180-2 obtaining an original license. At least 30 days before the
180-3 expiration of a license, the commissioner shall send written notice
180-4 of the impending license expiration to the licensee at the
180-5 licensee's last known address. This subsection may not be
180-6 construed to prevent the board from denying or refusing to renew a
180-7 license under applicable law or rules of the State Board of
180-8 Insurance.>
180-9 SECTION 10.03. Article 21.01-1, Insurance Code, is amended
180-10 to read as follows:
180-11 Art. 21.01-1. Agents' Qualifying Examination <to be
180-12 Prescribed by the Board>. (a) The State Board of Insurance may,
180-13 at its discretion, accept examinations administered by a testing
180-14 service as satisfying the examination requirements of persons
180-15 seeking license as agents, solicitors, counselors, or adjusters
180-16 under this code. The State Board of Insurance may negotiate
180-17 agreements with such testing services to include performance of
180-18 examination development, test scheduling, examination site
180-19 arrangements, and test administration, grading, reporting and
180-20 analysis. The State Board of Insurance may require such testing
180-21 services to correspond directly with the applicants with regard to
180-22 the administration of such examinations and that such testing
180-23 services collect fees for administering such examinations directly
180-24 from the applicants. The State Board of Insurance may stipulate
180-25 that any agreements with such testing services provide for the
180-26 administration of examinations in specific locales and at specified
180-27 frequencies. The State Board of Insurance shall retain the
181-1 authority to establish the scope and type of all examinations.
181-2 Prior to negotiating and making any agreement with any testing
181-3 service as authorized hereby, the State Board of Insurance shall
181-4 hold a public hearing thereon in accordance with the provisions of
181-5 Section 5 of the Administrative Procedure and Texas Register Act
181-6 (Article 6252-13a, Vernon's Texas Civil Statutes), and shall adopt
181-7 such rules, regulations, and standards as may be deemed appropriate
181-8 by the Board to implement the authority granted in this Article.
181-9 (b) The commissioner may appoint advisory boards consisting
181-10 of any of the following persons: persons holding a license for
181-11 which the respective examinations are intended, persons who are
181-12 employed by insurance companies appointing such licensees, persons
181-13 acting as general agents or managers, persons teaching insurance at
181-14 an accredited college or university in Texas, persons who are
181-15 citizens of the State of Texas but who are not of any of the
181-16 preceding descriptions, or any combination of such persons. The
181-17 function of such advisory boards will be to make recommendations to
181-18 the State Board of Insurance or the testing service with respect to
181-19 the scope, type, and conduct of such examinations and the times and
181-20 places within the state where they shall be held. The members of
181-21 such advisory boards shall serve without pay but shall be
181-22 reimbursed for their reasonable expenses in attending meetings of
181-23 their respective advisory boards.
181-24 (c) In the absence of an agreement with a testing service,
181-25 the State Board of Insurance shall administer any required
181-26 qualifying examination in accordance with the provisions of the
181-27 respective statutes governing the issuance of the license sought by
182-1 the applicant.
182-2 (d) Not later than the 30th day after the date on which a
182-3 licensing examination is administered under this code, the
182-4 department shall notify each examinee of the results of the
182-5 examination. However, if an examination is graded or reviewed by a
182-6 testing service, the department shall notify examinees of the
182-7 results of the examination not later than the 14th day after the
182-8 date on which the department receives the results from the testing
182-9 service. If the notice of examination results graded or reviewed
182-10 by a testing service will be delayed for longer than 90 days after
182-11 the examination date, the department shall notify the examinee of
182-12 the reason for the delay before the 90th day. The department may
182-13 require a testing service to notify examinees of the results of an
182-14 examination.
182-15 (e) If requested in writing by a person who fails a
182-16 licensing examination administered under this code, the department
182-17 shall furnish the person with an analysis of the person's
182-18 performance on the examination.
182-19 SECTION 10.04. Sections 4(c) and (d), Article 1.14-2,
182-20 Insurance Code, are amended to read as follows:
182-21 (c) Unless the State Board of Insurance adopts a system for
182-22 staggered renewal of licenses, as provided by Article 21.01-2 of
182-23 this code <this section>, each license issued under this section is
182-24 for a two-year term that expires on December 31; however, the term
182-25 of the initial licensing period shall expire on December 31 of the
182-26 year following the year in which the license is issued. A license
182-27 may be renewed for periods of two years.
183-1 (d) By filing a completed written application in the form
183-2 prescribed by the State Board of Insurance and paying the
183-3 nonrefundable renewal fee set by the board in an amount not to
183-4 exceed $50, an unexpired license may be renewed on or before the
183-5 expiration date of the license. <If a license has been expired for
183-6 not longer than 90 days, the licensee may renew the license by
183-7 filing a completed written application for renewal and by paying to
183-8 the board the required nonrefundable renewal fee and a
183-9 nonrefundable fee that is one-half of the original fee for the
183-10 license. If a license has been expired for more than 90 days, the
183-11 license may not be renewed. A new license may be obtained by
183-12 complying with the requirements and procedures for obtaining an
183-13 original license. This subsection may not be construed to prevent
183-14 the board from denying or refusing to renew a license under
183-15 applicable law or rules of the State Board of Insurance.>
183-16 SECTION 10.05. Section 2(b), Article 9.36, Insurance Code,
183-17 is amended to read as follows:
183-18 (b) Unless a staggered renewal system is adopted under
183-19 Article 21.01-2 of this code and its subsequent amendments <Section
183-20 5 of this article>, a license shall continue in force until June 1
183-21 after the second anniversary of the date on which the license was
183-22 issued unless previously cancelled.
183-23 SECTION 10.06. Sections B and E, Article 9.37, Insurance
183-24 Code, are amended to read as follows:
183-25 B. The department may discipline <license of> any agent or
183-26 direct operation or deny an application under Section 5, Article
183-27 21.01-2, of this code and its subsequent amendments <may be denied,
184-1 or a license duly issued may be suspended or revoked or a renewal
184-2 thereof refused by the Board,> if<, after notice and hearing as
184-3 hereafter provided,> it finds that the applicant for or holder of
184-4 such license:
184-5 (1) Has wilfully violated any provision of this Act;
184-6 <or>
184-7 (2) Has intentionally made a material misstatement in
184-8 the application for such license; <or>
184-9 (3) Has obtained, or attempted to obtain, such license
184-10 by fraud or misrepresentation; <or>
184-11 (4) Has misappropriated or converted to his own use or
184-12 illegally withheld money belonging to a title insurance company, an
184-13 insured or any other person; <or>
184-14 (5) <Has otherwise demonstrated lack of
184-15 trustworthiness or competence to act as an agent or direct
184-16 operation; or>
184-17 <(6)> Has been guilty of fraudulent or dishonest
184-18 practices; <or>
184-19 (6) <(7)> Has materially misrepresented the terms and
184-20 conditions of title insurance policies or contracts; or
184-21 (7) <(8) Is not of good character or reputation; or>
184-22 <(9)> Has failed to maintain a separate and distinct
184-23 accounting of escrow funds, and has failed to maintain an escrow
184-24 bank account or accounts separate and apart from all other
184-25 accounts.
184-26 E. A disciplinary action or denial of an application under
184-27 this article may be appealed under Article 1.04 of this code and
185-1 its subsequent amendments, except that judicial review of the
185-2 disciplinary <If the Board shall refuse an application for any
185-3 license provided for in this Act, or shall suspend, revoke or
185-4 refuse to renew any such license at said hearing, then any such
185-5 applicant or licensee, and any title insurance company or companies
185-6 concerned, may appeal from said order by filing suit against the
185-7 Board as defendant in any of the District Courts of Travis County,
185-8 Texas, and not elsewhere, within twenty (20) days from the date of
185-9 the order of said Board. The> action shall not be limited to
185-10 questions of law and shall be tried and determined upon a trial de
185-11 novo to the same extent as now provided for in the case of an
185-12 appeal from the justice court to the county court. <Any party to
185-13 said action may appeal to the appellate court having jurisdiction
185-14 of said cause, and said appeal shall be at once returnable to said
185-15 appellate court having jurisdiction of said cause and said action
185-16 so appealed shall have precedence in said appellate court over all
185-17 causes of a different character therein pending. The Board shall
185-18 not be required to give any appeal bond in any cause arising
185-19 hereunder.>
185-20 SECTION 10.07. Section 1(b), Article 9.42, Insurance Code,
185-21 is amended to read as follows:
185-22 (b) Unless a system of staggered renewal is adopted under
185-23 Article 21.01-2 of this code and its subsequent amendments <Section
185-24 2 of this article>, a license shall continue in force until the
185-25 second June 1 after its issuance, unless previously cancelled.
185-26 Provided, however, that if any title insurance agent or direct
185-27 operation surrenders its license or has its license revoked by the
186-1 Board, all existing licenses of its escrow officers shall
186-2 automatically terminate without notice.
186-3 SECTION 10.08. Section B, Article 9.43, Insurance Code, is
186-4 amended to read as follows:
186-5 B. Such application shall contain the following:
186-6 (1) that the proposed escrow officer is a natural
186-7 person, a bona fide resident of the State of Texas, and either an
186-8 attorney or a bona fide employee of an attorney licensed as an
186-9 escrow officer, a bona fide employee of a title insurance agent, or
186-10 a bona fide employee of a direct operation;
186-11 (2) that the proposed escrow officer has reasonable
186-12 experience or instruction in the field of title insurance; and
186-13 (3) that <the proposed escrow officer is known to the
186-14 direct operation or title insurance agent to have a good business
186-15 reputation and is worthy of the public trust and> the direct
186-16 operation or title insurance agent knows of no fact or condition
186-17 which would disqualify the proposed escrow officer from receiving a
186-18 license.
186-19 SECTION 10.09. Sections 2 and 5, Article 9.44, Insurance
186-20 Code, are amended to read as follows:
186-21 Sec. 2. The department may discipline an <license of any>
186-22 escrow officer or deny an application under Section 5, Article
186-23 21.01-2, of this code and its subsequent amendments <may be denied,
186-24 or a license duly issued may be suspended or revoked or a renewal
186-25 thereof refused by the Board,> if<, after notice and hearing as
186-26 hereafter provided,> it finds that the applicant for or holder of
186-27 such license:
187-1 (1) has wilfully violated any provision of this Act;
187-2 (2) has intentionally made a material misstatement in
187-3 the application for such license;
187-4 (3) has obtained, or attempted to obtain, such license
187-5 by fraud or misrepresentation;
187-6 (4) has misappropriated or converted to the escrow
187-7 officer's own use or illegally withheld money belonging to a direct
187-8 operation, title insurance agent, or any other person;
187-9 (5) <has otherwise demonstrated lack of
187-10 trustworthiness or competence to act as escrow officer;>
187-11 <(6)> has been guilty of fraudulent or dishonest
187-12 practices;
187-13 (6) <(7)> has materially misrepresented the terms and
187-14 conditions of title insurance policies or contracts;
187-15 <(8) is not of good character or reputation;> or
187-16 (7) <(9)> has failed to complete all educational
187-17 requirements.
187-18 Sec. 5. A disciplinary action or denial of an application
187-19 under this article may be appealed under Article 1.04 of this code
187-20 and its subsequent amendments, except that judicial review of the
187-21 <If the Board shall refuse an application for any license provided
187-22 for in this Article, or shall suspend, revoke or refuse to renew
187-23 any such license at said hearing, then any such applicant may
187-24 appeal from said order by filing suit against the Board as
187-25 defendant in any of the District Courts of Travis County, Texas,
187-26 and not elsewhere, within twenty (20) days from the date of the
187-27 order of said Board. The> action shall not be limited to questions
188-1 of law and shall be tried and determined upon a trial de novo to
188-2 the same extent as now provided for in the case of an appeal from
188-3 the justice court to the county court. <Either party to said
188-4 action may appeal to the appellate court having jurisdiction of
188-5 said cause, and said appeal shall be at once returnable to said
188-6 appellate court having jurisdiction of said cause and said action
188-7 so appealed shall have precedence in said appellate court over all
188-8 causes of a different character therein pending. The Board shall
188-9 not be required to give any appeal bond in any cause arising
188-10 hereunder.>
188-11 SECTION 10.10. Section 6(b), Article 9.56, Insurance Code,
188-12 is amended to read as follows:
188-13 (b) Unless a system of staggered renewal is adopted under
188-14 Article 21.01-2 of this code and its subsequent amendments
188-15 <Subsection (d) of this section>, on or before the first day of
188-16 June of each year, every attorney's title insurance company
188-17 operating under the provisions of this Chapter 9 shall certify to
188-18 the board, on forms provided by the board, the names and addresses
188-19 of every title attorney of said attorney's title insurance company,
188-20 and shall apply for and pay a fee in an amount not to exceed $50 as
188-21 determined by the board for an annual license in the name of each
188-22 title attorney included in said list; if any such attorney's title
188-23 insurance company shall terminate any licensed title attorney, it
188-24 shall immediately notify the board in writing of such act and
188-25 request cancellation of such license, notifying the title attorney
188-26 of such action. No such attorney's title insurance company shall
188-27 permit any title attorney appointed by it to write, sign, or
189-1 deliver title insurance policies within the state until the
189-2 foregoing conditions have been complied with, and the board has
189-3 granted said license. The board shall deliver such license to the
189-4 attorney's title insurance company for transmittal to the title
189-5 attorney.
189-6 Unless a system of staggered renewal is adopted under Article
189-7 21.01-2 of this code and its subsequent amendments <Subsection (d)
189-8 of this section>, licenses shall continue until the first day of
189-9 the next June unless previously cancelled; provided, however, that
189-10 if any attorney's title insurance company surrenders or has its
189-11 certificate of authority revoked by the board, all existing
189-12 licenses of its title attorneys shall automatically terminate
189-13 without notice.
189-14 The board shall keep a record of the names and addresses of
189-15 all licensed title attorneys in such manner that the title
189-16 attorneys appointed by any attorney's title insurance company
189-17 authorized to transact the business of an attorney's title
189-18 insurance company within the State of Texas may be conveniently
189-19 ascertained and inspected by any person upon request.
189-20 SECTION 10.11. Sections 8(b) and (e), Article 9.56,
189-21 Insurance Code, are amended to read as follows:
189-22 (b) The department may discipline a <license of any> title
189-23 attorney or deny an application under Section 5, Article 21.01-2,
189-24 of this code and its subsequent amendments <may be denied, or a
189-25 license duly issued may be suspended or revoked or a renewal
189-26 thereof refused by the board,> if<, after notice and hearing as
189-27 hereafter provided,> it finds that the applicant for or holder of
190-1 such license:
190-2 (1) has wilfully violated any provision of this
190-3 Chapter 9; <or>
190-4 (2) has intentionally made a material misstatement in
190-5 the application for such license; <or>
190-6 (3) has obtained, or attempted to obtain, such license
190-7 by fraud or misrepresentation; <or>
190-8 (4) has misappropriated or converted to his own use or
190-9 illegally withheld money belonging to an attorney's title insurance
190-10 company, an insured, or any other person; <or>
190-11 (5) <has otherwise demonstrated lack of
190-12 trustworthiness or competence to act as a title attorney; or>
190-13 <(6)> has been guilty of fraudulent or dishonest
190-14 practices; <or>
190-15 (6) <(7)> has materially misrepresented the terms and
190-16 conditions of title insurance policies or contracts; <or>
190-17 <(8) is not of good character or reputation; or>
190-18 (7) <(9)> has failed to maintain a separate and
190-19 distinct accounting of escrow funds, and has failed to maintain an
190-20 escrow bank account or accounts separate and apart from all other
190-21 accounts; <or>
190-22 (8) <(10)> has failed to remain a member of the State
190-23 Bar of Texas, or has been disbarred; or
190-24 (9) <(11)> is no longer actively engaged in the
190-25 practice of law.
190-26 (e) A disciplinary action or denial of an application under
190-27 this article may be appealed under Article 1.04 of this code and
191-1 its subsequent amendments, except that judicial review of the <If
191-2 the board shall refuse an application for any license provided for
191-3 in this Act, or shall suspend, revoke, or refuse to renew any such
191-4 license at said hearing, then any such applicant or licensee, and
191-5 any attorney's title insurance company concerned, may appeal from
191-6 said order by filing suit against the board as defendant in any of
191-7 the district courts of Travis County, Texas, and not elsewhere,
191-8 within 20 days from the date of the order of said board. The>
191-9 action shall not be limited to questions of law and shall be tried
191-10 and determined upon a trial de novo to the same extent as now
191-11 provided for in the case of an appeal from the justice court to the
191-12 county court. <Any party to said action may appeal to the
191-13 appellate court having jurisdiction of said cause, and said appeal
191-14 shall be at once returnable to said appellate court having
191-15 jurisdiction of said cause and said action so appealed shall have
191-16 precedence in said appellate court over all causes of a different
191-17 character therein pending. The board shall not be required to give
191-18 any appeal bond in any cause arising hereunder.>
191-19 SECTION 10.12. Chapter 10, Insurance Code, is amended by
191-20 adding Article 10.37-2 to read as follows:
191-21 Art. 10.37-2. CERTAIN PERSONS MAY NOT SOLICIT. A fraternal
191-22 benefit society may not employ or otherwise retain a person to
191-23 solicit business if that person has had a license revoked under
191-24 Articles 21.07 or 21.14, Insurance Code, or under Chapter 213, Acts
191-25 of the 54th Legislature, Regular Session, 1955 (Article 21.07-1,
191-26 Vernon's Texas Insurance Code).
191-27 SECTION 10.13. Section 15(c), Texas Health Maintenance
192-1 Organization Act (Section 20A.15, Vernon's Texas Insurance Code),
192-2 is amended to read as follows:
192-3 (c) Except as may be provided by a staggered renewal system
192-4 adopted under Article 21.01-2, Insurance Code, and its subsequent
192-5 amendments <Subsection (i) of this section>, each license issued to
192-6 a health maintenance organization agent shall expire two years
192-7 following the date of issue, unless prior thereto it is suspended
192-8 or revoked by the commissioner or the authority of the agent to act
192-9 for the health maintenance organization is terminated.
192-10 SECTION 10.14. Sections 15A(c) and (i), Texas Health
192-11 Maintenance Organization Act (Section 20A.15A, Vernon's Texas
192-12 Insurance Code), are amended to read as follows:
192-13 (c) Except as may be provided by a staggered renewal system
192-14 adopted under Article 21.01-2, Insurance Code, and its subsequent
192-15 amendments <Section 15(i) of this Act>, each license issued to a
192-16 health maintenance organization agent under this section shall
192-17 expire two years following the date of issuance, unless before that
192-18 time the license is suspended or revoked by the commissioner or the
192-19 authority of the agent to act for the health maintenance
192-20 organization is terminated.
192-21 (i) A licensee may renew an unexpired license issued under
192-22 this section by filing the required renewal application and paying
192-23 a nonrefundable fee with the State Board of Insurance on or before
192-24 the expiration date of the license. <If a license has been expired
192-25 for not longer than 90 days, the licensee may renew the license by
192-26 filing a completed application and paying to the State Board of
192-27 Insurance the required nonrefundable renewal fee and a
193-1 nonrefundable fee that is one-half of the original license fee. If
193-2 a license has been expired for more than 90 days, the license may
193-3 not be renewed. A new license may be obtained by complying with
193-4 the requirements and procedures for obtaining an original license.
193-5 At least 30 days before the expiration of a license, the
193-6 commissioner shall send written notice of the impending license
193-7 expiration to the licensee at the licensee's last known address.
193-8 This section does not prevent the State Board of Insurance from
193-9 denying or refusing to renew a license under applicable law or
193-10 rules.>
193-11 SECTION 10.15. Article 21.06, Insurance Code, is amended to
193-12 read as follows:
193-13 Art. 21.06. Certificates for Agents. Each such foreign
193-14 insurance company shall, by resolution of its board of directors,
193-15 designate some officer or agent who is empowered to appoint or
193-16 employ its agents or solicitors in this State, and such officer or
193-17 agent shall promptly notify the Board in writing of the name, title
193-18 and address of each person so appointed or employed. Upon receipt
193-19 of this notice, <if such person is of good reputation and
193-20 character,> the Board shall issue to him a certificate which shall
193-21 include a copy of the certificate of authority authorizing the
193-22 company requesting it to do business in this State, and the name
193-23 and title of the person to whom the certificate is issued. Such
193-24 certificate, unless sooner revoked by the Board for cause or
193-25 cancelled at the request of the company employing the holder
193-26 thereof, shall continue in force until the first day of March next
193-27 after its issuance, and must be renewed annually.
194-1 SECTION 10.16. Section 1, Article 21.07, Insurance Code, is
194-2 amended by adding Subsection (c) to read as follows:
194-3 (c) A person who has had a license revoked under Section 10
194-4 of this article may not solicit or otherwise transact business
194-5 under Chapter 10 of this code.
194-6 SECTION 10.17. Section 2(b), Article 21.07, Insurance Code,
194-7 is amended to read as follows:
194-8 (b) The application must bear a signed endorsement by an
194-9 officer or properly authorized representative of the insurance
194-10 carrier that the individual applicant or each member of the
194-11 partnership or each officer, director, and shareholder of the
194-12 corporation is <trustworthy, of good character and good reputation,
194-13 and> qualified to hold himself or the partnership or the
194-14 corporation out in good faith to the general public as an insurance
194-15 agent, and that the insurance carrier desires that the applicant
194-16 act as an insurance agent to represent it in this State.
194-17 SECTION 10.18. Section 3, Article 21.07, Insurance Code, is
194-18 amended to read as follows:
194-19 Sec. 3. Issuance of License Under Certain Circumstances.
194-20 The <After the State Board of Insurance has determined that such
194-21 applicant is of good character and trustworthy, the> State Board of
194-22 Insurance shall issue a license to a <such> person or corporation
194-23 in such form as it may prepare authorizing such applicant to write
194-24 the types of insurance authorized by law to be issued by
194-25 applicant's appointing insurance carrier, except that:
194-26 (a) Such applicant shall not be authorized to write
194-27 health and accident insurance unless: (i) applicant, if not a
195-1 partnership or corporation, shall have first passed a written
195-2 examination as provided for in this Article 21.07, as amended, or
195-3 (ii) applicant will act only as a ticket-selling agent of a public
195-4 carrier with respect to accident life insurance covering risks of
195-5 travel or as an agent selling credit life, health and accident
195-6 insurance issued exclusively in connection with credit
195-7 transactions, or (iii) applicant will write policies or riders to
195-8 policies providing only lump sum cash benefits in the event of the
195-9 accidental death, or death by accidental means, or dismemberment,
195-10 or providing only ambulance expense benefits in the event of
195-11 accident or sickness; and
195-12 (b) Such applicant, if not a partnership or
195-13 corporation, shall not be authorized to write life insurance in
195-14 excess of $7,500 <$5,000> upon any one life unless: (i) applicant,
195-15 if not a partnership or corporation, shall have first passed a
195-16 written examination as provided for in this Article 21.07, as
195-17 amended, or (ii) applicant will act only as a ticket-selling agent
195-18 of a public carrier with respect to accident life insurance
195-19 covering risks of travel or as an agent selling credit life, health
195-20 and accident insurance issued exclusively in connection with credit
195-21 transactions, or (iii) applicant will write policies or riders to
195-22 policies providing only lump sum cash benefits in the event of the
195-23 accidental death, or death by accidental means, or dismemberment,
195-24 or providing only ambulance expense benefits in the event of
195-25 accident or sickness.
195-26 SECTION 10.19. Section 4(c), Article 21.07, Insurance Code,
195-27 is amended to read as follows:
196-1 (c) After the State Board of Insurance shall determine that
196-2 such applicant has successfully passed the written examination or
196-3 it has been waived, <and is a person of good character and
196-4 reputation,> the State Board of Insurance shall forthwith issue a
196-5 license to such applicant which shall also authorize such applicant
196-6 to write health and accident insurance for the designated insurance
196-7 carrier.
196-8 SECTION 10.20. Sections 4A(a), (c), and (e), Article 21.07,
196-9 Insurance Code, are amended to read as follows:
196-10 (a) Each applicant for a license under the provisions of
196-11 this Article 21.07, Insurance Code, as amended, who desires to
196-12 write life insurance in excess of $7,500 <$5,000> upon any one
196-13 life, other than as excepted in Section 3 of this Article 21.07,
196-14 within this state shall submit to a personal written examination
196-15 prescribed by the State Board of Insurance and administered in the
196-16 English or Spanish language to determine his competency with
196-17 respect to life insurance and his familiarity with the pertinent
196-18 provisions of the laws of the State of Texas relating to life
196-19 insurance and shall pass the same to the satisfaction of the State
196-20 Board of Insurance; except that no written examination shall be
196-21 required of an applicant that is a partnership or corporation.
196-22 (c) After the State Board of Insurance shall determine that
196-23 such applicant has successfully passed the written examination or
196-24 it has been waived <and is a person of good character and
196-25 reputation>, the State Board of Insurance shall forthwith issue a
196-26 license to such applicant which shall also authorize such applicant
196-27 to write life insurance upon any one life in excess of $7,500 <Five
197-1 Thousand Dollars ($5,000.00)> for the designated insurance carrier.
197-2 (e) When any license shall be issued by the State Board of
197-3 Insurance to an applicant entitled to write life insurance upon any
197-4 one life in excess of $7,500 <Five Thousand Dollars ($5,000.00)>,
197-5 the license shall have stamped thereon the words, "Life Insurance
197-6 in Excess of $7,500 <$5,000.00>."
197-7 SECTION 10.21. Sections 5, 8, and 11, Article 21.07,
197-8 Insurance Code, are amended to read as follows:
197-9 Sec. 5. Failure of Applicant to Qualify for License. If
197-10 <the State Board of Insurance is not satisfied that> the applicant
197-11 for a license <is trustworthy and of good character, or, if
197-12 applicable, that the applicant>, if required to do so, has not
197-13 passed the written examination to the satisfaction of the State
197-14 Board of Insurance, the State Board of Insurance shall forthwith
197-15 notify the applicant and the insurance carrier in writing that the
197-16 license will not be issued to the applicant.
197-17 Sec. 8. Temporary license. The department<, if it is
197-18 satisfied with the honesty and trustworthiness of any applicant who
197-19 desires to write health and accident insurance,> may issue a
197-20 temporary agent's license, authorizing the applicant to write
197-21 health and accident insurance, as well as all other insurance
197-22 authorized to be written by the appointing insurance carrier,
197-23 effective for ninety (90) days, without requiring the applicant to
197-24 pass a written examination, as follows:
197-25 To any applicant who has been appointed or who is being
197-26 considered for appointment as an agent by an insurance carrier
197-27 authorized to write health and accident insurance immediately upon
198-1 receipt by the department of an application executed by such person
198-2 in the form required by this Article, together with a nonrefundable
198-3 filing fee of $100 and a certificate signed by an officer or
198-4 properly authorized representative of such insurance carrier
198-5 certifying:
198-6 (a) <that such insurance carrier has
198-7 investigated the character and background of such person and is
198-8 satisfied that he is trustworthy and of good character;>
198-9 <(b)> that such person has been appointed or is
198-10 being considered for appointment by such insurance carrier as its
198-11 agent; and
198-12 (b) <(c)> that such insurance carrier desires
198-13 that such person be issued a temporary license; provided that if
198-14 such temporary license shall not have been received from the
198-15 department within seven days from the date on which the application
198-16 and certificate were delivered to or mailed to the department, the
198-17 insurance carrier may assume that such temporary license will be
198-18 issued in due course and the applicant may proceed to act as an
198-19 agent; provided, however, that no temporary license shall be
198-20 renewable or issued more than once in a consecutive six months
198-21 period to the same applicant; and provided further, that no
198-22 temporary license shall be granted to any person who does not
198-23 intend to actively sell health and accident insurance to the public
198-24 generally and it is intended to prohibit the use of a temporary
198-25 license to obtain commissions from sales to persons of family
198-26 employment or business relationships to the temporary licensee, to
198-27 accomplish which purposes an insurance carrier is hereby prohibited
199-1 from knowingly paying directly or indirectly to the holder of a
199-2 temporary license under this Section any commissions on the sale of
199-3 a contract of health and accident insurance to any person related
199-4 to temporary licensee by blood or marriage, and the holder of a
199-5 temporary license is hereby prohibited from receiving or accepting
199-6 commissions on the sale of a contract of health and accident
199-7 insurance to any person included in the foregoing classes of
199-8 relationship.
199-9 Sec. 11. Judicial review of acts of State Board of
199-10 Insurance. If the commissioner refuses an application for license
199-11 as provided by this Article, or suspends, revokes, or refuses to
199-12 renew a license at a hearing as provided by this Article, <and this
199-13 action is upheld on review to the Board as provided by this code,>
199-14 and if the applicant or accused is dissatisfied with the action of
199-15 the commissioner <and the Board>, the applicant or accused may
199-16 appeal from the action as provided by <Section (f),> Article
199-17 1.04<,> of this code.
199-18 SECTION 10.22. Section 10(a), Article 21.07, Insurance Code,
199-19 is amended to read as follows:
199-20 (a) The department may discipline a <A> license holder or
199-21 deny an application under Section 5, Article 21.01-2, of this code
199-22 <may be denied, or a license duly issued may be suspended or
199-23 revoked or the renewal thereof refused by the State Board of
199-24 Insurance> if<, after notice and hearing as hereafter provided,> it
199-25 finds that the applicant, individually or through any officer,
199-26 director, or shareholder, for, or holder of, such license:
199-27 (1) Has wilfully violated any provision of the
200-1 insurance laws of this State; <or>
200-2 (2) Has intentionally made a material misstatement in
200-3 the application for such license; <or>
200-4 (3) Has obtained, or attempted to obtain, such license
200-5 by fraud or misrepresentation; <or>
200-6 (4) Has misappropriated or converted to his or its own
200-7 use or illegally withheld money belonging to an insurance carrier
200-8 or an insured or beneficiary; <or>
200-9 (5) <Has otherwise demonstrated lack of
200-10 trustworthiness or competence to act as an agent; or>
200-11 <(6)> Has been guilty of fraudulent or dishonest
200-12 practices; <or>
200-13 (6) <(7)> Has materially misrepresented the terms and
200-14 conditions of any insurance policy or contract; <or>
200-15 (7) <(8)> Has made or issued, or caused to be made or
200-16 issued, any statement misrepresenting or making incomplete
200-17 comparisons regarding the terms or conditions of any insurance
200-18 contract legally issued by any insurance carrier, for the purpose
200-19 of inducing or attempting to induce the owner of such contract to
200-20 forfeit or surrender such contract or allow it to lapse for the
200-21 purpose of replacing such contract with another; <or>
200-22 <(9) Is not of good character or reputation;> or
200-23 (8) <(10)> Is convicted of a felony.
200-24 SECTION 10.23. Section 19(b), Article 21.07, Insurance Code,
200-25 is amended to read as follows:
200-26 (b) The State Board of Insurance may, upon request of such
200-27 insurer on application forms furnished by the State Board of
201-1 Insurance and upon payment of a nonrefundable license fee in an
201-2 amount not to exceed $50 as determined by the State Board of
201-3 Insurance, issue such license to such person which will be valid
201-4 only for such limited representation of such insurer as provided
201-5 herein. The application shall be accompanied by a certificate, on
201-6 forms to be prescribed and furnished by the State Board of
201-7 Insurance and signed by an officer or properly authorized
201-8 representative of the insurance company the applicant proposes to
201-9 represent, stating that the insurance company <has investigated the
201-10 character and background of the applicant and is satisfied that the
201-11 applicant is trustworthy and qualified to hold himself out in good
201-12 faith as an insurance agent, and that the insurance company>
201-13 desires that the applicant act as an insurance agent to represent
201-14 the insurance company. The insurer shall also certify to the State
201-15 Board of Insurance that it has provided the applicant with at least
201-16 forty (40) hours of training, has tested the applicant and found
201-17 the applicant qualified to represent the insurer, and that the
201-18 insurer is willing to be bound by the acts of such applicant within
201-19 the scope of such limited representation.
201-20 SECTION 10.24. Section 3, Chapter 213, Acts of the 54th
201-21 Legislature, Regular Session, 1955 (Article 21.07-1, Vernon's Texas
201-22 Insurance Code), is amended by adding Subsection (c) to read as
201-23 follows:
201-24 (c) A person who has had a license revoked under Section 12
201-25 of this Act may not solicit or otherwise transact business under
201-26 Chapter 10 of this code.
201-27 SECTION 10.25. Section 4(b), Chapter 213, Acts of the 54th
202-1 Legislature, Regular Session, 1955 (Article 21.07-1, Vernon's Texas
202-2 Insurance Code), is amended to read as follows:
202-3 (b) The application shall be accompanied by a certificate on
202-4 forms furnished by the Commissioner and signed by an officer or
202-5 properly authorized representative of the life insurance company
202-6 the applicant proposes to represent, stating that <the insurer has
202-7 investigated the character and background of the applicant and is
202-8 satisfied that the applicant or the partners of the partnership or
202-9 the officers, directors, and shareholders of the corporation are
202-10 trustworthy and qualified to act as a life insurance agent, that>
202-11 the applicant has completed the educational requirements as
202-12 provided in this Act, and that the insurer desires that the
202-13 applicant be licensed as a life insurance agent to represent it in
202-14 this State.
202-15 SECTION 10.26. Section 6, Chapter 213, Acts of the 54th
202-16 Legislature, Regular Session, 1955 (Article 21.07-1, Vernon's Texas
202-17 Insurance Code), is amended to read as follows:
202-18 Sec. 6. Issuance or Denial of License. After <If the
202-19 Commissioner is satisfied that the applicant is trustworthy and
202-20 competent and after> the applicant, if required to do so, has
202-21 passed the written examination to the satisfaction of the
202-22 Commissioner, a license shall be issued forthwith. If the license
202-23 is denied for any of the reasons set forth in Section 12 of this
202-24 Act, the Commissioner shall notify the applicant and the insurer in
202-25 writing that the license will not be issued to the applicant.
202-26 SECTION 10.27. Section 9(a), Chapter 213, Acts of the 54th
202-27 Legislature, Regular Session, 1955 (Article 21.07-1, Vernon's Texas
203-1 Insurance Code), is amended to read as follows:
203-2 (a) Except as may be provided by a staggered renewal system
203-3 adopted under Article 21.01-2, Insurance Code <Subsection (e) of
203-4 this section>, each license issued to a life insurance agent shall
203-5 expire two years following the date of issue, unless prior thereto
203-6 it is suspended or revoked by the Commissioner.
203-7 SECTION 10.28. Section 10, Chapter 213, Acts of the 54th
203-8 Legislature, Regular Session, 1955 (Article 21.07-1, Vernon's Texas
203-9 Insurance Code), is amended to read as follows:
203-10 Sec. 10. Temporary License. (a) The department<, if it is
203-11 satisfied with the honesty and trustworthiness of the applicant,>
203-12 may issue a temporary life insurance agent's license, effective for
203-13 ninety days, without requiring the applicant to pass a written
203-14 examination, as follows:
203-15 (1) <(a)> To an applicant who has fulfilled the
203-16 provisions of Section 4 of this Act where such applicant will
203-17 actually collect the premiums on industrial life insurance
203-18 contracts during the period of such temporary license; provided,
203-19 however, that if such temporary license is not received from the
203-20 department within seven days from the date the application was sent
203-21 to the department, the company may assume that the temporary
203-22 license will be issued in due course and the applicant may proceed
203-23 to act as an agent. For the purpose of this subsection an
203-24 industrial life insurance contract shall mean a contract for which
203-25 the premiums are payable at monthly or more frequent intervals
203-26 directly by the owner thereof, or by a person representing the
203-27 owner, to a representative of the company;
204-1 (2) <(b)> To any person who is being considered for
204-2 appointment as an agent by an insurer immediately upon receipt by
204-3 the department of an application executed by such person in the
204-4 form required by Section 4 of this Act, together with a
204-5 nonrefundable filing fee of $100 and a certificate signed by an
204-6 officer or properly authorized representative of such insurer
204-7 stating:
204-8 (A) <(1) that such insurer has investigated the
204-9 character and background of such person and is satisfied that he is
204-10 trustworthy;>
204-11 <(2)> that such person is being considered for
204-12 appointment by such insurer as its full-time agent; <and>
204-13 (B) <(3)> that such insurer desires that such
204-14 person be issued a temporary license; provided that if such
204-15 temporary license shall not have been received from the department
204-16 within seven days from the date on which the application and
204-17 certificate were delivered to or mailed to the department the
204-18 insurer may assume that such temporary license will be issued in
204-19 due course and the applicant may proceed to act as an agent;
204-20 provided, however, that no temporary license shall be renewable nor
204-21 issued more than once in a consecutive six months period to the
204-22 same applicant; and provided further, that no temporary license
204-23 shall be granted to any person who does not intend to apply for a
204-24 license to sell life insurance to the public generally and it is
204-25 intended to prohibit the use of a temporary license to obtain
204-26 commissions from sales to persons of family employment or business
204-27 relationships to the temporary licensee, to accomplish which
205-1 purposes an insurer is hereby prohibited from knowingly paying
205-2 directly or indirectly to the holder of a temporary license under
205-3 this subsection any commissions on the sale of a contract of
205-4 insurance on the life of the temporary licensee, or on the life of
205-5 any person related to him by blood or marriage, or on the life of
205-6 any person who is or has been during the past six months his
205-7 employer either as an individual or as a member of a partnership,
205-8 association, firm or corporation, or on the life of any person who
205-9 is or who has been during the past six months his employee, and the
205-10 holder of a temporary license is hereby prohibited from receiving
205-11 or accepting commissions on the sale of a contract of insurance to
205-12 any person included in the foregoing classes of relationship;
205-13 (C) <(4)> that a person who has been issued a
205-14 temporary license under this subsection and is acting under the
205-15 authority of the temporary license may not engage in any insurance
205-16 solicitation, sale, or other agency transaction that results in or
205-17 is intended to result in the replacement of any existing individual
205-18 life insurance policy form or annuity contract that is in force or
205-19 receive, directly or indirectly, any commission or other
205-20 compensation that may or does result from such solicitation, sale,
205-21 or other agency transaction; and that any person holding a
205-22 permanent license may not circumvent or attempt to circumvent the
205-23 intent of this subdivision by acting for or with a person holding
205-24 such a temporary license. As used in this subdivision,
205-25 "replacement" means any transaction in which a new life insurance
205-26 or annuity contract is to be purchased, and it is known or should
205-27 be known to the temporary agent that by reason of the solicitation,
206-1 sale, or other transaction the existing life insurance or annuity
206-2 contract has been or is to be:
206-3 (i) <(A)> lapsed, forfeited, surrendered,
206-4 or otherwise terminated;
206-5 (ii) <(B)> converted to reduced paid-up
206-6 insurance, continued as extended term insurance, or otherwise
206-7 reduced in value by the use of nonforfeiture benefits or other
206-8 policy values;
206-9 (iii) <(C)> amended so as to effect either
206-10 a reduction in benefits or in the term for which coverage would
206-11 otherwise remain in force or for which benefits would be paid;
206-12 (iv) <(D)> reissued with any reduction in
206-13 cash value; or
206-14 (v) <(E)> pledged as collateral or
206-15 subjected to borrowing, whether in a single loan or under a
206-16 schedule of borrowing over a period of time for amounts in the
206-17 aggregate exceeding 25 percent of the loan value set forth in the
206-18 policy; and
206-19 (D) <(5)> that such person will complete, under
206-20 such insurer's supervision, at least forty hours of training as
206-21 prescribed by Subsection (c) of this Section within fourteen days
206-22 from the date on which the application and certificate were
206-23 delivered or mailed to the department.
206-24 (b) <(6)> The department shall have the authority to cancel,
206-25 suspend, or revoke the temporary appointment powers of any life
206-26 insurance company, if, after notice and hearing, he finds that such
206-27 company has abused such temporary appointment powers. In
207-1 considering such abuse, the department may consider, but is not
207-2 limited to, the number of temporary appointments made by a company
207-3 as provided by Subsection (f) <(e)> of this Section, the percentage
207-4 of appointees sitting for the examination as life insurance agents
207-5 under this Article as it may be in violation of Subsection (e)
207-6 <(d)> of this Section, and the number of appointees successfully
207-7 passing said examination in accordance with Subsection (e) <(d)>.
207-8 Appeals from the department's decision shall be made in accordance
207-9 with Section 13 hereof.
207-10 (c) At least forty hours of training must be administered to
207-11 any applicant for a temporary license as herein defined within
207-12 fourteen days from the date on which the application and
207-13 certificate were delivered or mailed to the department. Of this
207-14 forty-hour requirement, ten hours must be taught in a classroom
207-15 setting, including but not limited to an accredited college,
207-16 university, junior or community college, business school, or
207-17 private institute or classes sponsored by the insurer and
207-18 especially established for this purpose. Such training program
207-19 shall be constructed so as to provide an applicant with the basic
207-20 knowledge of:
207-21 (1) the broad principles of insurance, licensing, and
207-22 regulatory laws of this State; and
207-23 (2) the obligations and duties of a life insurance
207-24 agent.
207-25 (d) The Commissioner of Insurance may, in his discretion,
207-26 require that the <such> training program required by Subsection (c)
207-27 of this Section <shall> be filed with the department for approval
208-1 in the event the commissioner <he> finds an abuse of temporary
208-2 appointment powers under Subsection (b)<(6)> of this Section.
208-3 (e) <(d)> Each insurer is responsible for requiring that not
208-4 less than 70 percent of such insurer's applicants for temporary
208-5 licenses sit for an examination during any two consecutive calendar
208-6 quarters. At least 50 percent of those applicants sitting for the
208-7 examination must pass during such a period.
208-8 (f) <(e)> Each insurer may make no more than two hundred and
208-9 fifty temporary licensee appointments during a calendar year under
208-10 Subsection (a)(2) <(b)> of this Section.
208-11 SECTION 10.29. Section 12(a), Chapter 213, Acts of the 54th
208-12 Legislature, Regular Session, 1955 (Article 21.07-1, Vernon's Texas
208-13 Insurance Code), is amended to read as follows:
208-14 (a) The commissioner may discipline a <A> license holder or
208-15 deny an application under Section 5, Article 21.01-2, Insurance
208-16 Code, <may be denied, or a license duly issued may be suspended or
208-17 revoked or the renewal thereof refused by the Commissioner> if<,
208-18 after notice and hearing as hereafter provided,> the Commissioner
208-19 finds that the applicant, individually or through any officer,
208-20 director, or shareholder, for, or holder of such license:
208-21 (1) Has wilfully violated any provision of the
208-22 insurance laws of this State;
208-23 (2) Has intentionally made a material misstatement in
208-24 the application for such license;
208-25 (3) Has obtained, or attempted to obtain, such license
208-26 by fraud or misrepresentation;
208-27 (4) Has misappropriated or converted to the
209-1 applicant's or licensee's own use or illegally withheld money
209-2 belonging to an insurer or an insured or beneficiary;
209-3 (5) <Has otherwise demonstrated lack of
209-4 trustworthiness or competence to act as a life insurance agent;>
209-5 <(6)> Has been guilty of fraudulent or dishonest
209-6 practices;
209-7 (6) <(7)> Has materially misrepresented the terms and
209-8 conditions of life insurance policies or contracts;
209-9 (7) <(8)> Has made or issued, or caused to be made or
209-10 issued, any statement misrepresenting or making incomplete
209-11 comparisons regarding the terms or conditions of any insurance or
209-12 annuity contract legally issued by any insurer, for the purpose of
209-13 inducing or attempting to induce the owner of such contract to
209-14 forfeit or surrender such contract or allow it to lapse for the
209-15 purpose of replacing such contract with another;
209-16 (8) <(9)> Has obtained, or attempted to obtain such
209-17 license, not for the purpose of holding himself or itself out to
209-18 the general public as a life insurance agent, but primarily for the
209-19 purpose of soliciting, negotiating or procuring life insurance or
209-20 annuity contracts covering the applicant or licensee, members of
209-21 the applicant's or licensee's family, or the applicant's or
209-22 licensee's business associates;
209-23 (9) <(10) Is not of good character or reputation; or>
209-24 <(11)> Is convicted of a felony; or
209-25 (10) Is guilty of rebating an insurance premium or
209-26 commission to an insured.
209-27 SECTION 10.30. Section 13, Chapter 213, Acts of the 54th
210-1 Legislature, Regular Session, 1955 (Article 21.07-1, Vernon's Texas
210-2 Insurance Code), is amended to read as follows:
210-3 Sec. 13. Judicial review of acts of commissioner. If the
210-4 Commissioner refuses an application for license as provided by this
210-5 Act or suspends, revokes, or refuses to renew a license at a
210-6 hearing provided by this Act, <and the action is upheld on review
210-7 to the Board as provided by this Code,> and if the applicant or
210-8 accused is dissatisfied with the action of the Commissioner and the
210-9 Board, the applicant or accused may appeal from that action in
210-10 accordance with <Section (f),> Article 1.04, Insurance Code.
210-11 SECTION 10.31. Section 16(h), Chapter 213, Acts of the 54th
210-12 Legislature, Regular Session, 1955 (Article 21.07-1, Vernon's Texas
210-13 Insurance Code), is amended to read as follows:
210-14 (h) After the State Board of Insurance determines that an
210-15 applicant has successfully passed the written examination or is
210-16 exempt therefrom as provided in Subsection (d) above, <and the
210-17 board has determined the applicant to be of good character and
210-18 reputation,> has been appointed to act as an agent by one or more
210-19 legal reserve life insurance companies, and has paid a
210-20 nonrefundable license fee not to exceed $50 as determined by the
210-21 board, the board shall issue a license to such applicant
210-22 authorizing the applicant to act as an accident and health
210-23 insurance agent for the appointing insurance carrier.
210-24 SECTION 10.32. Section 5, Chapter 29, Acts of the 54th
210-25 Legislature, Regular Session, 1955 (Article 21.07-2, Vernon's Texas
210-26 Insurance Code), is amended to read as follows:
210-27 Sec. 5. Mode of Licensing and Regulation. (a) The
211-1 licensing and regulation of a Life Insurance Counselor, as that
211-2 term is defined herein, shall be in the same manner and subject to
211-3 the same requirements as applicable to the licensing of agents of
211-4 legal reserve life insurance companies as provided in Article
211-5 21.07-1 of the Texas Insurance Code, 1951, or as provided by any
211-6 existing or subsequent applicable law governing the licensing of
211-7 such agents, and all the provisions thereof are hereby made
211-8 applicable to applicants and licensees under this Act, except that
211-9 a Life Insurance Counselor shall not advertise in any manner and
211-10 shall not circulate materials indicating professional superiority
211-11 or the performance of professional service in a superior manner;
211-12 provided, however, that an appointment to act for an insurer shall
211-13 not be a condition to the licensing of a Life Insurance Counselor.
211-14 (b) In addition to the above requirements, the applicant for
211-15 licensure as a Life Insurance Counselor shall submit to the
211-16 Commissioner <evidence of high moral and ethical character,>
211-17 documentation that he has been licensed as a life insurance agent
211-18 in excess of three years. After the Insurance Commissioner has
211-19 satisfied himself as to these requirements, he shall then cause the
211-20 applicant for a Life Insurance Counselor's license to sit for an
211-21 examination which shall include the following<:>
211-22 <Such examination shall consist of> five subjects and subject
211-23 areas:
211-24 (1) <(a)> Fundamentals of life and health insurance;
211-25 (2) <(b)> Group life insurance, pensions and health
211-26 insurance;
211-27 (3) <(c)> Law, trust and taxation;
212-1 (4) <(d)> Finance and economics; and
212-2 (5) <(e)> Business insurance and estate planning.
212-3 (c) No license shall be granted until such individual shall
212-4 have successfully passed each of the five parts under Subsection
212-5 (b) of this section <above enumerated>. Such examinations may be
212-6 given and scheduled by the Commissioner at his discretion.
212-7 Individuals currently holding Life Insurance Counselor licenses
212-8 issued by the Texas State Board of Insurance, who do not have the
212-9 equivalent of the requirements above listed, shall have one year
212-10 from the date of enactment hereof to so qualify.
212-11 <Unless the State Board of Insurance accepts a qualifying
212-12 examination administered by a testing service, as provided under
212-13 Article 21.01-1, Insurance Code, as amended, not later than the
212-14 30th day after the day on which a licensing examination is
212-15 administered under this Section, the Commissioner shall send notice
212-16 to each examinee of the results of the examination. If an
212-17 examination is graded or reviewed by a testing service, the
212-18 Commissioner shall send, or require the testing service to send,
212-19 notice to the examinees of the results of the examination within
212-20 two weeks after the date on which the Commissioner receives the
212-21 results from the testing service. If the notice of the examination
212-22 results will be delayed for longer than 90 days after the
212-23 examination date, the Commissioner shall send, or require the
212-24 testing service to send, notice to the examinee of the reason for
212-25 the delay before the 90th day. If requested in writing by a person
212-26 who fails the licensing examination administered under this
212-27 Section, the Commissioner shall send, or require the testing
213-1 service to send, to the person an analysis of the person's
213-2 performance on the examination.>
213-3 SECTION 10.33. Sections 9, 12, and 14, Managing General
213-4 Agents' Licensing Act (Article 21.07-3, Vernon's Texas Insurance
213-5 Code), are amended to read as follows:
213-6 Sec. 9. Expiration of License; Renewal. <(a)> Except as
213-7 may be provided by a staggered renewal system adopted under Article
213-8 21.01-2, Insurance Code <Subsection (c) of this section>, every
213-9 license issued under this Act expires two years from the date of
213-10 issuance, unless a completed application to qualify for renewal of
213-11 such license shall be filed with the commissioner and a
213-12 nonrefundable fee paid on or before such date, in which event the
213-13 license sought to be renewed shall continue in full force and
213-14 effect until renewed or renewal is denied.
213-15 <(b) An unexpired license may be renewed by paying the
213-16 required nonrefundable renewal fee to the board not later than the
213-17 expiration date of the license. If a license has been expired for
213-18 not longer than 90 days, the licensee may renew the license by
213-19 paying to the board the required nonrefundable renewal fee and a
213-20 nonrefundable fee that is one-half of the original license fee. If
213-21 a license has been expired for more than 90 days, the license may
213-22 not be renewed. A new license may be obtained by complying with
213-23 the requirements and procedures for obtaining an original license.
213-24 At least 30 days before the expiration of a license, the
213-25 commissioner shall send written notice of the impending license
213-26 expiration to the licensee at the licensee's last known address.
213-27 This subsection may not be construed to prevent the board from
214-1 denying or refusing to renew a license under applicable law or
214-2 rules of the State Board of Insurance.>
214-3 <(c) The State Board of Insurance by rule may adopt a system
214-4 under which licenses expire on various dates during the year. For
214-5 the period in which the license is valid for less than two years,
214-6 the license fee shall be prorated on a monthly basis so that each
214-7 licensee shall pay only that portion of the license fee that is
214-8 allocable to the number of months during which the license is
214-9 valid. On each subsequent renewal of the license, the total
214-10 license renewal fee is payable.>
214-11 Sec. 12. Denial, Refusal, Suspension, or Revocation of
214-12 Licenses. The commissioner may discipline a <A> license holder or
214-13 deny an application under Section 5, Article 21.01-2, Insurance
214-14 Code, if it <may be denied, suspended for a period of time, revoked
214-15 or the renewal thereof refused by the commissioner if, after notice
214-16 and hearing as hereinafter provided, he> finds that the applicant
214-17 for, or holder of such license:
214-18 (a) has wilfully violated or participated in the
214-19 violation of any provisions of this Act or any of the insurance
214-20 laws of this state; <or>
214-21 (b) has intentionally made a material misstatement in
214-22 the application for such license; <or>
214-23 (c) has obtained, or attempted to obtain such license
214-24 by fraud or misrepresentation; <or>
214-25 (d) has misappropriated or converted to his own use or
214-26 has illegally withheld moneys required to be held in a fiduciary
214-27 capacity; <or>
215-1 (e) has with intent to deceive materially
215-2 misrepresented the terms or effect of any contract of insurance, or
215-3 has engaged in any fraudulent transaction; or
215-4 (f) has been convicted of a felony, or of any
215-5 misdemeanor of which criminal fraud is an essential element<; or>
215-6 <(g) has shown himself to be, and is so deemed by the
215-7 commissioner, incompetent, or untrustworthy, or not of good
215-8 character and reputation>.
215-9 Sec. 14. JUDICIAL REVIEW OF ACTS OF COMMISSIONER <AND THE
215-10 BOARD>. If the commissioner shall refuse an application for
215-11 license as provided in this Act, or shall suspend, revoke or refuse
215-12 to renew any license at a hearing as provided by this Act, <and
215-13 such action is upheld upon review to the board as in this Code
215-14 provided,> and if the applicant or accused thereafter is
215-15 dissatisfied with the action of the commissioner <and the board>,
215-16 the applicant or accused may appeal from that action in accordance
215-17 with <Section (f),> Article 1.04, Insurance Code.
215-18 SECTION 10.34. Sections 10 and 18, Chapter 407, Acts of the
215-19 63rd Legislature, Regular Session, 1973 (Article 21.07-4, Vernon's
215-20 Texas Insurance Code), are amended to read as follows:
215-21 Sec. 10. Examination for License. <(a)> Each applicant for
215-22 a license as an adjuster shall, prior to the issuance of such
215-23 license, personally take and pass, to the satisfaction of the
215-24 commissioner, an examination as a test of his qualifications and
215-25 competency; but the requirement of an examination shall not apply
215-26 to any of the following:
215-27 (1) an applicant who for the 90-day period next
216-1 preceding the effective date of this Act has been principally
216-2 engaged in the investigation, adjustment, or supervision of losses
216-3 and who is so engaged on the effective date of this Act;
216-4 (2) an applicant for the renewal of a license issued
216-5 hereunder; <or>
216-6 (3) an applicant who is licensed as an insurance
216-7 adjuster, as defined by this statute, in another state with which
216-8 state a reciprocal agreement has been entered into by the
216-9 commissioner; or
216-10 (4) any person who has completed a course or training
216-11 program in adjusting of losses as prescribed and approved by the
216-12 commissioner and is certified to the commissioner upon completion
216-13 of the course that such person has completed said course or
216-14 training program, and has passed an examination testing his
216-15 knowledge and qualification, as prescribed by the commissioner.
216-16 <(b) Unless the State Board of Insurance accepts a
216-17 qualifying examination administered by a testing service, as
216-18 provided under Article 21.01-1, Insurance Code, as amended, not
216-19 later than the 30th day after the day on which a licensing
216-20 examination is administered under this section, the commissioner
216-21 shall send notice to each examinee of the results of the
216-22 examination. If an examination is graded or reviewed by a testing
216-23 service, the commissioner shall send, or require the testing
216-24 service to send, notice to the examinees of the results of the
216-25 examination within two weeks after the date on which the
216-26 commissioner receives the results from the testing service. If the
216-27 notice of the examination results will be delayed for longer than
217-1 90 days after the examination date, the commissioner shall send, or
217-2 require the testing service to send, notice to the examinee of the
217-3 reason for the delay before the 90th day.>
217-4 <(c) If requested in writing by a person who fails the
217-5 licensing examination administered under this section, the
217-6 commissioner shall send, or require the testing service to send, to
217-7 the person an analysis of the person's performance on the
217-8 examination.>
217-9 Sec. 18. Automatic <Procedure for Refusal, Suspension, or>
217-10 Revocation. <(a)> The commissioner may revoke or refuse to renew
217-11 any license of an adjuster immediately and without hearing, upon
217-12 the licensee's conviction of a felony, by final judgment, in any
217-13 court of competent jurisdiction.
217-14 <(b) The commissioner may deny, suspend, revoke, or refuse
217-15 to renew a license:>
217-16 <(1) by order or notice given to the licensee not less
217-17 than 15 days in advance of the effective date of the order or
217-18 notice, subject to the right of the licensee to demand in writing,
217-19 a hearing, before the board after receipt of notice and before the
217-20 effective date of the revocation. Pending such hearing, the
217-21 license may be suspended.>
217-22 <(2) by an order after a hearing which is effective 10
217-23 days after the order is issued subject to appeal to a district
217-24 court in Travis County.>
217-25 SECTION 10.35. Section 16(a), Chapter 407, Acts of the 63rd
217-26 Legislature, Regular Session, 1973 (Article 21.07-4, Vernon's Texas
217-27 Insurance Code), is amended to read as follows:
218-1 Sec. 16. (a) Except as may be provided by a staggered
218-2 renewal system adopted under Article 21.01-2, Insurance Code
218-3 <Subsection (e) of this section>, an adjuster's license expires two
218-4 years after the date of issuance.
218-5 SECTION 10.36. Section 17(a), Chapter 407, Acts of the 63rd
218-6 Legislature, Regular Session, 1973 (Article 21.07-4, Vernon's Texas
218-7 Insurance Code), is amended to read as follows:
218-8 (a) The department <commissioner> may discipline an adjuster
218-9 or deny an application under Section 5, Article 21.01-2, Insurance
218-10 Code, <deny, suspend, revoke, or refuse to renew any adjuster's
218-11 license> for any of the following causes:
218-12 (1) for any cause for which issuance of the license
218-13 could have been refused had it been existent and been known to the
218-14 board;
218-15 (2) if the applicant or licensee willfully violates or
218-16 knowingly participates in the violation of any provision of this
218-17 Act;
218-18 (3) if the applicant or licensee has obtained or
218-19 attempted to obtain any such license through willful
218-20 misrepresentation or fraud, or has failed to pass any examination
218-21 required under this Act;
218-22 (4) if the applicant or licensee has misappropriated,
218-23 or converted to the applicant's or licensee's own use, or has
218-24 illegally withheld moneys required to be held in a fiduciary
218-25 capacity;
218-26 (5) if the applicant or licensee has, with intent to
218-27 deceive, materially misrepresented the terms or effect of an
219-1 insurance contract, or has engaged in any fraudulent transactions;
219-2 or
219-3 (6) if the applicant or licensee is convicted, by
219-4 final judgment, of a felony<; or>
219-5 <(7) if in the conduct of the licensee's affairs under
219-6 the license, the licensee has proven to be, and is so deemed by the
219-7 commissioner, incompetent, untrustworthy, or a source of injury to
219-8 the public>.
219-9 SECTION 10.37. Section 5(a), Article 21.07-6, Insurance
219-10 Code, is amended to read as follows:
219-11 (a) The commissioner shall approve an application for a
219-12 certificate of authority to conduct a business in this state as an
219-13 administrator if the commissioner is satisfied that the application
219-14 meets the following criteria:
219-15 (1) the granting of the application would not violate
219-16 a federal or state law;
219-17 (2) the <competence, trustworthiness, experience,>
219-18 financial condition<, or integrity> of an administrator applicant
219-19 or those persons who would operate or control an administrator
219-20 applicant are such that the granting of a certificate of authority
219-21 would not be adverse to the public interest;
219-22 (3) the applicant has not attempted through fraud or
219-23 bad faith to obtain the certificate of authority;
219-24 (4) the applicant has complied with this article and
219-25 rules adopted by the board under this article; and
219-26 (5) the name under which the applicant will conduct
219-27 business in this state is not so similar to that of another
220-1 administrator or insurer that it is likely to mislead the public.
220-2 SECTION 10.38. Section 3(e), Article 21.07-7, Insurance
220-3 Code, is amended to read as follows:
220-4 (e) The department <commissioner> may discipline a license
220-5 holder or deny an application under Section 5, Article 21.01-2, of
220-6 this code if it <deny a license application or suspend, revoke, or
220-7 refuse to renew a license if, after notice and hearing as provided
220-8 by this code, the commissioner> determines that the applicant for
220-9 or holder of a license, or any person who would be authorized to
220-10 act on behalf of the applicant or the license holder under
220-11 Subsection (c) of this section has:
220-12 (1) wilfully violated or participated in the violation
220-13 of this article or any of the insurance laws of this state;
220-14 (2) intentionally made a material misstatement in the
220-15 license application;
220-16 (3) obtained or attempted to obtain the license by
220-17 fraud or misrepresentation;
220-18 (4) misappropriated, converted to his own use, or
220-19 illegally withheld money required to be held in a fiduciary
220-20 capacity;
220-21 (5) materially misrepresented the terms or effect of
220-22 any contract of insurance or reinsurance, or engaged in any
220-23 fraudulent transaction; or
220-24 (6) been convicted of a felony or of any misdemeanor
220-25 of which criminal fraud is an essential element<; or>
220-26 <(7) shown himself to be, and is so determined to be
220-27 by the commissioner, incompetent, untrustworthy, or not of good
221-1 character and reputation>.
221-2 SECTION 10.39. Section 2(b), Article 21.14, Insurance Code,
221-3 is amended to read as follows:
221-4 (b) Nothing contained in this article shall be so construed
221-5 as to affect or apply to orders, societies, or associations which
221-6 admit to membership only persons engaged in one or more crafts or
221-7 hazardous occupations in the same or similar lines of business, and
221-8 the ladies' societies, or ladies' auxiliary to such orders,
221-9 societies or associations, or any secretary of a Labor Union or
221-10 organization, or any secretary or agent of any fraternal benefit
221-11 society, which does not operate at a profit, except that a person
221-12 who has had a license revoked under Section 16 of this article may
221-13 not solicit or otherwise transact business under Chapter 10 of this
221-14 code.
221-15 SECTION 10.40. Sections 3(a) and (c), Article 21.14,
221-16 Insurance Code, are amended to read as follows:
221-17 (a) When any person, partnership or corporation shall desire
221-18 to engage in business as a local recording agent for an insurance
221-19 company, or insurance carrier, he or it shall make application for
221-20 a license to the State Board of Insurance, in such form as the
221-21 Board may require. Such application shall bear a signed
221-22 endorsement by a general, state or special agent of a qualified
221-23 insurance company, or insurance carrier that applicant or each
221-24 member of the partnership or each stockholder of the corporation is
221-25 a resident of this state <Texas, trustworthy, of good character and
221-26 good reputation, and is worthy of a license>.
221-27 (c) The Board shall issue a license to a corporation if the
222-1 Board finds:
222-2 (1) That the corporation is a Texas corporation
222-3 organized or existing under the Texas Business Corporation Act or
222-4 the Texas Professional Corporation Act having its principal place
222-5 of business in the State of Texas and having as one of its purposes
222-6 the authority to act as a local recording agent; and
222-7 (2) That every officer, director and shareholder of
222-8 the corporation is individually licensed as a local recording agent
222-9 under the provisions of this Insurance Code, except as may be
222-10 otherwise permitted by this Section or Section 3a of this article,
222-11 or that every officer and director of the corporation is
222-12 individually licensed as a local recording agent under this
222-13 Insurance Code, that the corporation is a wholly owned subsidiary
222-14 of a parent corporation that is licensed as a local recording agent
222-15 under this Insurance Code, and that every shareholder of the parent
222-16 corporation is individually licensed as a local recording agent
222-17 under this Insurance Code, and except as specifically provided by
222-18 this article, that no shareholder of the corporation is a corporate
222-19 entity; and
222-20 (3) That such corporation will have the ability to pay
222-21 any sums up to $25,000 which it might become legally obligated to
222-22 pay on account of any claim made against it by any customer and
222-23 caused by any negligent act, error or omission of the corporation
222-24 or any person for whose acts the corporation is legally liable in
222-25 the conduct of its business as a local recording agent. The term
222-26 "customer" as used herein shall mean any person, firm or
222-27 corporation to whom such corporation sells or attempts to sell a
223-1 policy of insurance, or from whom such corporation accepts an
223-2 application for insurance. Such ability shall be proven in one of
223-3 the following ways:
223-4 (A) <(a)> An errors and omissions policy
223-5 insuring such corporation against errors and omissions, in at least
223-6 the sum of $100,000<,> with no more than a $10,000 deductible
223-7 feature or the sum of at least $300,000 with no more than a $25,000
223-8 deductible feature, issued by an insurance company licensed to do
223-9 business in the State of Texas or, if a policy cannot be obtained
223-10 from a company licensed to do business in Texas, a policy issued by
223-11 a company not licensed to do business in Texas, on filing an
223-12 affidavit with the State Board of Insurance stating the inability
223-13 to obtain coverage and receiving the Board's approval; or
223-14 (B) <(b)> A bond executed by such corporation as
223-15 principal and a surety company authorized to do business in this
223-16 state, as surety, in the principal sum of $25,000, payable to the
223-17 State Board of Insurance for the use and benefit of customers of
223-18 such corporation, conditioned that such corporation shall pay any
223-19 final judgment recovered against it by any customer; or
223-20 (C) <(c)> A deposit of cash or securities of the
223-21 class authorized by Articles 2.08 and 2.10 of this Code, having a
223-22 fair market value of $25,000 with the State Treasurer. The State
223-23 Treasurer is hereby authorized and directed to accept and receive
223-24 such deposit and hold it exclusively for the protection of any
223-25 customer of such corporation recovering a final judgment against
223-26 such corporation. Such deposit may be withdrawn only upon filing
223-27 with the Board evidence satisfactory to it that the corporation has
224-1 withdrawn from business, and has no unsecured liabilities
224-2 outstanding, or that such corporation has provided for the
224-3 protection of its customers by furnishing an errors and omissions
224-4 policy or a bond as hereinbefore provided. Securities so deposited
224-5 may be exchanged from time to time for other qualified securities.
224-6 A binding commitment to issue such a policy or bond, or the
224-7 tender of such securities, shall be sufficient in connection with
224-8 any application for license.
224-9 Nothing contained herein shall be construed to permit any
224-10 unlicensed employee or agent of any corporation to perform any act
224-11 of a local recording agent without obtaining a local recording
224-12 agent's license. The Board shall not require a corporation to take
224-13 the examination provided in Section 6 of this Article 21.14.
224-14 If at any time, any corporation holding a local recording
224-15 agent's license does not maintain the qualifications necessary to
224-16 obtain a license, the license of such corporation to act as a local
224-17 recording agent shall be cancelled or denied in accordance with the
224-18 provisions of Sections 16, 17 and 18 of this Article 21.14;
224-19 provided, however, that should any person who is not a licensed
224-20 local recording agent acquire shares in such a corporation by
224-21 devise or descent, they shall have a period of 90 days from date of
224-22 acquisition within which to obtain a license as a local recording
224-23 agent or to dispose of the shares to a licensed local recording
224-24 agent except as may be permitted by Section 3a of this article.
224-25 Should such an unlicensed person, except as may be permitted
224-26 by Section 3a of this article, acquire shares in such a corporation
224-27 and not dispose of them within said period of 90 days to a licensed
225-1 local recording agent, then they must be purchased by the
225-2 corporation for their book value, that is, the value of said shares
225-3 of stock as reflected by the regular books and records of said
225-4 corporation, as of the date of the acquisition of said shares by
225-5 said unlicensed person. Should the corporation fail or refuse to
225-6 so purchase such shares, its license shall be cancelled.
225-7 Any such corporation shall have the power to redeem the
225-8 shares of any shareholder, or the shares of a deceased shareholder,
225-9 upon such terms as may be agreed upon by the Board of Directors and
225-10 such shareholder or his personal representative, or at such price
225-11 and upon such terms as may be provided in the Articles of
225-12 Incorporation, the Bylaws, or an existing contract entered into
225-13 between the shareholders of the corporation.
225-14 Each corporation licensed as a local recording agent shall
225-15 file, under oath, a list of the names and addresses of all of its
225-16 officers, directors and shareholders with its application for
225-17 renewal license.
225-18 Each corporation licensed as a local recording agent shall
225-19 notify the State Board of Insurance upon any change in its
225-20 officers, directors or shareholders not later than the 30th day
225-21 after the date on which the change became effective.
225-22 The term "firm" as it applies to local recording agents in
225-23 Sections 2, 12 and 16 of this Article 21.14 shall be construed to
225-24 include corporations.
225-25 SECTION 10.41. Sections 5, 8, and 18, Article 21.14,
225-26 Insurance Code, are amended to read as follows:
225-27 Sec. 5. ACTIVE AGENTS OR SOLICITORS ONLY TO BE LICENSED. No
226-1 license shall be granted to any person, firm, partnership or
226-2 corporation as a local recording agent or to a person as a
226-3 solicitor, for the purpose of writing any form of insurance, unless
226-4 it is found by the State Board of Insurance that such person, firm,
226-5 partnership or corporation, is or intends to be, actively engaged
226-6 in the soliciting or writing of insurance for the public generally;
226-7 that each person or individual of a firm is a resident of Texas<,
226-8 of good character and good reputation, worthy of a license,> and is
226-9 to be actively engaged in good faith in the business of insurance,
226-10 and that the application is not being made in order to evade the
226-11 laws against rebating and discrimination either for the applicant
226-12 or for some other person, firm, partnership or corporation.
226-13 Nothing herein contained shall prohibit an applicant insuring
226-14 property which the applicant owns or in which the applicant has an
226-15 interest; but it is the intent of this Section to prohibit coercion
226-16 of insurance and to preserve to each citizen the right to choose
226-17 his own agent or insurance carrier, and to prohibit the licensing
226-18 of an individual, firm, partnership or corporation to engage in the
226-19 insurance business principally to handle business which the
226-20 applicant controls only through ownership, mortgage or sale, family
226-21 relationship or employment, which shall be taken to mean that an
226-22 applicant who is making an original application for license shall
226-23 show the State Board of Insurance that the applicant has a bona
226-24 fide intention to engage in business in which, in any calendar
226-25 year, at least twenty-five per cent (25%) of the total volume of
226-26 premiums shall be derived from persons or organizations other than
226-27 applicant and from property other than that on which the applicant
227-1 shall control the placing of insurance through ownership, mortgage,
227-2 sale, family relationship or employment. Nothing herein contained
227-3 shall be construed to authorize a partnership or corporation to
227-4 receive a license as a solicitor.
227-5 Sec. 8. EXPIRATION OF LICENSE; RENEWAL. <(a)> Except as
227-6 may be provided by a staggered renewal system adopted under Article
227-7 21.01-2 of this code <Subsection (c) of this section>, every
227-8 license issued to a local recording agent or a solicitor shall
227-9 expire two years from the date of its issue, unless a completed
227-10 application to qualify for the renewal of any such license shall be
227-11 filed with the State Board of Insurance and a nonrefundable fee
227-12 paid on or before such date, in which event the license sought to
227-13 be renewed shall continue in full force and effect until renewed or
227-14 renewal is denied.
227-15 <(b) An unexpired license may be renewed by filing a
227-16 completed application and paying the required nonrefundable renewal
227-17 fee to the State Board of Insurance not later than the expiration
227-18 date of the license. If a license has been expired for not longer
227-19 than 90 days, the licensee may renew the license by paying to the
227-20 State Board of Insurance the required nonrefundable renewal fee and
227-21 a nonrefundable fee that is one-half of the original license fee.
227-22 If a license has been expired for more than 90 days, the license
227-23 may not be renewed. A new license may be obtained by complying
227-24 with the requirements and procedures for obtaining an original
227-25 license. At least 30 days before the expiration of a license, the
227-26 commissioner shall send written notice of the impending license
227-27 expiration to the licensee at the licensee's last known address.
228-1 This subsection may not be construed to prevent the board from
228-2 denying or refusing to renew a license under applicable law or
228-3 rules of the State Board of Insurance.>
228-4 <(c) The State Board of Insurance by rule may adopt a system
228-5 under which licenses expire on various dates during the year. For
228-6 the period in which the license is valid for less than two years,
228-7 the license fee shall be prorated on a monthly basis so that each
228-8 licensee shall pay only that portion of the license fee that is
228-9 allocable to the number of months during which the license is
228-10 valid. On each subsequent renewal of the license, the total
228-11 license renewal fee is payable.>
228-12 Sec. 18. APPEAL. If the Commissioner refuses an application
228-13 for license as provided by this article, or suspends, revokes, or
228-14 refuses to renew any license at a hearing as provided by this
228-15 article, <and the action is upheld on review to the Board as
228-16 provided by this Code,> and if the applicant or accused is
228-17 dissatisfied with the action of the Commissioner <and the Board>,
228-18 the applicant or accused may appeal from the action in accordance
228-19 with <Section (f),> Article 1.04<,> of this Code.
228-20 SECTION 10.42. Section 16, Article 21.14, Insurance Code, as
228-21 amended by Chapters 242 and 790, Acts of the 72nd Legislature,
228-22 Regular Session, 1991, is reenacted and amended to read as follows:
228-23 Sec. 16. SUSPENSION OR REVOCATION OF LICENSE. (a) The
228-24 license of any local recording agent shall be suspended during a
228-25 period in which the agent does not have outstanding a valid
228-26 appointment to act as an agent for an insurance company. The Board
228-27 shall end the suspension on receipt of evidence satisfactory to the
229-1 board that the agent has a valid appointment. The Board shall
229-2 cancel the license of a solicitor if the solicitor does not have
229-3 outstanding a valid appointment to act as a solicitor for a local
229-4 recording agent, and shall suspend the license during a period that
229-5 the solicitor's local recording agent does not have outstanding a
229-6 valid appointment to act as an agent under this Article.
229-7 (b) The department may discipline <license of> any local
229-8 recording agent or solicitor or deny an application under Section
229-9 5, Article 21.01-2, of this code <may be denied or a license duly
229-10 issued may be suspended or revoked or the renewal thereof refused
229-11 by the State Board of Insurance> if<, after notice and hearing as
229-12 hereafter provided,> it finds that the applicant, individually or
229-13 through any officer, director, or shareholder, for or holder of
229-14 such license:
229-15 (1) Has wilfully violated any provision of the
229-16 insurance laws of this state;
229-17 (2) Has intentionally made a material misstatement in
229-18 the application for such license;
229-19 (3) Has obtained, or attempted to obtain, such license
229-20 by fraud or misrepresentation;
229-21 (4) Has misappropriated or converted to the
229-22 applicant's or licensee's own use or illegally withheld money
229-23 belonging to an insurer or an insured or beneficiary;
229-24 (5) <Has otherwise demonstrated lack of
229-25 trustworthiness or competence to act as an insurance agent;>
229-26 <(6)> Has been guilty of fraudulent or dishonest acts;
229-27 (6) <(7)> Has materially misrepresented the terms and
230-1 conditions of any insurance policies or contracts;
230-2 (7) <(8)> Has made or issued, or caused to be made or
230-3 issued, any statement misrepresenting or making incomplete
230-4 comparisons regarding the terms or conditions of any insurance
230-5 contract legally issued by an insurance carrier for the purpose of
230-6 inducing or attempting to induce the owner of such contract to
230-7 forfeit or surrender such contract or allow it to expire for the
230-8 purpose of replacing such contract with another;
230-9 (8) <(9) Is not of good character or reputation;>
230-10 <(10)> Is convicted of a felony;
230-11 (9) <(11)> Is guilty of rebating any insurance premium
230-12 or discriminating as between insureds; <or>
230-13 (10) <(12)> Is not engaged in the soliciting or
230-14 writing of insurance for the public generally as required by
230-15 Section 5 of this Article; or
230-16 (11) <(12)> Is afflicted with a disability as that
230-17 term is defined by Subsection (a) of Article 21.15-6 of this code.
230-18 (c) <(b)> The State Board of Insurance may order that a
230-19 local recording agent or solicitor who is afflicted with a
230-20 disability be placed on disability probation under the terms and
230-21 conditions specified under Article 21.15-6 of this code instead of
230-22 taking disciplinary action under Subsection (b) <(a)> of this
230-23 section.
230-24 (d) <(c)> A license applicant or licensee whose license
230-25 application or license has been denied, refused, or revoked under
230-26 this section may not apply for any license as an insurance agent
230-27 before the first anniversary of the effective date of the denial,
231-1 refusal, or revocation, or, if the applicant or licensee seeks
231-2 judicial review of the denial, refusal, or revocation before the
231-3 first anniversary of the date of the final court order or decree
231-4 affirming that action. The Commissioner may deny an application
231-5 timely filed if the applicant does not show good cause why the
231-6 denial, refusal, or revocation of the previous license application
231-7 or license should not be considered a bar to the issuance of a new
231-8 license. This subsection does not apply to an applicant whose
231-9 license application was denied for failure to pass a required
231-10 written examination.
231-11 SECTION 10.43. Section 18, Article 21.14, Insurance Code, is
231-12 amended to read as follows:
231-13 Sec. 18. APPEAL. If the Commissioner refuses an application
231-14 for license as provided by this article, or suspends, revokes, or
231-15 refuses to renew any license at a hearing as provided by this
231-16 article, <and the action is upheld on review to the Board as
231-17 provided by this Code,> and if the applicant or accused is
231-18 dissatisfied with the action of the Commissioner and the Board, the
231-19 applicant or accused may appeal from the action in accordance with
231-20 <Section (f),> Article 1.04<,> of this Code.
231-21 SECTION 10.44. Sections 5, 8, and 10, Article 21.14-1,
231-22 Insurance Code, are amended to read as follows:
231-23 Sec. 5. Qualifications for risk manager's license. To
231-24 qualify for a license under this article, a person must:
231-25 (1) be at least 18 years of age;
231-26 (2) maintain a place of business in this state;
231-27 (3) <be a trustworthy and competent person;>
232-1 <(4)> meet the application requirements required by
232-2 this article and rules of the board;
232-3 (4) <(5)> take and pass the licensing examination; and
232-4 (5) <(6)> pay the examination and licensing fees.
232-5 Sec. 8. License renewal; renewal fee. Except as provided by
232-6 a staggered renewal system adopted under Article 21.01-2 of this
232-7 code, a <(a) A> license issued under this article expires two
232-8 years after the date of issuance. A licensee may renew an
232-9 unexpired license by filing a completed application for renewal
232-10 with the board and paying the nonrefundable renewal fee, in an
232-11 amount not to exceed $50 as determined by the board, on or before
232-12 the expiration date of the license. The commissioner shall issue a
232-13 renewal certificate to the licensee at the time of the renewal if
232-14 the commissioner determines the licensee continues to be eligible
232-15 for the license.
232-16 <(b) If a person's license has been expired for not longer
232-17 than 90 days, the licensee may renew the license by paying the
232-18 nonrefundable renewal fee plus a nonrefundable late fee in an
232-19 amount not to exceed one-half of the original license fee as
232-20 determined by the board.>
232-21 <(c) If the license has been expired for more than 90 days,
232-22 the person may not renew the license. The person may obtain a new
232-23 license by submitting to reexamination, if the person was
232-24 originally required to take the examination, and complying with the
232-25 requirements and procedures for obtaining an original license.>
232-26 <(d) The commissioner shall notify each licensee in writing
232-27 at the licensee's last known address of the pending license
233-1 expiration not later than the 30th day before the date on which the
233-2 license expires.>
233-3 Sec. 10. Denial, suspension, or revocation of a license.
233-4 <(a)> The department may discipline a risk manager or deny an
233-5 application under Section 5, Article 21.01-2, of this code <State
233-6 Board of Insurance may deny an application or suspend, revoke, or
233-7 refuse to renew a risk manager's license for any of the following
233-8 reasons>:
233-9 (1) for any cause for which issuance of the license
233-10 could have been refused had it been known to the board;
233-11 (2) if the licensee wilfully violates or knowingly
233-12 participates in the violation of this article, any insurance law of
233-13 this state, or rules of the board;
233-14 (3) if the licensee has obtained or attempted to
233-15 obtain a license through wilful misrepresentation or fraud, or has
233-16 failed to pass the examination required under this article; or
233-17 (4) if a licensee is convicted, by final judgment, of
233-18 a felony<; or>
233-19 <(5) if in the conduct of his affairs under the
233-20 license, the licensee has shown himself to be, and is so deemed by
233-21 the commissioner, incompetent, untrustworthy, or a source of injury
233-22 to the public.>
233-23 <(b) A risk manager's license may not be suspended or
233-24 revoked without notice and hearing by the board>.
233-25 SECTION 10.45. Sections 2(a) and (c), Article 21.14-2,
233-26 Insurance Code, are amended to read as follows:
233-27 (a) To obtain a license to act as an agent under this
234-1 article, an applicant must submit a completed written application
234-2 to the commissioner of insurance on a form prescribed by the State
234-3 Board of Insurance and pay a $50 nonrefundable fee. The
234-4 application must bear an endorsement signed by an agent of an
234-5 insurance company that meets the requirements of Section 1 of this
234-6 article and must state that the applicant is a resident of this
234-7 state<, is of good character and good reputation, and is worthy of
234-8 a license>.
234-9 (c) Except as provided by a staggered renewal system adopted
234-10 under Article 21.01-2 of this code, a <A> license issued under this
234-11 article expires two years after the date of its issuance unless a
234-12 completed application to renew the license is filed with the
234-13 commissioner and the $50 nonrefundable renewal fee is paid on or
234-14 before that date, in which case the license continues in full force
234-15 and effect until renewed or the renewal is denied. <If a license
234-16 has been expired for not longer than 90 days, the licensee may
234-17 renew the license by filing with the State Board of Insurance the
234-18 required nonrefundable renewal fee and a nonrefundable fee that is
234-19 one-half of the original license fee. If a license has been
234-20 expired for more than 90 days, the license may not be renewed. A
234-21 new license may be obtained by complying with the procedures for
234-22 obtaining an original license. At least 30 days before the
234-23 expiration of a license the commissioner of insurance shall send
234-24 written notice of the impending license expiration to the licensee
234-25 at the licensee's last known address. This section may not be
234-26 construed to prevent the board from denying or refusing to renew a
234-27 license under applicable law or the rules of the State Board of
235-1 Insurance.>
235-2 SECTION 10.46. Section 3, Article 21.14-2, Insurance Code,
235-3 is amended to read as follows:
235-4 Sec. 3. The license of an agent is automatically suspended
235-5 or canceled if the agent does not have outstanding a valid
235-6 appointment to act as an agent for an insurance company described
235-7 in Section 1 of this article. The department may discipline a
235-8 licensee or deny an application under Section 5, Article 21.01-2,
235-9 of this code if it <commissioner of insurance may deny a license
235-10 application and may suspend or revoke a license or deny the renewal
235-11 of a license if, after notice and hearing, the commissioner>
235-12 determines that the license applicant or licensee:
235-13 (1) has intentionally or knowingly violated the
235-14 insurance laws of this state;
235-15 (2) has obtained or attempted to obtain a license by
235-16 fraud or misrepresentation;
235-17 (3) has misappropriated, converted, or illegally
235-18 withheld money belonging to an insurer or an insured or
235-19 beneficiary;
235-20 (4) <has otherwise demonstrated lack of
235-21 trustworthiness or competence to act as an insurance agent;>
235-22 <(5)> has been guilty of fraudulent or dishonest acts;
235-23 (5) <(6)> has materially misrepresented the terms and
235-24 conditions of an insurance policy or contract;
235-25 (6) <(7)> has made or issued or caused to be made or
235-26 issued any statement misrepresenting or making incomplete
235-27 comparisons regarding the terms or conditions of an insurance
236-1 contract legally issued by an insurance carrier for the purpose of
236-2 inducing or attempting to induce the owner of the contract to
236-3 forfeit or surrender the contract or allow the contract to expire
236-4 or for the purpose of replacing the contract with another contract;
236-5 (7) <(8)> has been convicted of a felony; or
236-6 (8) <(9)> is guilty of rebating an insurance premium
236-7 or discriminating between insureds.
236-8 SECTION 10.47. Article 21.15, Insurance Code, is amended to
236-9 read as follows:
236-10 Art. 21.15. Revocation of Agent's Certificate. Cause for
236-11 the discipline under Section 5, Article 21.01-2, of this code
236-12 <revocation of the certificate of authority> of an agent or
236-13 solicitor for an insurance company may exist <for violation of any
236-14 of the insurance laws, or> if <it shall appear to the Board upon
236-15 due proof, after notice that> such agent or solicitor has knowingly
236-16 deceived or defrauded a policyholder or a person having been
236-17 solicited for insurance<,> or <that such agent or solicitor> has
236-18 unreasonably failed and neglected to pay over to the company, or
236-19 its agent entitled thereto, any premium or part thereof collected
236-20 by him on any policy of insurance or application therefor. The
236-21 Board shall publish such revocation in such manner as it deems
236-22 proper for the protection of the public; and no person whose
236-23 certificate of authority as agent or solicitor has been revoked
236-24 shall be entitled to again receive a certificate of authority as
236-25 such agent or solicitor for any insurance company in this State for
236-26 a period of one year.
236-27 SECTION 10.48. Article 21.35B(a), Insurance Code, is amended
237-1 to read as follows:
237-2 (a) No payment may be solicited or collected by an insurer,
237-3 its agent, or sponsoring organization in connection with an
237-4 application for insurance or the issuance of a policy other than
237-5 premiums, taxes, finance charges, policy fees, agent fees, service
237-6 fees, inspection fees, or membership dues in a sponsoring
237-7 organization. The commissioner by rule shall permit sponsoring
237-8 organizations to solicit voluntary contributions with an initial
237-9 membership solicitation or a membership renewal solicitation when
237-10 the membership renewal solicitation is separate from an insurance
237-11 billing.
237-12 SECTION 10.49. Section (c), Article 23.23, Insurance Code,
237-13 is amended to read as follows:
237-14 (c) Except as may be provided by a staggered renewal system
237-15 adopted under Section 2(f), Article 21.01-2 <section (h)> of this
237-16 code <article>, each license issued to agents of corporations
237-17 complying with this chapter shall expire two years following the
237-18 date of issue, unless prior thereto it is suspended or revoked by
237-19 the Commissioner of Insurance or the authority of the agent to act
237-20 for the corporation complying with this chapter is terminated.
237-21 SECTION 10.50. The following laws are repealed:
237-22 (1) Section 4(e), Article 1.14-2, Insurance Code;
237-23 (2) Sections 5, 6, and 7, Article 9.36, Insurance
237-24 Code;
237-25 (3) Section C, Article 9.37, Insurance Code;
237-26 (4) Sections 2, 3, and 4, Article 9.42, Insurance
237-27 Code;
238-1 (5) Section 3, Article 9.44, Insurance Code;
238-2 (6) Sections 6(d), (e), (f), and (g) and Section 8(c),
238-3 Article 9.56, Insurance Code;
238-4 (7) Sections 15(h), (i), (j), (k), and (l), Texas
238-5 Health Maintenance Organization Act (Section 20A.15, Vernon's Texas
238-6 Insurance Code);
238-7 (8) Section 15A(j), Texas Health Maintenance
238-8 Organization Act (Section 20A.15A, Vernon's Texas Insurance Code);
238-9 (9) Sections 4(e) and (f), Article 21.07, Insurance
238-10 Code;
238-11 (10) Section 10(b), Article 21.07, Insurance Code;
238-12 (11) Sections 3A and 15A, Article 21.07, Insurance
238-13 Code;
238-14 (12) Sections 5(e), 9(d) and (e), and 12(b), Chapter
238-15 213, Acts of the 54th Legislature, Regular Session, 1955 (Article
238-16 21.07-1, Vernon's Texas Insurance Code);
238-17 (13) Section 5A, Managing General Agents' Licensing
238-18 Act (Article 21.07-3, Vernon's Texas Insurance Code);
238-19 (14) Sections 16(c), (d), and (e), Chapter 407, Acts
238-20 of the 63rd Legislature, Regular Session, 1973 (Article 21.07-4,
238-21 Vernon's Texas Insurance Code);
238-22 (15) Sections 3(j) and (k), Article 21.07-7, Insurance
238-23 Code;
238-24 (16) Article 21.13, Insurance Code;
238-25 (17) Sections 7a and 17, Article 21.14, Insurance
238-26 Code;
238-27 (18) Sections 6(f) and (h), Article 21.14-1, Insurance
239-1 Code; and
239-2 (19) Sections (g), (h), (i), (j), (k), and (l),
239-3 Article 23.23, Insurance Code.
239-4 SECTION 10.51. (a) The change in law made by this article
239-5 to Section 4A, Article 21.07, Insurance Code, does not affect the
239-6 validity of a license issued under that section on or before the
239-7 effective date of this Act.
239-8 (b) A person who holds a license issued under Section 4A,
239-9 Article 21.07, Insurance Code, on or before the effective date of
239-10 this Act may renew that license in accordance with Article 21.07,
239-11 Insurance Code, as amended by this Act. On renewal, the license
239-12 shall be conformed to Section 4A, Article 21.07, Insurance Code, as
239-13 amended by this Act, and a new license shall be issued in
239-14 conformity with Section 4A(e), Article 21.07, Insurance Code, as
239-15 amended by this Act.
239-16 SECTION 10.52. This article applies only to issuance or
239-17 renewal of a license or discipline of a license holder on or after
239-18 September 1, 1993. Issuance or renewal of a license or discipline
239-19 of a license holder before September 1, 1993, is governed by the
239-20 law in effect immediately before the effective date of this Act,
239-21 and that law is continued in effect for that purpose.
239-22 ARTICLE 11. ADMISSION OF INSURERS ORGANIZED UNDER
239-23 LAWS OF ANOTHER STATE OR FOREIGN COUNTRY
239-24 SECTION 11.01. Article 3.01, Insurance Code, is amended to
239-25 read as follows:
239-26 Art. 3.01. Terms Defined
239-27 Section 1. A life insurance company shall be deemed to be a
240-1 corporation doing business under any charter involving the payment
240-2 of money or other thing of value, conditioned on the continuance or
240-3 cessation of human life, or involving an insurance, guaranty,
240-4 contract or pledge for the payment of endowments or annuities.
240-5 Sec. 2. An accident insurance company shall be deemed to be
240-6 a corporation doing business under any charter involving the
240-7 payment of money or other thing of value, conditioned upon the
240-8 injury, disablement or death of persons resulting from traveling or
240-9 general accidents by land or water.
240-10 Sec. 3. A health insurance company shall be deemed to be a
240-11 corporation doing business under any charter involving the payment
240-12 of any amount of money, or other thing of value, conditioned upon
240-13 loss by reason of disability due to sickness or ill-health.
240-14 Sec. 4. When consistent with the context and not obviously
240-15 used in a different sense, the term "company," or "insurance
240-16 company," as used herein, includes all corporations engaged as
240-17 principals in the business of life, accident or health insurance.
240-18 Sec. 5. The term "domestic" company, as used herein,
240-19 designates those life, accident or life and accident, health and
240-20 accident, or life, health and accident insurance companies
240-21 incorporated and formed in this State.
240-22 Sec. 6. The term "foreign company" means any life, accident
240-23 or health insurance company organized under the laws of any other
240-24 state or territory of the United States <or foreign country>.
240-25 Sec. 7. The term "alien company" means any life, accident or
240-26 health insurance company organized under the laws of any foreign
240-27 country.
241-1 Sec. 8. The term "home office" of a company means its
241-2 principal office within the state or country in which it is
241-3 incorporated and formed.
241-4 Sec. 9. <8.> The "insured" or "policyholder" is the person
241-5 on whose life a policy of insurance is effected.
241-6 Sec. 10. <9.> The "beneficiary" is the person to whom a
241-7 policy of insurance effected is payable.
241-8 Sec. 11. <10.> By the term "net assets" is meant the funds
241-9 of the company available for the payment of its obligations in this
241-10 state, including but not limited to:
241-11 (a) Uncollected premiums not more than three (3) months past
241-12 due and deferred premiums on policies actually in force, after
241-13 deducting from such funds all unpaid losses and claims and claims
241-14 for losses, and all other debts, exclusive of capital stock; and
241-15 (b) All electronic machines, constituting a data-processing
241-16 system or systems, and all other office equipment, furniture,
241-17 machines and labor-saving devices heretofore or hereafter purchased
241-18 for and used in connection with the business of an insurance
241-19 company to the extent that the total actual cash market value of
241-20 all of such systems, equipment, furniture, machines and devices
241-21 constitute not more than ten percent (10%) of the otherwise
241-22 admitted assets of such company; and provided further, that the
241-23 total value of all such property of a company must exceed Two
241-24 Thousand Dollars ($2,000), to qualify hereunder.
241-25 (c) The Commissioner of Insurance may adopt regulations
241-26 defining electronic machines and systems, office equipment,
241-27 furniture, machines and labor-saving devices as used in subsection
242-1 (b), and provide for the maximum period for which each such class
242-2 of equipment may be amortized.
242-3 (d) Companies regulated by the provisions of Chapter 14 of
242-4 this Insurance Code, same being local mutual aid associations,
242-5 local mutual burial associations and state-wide mutual assessment
242-6 corporations, and companies regulated by the provisions of Chapter
242-7 22 of this Insurance Code, same being stipulated premium companies,
242-8 may include among their admitted assets any asset herein designated
242-9 as "net assets" except that companies regulated by the provisions
242-10 of Chapter 14 of this Code may only include the same within the
242-11 assets of the expense fund of any such company.
242-12 Sec. 12. <11.> The "profits" of a company are that portion
242-13 of its funds not required for the payment of losses and expenses,
242-14 nor set apart for any other purpose required by law.
242-15 Sec. 13. The term "United States branch" means:
242-16 (a) the business unit through which business is transacted
242-17 within the United States by an alien insurer;
242-18 (b) the assets and liabilities of the insurer within the
242-19 United States relating to that business;
242-20 (c) the management powers relating to that business and to
242-21 the assets and liabilities; or
242-22 (d) any combination of that business unit, or those assets
242-23 and liabilities and management powers.
242-24 SECTION 11.02. Subchapter B, Chapter 3, Insurance Code, is
242-25 amended to read as follows:
242-26 SUBCHAPTER B. FOREIGN OR ALIEN COMPANIES
242-27 Art. 3.20. SCOPE. This subchapter applies to a life
243-1 insurance company, accident insurance company, life and accident,
243-2 health and accident, or life, health, and accident insurance
243-3 company that is incorporated under the laws of any other state,
243-4 territory or country, and that desires to transact the business of
243-5 that insurance in this state.
243-6 Art. 3.20-1. Statement to be Filed. (a) A foreign or alien
243-7 <Any> life insurance company, or accident insurance company, or
243-8 life and accident, health and accident, or life, health and
243-9 accident insurance company, incorporated under the laws of any
243-10 other state, territory or country, desiring to transact the
243-11 business of such insurance in this State, shall furnish the Texas
243-12 Department <said Board> of Insurance <Commissioners> with a written
243-13 or printed statement under oath of the president or vice president,
243-14 or treasurer and secretary of such company which statement shall
243-15 show:
243-16 1. The name and locality of the company.
243-17 2. The amount of its capital stock.
243-18 3. The amount of its capital stock paid up.
243-19 4. The assets of the company, including: first, the
243-20 amount of cash on hand and in the hands of other persons, naming
243-21 such persons and their residence; second, real estate unincumbered,
243-22 where situated and its value; third, the bonds owned by the company
243-23 and how they are secured, with the rate of interest thereon;
243-24 fourth, debts due the company secured by mortgage, describing the
243-25 property mortgaged and its market value; fifth, debts otherwise
243-26 secured, stating how secured; sixth, debts for premiums; seventh,
243-27 all other moneys and securities.
244-1 5. Amount of liabilities of the company, stating the
244-2 name of the person or corporation to whom liable.
244-3 6. Losses adjusted and due.
244-4 7. Losses adjusted and not due.
244-5 8. Losses adjusted.
244-6 9. Losses in suspense and for what cause.
244-7 10. All other claims against the company, describing
244-8 the same.
244-9 (b) The department <Board of Insurance Commissioners> may
244-10 require any additional facts to be shown by such annual statement.
244-11 (c) Each foreign <such> company shall be required to file a
244-12 similar statement not later than March 1 of each year.
244-13 (d) Each alien company shall be required to file a financial
244-14 statement as provided by Article 3.27-2 of this subchapter.
244-15 Art. 3.21. Articles of Incorporation to be Filed. Each <Any
244-16 such> foreign or alien insurance company shall accompany the
244-17 statement required in the foregoing article with a certified copy
244-18 of its acts or articles of incorporation, and all amendments
244-19 thereto, and a copy of its by-laws, together with the name and
244-20 residence of each of its officers and directors. The same shall be
244-21 certified under the hand of the president or secretary of such
244-22 company.
244-23 Art. 3.22. Capital Stock and Surplus Requirements. No
244-24 <such> foreign or alien stock insurance company shall be licensed
244-25 by the department <Board of Insurance Commissioners> or shall
244-26 transact any such business of insurance in this State unless such
244-27 company is possessed of not less than the minimum capital and
245-1 surplus required by this chapter of a similar domestic company in
245-2 similar circumstances, including the same character of investments
245-3 for its minimum capital and surplus. No <such> foreign or alien
245-4 mutual insurance company shall be licensed by the department <Board
245-5 of Insurance Commissioners> or shall transact any such business of
245-6 insurance in this State unless such company is possessed of not
245-7 less than the minimum free surplus required by Chapter 11 of this
245-8 Code of a similar domestic company in similar circumstances
245-9 including the same character of investments for its minimum free
245-10 surplus.
245-11 Art. 3.23. <FOREIGN> COMPANIES TO DEPOSIT. (a) No alien
245-12 <such foreign> insurance company <incorporated by or organized
245-13 under the laws of any foreign government,> shall transact business
245-14 in this State, unless it shall first deposit and keep deposited
245-15 with the Treasurer of this State, for the benefit of the
245-16 policyholders of such company, citizens or residents of the United
245-17 States, bonds or securities of the United States or the State of
245-18 Texas in an <to the> amount at least equal to:
245-19 (1) the minimum capital required to be maintained by a
245-20 domestic stock insurer licensed to transact the same kind of
245-21 insurance; or
245-22 (2) one-half the minimum free surplus required to be
245-23 maintained by a domestic mutual insurer licensed to transact the
245-24 same kind of insurance <of One Hundred Thousand ($100,000.00)
245-25 Dollars>.
245-26 (b) On approval by the commissioner in accordance with
245-27 Article 3.27-1 of this code, a licensed alien insurer may be
246-1 permitted to deposit assets with a trustee for the security of its
246-2 policyholders in the United States instead of making the deposit
246-3 with the state treasurer required under Subsection (a) of this
246-4 article if those assets are securities or bonds of the United
246-5 States or this state and are maintained in accordance with Article
246-6 3.27-1 of this code.
246-7 Art. 3.24. Deposit Liable for Judgment. The deposit
246-8 required by Article 3.23 of this code <the preceding article> shall
246-9 be held liable to pay the judgments of policyholders of that
246-10 insurer in the United States <such company>, and may be so decreed
246-11 by the court adjudicating the same. The deposit shall be
246-12 maintained as long as any liability of the insurer arising out of
246-13 its insurance transactions in the United States remains
246-14 outstanding.
246-15 Art. 3.24-1. Certificate of Authority. When a foreign or
246-16 alien company has complied with the requirements of this Subchapter
246-17 and all other requirements imposed on such company by law and has
246-18 paid any deposit imposed by law, and the operational history of the
246-19 company when reviewed in conjunction with its loss experience, the
246-20 kinds and nature of risks insured, the financial condition of the
246-21 company and its ownership, its proposed method of operation, its
246-22 affiliations, its investments, any contracts leading to contingent
246-23 liability or agreements in respect to guaranty and surety, other
246-24 than insurance, and the ratio of total annual premium and net
246-25 investment income to commission expenses, general insurance
246-26 expenses, policy benefits paid and required policy reserve
246-27 increases, indicates a condition such that the expanded operation
247-1 of the company in this State or its operations outside this State
247-2 will not create a condition which might be hazardous to its
247-3 policyholders, creditors or the general public, the Commissioner
247-4 shall file in the office the documents delivered to him and shall
247-5 issue to the company a certificate of authority to transact in this
247-6 State the kind or kinds of business specified therein. Such
247-7 certificate shall continue in full force and effect upon the
247-8 condition that the company shall continue to comply with the laws
247-9 of this State.
247-10 Art. 3.25. Law Deemed Accepted. Each life insurance company
247-11 not organized under the laws of this State, hereafter granted a
247-12 certificate of authority to transact business in this State, shall
247-13 be deemed to have accepted such certificate and to transact such
247-14 business hereunder subject to the conditions and requirements that,
247-15 after it shall cease to transact new business in this State under a
247-16 certificate of authority, and so long as it shall continue to
247-17 collect renewal premiums from citizens of this State, it shall be
247-18 subject to the payment of the same occupation tax in proportion to
247-19 its gross premiums during any year, from citizens of this State, as
247-20 is or may be imposed by law on such companies transacting new
247-21 business within this State, under certificates of authority during
247-22 such year. The rate of such tax to be so paid by any such company
247-23 shall never exceed the rate imposed by law upon insurance companies
247-24 transacting business in this State. Each such company shall make
247-25 the same reports of its gross premium receipts for each such year
247-26 and within the same period as is or may be required of such
247-27 companies holding certificates of authority and shall at all times
248-1 be subject to examination by the Texas Department <Board> of
248-2 Insurance <Commissioners> or some one selected by it for that
248-3 purpose, in the same way and to the same extent as is or may be
248-4 required of companies transacting new business under certificates
248-5 of authority in this State, the expenses of such examination to be
248-6 paid by the company examined. The respective duties of the Board
248-7 in certifying to the amount of such taxes and of the State
248-8 Treasurer and Attorney General in their collection shall be the
248-9 same as are or may be prescribed respecting taxes due from
248-10 companies authorized to transact new business within this State.
248-11 Art. 3.26. WHEN ALIEN <FOREIGN> COMPANIES NEED NOT DEPOSIT.
248-12 If the deposit required by Article 3.23 of this code has been made
248-13 in any State of the United States, under the laws of such State, in
248-14 such manner as to secure equally all the policyholders of such
248-15 Company who are citizens and residents of the United States, then
248-16 no deposit shall be required in this State; but a certificate of
248-17 such deposit under the hand and seal of the officer of such other
248-18 State with whom the same has been made shall be filed with the
248-19 department <Board of Insurance Commissioners>.
248-20 Art. 3.27. Companies Desiring to Loan Money. Any life
248-21 insurance company not desiring to engage in the business of writing
248-22 life insurance in this State, but desiring to loan its funds in
248-23 this State, may obtain a permit to do so from the Secretary of
248-24 State by complying with the laws of this State relating to foreign
248-25 corporations engaged in loaning money in this State, without being
248-26 required to secure a certificate of authority to write life
248-27 insurance in this State.
249-1 Art. 3.27-1. TRUSTEED ASSETS OF ALIEN INSURER. (a) The
249-2 assets that an authorized alien insurer is required or permitted by
249-3 this subchapter to deposit with a trustee for the security of its
249-4 policyholders in the United States shall be known as "trusteed
249-5 assets." All trusteed assets shall be kept continuously in the
249-6 United States, and the trusteed assets of an alien insurer entering
249-7 the United States through this state shall be kept continuously in
249-8 this state.
249-9 (b) The deed of trust and all amendments to the deed of
249-10 trust of the insurer shall be authenticated in the form and manner
249-11 prescribed by the commissioner, and do not take effect unless
249-12 approved by the commissioner.
249-13 (c) The commissioner shall approve a deed of trust if the
249-14 commissioner finds:
249-15 (1) the deed of trust or its amendments are sufficient
249-16 in form and are in conformity with applicable law;
249-17 (2) the trustee is eligible to serve as a trustee
249-18 under this subchapter; and
249-19 (3) the deed of trust is adequate to protect the
249-20 interests of the beneficiaries of the trust.
249-21 (d) If, after notice and hearing, the commissioner finds
249-22 that the requirements for approval of the deed of trust no longer
249-23 exist, the commissioner may withdraw approval.
249-24 (e) The commissioner may from time to time approve
249-25 modifications or variations of a deed of trust that in the
249-26 commissioner's judgment are in the best interests of the
249-27 policyholders of the alien insurer in the United States.
250-1 (f) The deed of trust must include provisions that:
250-2 (1) vest legal title to trusteed assets in the trustee
250-3 and lawfully appointed successors to the trustee, in trust for the
250-4 security of all policyholders of the alien insurer in the United
250-5 States;
250-6 (2) provide for substitution of a new trustee in the
250-7 event of vacancy by death, resignation, or other incapacity,
250-8 subject to the approval of the commissioner; and
250-9 (3) require that the trustee continuously maintain a
250-10 record at all times sufficient to identify the assets of the trust
250-11 fund.
250-12 (g) The deed of trust may provide that income, earnings,
250-13 dividends, or interest accumulations of the assets of the trust
250-14 fund may be paid to the United States manager of the alien insurer,
250-15 on request.
250-16 (h) The deed of trust must provide that a withdrawal of
250-17 assets, other than income as specified in Subsection (g) of this
250-18 article, may not be made or permitted by the trustee without prior
250-19 written approval of the commissioner, except a withdrawal to:
250-20 (1) make deposits required by law in any state for the
250-21 security or benefit of all policyholders of the alien insurer in
250-22 the United States;
250-23 (2) substitute other assets as permitted by law and at
250-24 least equal in value to those withdrawn, on the specific written
250-25 direction of the United States manager or an assistant United
250-26 States manager when duly empowered and acting under either general
250-27 or specific written authority previously given or delegated by the
251-1 board of directors; or
251-2 (3) transfer the assets to an official liquidator or
251-3 rehabilitator under an order issued by a court of competent
251-4 jurisdiction.
251-5 (i) On withdrawal of trusteed assets deposited in another
251-6 state in which the insurer is authorized to do business, the deed
251-7 of trust may require similar written approval of the insurance
251-8 supervising official of that state instead of approval by the
251-9 commissioner as required under Subsection (h) of this article. In
251-10 such a case, the alien insurer shall notify the commissioner in
251-11 writing of the nature and extent of the withdrawal.
251-12 Art. 3.27-2. TRUSTEED SURPLUS OF ALIEN INSURERS. (a) Each
251-13 authorized alien insurer shall file with the department not later
251-14 than March 1 of each year on a form prescribed by the commissioner
251-15 a financial statement showing, as of last year's end, the
251-16 following:
251-17 (1) all its general deposits of assets in the United
251-18 States that are deposited with officers of any state in trust for
251-19 the exclusive benefit, security, and protection of its
251-20 policyholders in the United States;
251-21 (2) all its special deposits of assets in the United
251-22 States that are deposited with officers of any state in trust for
251-23 the exclusive benefit, security, and protection of its
251-24 policyholders in a particular state;
251-25 (3) all its trusteed assets in the United States that
251-26 are held by a trustee for the exclusive benefit, security, and
251-27 protection of all its policyholders in the United States;
252-1 (4) the amount of its policy loans to policyholders in
252-2 the United States, not exceeding the amount of the legal reserve
252-3 required on each policy;
252-4 (5) all its reserves and other liabilities that arise
252-5 out of policies or obligations issued, assumed, or incurred in the
252-6 United States; and
252-7 (6) any additional information determined by the
252-8 commissioner to be necessary to implement this article.
252-9 (b) In determining the net amount of an alien insurer's
252-10 liabilities in the United States, a deduction may be made for:
252-11 (1) reinsurance on losses with insurers qualifying for
252-12 credit, less unpaid reinsurance premiums, with a schedule showing
252-13 by company the amount deducted; and
252-14 (2) unearned premiums on agents' balances or
252-15 uncollected premiums not more than 90 days past due.
252-16 (c) Any liability on an asset not considered in the
252-17 financial statement may be applied against that asset.
252-18 (d) A credit may not be allowed in the financial statement
252-19 for a special state deposit held for the exclusive benefit of
252-20 policyholders of a particular state except as an offset against the
252-21 liabilities of the alien insurer in that state.
252-22 (e) The accrued interest at the date of the financial
252-23 statement on assets deposited with states and trustees shall be
252-24 allowed in the statement if the interest is collected by the states
252-25 or trustees.
252-26 (f) The aggregate value of the insurer's general state
252-27 deposits and trusteed assets less the aggregate net amount of all
253-1 its liabilities and reserves in the United States as determined in
253-2 accordance with this section shall be known as its "trusteed
253-3 surplus" in the United States. If it appears to the commissioner
253-4 from a financial statement or a report that an alien insurer's
253-5 trusteed surplus is reduced below the greater of minimum capital
253-6 required of, or the minimum surplus required to be maintained by, a
253-7 domestic insurer licensed to transact the same kinds of insurance,
253-8 the commissioner shall determine the amount of the impairment and
253-9 shall order the insurer, through its United States manager or
253-10 attorney, to eliminate the impairment within a period designated by
253-11 the commissioner, but not more than 90 days after the date of
253-12 service of the order. The commissioner by order may also revoke or
253-13 suspend the insurer's license or prohibit it from issuing new
253-14 policies in the United States while the impairment exists. If at
253-15 the expiration of the designated period, the insurer has not
253-16 satisfied the commissioner that the impairment has been eliminated,
253-17 the commissioner may proceed against the insurer under Article
253-18 21.28-A of this code as an insurer whose further transaction of the
253-19 business of insurance in the United States will be hazardous to its
253-20 policyholders in the United States.
253-21 (g) The trusteed surplus statement shall be signed and
253-22 verified by the United States manager, attorney-in-fact, or a duly
253-23 empowered assistant United States manager of the alien insurer.
253-24 The items of securities and other property held under trust deeds
253-25 shall be certified by the United States trustee. The commissioner
253-26 may at any time and for any period determined necessary require
253-27 further statements of the same kind.
254-1 Art. 3.27-3. EXAMINATION OF ALIEN INSURERS. (a) The books,
254-2 records, accounting, and verification relating to the trusteed
254-3 assets of an authorized alien insurer are subject to examination by
254-4 the department or the department's representative at the United
254-5 States branch office of the insurer, in the same manner and to the
254-6 same extent as an examination under Articles 1.15 and 1.16 of this
254-7 code of domestic and foreign insurers licensed to transact the same
254-8 kind of insurance.
254-9 (b) The books, records, and accounting for trusteed assets
254-10 shall be kept and maintained, in English, in the Texas branch
254-11 office of any alien insurer entering the United States through this
254-12 state.
254-13 SECTION 11.03. Article 21.43, Insurance Code, is amended to
254-14 read as follows:
254-15 Art. 21.43. FOREIGN OR ALIEN INSURANCE CORPORATIONS
254-16 Sec. 1. DEFINITIONS. In this article:
254-17 (1) "Foreign insurance corporation" means an insurance
254-18 company organized under the laws of any other state or territory of
254-19 the United States, other than an insurance company subject to
254-20 Subchapter B, Chapter 3, of this code.
254-21 (2) "Alien insurance corporation" means an insurance
254-22 company organized under the laws of a foreign country, other than
254-23 one subject to Subchapter B, Chapter 3, of this code.
254-24 (3) "United States branch" means:
254-25 (A) the business unit through which business is
254-26 transacted within the United States by an alien insurer;
254-27 (B) the assets and liabilities of the insurer
255-1 within the United States relating to that business;
255-2 (C) the management powers relating to that
255-3 business and to the assets and liabilities; or
255-4 (D) any combination of that business unit, those
255-5 assets and liabilities, and management powers.
255-6 Sec. 2. SCOPE. This article applies to an insurance
255-7 corporation incorporated under the laws of another state,
255-8 territory, or country, that desires to transact the business of
255-9 insurance in this state, other than a corporation subject to
255-10 Subchapter B, Chapter 3, of this code.
255-11 Sec. 3. CERTIFICATE OF AUTHORITY REQUIRED. (a) It is
255-12 unlawful, except as provided by Articles 1.14-1 and 1.14-2 of this
255-13 code, for any foreign insurance corporation or alien insurance
255-14 corporation of the type provided for in any chapter of this code to
255-15 engage in the business of insuring others against losses that may
255-16 be insured against under the laws of this state without initially
255-17 procuring a certificate of authority from the commissioner of
255-18 insurance permitting the corporation to engage in those business
255-19 activities.
255-20 (b) This article does not prohibit a foreign insurer from
255-21 reinsuring a domestic insurer or prohibit the location in this
255-22 state of a company that does not directly insure either persons
255-23 domiciled in this state or other risks located in this state.
255-24 Sec. 4. ANNUAL FINANCIAL STATEMENT TO BE FILED. (a) A
255-25 foreign or alien insurance corporation that desires to transact the
255-26 business of insurance in this state shall furnish to the Texas
255-27 Department of Insurance copies of its annual financial statements
256-1 for the two most recent years that are certified by the
256-2 commissioner or other insurance supervising official of the state
256-3 or country in which the insurer is organized and incorporated. The
256-4 department may require any additional facts to be shown by that
256-5 annual statement.
256-6 (b) Each foreign insurance corporation shall file a
256-7 statement similar to that required under Subsection (a) of this
256-8 section not later than March 1 of each year.
256-9 (c) Each alien insurance corporation shall file a financial
256-10 statement as provided by Section 11 of this article.
256-11 Sec. 5. ARTICLES OF INCORPORATION TO BE FILED. A foreign
256-12 or alien insurance corporation shall accompany the statement
256-13 required under Section 4 of this article with a certified copy of
256-14 its acts or articles of incorporation, all amendments to the acts
256-15 or articles of incorporation, and a copy of its by-laws, together
256-16 with the name and residence of each of its officers and directors.
256-17 Those documents shall be certified under the hand of the president
256-18 or secretary of the corporation.
256-19 Sec. 6. EXAMINATION REQUIRED. Before issuing a certificate
256-20 of authority to do business in this state to a foreign or alien
256-21 insurance corporation, the commissioner shall either conduct an
256-22 examination of the insurer at the expense of the insurer at its
256-23 principal office in the United States, or accept a report of an
256-24 examination made by the insurance department or other insurance
256-25 supervisory official of any other state, or of any government of a
256-26 foreign country.
256-27 Sec. 7. ALIEN CORPORATIONS TO DEPOSIT. (a) An alien
257-1 insurance corporation may not transact business in this state
257-2 unless it first deposits and keeps deposited with the treasurer of
257-3 this state, for the benefit of the policyholders of the corporation
257-4 who are citizens or residents of the United States, bonds or
257-5 securities of the United States or of this state in an amount at
257-6 least equal to:
257-7 (1) the minimum capital required to be maintained by a
257-8 domestic stock insurer licensed to transact the same kind of
257-9 insurance; or
257-10 (2) one-half the minimum free surplus required to be
257-11 maintained by a domestic mutual insurer licensed to transact the
257-12 same kind of insurance.
257-13 (b) On approval by the commissioner in accordance with
257-14 Section 10 of this article, a licensed alien insurer may be
257-15 permitted to deposit assets with a trustee for the security of its
257-16 policyholders in the United States instead of making the deposit
257-17 with the state treasurer required under Subsection (a) of this
257-18 article if those assets are composed of securities or bonds of the
257-19 United States or this state and are maintained in accordance with
257-20 Section 10 of this article.
257-21 (c) If the deposit required by Subsection (a) of this
257-22 section has been made in any state of the United States, under the
257-23 laws of that state, in a manner that secures equally all the
257-24 policyholders of the corporation who are citizens or residents of
257-25 the United States, a deposit in this state is not required, but a
257-26 certificate of the deposit under the hand and seal of the officer
257-27 of the state with whom the deposit has been made must be filed with
258-1 the department.
258-2 Sec. 8. PURPOSE AND DURATION OF DEPOSIT. The deposit
258-3 required by Section 7 of this article shall be for the exclusive
258-4 benefit, security, and protection of policyholders of the insurer
258-5 in the United States. The deposit shall be maintained as long as
258-6 any liability of the insurer arising out of its insurance
258-7 transactions in the United States remains outstanding.
258-8 Sec. 9. LAW DEEMED ACCEPTED. The provisions of this code
258-9 are conditions under which a foreign or alien insurance corporation
258-10 is permitted to conduct the business of insurance in this state,
258-11 and any foreign or alien corporation engaged in issuing contracts
258-12 or policies in this state is considered to have agreed to comply
258-13 fully with those provisions as a prerequisite to the right to
258-14 engage in business in this state.
258-15 Sec. 10. TRUSTEED ASSETS OF ALIEN INSURANCE CORPORATION.
258-16 (a) The assets that an authorized alien insurance corporation is
258-17 required or permitted by this article to deposit with a trustee for
258-18 the security of its policyholders in the United States shall be
258-19 known as "trusteed assets." All trusteed assets shall be kept
258-20 continuously in the United States, and the trusteed assets of an
258-21 alien insurance corporation entering the United States through this
258-22 state shall be kept continuously in this state.
258-23 (b) The deed of trust and all amendments to the deed of
258-24 trust of that insurance corporation shall be authenticated in the
258-25 form and manner prescribed by the commissioner, and do not take
258-26 effect unless approved by the commissioner.
258-27 (c) The commissioner shall approve a deed of trust if the
259-1 commissioner finds:
259-2 (1) the deed of trust or its amendments are sufficient
259-3 in form and are in conformity with applicable law;
259-4 (2) the trustee is eligible to serve as a trustee
259-5 under this article; and
259-6 (3) the deed of trust is adequate to protect the
259-7 interest of the beneficiaries of the trust.
259-8 (d) If, after notice and hearing, the commissioner finds
259-9 that the requirements for approval of the deed of trust no longer
259-10 exist, the commissioner may withdraw approval.
259-11 (e) The commissioner may from time to time approve
259-12 modifications or variations of a deed of trust that in the
259-13 commissioner's judgment are in the best interests of the state.
259-14 (f) The deed of trust must include provisions that:
259-15 (1) vest legal title to trusteed assets in the trustee
259-16 and lawfully appointed successors to the trustee, in trust for the
259-17 security of all policyholders of the alien insurance corporation in
259-18 the United States;
259-19 (2) provide for substitution of a new trustee in the
259-20 event of vacancy by death, resignation, or other incapacity,
259-21 subject to the approval of the commissioner; and
259-22 (3) require that the trustee continuously maintain a
259-23 record at all times sufficient to identify the assets of the trust
259-24 fund.
259-25 (g) The deed of trust may provide that income, earnings,
259-26 dividends, or interest accumulations of the assets of the trust
259-27 fund may be paid to the United States manager of the alien
260-1 insurance corporation, on request.
260-2 (h) The deed of trust must provide that a withdrawal of
260-3 assets, other than income as specified by Subsection (g) of this
260-4 section, may not be made or permitted by the trustee without prior
260-5 written approval of the commissioner, except a withdrawal to:
260-6 (1) make deposits required by law in any state for the
260-7 security or benefit of all policyholders of the alien insurance
260-8 corporation in the United States;
260-9 (2) substitute other assets as permitted by law and at
260-10 least equal in value to those withdrawn, on the specific written
260-11 direction of the United States manager or an assistant United
260-12 States manager when duly empowered and acting under either general
260-13 or specific written authority previously given or delegated by the
260-14 board of directors; or
260-15 (3) transfer the assets to an official liquidator or
260-16 rehabilitator under an order issued by a court of competent
260-17 jurisdiction.
260-18 (i) On withdrawal of trusteed assets deposited in another
260-19 state in which the insurance corporation is authorized to do
260-20 business, the deed of trust may require similar written approval of
260-21 the insurance supervising official of that state instead of
260-22 approval by the commissioner as required under Subsection (h) of
260-23 this section. In such a case, the alien insurance corporation
260-24 shall notify the commissioner in writing of the nature and extent
260-25 of the withdrawal.
260-26 Sec. 11. TRUSTEED SURPLUS OF ALIEN INSURANCE CORPORATION.
260-27 (a) Each authorized alien insurance corporation shall file with
261-1 the department not later than March 1 of each year on a form
261-2 prescribed by the commissioner a financial statement showing, as of
261-3 last year's end, the following:
261-4 (1) all its general deposits of assets in the United
261-5 States that are deposited with officers of any state in trust for
261-6 the exclusive benefit, security, and protection of its
261-7 policyholders in the United States;
261-8 (2) all its special deposits of assets in the United
261-9 States that are deposited with officers of any state in trust for
261-10 the exclusive benefit, security, and protection of its
261-11 policyholders in a particular state;
261-12 (3) all its trusteed assets in the United States that
261-13 are held by a trustee for the exclusive benefit, security, and
261-14 protection of all its policyholders in the United States;
261-15 (4) all its reserves and other liabilities that arise
261-16 out of policies or obligations issued, assumed, or incurred in the
261-17 United States; and
261-18 (5) any additional information determined by the
261-19 commissioner to be necessary to implement this section.
261-20 (b) In determining the net amount of an alien insurance
261-21 corporation's liabilities in the United States, a deduction may be
261-22 made for:
261-23 (1) reinsurance on losses with insurers qualifying for
261-24 credit, less unpaid reinsurance premiums, with a schedule showing
261-25 by company the amount deducted; and
261-26 (2) unearned premiums on agents' balances or
261-27 uncollected premiums not more than 90 days past due.
262-1 (c) Any liability on an asset not considered in the
262-2 financial statement may be applied against that asset.
262-3 (d) A credit may not be allowed in the statement for any
262-4 special state deposit held for the exclusive benefit of
262-5 policyholders of a particular state except as an offset against the
262-6 liabilities of the alien insurance corporation in that state.
262-7 (e) The accrued interest at the date of the financial
262-8 statement on assets deposited with states and trustees shall be
262-9 allowed in the statement if the interest is collected by the states
262-10 or trustees.
262-11 (f) The aggregate value of the insurer's general state
262-12 deposits and trusteed assets less the aggregate net amount of all
262-13 its liabilities and reserves in the United States as determined in
262-14 accordance with this section shall be known as its "trusteed
262-15 surplus" in the United States. If it appears to the commissioner
262-16 from a financial statement or a report that an alien insurance
262-17 corporation's trusteed surplus is reduced below the greater of
262-18 minimum capital required of, or the minimum surplus required to be
262-19 maintained by, a domestic insurer licensed to transact the same
262-20 kinds of insurance, the commissioner shall determine the amount of
262-21 the impairment and shall order the insurance corporation, through
262-22 its United States manager or attorney, to eliminate the impairment
262-23 within a period designated by the commissioner, but not more than
262-24 90 days from service of the order. The commissioner by order may
262-25 also revoke or suspend the alien insurance corporation's license or
262-26 prohibit it from issuing new policies in the United States while
262-27 the impairment exists. If, at the expiration of the designated
263-1 period, the insurance corporation has not satisfied the
263-2 commissioner that the impairment has been eliminated, the
263-3 commissioner may proceed against the insurance corporation under
263-4 Article 21.28-A of this code as an insurer whose further
263-5 transaction of the business of insurance in the United States will
263-6 be hazardous to its policyholders in the United States.
263-7 (g) The trusteed surplus statement shall be signed and
263-8 verified by the United States manager, attorney-in-fact, or a duly
263-9 empowered assistant United States manager of the alien insurance
263-10 corporation. The items of securities and other property held under
263-11 trust deeds shall be certified to by the United States trustee.
263-12 The commissioner may at any time and for any time period determined
263-13 necessary require further statements of the same kind.
263-14 Sec. 12. EXAMINATION OF ALIEN INSURANCE CORPORATIONS. (a)
263-15 The books, records, accounting, and verification relating to the
263-16 trusteed assets of an authorized alien insurance corporation are
263-17 subject to examination by the department or the department's
263-18 representative at the United States branch office of the
263-19 corporation, in the same manner and to the same extent as an
263-20 examination under Articles 1.15 and 1.16 of this code of domestic
263-21 and foreign insurers licensed to transact the same kind of
263-22 insurance.
263-23 (b) The books, records, and accounting for trusteed assets
263-24 shall be kept and maintained, in English, in the Texas branch
263-25 office of any alien insurance corporation entering the United
263-26 States through this state.
263-27 Sec. 13. MISCELLANEOUS PROVISIONS. (a) <It shall be
264-1 unlawful, except as is provided for surplus lines in Articles
264-2 1.14-1 and 1.14-2 of this code, for any foreign insurance
264-3 corporation of the type provided for in any chapter of this code to
264-4 engage in the business of insuring others against losses which may
264-5 be insured against under the laws of this state without initially
264-6 procuring a certificate of authority from the commissioner of
264-7 insurance permitting it to engage in those business activities.>
264-8 <(b) This article does not prohibit a foreign insurer from
264-9 reinsuring a domestic insurer or prohibit the location in Texas of
264-10 a company that does not directly insure either persons domiciled or
264-11 other risks located in this state.>
264-12 <(c) The provisions of this code are conditions on which the
264-13 foreign insurance corporations are permitted to do business in this
264-14 state, and any of the foreign corporations engaged in issuing
264-15 contracts or policies in this state are deemed to have agreed to
264-16 these conditions as a prerequisite to the right to engage in
264-17 business in this state.>
264-18 <(d)> A foreign or alien insurance corporation may not be
264-19 denied permission to do business in this state on the ground that
264-20 all of its authorized capital stock has not been fully subscribed
264-21 and paid for if:
264-22 (1) at least the minimum dollar amount of capital
264-23 stock of the corporation required by the laws of this state (which
264-24 may be less than all of its authorized capital stock) has been
264-25 subscribed and paid for;
264-26 (2) it has at least the minimum dollar amount of
264-27 surplus required by the laws of this state for the kinds of
265-1 business the corporation seeks to write; and
265-2 (3) the corporation has fully complied with the laws
265-3 of its domiciliary state or country relating to authorization and
265-4 issuance of capital stock.
265-5 (b) <(e)> A foreign casualty insurer may not be required to
265-6 make or maintain the deposit required of domestic casualty insurers
265-7 by Article 8.05 of this code if a similar deposit has been made in
265-8 any state of the United States, under the laws of that state, in a
265-9 manner that secures equally all the policyholders of the company
265-10 who are citizens and residents of the United States. A certificate
265-11 of the deposit under the signature and seal of the officer of the
265-12 other state with whom the deposit is made must be filed with the
265-13 department <board>.
265-14 (c) <(f)> A foreign or alien insurance corporation subject
265-15 to this code may not be denied permission to do business in this
265-16 state because the name of the corporation is the same as, or
265-17 deceptively similar to, the name of any domestic corporation
265-18 existing under the laws of this state or of any foreign or alien
265-19 corporation authorized to transact business in this state if the
265-20 foreign or alien insurance corporation:
265-21 (1) files an assumed name certificate setting forth a
265-22 name permitted under the laws of this state with the Texas
265-23 Department <State Board> of Insurance and with any county clerks as
265-24 provided by Section 36.10 or 36.11, Business & Commerce Code; and
265-25 (2) does not transact or conduct any business in this
265-26 state except under the assumed name.
265-27 (d) <(g)> No action on or involving any contract entered
266-1 into in this state between an insurance corporation and a resident
266-2 of this state shall be commenced in or transferred to a court in
266-3 another state without the consent of the resident of this state.
266-4 SECTION 11.04. Article 21.44, Insurance Code, is amended to
266-5 read as follows:
266-6 Art. 21.44. CAPITAL AND SURPLUS REQUIREMENTS FOR FOREIGN OR
266-7 ALIEN INSURANCE COMPANIES <OTHER THAN LIFE>. No foreign or alien
266-8 insurance corporation subject to Article 21.43 of this Code
266-9 <company other than one doing a life insurance business> shall be
266-10 permitted to do business within this State unless it shall have and
266-11 maintain the minimum requirements of this Code as to capital or
266-12 surplus or both, applicable to companies organized under this Code
266-13 doing the same kind or kinds of insurance business.
266-14 ARTICLE 12. REINSURANCE ISSUES
266-15 SECTION 12.01. Article 3.10(a), Insurance Code, is amended
266-16 to read as follows:
266-17 (a) Any insurer authorized to do the business of insurance
266-18 in this state may reinsure in any solvent assuming insurer, any
266-19 risk or part of a risk which both are authorized to assume;
266-20 provided, however, no credit for reinsurance, either as an asset or
266-21 a deduction of liability, may be taken by the ceding insurer except
266-22 as provided in this article, and, provided further, no insurer
266-23 operating under Section 2(a) of Article 3.02 shall reinsure any
266-24 risk or part of a risk with any insurer which is not licensed to
266-25 engage in the business of insurance in this state. This article
266-26 applies to all insurers regulated by the State Board of Insurance,
266-27 including any stock and mutual life, accident, and health insurers,
267-1 fraternal benefit societies, health maintenance organizations
267-2 operating under the Texas Health Maintenance Organization Act
267-3 (Chapter 20A, Vernon's Texas Insurance Code), and nonprofit
267-4 hospital, medical, or dental service corporations, including
267-5 companies subject to Chapter 20 of this code. No such insurer
267-6 shall have the power to reinsure its entire outstanding business to
267-7 an assuming insurer unless the assuming insurer is licensed in this
267-8 state and until the contract therefor shall be submitted to the
267-9 Commissioner and approved by him as protecting fully the interests
267-10 of all policy holders. This article does not apply to ceding
267-11 insurers domiciled in another state that regulates credit for
267-12 reinsurance under statutes, rules, or regulations substantially
267-13 similar in substance or effect to this article. To qualify for
267-14 this exception, the ceding insurer must provide the Commissioner on
267-15 request with evidence of the similarity in the form of statutes,
267-16 rules, or regulations, and an interpretation of the statutes,
267-17 rules, or regulations and the standards used by the state of
267-18 domicile. This article is supplementary to and cumulative of other
267-19 provisions of this code and other insurance laws of this state
267-20 relating to reinsurance to the extent those provisions are not in
267-21 conflict with this article.
267-22 SECTION 12.02. Section 2(c), Article 4.11, Insurance Code,
267-23 is amended to read as follows:
267-24 (c) "Gross premiums" are the total gross amount of all
267-25 premiums, membership fees, assessments, dues, and any other
267-26 considerations for such insurance received during the taxable year
267-27 on each and every kind of such insurance policy or contract
268-1 covering persons located in the State of Texas and arising from the
268-2 types of insurance specified in Section 1 of this article, but
268-3 deducting returned premiums, any dividends applied to purchase
268-4 paid-up additions to insurance or to shorten the endowment or
268-5 premium payment period, and excluding those premiums received from
268-6 insurance carriers for reinsurance and there shall be no deduction
268-7 for premiums paid for reinsurance. For purposes of this article, a
268-8 stop-loss or excess loss insurance policy issued to a health
268-9 maintenance organization, as defined under the Texas Health
268-10 Maintenance Organization Act (Chapter 20A, Vernon's Texas Insurance
268-11 Code), shall be considered reinsurance. Such gross premiums shall
268-12 not include premiums received from the Treasury of the State of
268-13 Texas or from the Treasury of the United States for insurance
268-14 contracted for by the state or federal government for the purpose
268-15 of providing welfare benefits to designated welfare recipients or
268-16 for insurance contracted for by the state or federal government in
268-17 accordance with or in furtherance of the provisions of Title 2,
268-18 Human Resources Code, or the Federal Social Security Act. The
268-19 gross premiums receipts so reported shall not include the amount of
268-20 premiums paid on group health, accident, and life policies in which
268-21 the group covered by the policy consists of a single nonprofit
268-22 trust established to provide coverage primarily for municipal or
268-23 county employees of this state.
268-24 SECTION 12.03. Section 6(a), Texas Health Maintenance
268-25 Organization Act (Article 20A.06, Vernon's Texas Insurance Code),
268-26 is amended to read as follows:
268-27 (a) The powers of a health maintenance organization include,
269-1 but are not limited to, the following:
269-2 (1) the purchase, lease, construction, renovation,
269-3 operation, or maintenance of hospitals, medical facilities, or
269-4 both, and ancillary equipment and such property as may reasonably
269-5 be required for its principal office or for such other purposes as
269-6 may be necessary in the transaction of the business of the health
269-7 maintenance organization;
269-8 (2) the making of loans to a medical group, under an
269-9 independent contract with it in furtherance of its program, or
269-10 corporations under its control, for the purpose of acquiring or
269-11 constructing medical facilities and hospitals, or in the
269-12 furtherance of a program providing health care services to
269-13 enrollees;
269-14 (3) the furnishing of or arranging for medical care
269-15 services only through physicians or groups of physicians who have
269-16 independent contracts with the health maintenance organizations;
269-17 the furnishing of or arranging for the delivery of health care
269-18 services only through providers or groups of providers who are
269-19 under contract with or employed by the health maintenance
269-20 organization or through physicians or providers who have contracted
269-21 for health care services with those physicians or providers, except
269-22 for the furnishing of or authorization for emergency services,
269-23 services by referral, and services to be provided outside of the
269-24 service area as approved by the commissioner; provided, however,
269-25 that a health maintenance organization is not authorized to employ
269-26 or contract with physicians or providers in any manner which is
269-27 prohibited by any licensing law of this state under which such
270-1 physicians or providers are licensed;
270-2 (4) the contracting with any person for the
270-3 performance on its behalf of certain functions such as marketing,
270-4 enrollment, and administration;
270-5 (5) the contracting with an insurance company licensed
270-6 in this state, or with a group hospital service corporation
270-7 authorized to do business in the state, for the provision of
270-8 insurance, reinsurance, indemnity, or reimbursement against the
270-9 cost of health care and medical care services provided by the
270-10 health maintenance organization;
270-11 (6) the offering of:
270-12 (A) indemnity benefits covering out-of-area
270-13 emergency services; and
270-14 (B) indemnity benefits in addition to those
270-15 relating to out-of-area and emergency services, provided through
270-16 insurers or group hospital service corporations;
270-17 (7) receiving and accepting from government or private
270-18 agencies payments covering all or part of the cost of the services
270-19 provided or arranged for by the organization;
270-20 (8) all powers given to corporations (including
270-21 professional corporations and associations), partnerships, and
270-22 associations pursuant to their organizational documents which are
270-23 not in conflict with provisions of this Act, or other applicable
270-24 law.
270-25 ARTICLE 13. MOTOR VEHICLE INSURANCE
270-26 SECTION 13.01. Section 1B, Texas Motor Vehicle
270-27 Safety-Responsibility Act (Article 6701h, Vernon's Texas Civil
271-1 Statutes), is amended by amending Subsection (a) and adding
271-2 Subsection (d) to read as follows:
271-3 (a) As a condition of operating a motor vehicle in this
271-4 state, the operator of the motor vehicle shall furnish, on request
271-5 of a peace officer or a person involved in an accident with the
271-6 operator:
271-7 (1) a liability insurance policy in at least the
271-8 minimum amounts required by this Act, or a photocopy of that
271-9 policy, that covers the vehicle;
271-10 (2) a standard proof of liability insurance form
271-11 promulgated by the Texas Department of Insurance and issued by a
271-12 liability insurer that:
271-13 (A) includes the name of the insurer;
271-14 (B) includes the insurance policy number;
271-15 (C) includes the policy period;
271-16 (D) includes the name and address of each
271-17 insured;
271-18 (E) includes the policy limits or a statement
271-19 that the coverage of the policy complies with at least the minimum
271-20 amounts of liability insurance required by this Act; and
271-21 (F) includes the make and model of each covered
271-22 vehicle;
271-23 (3) an insurance binder that confirms that the
271-24 operator is in compliance with this Act;
271-25 (4) a certificate or copy of a certificate issued by
271-26 the department that shows the vehicle is covered by self-insurance;
271-27 (5) a certificate issued by the state treasurer that
272-1 shows that the owner of the vehicle has on deposit with the
272-2 treasurer money or securities in at least the amount required by
272-3 Section 25 of this Act;
272-4 (6) a certificate issued by the department that shows
272-5 that the vehicle is a vehicle for which a bond is on file with the
272-6 department as provided by Section 24 of this Act; or
272-7 (7) a copy of a certificate issued by the county judge
272-8 of a county in which the vehicle is registered that shows that the
272-9 owner of the vehicle has on deposit with the county judge cash or a
272-10 cashier's check in at least the amount required by Section 1A(b)(6)
272-11 of this Act.
272-12 (d) A standard proof of liability insurance form described
272-13 in Subsection (A)(2) of this section, or a document that is an
272-14 unauthorized version of the form, is a governmental record for
272-15 purposes of Chapter 37, Penal Code. A standard proof of liability
272-16 insurance form is unauthorized for purposes of this subsection if
272-17 it is not issued by an insurer authorized to transact motor vehicle
272-18 liability insurance in this state.
272-19 SECTION 13.02. Section 19, Texas Motor Vehicle
272-20 Safety-Responsibility Act (Article 6701h, Vernon's Texas Civil
272-21 Statutes), is amended by adding Subsection (c) to read as follows:
272-22 (c) A certificate described in Subsection (a) of this
272-23 section, or a document that is an unauthorized version of the
272-24 certificate, is a governmental record for purposes of Chapter 37,
272-25 Penal Code. A certificate is unauthorized for purposes of this
272-26 subsection if it is not issued by an insurer authorized to transact
272-27 motor vehicle liability insurance in this state.
273-1 SECTION 13.03. Section 21, Texas Motor Vehicle
273-2 Safety-Responsibility Act (Article 6701h, Vernon's Texas Civil
273-3 Statutes), is amended by adding Subsection (b-1) to read as
273-4 follows:
273-5 (b-1) The commissioner of insurance, by rule, shall require
273-6 that the owner's policy of liability insurance exclude coverage for
273-7 the liability of a person insured under the policy for a bodily
273-8 injury to or death of the insured or a family member of the
273-9 insured. For purposes of this subsection, "family member" means:
273-10 (1) the spouse of the insured, including a spouse who
273-11 is not a resident of the insured's household during a period of
273-12 separation in contemplation of divorce; or
273-13 (2) a person who is a resident of the insured's
273-14 household and who is:
273-15 (A) related to the insured by blood, marriage,
273-16 or adoption; or
273-17 (B) a ward or foster child of the insured.
273-18 SECTION 13.04. Article 5.06, Insurance Code, is amended by
273-19 adding Subsection (9) to read as follows:
273-20 (9) The commissioner, by rule, shall require that a policy
273-21 form adopted under this article exclude coverage for the liability
273-22 of an individual insured under the policy for bodily injury to or
273-23 death of the insured or a family member of the insured. For
273-24 purposes of this subsection, "family member" has the meaning
273-25 assigned by Section 21(b-1), Texas Motor Vehicle
273-26 Safety-Responsibility Act (Article 6701h, Vernon's Texas Civil
273-27 Statutes).
274-1 SECTION 13.05. Subchapter F, Chapter 21, Insurance Code, is
274-2 amended by adding Article 21.81 to read as follows:
274-3 Art. 21.81. TEXAS AUTOMOBILE INSURANCE PLAN ASSOCIATION
274-4 Sec. 1. DEFINITIONS. In this article:
274-5 (1) "Association" means the Texas Automobile Insurance
274-6 Plan Association established under this article.
274-7 (2) "Authorized insurer" means any insurer authorized
274-8 by the department to write motor vehicle liability coverage under
274-9 the provisions of Chapter 5 of this code. The term does not
274-10 include an insurer organized under Chapter 17 of this code.
274-11 (3) "Insurance" means an insurance policy that meets
274-12 the requirements of the Texas Motor Vehicle Safety-Responsibility
274-13 Act (Article 6701h, Vernon's Texas Civil Statutes).
274-14 (4) "Rate board" means the Texas Insurance Rate Board.
274-15 (5) "Plan of operation" means the plan for operating
274-16 the association to provide a means by which insurance may be
274-17 assigned to an eligible person who is required by law to show proof
274-18 of financial responsibility for the future.
274-19 Sec. 2. CREATION OF THE ASSOCIATION. (a) The Texas
274-20 Automobile Insurance Plan Association is established. The
274-21 association is a nonprofit corporate body composed of all
274-22 authorized insurers. Each authorized insurer shall be a member of
274-23 the association and shall remain a member of the association so
274-24 long as the association is in existence as a condition of its
274-25 authority to write motor vehicle liability insurance in this state.
274-26 (b) The association shall be administered by a governing
274-27 committee composed of fifteen members selected as follows:
275-1 (1) eight members who represent the interests of
275-2 insurers, elected by the members of the association according to a
275-3 method determined by such members;
275-4 (2) five public members nominated by the Office of
275-5 Public Insurance Counsel and selected by the commissioner; and
275-6 (3) two members who are licensed local recording
275-7 agents, selected by the commissioner.
275-8 (c) To be eligible to serve on the governing committee as a
275-9 representative of insurers, a person must be a full-time employee
275-10 of an authorized insurer.
275-11 (d) A person may not serve on the governing committee as a
275-12 public member if that person, an individual related to that person
275-13 within the second degree of consanguinity or affinity, or an
275-14 individual residing in the same household with that person is:
275-15 (1) required to be registered or licensed under this
275-16 code or another insurance law of this state;
275-17 (2) employed by or acts as a consultant to a person
275-18 required to be registered or licensed under this code or another
275-19 insurance law of this state;
275-20 (3) the owner of, has a financial interest in, or
275-21 participates in the management of an organization required to be
275-22 registered or licensed under this code or another insurance law of
275-23 this state;
275-24 (4) an officer, employer, or consultant of an
275-25 association in the field of insurance; or
275-26 (5) required to register as a lobbyist under Chapter
275-27 305, Government Code.
276-1 Sec. 3. AUTHORITY OF THE ASSOCIATION; PLAN OF OPERATION.
276-2 (a) The governing committee has the responsibility for the
276-3 administration of the association through the plan of operation.
276-4 The association may collect funds from the member companies to
276-5 provide for the operation of the association. Assessments must be
276-6 made upon member companies in proportion to their writings of motor
276-7 vehicle liability insurance in this state. If an assessment made
276-8 upon a member insurer is not paid within a reasonable time, the
276-9 association may bring an action to collect the assessment. In
276-10 addition, the association may report the failure to pay to the
276-11 commissioner, who may institute a disciplinary action under Article
276-12 1.10 of this code. The association has the powers granted to
276-13 nonprofit corporations under the Texas Non-Profit Corporation Act
276-14 (Article 1396-1.01 et seq., Vernon's Texas Civil Statutes).
276-15 (b) The plan of operation of the association must provide
276-16 for the efficient, economical, fair, and nondiscriminatory
276-17 administration of the association.
276-18 (c) Subject to the approval of the commissioner, the
276-19 governing committee may adopt and amend the plan of operation.
276-20 (d) If the commissioner at any time believes that any part
276-21 of the plan of operation is not in keeping with the purposes of the
276-22 Texas Motor Vehicle Safety-Responsibility Act (Article 6701h,
276-23 Vernon's Texas Civil Statutes), the commissioner shall notify the
276-24 governing committee in writing so that the governing committee may
276-25 take corrective action.
276-26 (e) Among other provisions, the plan of operation must
276-27 contain incentive programs to encourage members to write insurance
277-1 on a voluntary basis and to minimize the use of the association as
277-2 a means to obtain insurance. The incentive programs are effective
277-3 on approval of the commissioner. One of these programs shall
277-4 target underserved geographic areas which shall be determined and
277-5 designated by the commissioner by rule. In determining which areas
277-6 will be designated as underserved, the commissioner shall consider
277-7 the availability of insurance, the number of uninsured drivers, the
277-8 number of drivers insured through the association, and any other
277-9 relevant factor.
277-10 (f) The plan of operation must include a voluntary,
277-11 competitive limited assignment distribution plan that allows
277-12 members to contract directly with another member to service
277-13 applications assigned to that member by the association. A
277-14 servicing company must be an insurance company licensed to write
277-15 automobile insurance in this state and is qualified if it has
277-16 written automobile liability insurance in Texas for at least five
277-17 years or is currently engaged as a servicing carrier for assigned
277-18 risk automobile business in at least one other state. After notice
277-19 and hearing, the commissioner may prohibit an insurer from acting
277-20 as a servicing carrier. The terms of the contract between the
277-21 servicing carrier and the insurer, including the buy-out fee, shall
277-22 be determined by negotiation between the parties. The governing
277-23 committee may adopt reasonable rules for the conduct of business
277-24 under the contract.
277-25 Sec. 4. DUTIES AND FUNCTIONS OF THE ASSOCIATION. (a) The
277-26 association shall provide a means by which insurance may be
277-27 assigned to an authorized insurance company for a person required
278-1 by the Texas Motor Vehicle Safety-Responsibility Act (Article
278-2 6701h, Vernon's Texas Civil Statutes) to show proof of financial
278-3 responsibility for the future.
278-4 (b) An applicant is not eligible for insurance through the
278-5 association unless the applicant and the servicing agent certify as
278-6 part of the application to the association that the applicant has
278-7 been rejected for insurance by at least two insurers licensed to do
278-8 business in this state and actually writing automobile insurance in
278-9 this state.
278-10 (c) A person who obtains, from any source, excess private
278-11 passenger auto liability insurance coverage over the minimum auto
278-12 liability coverage required by law is ineligible for insurance
278-13 through the association. The coverage for the excess and basic
278-14 limits policies is not affected by a violation of this section
278-15 unless the insurer shows that the insured had actual knowledge that
278-16 they were ineligible for coverage through the association. An
278-17 agent may not knowingly write excess private passenger auto
278-18 liability insurance coverage if the minimum auto liability coverage
278-19 required by law is provided through the association. If an agent
278-20 violates this section, the agent, after notice and hearing, is
278-21 subject to the penalties provided by Section 7, Article 1.10, of
278-22 this code.
278-23 Sec. 5. RATES FOR INSURANCE. (a) At least annually, the
278-24 rate board shall conduct a hearing for the purpose of determining
278-25 appropriate rates to be charged for insurance provided through the
278-26 association. The association may appear as a matter of right,
278-27 shall be admitted as a party to present testimony at the hearing,
279-1 and may file information for consideration by the rate board. The
279-2 rate board shall determine and prescribe rates that are just,
279-3 reasonable, adequate, not excessive, not confiscatory, and not
279-4 unfairly discriminatory for the risks to which they apply. Rates
279-5 shall be set in an amount sufficient to carry all claims to
279-6 maturity and to meet the expenses incurred in the writing and
279-7 servicing of the business. In making its determination, the rate
279-8 board shall consider the reports of aggregated premiums earned and
279-9 losses and expenses incurred in the writing of motor vehicle
279-10 insurance through the plan collected under the statistical plan
279-11 provided for by Subsection (b) of this section.
279-12 (b) The rate board shall promulgate reasonable rules and
279-13 statistical plans to be used by each insurer in the recording and
279-14 reporting of its premium, loss, and expense experience which must
279-15 be reported separately for business assigned to it and other data
279-16 required by the board.
279-17 Sec. 6. IMMUNITY FROM LIABILITY. (a) The association, a
279-18 member of the governing committee, and any employee of the
279-19 association is not personally liable for any act performed in good
279-20 faith within the scope of the person's authority as determined
279-21 under this article or the plan of operation or for damages
279-22 occasioned by the person's official acts or omissions except for an
279-23 act or omission that is corrupt or malicious. The association
279-24 shall provide counsel to defend any action brought against a member
279-25 of the governing committee or an employee by reason of the person's
279-26 official act or omission whether or not at the time of the
279-27 institution of the action the defendant has terminated service with
280-1 the association.
280-2 (b) This section is cumulative with and does not affect or
280-3 modify any common law or statutory privilege or immunity.
280-4 SECTION 13.06. Section 35, Texas Motor Vehicle
280-5 Safety-Responsibility Act (Article 6701h, Vernon's Texas Civil
280-6 Statutes), is repealed.
280-7 SECTION 13.07. The change in law made by Sections
280-8 13.01-13.05 of this Act applies only to an insurance policy that is
280-9 delivered, issued for delivery, or renewed on or after January 1,
280-10 1994. An insurance policy that is delivered, issued for delivery,
280-11 or renewed before January 1, 1994, is governed by the law as it
280-12 existed immediately before the effective date of this Act, and that
280-13 law is continued in effect for that purpose.
280-14 SECTION 13.08. (a) Not later than December 31, 1993, the
280-15 plan of operation for the Texas Automobile Insurance Plan
280-16 Association established under Article 21.81, Insurance Code, as
280-17 added by this Act, shall include the limited assignment
280-18 distribution plan required by Section 3(f) of that article.
280-19 (b) The administrative agency created under Section 35,
280-20 Texas Motor Vehicle Safety-Responsibility Act (Article 6701h,
280-21 Vernon's Texas Civil Statutes), shall continue to operate in
280-22 accordance with that section as it existed immediately before the
280-23 effective date of this Act until a governing committee is selected
280-24 and a plan of operation for the Texas Automobile Insurance Plan
280-25 Association is adopted and approved under Article 21.81, Insurance
280-26 Code, as added by this Act. On the effective date of the plan of
280-27 operation, the administrative agency shall transfer all of its
281-1 assets and obligations to the Texas Automobile Insurance Plan
281-2 Association. On and after the effective date of the plan of
281-3 operation, the administrative agency established under Section 35,
281-4 Texas Motor Vehicle Safety-Responsibility Act (Article 6701h,
281-5 Vernon's Texas Civil Statutes), is abolished.
281-6 ARTICLE 14. TEXAS WORKERS' COMPENSATION FACILITY AND FUND
281-7 SECTION 14.01. Section 4.06(d), Article 5.76-2, Insurance
281-8 Code, is amended to read as follows:
281-9 (d) A policyholder in the facility who is insured under the
281-10 rejected risk fund shall obtain a safety consultation if the
281-11 employer:
281-12 (1) has a Texas <an> experience modifier greater than
281-13 1.25;
281-14 (2) has a national experience modifier greater than
281-15 1.25 and estimated premium allocable to Texas of $2,500 or more;
281-16 (3) <(2)> does not have an experience modifier but has
281-17 had a loss ratio greater than 0.70 in at least two of the three
281-18 most recent policy years for which information is available; or
281-19 (4) <(3)> has not been in business three years and
281-20 meets criteria established by the commission, which may include the
281-21 number and classification of employees, the policyholder's
281-22 industry, and previous workers' compensation experience in this
281-23 state or another jurisdiction.
281-24 SECTION 14.02. Section 10(c), Article 5.76-3, Insurance
281-25 Code, is amended to read as follows:
281-26 (c) A policyholder in the fund who is insured under Article
281-27 5.76-4 of this code shall obtain a safety consultation if the
282-1 policyholder:
282-2 (1) has a Texas <an> experience modifier greater than
282-3 1.25; <or>
282-4 (2) has a national experience modifier greater than
282-5 1.25 and estimated premium allocable to Texas of $2,500 or more; or
282-6 (3) does not have an experience modifier but has had a
282-7 loss ratio greater than 0.70 in at least two of the three most
282-8 recent policy years for which information is available.
282-9 SECTION 14.03. Article 5.76-4(d), Insurance Code, is amended
282-10 to read as follows:
282-11 (d) The fund shall decline to insure any risk if:
282-12 (1) insuring that risk would cause the fund to exceed
282-13 the premium-to-surplus ratios established by Article 5.76-3 of this
282-14 code; or
282-15 (2) the risk is not in good faith entitled to
282-16 insurance through the fund according to rules adopted by the board.
282-17 ARTICLE 15. TITLE INSURANCE
282-18 SECTION 15.01. Article 9.02, Insurance Code, is amended by
282-19 amending Subsections (a), (i), and (m) and adding Subsections (r)
282-20 and (s) to read as follows:
282-21 (a) "Title Insurance" means insuring, guaranteeing or
282-22 indemnifying owners of real property or others interested therein
282-23 against loss or damage suffered by reason of liens, encumbrances
282-24 upon, or defects in the title to said property, and the invalidity
282-25 or impairment of liens thereon, or doing any business in substance
282-26 equivalent to any of the foregoing in a manner designed to evade
282-27 the provisions of this Act.
283-1 (i) "Abstract plant" as used herein shall mean a
283-2 geographical abstract plant such as is defined by the Board <from
283-3 time to time> and the Board, in defining an abstract plant, shall
283-4 require a geographically arranged plant, currently kept to date,
283-5 that is found by the Board to be adequate for use in insuring
283-6 titles, so as to provide for the safety and protection of the
283-7 policyholders.
283-8 (m) "Title Examination" means the search and examination of
283-9 a title solely for the benefit of the title insurance company,
283-10 direct operation, or title insurance agent to determine the
283-11 conditions of the title insurance to be provided <insured> and to
283-12 evaluate the risk to be undertaken in the issuance of a title
283-13 insurance policy.
283-14 (r) "Examined title evidence" means title evidence that has
283-15 been subjected to a title examination for title insurance purposes
283-16 and that is based on title evidence prepared from an abstract plant
283-17 owned by, or leased and operated by, a licensed title insurance
283-18 agent or direct operation.
283-19 (s) "Agent's retained premium" means the amount of the gross
283-20 premium retained by the agent after payment of the underwriting
283-21 portion of the gross premium to the title insurance company under
283-22 an approved agency contract.
283-23 SECTION 15.02. Articles 9.03 and 9.07, Insurance Code, are
283-24 amended to read as follows:
283-25 Art. 9.03. May Incorporate. (a) Private corporations may
283-26 be created and licensed under this chapter to <for the following
283-27 named purposes:>
284-1 <(1) To> compile and own or lease, or to acquire and
284-2 own or lease, records or abstracts of title to lands and interests
284-3 in land<;> and to insure titles to lands or interests therein, both
284-4 in Texas and other jurisdictions <states of the United States>, and
284-5 indemnify the owners of such lands, or the holders of interests in
284-6 or liens on such lands, against loss or damage on account of
284-7 incumbrances upon or defects in the title to such lands or
284-8 interests therein; and in transactions in which title insurance is
284-9 to be or is being issued, to supervise or approve the signing of
284-10 legal instruments (but not the preparation of such instruments)
284-11 affecting land titles, disbursement of funds, prorations, delivery
284-12 of legal instruments, closing of deals, issuance of commitments for
284-13 title insurance specifying the requirements for title insurance and
284-14 the defects in title necessary to be cured or corrected. Nothing<;
284-15 provided, however, that nothing> herein contained shall authorize
284-16 such corporation to practice law, as that term is defined by the
284-17 courts of this state, and in the event of any conflict herein, this
284-18 clause shall be controlling.
284-19 (b) A corporation described by Subsection (a) of this
284-20 article <Such corporations> may also exercise the following powers
284-21 by including same in the charter when filed originally, or by
284-22 amendment:
284-23 (1) <(2)> To make and sell abstracts of title in any
284-24 counties of Texas or other states;
284-25 (2) <(3)> To accumulate and lend money, to purchase,
284-26 sell or deal in notes, bonds, and securities, but without banking
284-27 privileges;
285-1 (3) <(4)> To act as trustee under any lawful trust
285-2 committed to it by contract or will, appointment by any court
285-3 having jurisdiction of the subject matter as trustee, receiver or
285-4 guardian and as executor or guardian under the terms of any will
285-5 and as any administrator of the estates of decedents under the
285-6 appointment of the court.
285-7 Art. 9.07. Policy Forms and Premiums. (a) Corporations
285-8 organized under this Chapter, as well as foreign corporations and
285-9 those created under Subdivision 57, Article 1302, of the Revised
285-10 Civil Statutes of 1925 before the repeal of that statute, or under
285-11 Chapter 8 of this Code, or any other law insofar as the business of
285-12 either may be the business of title insurance, shall operate in
285-13 Texas under the control and supervision and under such uniform
285-14 rules and regulations as to forms of policies and underwriting
285-15 contracts and premiums therefor, and such underwriting standards
285-16 and practices as may be <from time to time> prescribed by the
285-17 Board; and no Texas or foreign corporation, whether incorporated
285-18 under this Chapter or any other law of the State of Texas, shall be
285-19 permitted to issue any title policy of any character, or
285-20 underwriting contract, to delete any policy exclusion or to
285-21 reinsure any portion of the risk assumed by any title policy, on
285-22 Texas real property other than under this Chapter and under such
285-23 rules and regulations. No policy of title insurance, title
285-24 insurance coverage, reinsurance of any risk assumed under any
285-25 policy of title insurance, or any guarantee of any character made
285-26 when insuring <on> Texas titles shall be issued or valid unless
285-27 written by a corporation complying with the provisions of and
286-1 authorized or qualified under this Chapter, except as is provided
286-2 in Article 9.19D. Before any premium rate provided for herein
286-3 shall be fixed or charged, reasonable notice shall issue, and a
286-4 hearing afforded to the title insurance companies and title
286-5 insurance agents authorized or qualified under this Chapter and the
286-6 public. Under no circumstances may any title insurance company or
286-7 title insurance agent use any form which is required under the
286-8 provisions of this Chapter 9 to be promulgated or approved until
286-9 the same shall have been so promulgated or approved by the Board.
286-10 (b) The Board shall have the duty to fix and promulgate the
286-11 premium rates to be charged by title insurance companies and title
286-12 insurance agents created or operating under this Chapter for
286-13 policies of title insurance or other promulgated or approved forms,
286-14 and the premiums therefor shall be paid in the due and ordinary
286-15 course of business. Premium rates for reinsurance as between title
286-16 insurance companies qualified under this Chapter shall not be fixed
286-17 or promulgated by the Board, and title insurance companies may set
286-18 such premium rates for reinsurance as such title insurance
286-19 companies shall agree upon. Under no circumstance shall any
286-20 premium be charged for any policy of title insurance or other
286-21 promulgated or approved forms different from those fixed and
286-22 promulgated by the Board, except for premiums charged for
286-23 reinsurance. The premium rates fixed by the Board shall be
286-24 reasonable to the public and nonconfiscatory as to the title
286-25 insurance companies and title insurance agents. For the purpose
286-26 of collecting data on which to determine the proper rates to be
286-27 fixed, the Board shall require all title insurance companies and
287-1 all title insurance agents operating in Texas to submit such
287-2 information in such form as it may deem proper, all information as
287-3 to loss experience, expense of operation, and other material matter
287-4 for the Board's consideration.
287-5 (c) The Board shall hold a biennial <an annual> hearing not
287-6 earlier than October 1 or later than December 15 of each
287-7 even-numbered calendar year, to consider adoption of premium rates
287-8 and such other matters and subjects relative to the regulation of
287-9 the business of title insurance as may be requested by any title
287-10 insurance company, any title insurance agent, any member of the
287-11 public, or as the Board may determine necessary to consider.
287-12 Proper notice of such public hearing and the items to be considered
287-13 shall be made to the public and shall be sent direct to all title
287-14 insurance companies and title insurance agents qualified or
287-15 authorized to do business under this Chapter for at least four (4)
287-16 weeks in advance of such hearing.
287-17 (d) Premium rates when once fixed shall not be changed until
287-18 after a public hearing shall be had by the Board, after proper
287-19 notice sent direct to all title insurance companies and title
287-20 insurance agents qualified or authorized to do business under this
287-21 Chapter, and after public notice in such manner as to give fair
287-22 publicity thereto for at least four (4) weeks in advance. The
287-23 Board must call such additional hearings to consider premium rate
287-24 changes at the request of a title insurance company.
287-25 (e) The Board may, on its own motion, following notice as
287-26 required for the biennial <annual> hearing hold at any time a
287-27 public hearing to consider adoption of premium rates and such other
288-1 matters and subjects relative to the regulation of the business of
288-2 title insurance as the Board shall determine necessary or proper.
288-3 (f) Any title insurance company, any title insurance agent,
288-4 or other person or association of persons interested, feeling
288-5 injured by any action of the Board or the Commissioner with regard
288-6 to premium rates or other action taken by the Board or the
288-7 Commissioner, shall have the right to file a suit in the District
288-8 Court of Travis County, within thirty (30) days after the Board or
288-9 the Commissioner has made such order, to review the action. Such
288-10 cases shall be tried de novo in the District Court <in accordance
288-11 with the provisions of Article 21.80 of the Insurance Code> and
288-12 shall be governed by the same rules of evidence and procedure as
288-13 other civil cases in said court; in which suit the court may enter
288-14 a judgment setting aside the Board's or the Commissioner's order,
288-15 or affirming, the action of the Board or the Commissioner.
288-16 SECTION 15.03. Chapter 9, Insurance Code, is amended by
288-17 adding Article 9.07B to read as follows:
288-18 Art. 9.07B. ABSTRACT OF TITLE; COMMITMENT FOR TITLE
288-19 INSURANCE DISTINGUISHED. (a) An abstract of title prepared from
288-20 an abstract plant for a chain of title of real property described
288-21 in the abstract of title is not title insurance, a commitment for
288-22 title insurance, or any other title insurance form.
288-23 (b) The Board may not adopt regulations relating to
288-24 abstracts of title.
288-25 (c) In this article, "commitment for title insurance" means
288-26 a title insurance form that offers to issue a title policy subject
288-27 to stated exceptions, requirements, and terms. The term includes a
289-1 mortgagee title policy binder on an interim construction loan.
289-2 SECTION 15.04. Article 9.09, Insurance Code, is amended to
289-3 read as follows:
289-4 Art. 9.09. Prohibiting Transacting of Other Kinds of
289-5 Insurance by Title Insurance Companies or the Transacting of Title
289-6 Insurance by Other Types of Insurance Companies. Corporations,
289-7 domestic or foreign, operating under this Chapter shall not
289-8 transact, underwrite or issue any kind of insurance other than
289-9 title insurance on real property; nor shall title insurance be
289-10 transacted, underwritten or issued by any company transacting any
289-11 other kinds of insurance<; provided, however, that the above
289-12 prohibitions shall not apply as to any corporation, domestic or
289-13 foreign, which on October 1, 1967 was transacting, underwriting and
289-14 issuing within the State of Texas title insurance and any other
289-15 kind of insurance. Any corporation now organized and doing
289-16 business under the provisions of Chapter 8 and actively writing
289-17 title insurance shall be subject to all the provisions of this
289-18 Chapter except Article 9.18 relating to investments>.
289-19 SECTION 15.05. Chapter 9, Insurance Code, is amended by
289-20 adding Article 9.09A to read as follows:
289-21 Art. 9.09A. PROHIBITING UNMARKETABILITY OF TITLE INSURANCE.
289-22 No company shall insure against loss or damage by reason of
289-23 unmarketability of title. The board or commissioner may not
289-24 promulgate rules or forms providing for such coverage.
289-25 SECTION 15.06. Article 9.17(a), Insurance Code, is amended
289-26 to read as follows:
289-27 (a) All title insurance companies operating under the
290-1 provisions of this Act shall at all times establish and maintain,
290-2 in addition to other reserves, a reserve against (1) unpaid losses,
290-3 and (2) loss expense for costs of defense of the insured under the
290-4 terms of the title insurance policy, and shall calculate such
290-5 reserves by making a careful estimate in each case of the loss and
290-6 loss expense likely to be incurred, by reason of every claim
290-7 presented, pursuant to notice from or on behalf of the insured, of
290-8 a title defect in or lien or adverse claim against the title
290-9 insured, that may result in a loss or cause expense to be incurred
290-10 for the proper disposition of the claim. The sums of items so
290-11 estimated for payment of loss and costs of defense of the insured
290-12 under the terms of the title insurance policy shall be the total
290-13 expenses of such title insurance company.
290-14 SECTION 15.07. Articles 9.18 and 9.21, Insurance Code, are
290-15 amended to read as follows:
290-16 Art. 9.18. Admissible Investments for Title Insurance
290-17 Companies. Investments of all title insurance companies operating
290-18 under the provisions of this Act shall be held in cash or may be
290-19 invested in the following:
290-20 (a) Any corporation organized under this Act having the
290-21 right to do a title insurance business may invest as much as 50
290-22 <fifty (50%)> percent of its capital stock in an abstract plant or
290-23 plants, provided that the valuation to be placed upon such plant or
290-24 plants shall be approved by the Board; provided, however, that if
290-25 such corporation maintains with the Board the deposit of One
290-26 Hundred Thousand Dollars ($100,000) in securities as provided in
290-27 Article 9.12 of this Act, such of its capital in excess of 50
291-1 <fifty (50%)> percent, as deemed necessary to its business by its
291-2 board of directors may be invested in abstract plants; and provided
291-3 further, that a corporation created or operating under the
291-4 provisions of this Act may own or acquire more than one abstract
291-5 plant in any one county but only one abstract plant in any one
291-6 county is admissible as an investment.
291-7 (b) Those securities set forth in Article 3.39, Insurance
291-8 Code, <as authorized investments for life insurance companies> and
291-9 in authorized investments for title insurance companies under the
291-10 laws of any other state in which the affected company may be
291-11 authorized to do business from time to time.
291-12 (c) Real estate or any interest therein which may be:
291-13 (1) required for its convenient accommodation in the
291-14 transaction of its business with reasonable regard to future needs;
291-15 (2) acquired in connection with a claim under a policy
291-16 of title insurance;
291-17 (3) acquired in satisfaction or on account of loans,
291-18 mortgages, liens, judgments or decrees, previously owing to it in
291-19 the course of its business;
291-20 (4) acquired in part payment of the consideration of
291-21 the sale of real property owned by it if the transaction shall
291-22 result in a net reduction in the company's investment in real
291-23 estate;
291-24 (5) reasonably necessary for the purpose of
291-25 maintaining or enhancing the sale value of real property previously
291-26 acquired or held by it under Subparagraphs (1), (2), (3) or (4) of
291-27 this Section; provided, however, that no title insurance company
292-1 shall hold any real estate acquired under Subparagraphs (2), (3) or
292-2 (4) for more than ten (10) years without written approval of the
292-3 Board.
292-4 (d) First mortgage notes secured by:
292-5 (1) abstract plants and connected personalty within or
292-6 without the State of Texas;
292-7 (2) stock of title insurance agents within or without
292-8 the State of Texas;
292-9 (3) construction contract or contracts for the purpose
292-10 of building an abstract plant and connected personalty;
292-11 (4) any combination of two or more of items (1), (2),
292-12 and (3).
292-13 In no event shall the amount of any first mortgage note
292-14 exceed 80 <eighty (80%)> percent of the appraised value of the
292-15 security for such note as set out above.
292-16 (e) The shares of any federal home loan bank in the amount
292-17 necessary to qualify for membership and any additional amounts
292-18 approved by the Commissioner.
292-19 (f) Investments in foreign securities that are substantially
292-20 of the same kinds, classes, and investment-grade as those eligible
292-21 for investment under other provisions of this Article. Unless the
292-22 investment is also authorized under Subsection (b) of this Article
292-23 the aggregate amount of foreign investments made under this Section
292-24 may not exceed:
292-25 (1) five percent of the insurer's admitted assets at
292-26 the last year end;
292-27 (2) two percent of the insurer's admitted assets at
293-1 the last year end invested in the securities of all entities
293-2 domiciled in any one foreign country; and
293-3 (3) one-half of one percent of the insurer's admitted
293-4 assets at the last year end invested in the securities of any one
293-5 individual entity domiciled in a foreign country.
293-6 Any investments which do not <now> qualify under this Article
293-7 <the provisions of Subsections (a), (b), (c), or (d) above> and
293-8 which were owned by the title insurance company on October 1, 1967,
293-9 <are owned as of the effective date of this Act shall> continue to
293-10 qualify.
293-11 If any otherwise valid investment which qualifies under the
293-12 provisions of this Article shall exceed in amount any of the
293-13 limitations on investment contained in this Article, it shall be
293-14 inadmissible only to the extent that it exceeds such limitation.
293-15 Art. 9.21. Authority of Board of Insurance of the State of
293-16 Texas. (a) If any company operating under the provisions of this
293-17 Act shall engage in the characters of business described in
293-18 Subdivisions (1) and (2) <and (3)> of Article 9.03 of this Act, in
293-19 such manner as might bring it within the provision of any other
293-20 regulatory statute now or hereafter to be in force within the State
293-21 of Texas, all examination and regulation shall be exercised by the
293-22 Board rather than any other state agency which may be named in such
293-23 other laws, so long as such corporation engages in the title
293-24 guaranty or insurance business.
293-25 (b) The Board is hereby vested with power and authority
293-26 under this Act to promulgate and enforce rules and regulations
293-27 prescribing underwriting standards and practices upon which title
294-1 insurance contracts are to be issued, and is hereby further vested
294-2 with the power and authority to define risks which may not be
294-3 assumed under title insurance contracts, including risks that may
294-4 not be assumed because of the solvency of the parties to the
294-5 transaction. In addition, the Board is hereby vested with power
294-6 and authority to promulgate and enforce all other such rules and
294-7 regulations which in the discretion of the Board are deemed
294-8 necessary to accomplish the purposes of this Act.
294-9 SECTION 15.08. Article 9.30, Insurance Code, is amended by
294-10 amending Sections B and C and adding Section F to read as follows:
294-11 B. This Article may not be construed as prohibiting:
294-12 (1) a foreign or domestic title insurance company
294-13 doing business in this state under this Chapter, from appointing as
294-14 its title insurance agent pursuant to this Chapter a person owning
294-15 or leasing and operating an abstract plant of such county and
294-16 making the arrangement for division of premiums with the agent as
294-17 shall be set by the Board;
294-18 (2) payment by a title insurance agent or direct
294-19 operation issuing the policy or furnishing examined title evidence
294-20 for a directly issued policy to another title insurance agent or
294-21 direct operation for closing the transaction for the benefit of a
294-22 seller, purchaser, or borrower to be insured <payments for services
294-23 actually performed by a title insurance company, a title insurance
294-24 agent, or a direct operation, in connection with closing the
294-25 transaction, furnishing of title evidence, or title examination,
294-26 which payment may not exceed the percentages of the premium or
294-27 amounts established by the Board for those payments>; <or>
295-1 (3) payment of bona fide compensation to a bona fide
295-2 employee principally employed by a title insurance company, direct
295-3 operation, or title insurance agent<, or other reasonable payment
295-4 for goods or facilities actually furnished and received>; or
295-5 (4) payments for services actually performed by an
295-6 attorney in connection with title examination or closing a
295-7 transaction, which payment may not exceed a reasonable charge for
295-8 such services.
295-9 (5) Nothing in this article shall affect the division
295-10 of premium between a title insurance company and its subsidiary
295-11 title insurance agent when the title insurance company directly
295-12 issues its policy or contract of title insurance pursuant to
295-13 Article 9.34. For purposes of this provision, a subsidiary is a
295-14 company at least 50 percent of the voting stock of which is owned
295-15 by the title insurance company or by a wholly owned subsidiary of
295-16 the title insurance company.
295-17 C. A person receiving any form of compensation under Section
295-18 B(2) or F of this Article must be licensed as provided for under
295-19 this Chapter.
295-20 F. (a) A portion, split, or percentage of any title
295-21 insurance premium may not be paid, either directly or indirectly,
295-22 to any person, firm, or organization for title insurance, title
295-23 evidence, title examination, determining status of title, or
295-24 closing a transaction regarding the issuance of a title insurance
295-25 policy, binder, commitment, or endorsement except as provided by
295-26 this Section.
295-27 (b) A title insurance company licensed to do business in
296-1 this state and a licensed title insurance agent may divide a
296-2 premium under an agency agreement approved by the Texas Department
296-3 of Insurance. A title insurance company may divide a premium with
296-4 a licensed title insurance agent or direct operation in a county in
296-5 which the title insurance company does not have an agency agreement
296-6 or direct operation if the licensed agent or direct operation is
296-7 furnishing examined title evidence for a directly issued policy. A
296-8 division of premium under this Subsection must be equal to a
296-9 division promulgated by the Texas Department of Insurance for the
296-10 division of a title insurance premium between a title insurance
296-11 company and its licensed title insurance agent under an approved
296-12 agency agreement.
296-13 (c) Licensed title insurance agents and direct operations
296-14 that cooperate on the issuance of a title policy, binder,
296-15 commitment, or endorsement on property located in more than one
296-16 county in this state to be insured in a single policy may divide a
296-17 premium if each agent or direct operation renders part of the
296-18 services included in the premium.
296-19 (d) A licensed title insurance agent or direct operation and
296-20 another licensed title insurance agent or direct operation in a
296-21 county that shares a common boundary line that cooperate on the
296-22 issuance of a policy and the closing of a transaction may divide a
296-23 premium if the agent or direct operation in each county has entered
296-24 a prior written agreement describing the split or percentage to be
296-25 paid and accepted for the services each entity shall render and
296-26 that agreement is filed with the Texas Department of Insurance.
296-27 The Texas Department of Insurance may, after notice and hearing,
297-1 require termination of the agreement if it finds the agreement has
297-2 an adverse effect on consumers or rates for title insurance. The
297-3 provisions of Subsection (e) of this Section do not apply to the
297-4 division of a premium under this Subsection.
297-5 (e) Payment made to a title insurance agent or direct
297-6 operation under Section B(2), Article 9.30, of this Code shall be
297-7 paid from the agent's retained premium. The payment must equal:
297-8 (1) 10 percent of the agent's retained premium for a
297-9 policy amount of not more than $100,000;
297-10 (2) 40 percent of the agent's retained premium for a
297-11 policy amount greater than $100,000 but not more than $2,000,000;
297-12 and
297-13 (3) 50 percent of the agent's retained premium for a
297-14 policy amount greater than $2,000,000.
297-15 SECTION 15.09. Article 9.34, Insurance Code, is amended to
297-16 read as follows:
297-17 Art. 9.34. POLICY ISSUANCE; DETERMINATION OF INSURABILITY
297-18 Sec. 1. (a) Except as otherwise provided by this section,
297-19 each policy, binder, commitment, or endorsement of title insurance
297-20 must be based on an examination of title made from title evidence
297-21 prepared from an abstract plant owned, or leased and operated, by a
297-22 licensed title insurance agent or direct operation and issued by a
297-23 licensed title insurance agent or direct operation in the county in
297-24 which the real property is located under an agency agreement
297-25 approved by the Texas Department of Insurance.
297-26 (b) If a title insurance company does not have an approved
297-27 agency agreement with a licensed title insurance agent or direct
298-1 operation in the county in which the affected real property is
298-2 located, the title insurance company may issue directly its policy,
298-3 binder, commitment, or endorsement of title insurance based on
298-4 examined title evidence furnished to the title insurance company by
298-5 a licensed title insurance agent or direct operation in the county
298-6 in which the real property is located. If a licensed title
298-7 insurance agent or direct operation does not exist for the county
298-8 in which the real property is located, a title insurance company
298-9 may issue directly its policy of title insurance based on the best
298-10 available evidence.
298-11 (c) If, within a reasonable time as determined by the Board,
298-12 all of the licensed title insurance agents and direct operations in
298-13 the county in which the real property is located refuse to issue
298-14 the policy or contract of title insurance or to provide examined
298-15 title evidence for a directly issued policy, a title insurance
298-16 company may issue directly its policy of title insurance based on
298-17 the best available evidence.
298-18 Sec. 2. If a policy or contract of title insurance covers
298-19 properties located in more than one county to be insured in a
298-20 single policy and the title insurance agent or direct operation
298-21 issuing the policy is not licensed in each of the counties, the
298-22 policy or contract of title insurance shall be issued directly by
298-23 the title insurance company in compliance with this Article.
298-24 Sec. 3. A licensed title insurance agent or direct operation
298-25 may request that a policy, binder, commitment, or endorsement of
298-26 title insurance be issued directly by a title insurance company
298-27 with which the agent or direct operation has an approved agency
299-1 contract. The title insurance company may issue directly the
299-2 policy, binder, commitment, or endorsement of title insurance if:
299-3 (1) the licensed title insurance agent or direct
299-4 operation perceives or determines a conflict of interest in issuing
299-5 the policy on behalf of the title insurance company; or
299-6 (2) the licensed title insurance agent or direct
299-7 operation cooperates on the issuance of a policy and closing of a
299-8 transaction with a licensed title insurance agent or direct
299-9 operation in a county that shares a common boundary line under a
299-10 written agreement between the licensed title insurance agents or
299-11 direct operations in each county that:
299-12 (A) is executed before the issuance of the
299-13 policy;
299-14 (B) describes the services to be provided and
299-15 the split or percentage of premium to be paid and accepted by each
299-16 licensed title insurance agent or direct operation; and
299-17 (C) is filed with the Texas Department of
299-18 Insurance.
299-19 Sec. 4. A policy or contract of title insurance may not be
299-20 written or issued except in compliance with Article 9.30 of this
299-21 code and with a determination of insurability of title made in
299-22 accordance with sound underwriting practices.
299-23 Sec. 5. Examined title evidence or the best evidence on
299-24 which a policy, binder, commitment, or endorsement of title
299-25 insurance is issued must be preserved and retained in the files of
299-26 the title insurance company, direct operation, or licensed title
299-27 insurance agent for at least 15 years after the date on which the
300-1 policy or contract is issued.
300-2 Sec. 6. <No policy or contract of title insurance shall be
300-3 written unless (1) there has been compliance with the provisions of
300-4 Article 9.30(B), (2) said policy or contract of title insurance is
300-5 based on an examination of title made from title evidence prepared
300-6 from an abstract plant owned, or leased and operated by a licensed
300-7 Texas title insurance agent or direct operation for the county in
300-8 which the real property is located, (3) there has been made a
300-9 determination of insurability of title in accordance with sound
300-10 title underwriting practices, and (4) evidence thereof shall be
300-11 preserved and retained in the files of the title insurance company,
300-12 direct operation, or title insurance agent for a period of not less
300-13 than fifteen (15) years after the policy or contract of title
300-14 insurance has been issued. If no licensed title insurance agent or
300-15 direct operation exists for the county in which the real property
300-16 is located, a title insurance company may directly issue its policy
300-17 of title insurance based on the best title evidence available. If
300-18 all licensed title insurance agents and direct operations for the
300-19 county refuse to provide the title evidence within such reasonable
300-20 time as determined by the Board, and in compliance with the
300-21 provisions of Article 9.30(B)(2), the title insurance company may
300-22 directly issue its policy if the title insurance company obtains
300-23 the best title evidence available.> The licensed <Texas> title
300-24 insurance agent or direct operation that provides <which provided>
300-25 the examined title evidence on which the directly issued policies
300-26 or contracts of title insurance are issued shall be provided with
300-27 legible complete copies of all policies or contracts of title
301-1 insurance actually issued in the transactions within a reasonable
301-2 period of time as determined by the Board.
301-3 Sec. 7. This Article shall not apply to (a) a company
301-4 assuming no primary liability in a contract of reinsurance, or (b)
301-5 a company acting as a co-insurer if one of the other co-insuring
301-6 companies has complied with this Article.
301-7 SECTION 15.10. Section 17(a), Article 9.48, Insurance Code,
301-8 is amended to read as follows:
301-9 (a) There shall be no liability on the part of and no cause
301-10 of action of any nature shall arise against any member insurer of
301-11 the association or its agents or employees, the association or its
301-12 agents or employees, members of the association's board of
301-13 directors, a special deputy receiver or its agents or employees, or
301-14 the commissioner or his representatives for any <good faith> action
301-15 or omission in the performance of their powers and duties under
301-16 this article.
301-17 SECTION 15.11. Article 9.49, Insurance Code, is amended to
301-18 read as follows:
301-19 Art. 9.49. Insured Closing. (a) Title insurance companies
301-20 operating under the provisions of this chapter are hereby expressly
301-21 authorized and empowered to issue upon request on real property
301-22 transactions in this state at no charge whatever insured closing
301-23 and settlement letters, in the form prescribed by the board, in
301-24 connection with the closing and settlement of loans <made> by a
301-25 title insurance agent or direct operation <agents> for any title
301-26 insurance company operating under the provisions of this chapter.
301-27 (b) If an owner policy of title insurance is to be issued in
302-1 connection with a real property transaction involving real property
302-2 located in this state and the sale price of the real property
302-3 exceeds the guaranty amount specified in Article 9.48 of this code,
302-4 the title insurance company may issue an insured closing and
302-5 settlement letter to the buyer or seller of the real property in
302-6 connection with the closing and settlement by a title insurance
302-7 agent or direct operation. The insured closing and settlement
302-8 letter must be issued at or before the closing and may be issued
302-9 only by the title insurance company that will issue the owner
302-10 policy. The Board may promulgate a charge that may be made for the
302-11 issuance of an insured closing and settlement letter under this
302-12 subsection and may adopt rules governing the form and manner of the
302-13 making of the charge.
302-14 (c) Only <After January 1, 1976, only> the form prescribed
302-15 by the board shall be used <thereafter> in issuing such insured
302-16 closing and settlement letters.
302-17 (d) The liability of the title insurance company under a
302-18 policy of title insurance that is issued shall not be changed or
302-19 altered by the failure of the title insurance company to issue such
302-20 insured closing and settlement letters <as authorized by this
302-21 Article 9.49>.
302-22 SECTION 15.12. Chapter 9, Insurance Code, is amended by
302-23 adding Article 9.57A to read as follows:
302-24 Art. 9.57A. CLAIMANT TO COMMUNICATE. A person making a
302-25 claim under a policy of title insurance shall communicate to the
302-26 title insurance company that issued the policy all facts that the
302-27 person knows that are, or that the person believes to be, material
303-1 to the claim.
303-2 SECTION 15.13. Section 17(a), Article 9.48, Insurance Code,
303-3 as amended by Section 15.10 of this Act, applies only to a cause of
303-4 action that accrues on or after the effective date of this Act. A
303-5 cause of action that accrues before the effective date of this Act
303-6 is governed by the law in effect at the time the cause of action
303-7 accrued and that law is continued in effect for that purpose.
303-8 SECTION 15.14. This article applies only to a policy or
303-9 contract of title insurance that is delivered, issued for delivery,
303-10 or renewed on or after January 1, 1994. A policy or contract
303-11 delivered, issued for delivery, or renewed before January 1, 1994,
303-12 is governed by the law that existed immediately before the
303-13 effective date of this Act, and that law is continued in effect for
303-14 that purpose.
303-15 ARTICLE 16. TEXAS CATASTROPHE PROPERTY INSURANCE POOL
303-16 SECTION 16.01. Sections 5(e), (h), and (l), Article 21.49,
303-17 Insurance Code, are amended to read as follows:
303-18 (e) The Board may <shall> develop programs to improve the
303-19 efficient operation of the Association, including a program
303-20 designed to create incentives for insurers to write windstorm and
303-21 hail insurance voluntarily to cover property located in a
303-22 catastrophe area, especially property located on the barrier
303-23 islands. <The Board shall implement the incentive program not
303-24 later than April 1, 1992. The program shall be designed in a way
303-25 that reduces the number of policies that are not written in the
303-26 voluntary market in catastrophe areas by not less than 10 percent
303-27 by January 1, 1993, not less than 25 percent by January 1, 1994,
304-1 and not less than 40 percent by January 1, 1995, based on the
304-2 number of risks underwritten by the Association on January 1, 1991.
304-3 The Board shall report its results to the legislature on March 1 of
304-4 each year beginning in 1993.>
304-5 (h) Members of the board of directors of the Association
304-6 serve three-year staggered terms, with the terms of three members
304-7 expiring on the third Tuesday of March of each year. A person may
304-8 hold a seat on the board of directors for not more than three
304-9 consecutive full terms, not to exceed nine years <If an insurer
304-10 member has been elected and served two full terms, such insurer
304-11 shall provide for a reasonable rotation of persons designated by it
304-12 to serve on the board>.
304-13 (l) If an occurrence or series of occurrences within the
304-14 defined catastrophe area results in insured losses that result in
304-15 tax credits under Section 19(4) of this article <in excess of $100
304-16 million> in a single calendar year, the Association shall
304-17 immediately notify the Board of that fact. The Board on receiving
304-18 notice shall immediately notify the Governor and appropriate
304-19 committees of each house of the Legislature of the amount of
304-20 insured losses eligible for tax credits under Section 19(4) of this
304-21 article <in excess of $100 million>.
304-22 SECTION 16.02. Sections 8(h) and (i), Article 21.49,
304-23 Insurance Code, are amended to read as follows:
304-24 (h) Each extended coverage benchmark rate, flexibility band,
304-25 and promulgated rate established by the Board in accordance with
304-26 Chapter 5, Insurance Code, must be uniform throughout the first
304-27 tier of coastal counties.
305-1 The rates for noncommercial windstorm and hail insurance
305-2 written by the association before December 31, 1995, shall be 90
305-3 percent of the modified extended coverage rates. For purposes of
305-4 this section, the modified extended coverage rate is the greater of
305-5 the upper flexibility band for extended coverage established by the
305-6 board under Article 5.101 of this code or 25 percent above the
305-7 extended coverage benchmark rate established by the board under
305-8 that article.
305-9 The rates for noncommercial windstorm and hail insurance
305-10 written by the association after December 31, 1995, shall be 90
305-11 percent of <Rates, including extended coverage rates covering risks
305-12 or classes of risks written by the Association before December 31,
305-13 1995, may not exceed the benchmark rates promulgated by the Board
305-14 under Subchapter M, Chapter 5, Insurance Code, for noncommercial
305-15 lines of insurance. Rates for noncommercial lines of insurance
305-16 written by the Association on or after December 31, 1995, may not
305-17 exceed> the manual rate for monoline extended coverage promulgated
305-18 by the Board for noncommercial risks under Subchapter C, Chapter 5,
305-19 Insurance Code. Notwithstanding Article 5.13-2, Insurance Code,
305-20 the Board shall promulgate a manual rate for commercial risks and
305-21 classes of risks written by the Association in accordance with
305-22 Subchapter C, Chapter 5, Insurance Code. Article 5.13-2, Insurance
305-23 Code, does not apply to the rates of insurance written by the
305-24 Association. The rates for commercial windstorm and hail insurance
305-25 written by the Association shall be 90 percent of the manual rates
305-26 for extended coverage promulgated by the Board for commercial risks
305-27 under Subchapter C, Chapter 5, Insurance Code.
306-1 If valid flood or rising water insurance coverage exists and
306-2 is maintained on any risk being insured in the pool the State Board
306-3 of Insurance may provide for a rate and reduction in rate of
306-4 premium as may be appropriate.
306-5 The catastrophe element of extended coverage rates
306-6 promulgated by the Board under this Act applicable to commercial
306-7 risks written by the Association shall be uniform throughout the
306-8 seacoast territory and shall be based on all monoline extended
306-9 coverage loss experience of all regulated insurers authorized to do
306-10 business in this state, including the Association, for property
306-11 located in the seacoast territory, using the most recent 30 years'
306-12 experience available. Surcharges collected in the past and used in
306-13 the development of current manual rates may not be excluded from
306-14 future rate development as long as those surcharges were collected
306-15 during the experience period used by the Board.
306-16 The association shall either establish a reinsurance program
306-17 or enter into a contract as provided in Subsection (i) of this
306-18 section. The Texas Department of Insurance may approve any
306-19 reinsurance program. <The State Board of Insurance shall make
306-20 provision by rule and regulation requiring catastrophe reserves as
306-21 part of the premium received on risks or classes of risks located
306-22 in a catastrophe area and shall approve a catastrophe reinsurance
306-23 pool or program that is funded through the excess of premiums over
306-24 losses in a calendar year and may approve a catastrophe reinsurance
306-25 pool funded through assessments of members of the Association. The
306-26 amount required to be reserved for catastrophes (as such
306-27 catastrophes are defined by the Board) shall be that portion of the
307-1 pure premium as is actuarially made attributable, as ascertained by
307-2 the Board, to prospective catastrophic loss. The portion of the
307-3 pure premium attributable to prospective catastrophic loss shall
307-4 not be income and shall be unearned until the occurrence of an
307-5 applicable catastrophe as defined and shall be held in trust by the
307-6 pool or trustee of the pool until losses are paid therefrom under
307-7 such reasonable rules and regulations as the State Board of
307-8 Insurance shall prescribe or approve.>
307-9 (i) The association may enter into a written agreement with
307-10 the Texas Department of Insurance under which the association
307-11 members relinquish their net equity pursuant to the written
307-12 agreement on an annual basis by making payments to a fund known as
307-13 the catastrophe reserve trust fund to be held by the Texas
307-14 Department of Insurance outside the state treasury to protect
307-15 policyholders of the association and to reduce the potential for
307-16 payments by members of the association giving rise to tax credits
307-17 in the event of loss or losses.
307-18 The catastrophe reserve trust fund shall be kept and
307-19 maintained by the Texas Department of Insurance pursuant to the
307-20 written agreement between the association, the Texas Department of
307-21 Insurance, the state treasurer, and the comptroller. Legal title
307-22 to money and investments in the fund is in the Texas Department of
307-23 Insurance unless or until paid out as provided by the written
307-24 agreement. The state treasurer, as custodian, shall administer the
307-25 funds strictly and solely as provided by the agreement and the
307-26 state may not take any action with respect to the fund other than
307-27 as specified by this act and the agreement.
308-1 On the effective date of an agreement, all funds held on
308-2 behalf of or paid to the association under one or more reinsurance
308-3 plans or programs may be immediately paid to the catastrophe
308-4 reserve trust fund. Thereafter, at the end of either each calendar
308-5 year or policy year, the association may pay the net equity of a
308-6 member, including all premium and other revenue of the association
308-7 in excess of incurred losses and operating expenses to the
308-8 catastrophe reserve trust fund or a reinsurance program approved by
308-9 the Commissioner of Insurance.
308-10 The written agreement shall establish the procedure relating
308-11 to the disbursement of funds from the catastrophe reserve trust
308-12 fund to policyholders in the event of an occurrence or series of
308-13 occurrences within the defined catastrophe area that results in
308-14 insured losses and operating expenses of the association greater
308-15 than $100 million <The Board annually shall promulgate extended
308-16 coverage rates based on sound actuarial principles. Rates for
308-17 windstorm and hail insurance shall be 90 percent of the extended
308-18 coverage rates. Extended coverage rates shall be uniform
308-19 throughout the first tier coastal counties. The catastrophe
308-20 element of extended coverage rates shall be uniform throughout the
308-21 seacoast territory and shall be based on all monoline extended
308-22 coverage loss experience of all regulated insurers authorized to do
308-23 business in this state, including the Association, for property
308-24 located in the seacoast territory, using the most recent 30 years'
308-25 experience available. Surcharges collected in the past and used in
308-26 the development of current manual rates may not be excluded from
308-27 future rate development as long as those surcharges were collected
309-1 during the experience period used by the Board>.
309-2 SECTION 16.03. Sections 10, 12A, and 19, Article 21.49,
309-3 Insurance Code, are amended to read as follows:
309-4 Sec. 10. Immunity From Liability. There shall be no
309-5 liability on the part of and no cause of action of any nature shall
309-6 arise against a director of the association, the Board or any of
309-7 its staff, the Association or its agents or employees, or against
309-8 any participating insurer or its agents or employees, for any
309-9 inspections made under the plan of operation or any statements made
309-10 in good faith by them in any reports or communications concerning
309-11 risks submitted to the Association, or at any administrative
309-12 hearings conducted in connection therewith under the provisions of
309-13 this Act.
309-14 Sec. 12A. Legal counsel. The association shall establish a
309-15 plan in its plan of operation under which the association's legal
309-16 representation before the State Board of Insurance, the Texas
309-17 Department of Insurance, and the Texas legislature is without
309-18 conflict of interest or the appearance of a conflict of interest as
309-19 defined in the Texas Disciplinary Rules of Professional Conduct.
309-20 The association shall also adopt separate and distinct procedures
309-21 for legal counsel in the handling of disputes involving
309-22 policyholder claims against the association <is a state agency for
309-23 purposes of employing or authorizing legal representation and shall
309-24 be represented by the attorney general in the manner provided by
309-25 general law for representation of any other state agency by the
309-26 attorney general>.
309-27 Sec. 19. Payment of Losses <Exceeding $100 Million in Year>;
310-1 Premium Tax Credit. (a) If, in any calendar year, an occurrence
310-2 or series of occurrences within the defined catastrophe area
310-3 results in insured losses and operating expenses of the association
310-4 in excess of premium and other revenue of the association, any
310-5 excess losses shall be paid as follows:
310-6 (1) $100 million shall be assessed to the members of
310-7 the association with the proportion of the loss allocable to each
310-8 insurer determined in the same manner as its participation in the
310-9 association has been determined for the year under Section 5(c) of
310-10 this Act;
310-11 (2) any losses in excess of $100 million shall be paid
310-12 from either the catastrophe reserve trust fund established under
310-13 Section 8(i) of this Act or any reinsurance program established by
310-14 the association;
310-15 (3) for losses in excess of those paid under
310-16 Subdivisions (1) and (2) of this subsection, an additional $200
310-17 million shall be assessed to the members of the association with
310-18 the proportion of the loss allocable to each insurer determined in
310-19 the same manner as its participation in the association has been
310-20 determined for the year under Section 5(c) of this Act; or
310-21 (4) any losses in excess of those paid under
310-22 Subdivisions (1), (2), and (3) of this subsection shall be assessed
310-23 against members of the association, with the proportion of the
310-24 total loss allocable to each insurer determined in the same manner
310-25 as its participation in the association has been determined for the
310-26 year under Section 5(c) of this Act.
310-27 (b) An insurer may credit any amount paid in accordance with
311-1 Subsection (a)(4) of this section in a calendar year against its
311-2 premium tax under Article 4.10 of this code <In the event any
311-3 occurrence or series of occurrences within the defined catastrophe
311-4 area results in insured losses of the association totaling in
311-5 excess of $100 million within a single calendar year, the
311-6 proportion of the total loss allocable to each insurer shall be
311-7 determined in the same manner as its participation in the
311-8 association has been determined for the year under Subsection (c)
311-9 of Section 5 of the Texas Catastrophe Insurance Pool Act, as
311-10 amended, and any insurer which has paid its share of total losses
311-11 exceeding $100 million in a calendar year shall be entitled to
311-12 credit the amount of that excess share against its premium tax
311-13 under Article 7064, Revised Civil Statutes of Texas, 1925, as
311-14 amended>. The tax credit herein authorized shall be allowed at a
311-15 rate not to exceed 20 percent per year for five or more successive
311-16 years following the year of payment of the claims. The balance of
311-17 payments paid by the insurer and not claimed as such tax credit may
311-18 be reflected in the books and records of the insurer as an admitted
311-19 asset of the insurer for all purposes, including exhibition in
311-20 annual statements pursuant to Article 6.12 of this code <Insurance
311-21 Code>.
311-22 SECTION 16.04. Section 8E, Article 21.49, Insurance Code, is
311-23 repealed.
311-24 SECTION 16.05. (a) This article takes effect September 1,
311-25 1993.
311-26 (b) The change in law made to Article 21.49, Insurance Code,
311-27 by this article applies only to an insurance policy that is
312-1 delivered, issued for delivery, or renewed on or after October 1,
312-2 1993. An insurance policy that is delivered, issued for delivery,
312-3 or renewed before October 1, 1993, is governed by the law as it
312-4 existed immediately before the effective date of this article, and
312-5 that law is continued in effect for that purpose.
312-6 ARTICLE 17. 24-HOUR COVERAGE PILOT PROJECT ACT
312-7 SECTION 17.01. SHORT TITLE. This article may be cited as
312-8 the 24-Hour Coverage Pilot Project Act.
312-9 SECTION 17.02. PURPOSE. It is the intent of the legislature
312-10 to determine whether the costs of the workers' compensation system
312-11 and the health care delivery system can be effectively contained by
312-12 combining the medical, hospital, and rehabilitative care required
312-13 by the Texas Workers' Compensation Act (Article 8308-1.01 et seq.,
312-14 Vernon's Texas Civil Statutes) or under any other laws of this
312-15 state governing workers' compensation insurance, whether enacted
312-16 before or after the effective date of this article, with the
312-17 accident and health insurance benefits typically offered under a
312-18 group comprehensive accident and health insurance policy. The
312-19 legislature authorizes the establishment of up to 10 pilot projects
312-20 to be administered by the Texas Department of Insurance after
312-21 consulting with the Texas Workers' Compensation Commission. Each
312-22 pilot project shall terminate two years after the first date of
312-23 operation of that project, unless extended by the legislature.
312-24 SECTION 17.03. COMMISSIONER'S AUTHORITY AND RESPONSIBILITY.
312-25 The Commissioner of Insurance shall promulgate all reasonable rules
312-26 and regulations necessary to implement these pilot projects, after
312-27 consulting with the Texas Workers' Compensation Commission
313-1 regarding:
313-2 (1) benefits required to be provided by the contract;
313-3 (2) payment of workers' compensation medical and
313-4 indemnity benefits after the expiration of the pilot project; and
313-5 (3) notice of injury reporting to the Texas Workers'
313-6 Compensation Commission.
313-7 SECTION 17.04. DEFINITIONS. In this article:
313-8 (1) "Board" means the State Board of Insurance.
313-9 (2) "Commission" means the Texas Workers' Compensation
313-10 Commission.
313-11 (3) "Commissioner" means the Commissioner of Insurance
313-12 or the commissioner's deputies.
313-13 (4) "Department" means the Texas Department of
313-14 Insurance.
313-15 (5) "Form" or "policy form" means the contractual
313-16 agreement between the insurer and the employer that provides the
313-17 terms and conditions of the coverage granted. The term includes
313-18 the contract or policy, any declarations or certificate, any
313-19 endorsement or rider, or any other document that amends the
313-20 insurance contract.
313-21 (6) "Texas Workers' Compensation Act" means the Texas
313-22 Workers' Compensation Act (Article 8308-1.01 et seq., Vernon's
313-23 Texas Civil Statutes), and its subsequent amendments, and any other
313-24 laws of this state governing workers' compensation insurance,
313-25 whether enacted before or after the effective date of this article.
313-26 SECTION 17.05. INSURERS AUTHORIZED TO PARTICIPATE IN PILOT
313-27 PROJECTS. An insurer authorized and admitted by the department to
314-1 do insurance business in this state under a certificate of
314-2 authority that includes authorization to write workers'
314-3 compensation insurance, including the Texas Workers' Compensation
314-4 Fund, or an insurer authorized to write accident and health
314-5 insurance, including a company authorized under Chapter 20 or 22,
314-6 Insurance Code, and any subsequent amendments, may, without further
314-7 amending its certificate of authority, participate in the pilot
314-8 project and issue insurance contracts of the type described by
314-9 Section 17.08 of this article.
314-10 SECTION 17.06. CONTRACTS TO PROVIDE PILOT PROJECTS. The
314-11 department, after consulting with the commission, may, without a
314-12 bidding process, negotiate and enter into contracts as necessary or
314-13 appropriate in the judgment of the department to implement the
314-14 pilot project.
314-15 SECTION 17.07. GRANTS. The department may accept grants and
314-16 money from any source and may expend the grants and money to
314-17 implement the pilot project.
314-18 SECTION 17.08. COVERAGE TO BE PROVIDED. (a) An insurer
314-19 participating in the pilot project shall provide to the insured
314-20 employer through a 24-hour medical and indemnity insurance policy
314-21 the following minimum coverages:
314-22 (1) group accident and health insurance benefits that
314-23 are equivalent to those provided by the employer's group accident
314-24 and health insurance contract in effect immediately before the
314-25 24-hour medical and indemnity insurance policy becomes effective;
314-26 (2) medical, hospital, rehabilitation, and disability
314-27 income benefits required under the Texas Workers' Compensation Act;
315-1 (3) employers' liability coverage equivalent to that
315-2 ordinarily provided under a workers' compensation insurance policy;
315-3 and
315-4 (4) other states coverage equivalent to that
315-5 ordinarily provided under a workers' compensation insurance policy.
315-6 (b) The 24-hour medical and indemnity insurance policy may
315-7 provide for accident and health care by a preferred provider
315-8 organization in accordance with the requirements of Subchapter X,
315-9 Chapter 3, Title 28, Texas Administrative Code. The premium for a
315-10 24-hour medical and indemnity insurance policy shall be paid
315-11 entirely by the employer, except that the employee may contribute
315-12 an amount equal to the amount the employee previously contributed
315-13 under the employer's group accident and health plan. The 24-hour
315-14 medical and indemnity insurance policy may use deductibles and
315-15 coinsurance provisions that require the employee to pay a portion
315-16 of the actual medical care received by the employee except for
315-17 job-related injuries or occupational disease. A provision of the
315-18 pilot project may not vary the methods for calculating weekly
315-19 payments for disability compensation under the Texas Workers'
315-20 Compensation Act. A provision of the pilot project may not limit
315-21 the right to a hearing under the Texas Workers' Compensation Act.
315-22 SECTION 17.09. EXCLUSIVE REMEDY AND PROHIBITED DEFENSES.
315-23 The exclusive remedy provisions of the Texas Workers' Compensation
315-24 Act apply to work-related injuries and occupational disease covered
315-25 by the 24-hour medical and indemnity insurance policy. Likewise,
315-26 the prohibited defense provisions of the Texas Workers'
315-27 Compensation Act apply to actions to recover damages brought by
316-1 employees against employers for job-related injuries and
316-2 occupational disease covered by the 24-hour medical and indemnity
316-3 insurance policy.
316-4 SECTION 17.10. APPROVAL OF POLICY LANGUAGE. The 24-hour
316-5 medical and indemnity insurance policy and any declarations or
316-6 certificate and any endorsement or rider to the policy may not be
316-7 issued or delivered to a participating employer until a copy of the
316-8 form is filed with the department and approved by the commissioner
316-9 as conforming with the requirements of this article and any other
316-10 applicable law. The commissioner shall review the filing and
316-11 either approve or disapprove the filing before the 61st day after
316-12 the date the filing was received by the department, unless the
316-13 commissioner notifies the insurer within that period that revisions
316-14 of the filing are necessary. The commissioner may direct the use
316-15 of specific policy language for the period of the pilot project.
316-16 SECTION 17.11. FILING OF RATES AND RATING PLANS. Each
316-17 insurer participating in the pilot project shall file with the
316-18 department its rules, rates, and rating systems that will be
316-19 applicable to the pilot project. Rates may not be excessive,
316-20 inadequate, or unfairly discriminatory. The board shall review the
316-21 filing and shall approve or disapprove the filing before the 61st
316-22 day after the date the filing was received by the department if the
316-23 filing or the rates do not meet the standards established under
316-24 this article, unless the board notifies the insurer within that
316-25 period that revisions of the filing or rates are necessary. The
316-26 insurer may not apply a rating plan that will prohibit it from
316-27 complying with the statistical reporting requirements of Section
317-1 17.14 of this article.
317-2 SECTION 17.12. EXAMINATION OF RECORDS. The commissioner
317-3 may, as often as the commissioner considers necessary, make or
317-4 cause to be made an examination of the books and records of the
317-5 insured employers.
317-6 SECTION 17.13. LOSS RESERVE STANDARDS. The commissioner
317-7 shall provide for reasonable and necessary standards for the
317-8 estimation of the ultimate losses incurred under the 24-hour
317-9 medical and indemnity insurance policy.
317-10 SECTION 17.14. STATISTICAL REPORTING. The commissioner
317-11 shall establish reasonable and necessary standards for collecting
317-12 and compiling the premium and loss experience incurred under the
317-13 24-hour medical and indemnity insurance policy. Those standards
317-14 shall include:
317-15 (1) provision of information necessary for the
317-16 commissioner to complete the report specified in Section 17.16 of
317-17 this article;
317-18 (2) provision of information to the department
317-19 consistent with its statistical plan so that the integrity of the
317-20 workers' compensation statistical data bases are maintained; and
317-21 (3) provision of information to the department
317-22 consistent with its statistical plans so that the Texas Uniform
317-23 Experience Rating Plan or any successor to that plan adopted by the
317-24 board or department may be applied to the participating employer
317-25 after the pilot project terminates.
317-26 SECTION 17.15. COMPLAINTS. Any employer insured under a
317-27 24-hour medical and indemnity insurance policy who is aggrieved by
318-1 an act of a participating insurer may file a complaint with the
318-2 commissioner. Any employee of an insured employer who is aggrieved
318-3 by an act of a participating insurer may file a complaint with the
318-4 commissioner. The commissioner shall review the complaint and
318-5 refer any complaints involving job-related injury to the
318-6 commission. The commissioner may establish procedures to address
318-7 complaints received under the pilot project. The commissioner
318-8 shall maintain a record of all complaints received.
318-9 SECTION 17.16. REPORT TO THE LEGISLATURE. (a) The
318-10 department shall make an interim report on or before September 1,
318-11 1995, and a final report within three months after the termination
318-12 date of the pilot project, to the legislature on the activities,
318-13 findings, and recommendations of the department relative to the
318-14 pilot projects. The department shall monitor, evaluate, and report
318-15 the following information regarding the pilot projects:
318-16 (1) cost savings;
318-17 (2) effectiveness;
318-18 (3) effect on indemnity payments;
318-19 (4) complaints from injured workers and participating
318-20 employers;
318-21 (5) recommendations to continue or discontinue
318-22 testing;
318-23 (6) recommendations for any legislative changes; and
318-24 (7) other pertinent matters.
318-25 (b) The information from the pilot projects shall be
318-26 reported in a format that facilitates comparisons to other similar
318-27 data.
319-1 ARTICLE 18. PARTICULAR FUNCTIONS OF THE STATE BOARD OF INSURANCE
319-2 SECTION 18.01. Subchapter B, Chapter 21, Insurance Code, is
319-3 amended by adding Article 21.20-1 to read as follows:
319-4 Art. 21.20-1. RULES RESTRICTING COMPETITIVE BIDDING OR
319-5 ADVERTISING. The commissioner may not adopt rules restricting
319-6 competitive bidding or advertising by a person regulated by the
319-7 department except to prohibit false, misleading, or deceptive
319-8 practices by the person.
319-9 SECTION 18.02. Section 2, Article 1.10D, Insurance Code, is
319-10 amended by adding Subsection (d-1) to read as follows:
319-11 (d-1) An authorized governmental agency and any state
319-12 licensing agency shall furnish any materials, documents, reports,
319-13 complaints, or other evidence to the insurance fraud unit on the
319-14 request of the unit. Compliance with this subsection by an
319-15 authorized governmental agency or state licensing agency does not
319-16 constitute waiver of any privilege or requirement of
319-17 confidentiality otherwise applicable. Notwithstanding Section 5(a)
319-18 of this article, the commissioner may not release evidence obtained
319-19 under this subsection for public inspection if release of the
319-20 evidence would violate a privilege held by or a requirement of
319-21 confidentiality imposed on the agency from which the evidence was
319-22 obtained.
319-23 SECTION 18.03. Sections 1(a) and (c), Article 1.28,
319-24 Insurance Code, are amended to read as follows:
319-25 (a) On giving written notice of intent to the commissioner
319-26 of insurance, and if the commissioner of insurance does not
319-27 disapprove within 30 days after that notice is given, a domestic
320-1 insurance company, including a life, health, and accident insurance
320-2 company, fire and marine insurance company, surety and trust
320-3 company, general casualty company, title insurance company,
320-4 fraternal benefit society, mutual life insurance company, local
320-5 mutual aid association, statewide mutual assessment company, mutual
320-6 insurance company other than life, farm mutual insurance company,
320-7 county mutual insurance company, Lloyds plan, reciprocal exchange,
320-8 group hospital service corporation, health maintenance
320-9 organization, stipulated premium insurance company, nonprofit legal
320-10 services corporation, or any other entity licensed under the
320-11 Insurance Code or chartered or organized under the laws of this
320-12 state that is an affiliated member of an insurance holding company
320-13 system, as defined by Article 21.49-1 <21.49>, Insurance Code, as
320-14 added by Chapter 356, Acts of the 62nd Legislature, Regular
320-15 Session, 1971 (Article 21.49-1, Vernon's Texas Insurance Code), may
320-16 locate and maintain all or any portion of its books, records, and
320-17 accounts and its principal offices outside this state at a location
320-18 within the United States if the company meets the requirements of
320-19 this section. This article does not apply to or prohibit the
320-20 location and maintenance of the normal books, records, and accounts
320-21 of either a branch office or agency office of a domestic insurance
320-22 company at the branch office or agency office, if that office is
320-23 located in the United States.
320-24 (c) The ultimate controlling person of the insurance holding
320-25 company system, the immediate controlling person of the domestic
320-26 insurance company, or an intermediate controlling person of the
320-27 domestic insurance company must be legally domiciled, licensed, or
321-1 admitted to transact business in a jurisdiction within the United
321-2 States.
321-3 SECTION 18.04. Section 2, Article 21.49-1, Insurance Code,
321-4 is amended to read as follows:
321-5 Sec. 2. Definitions. As used in this article, the following
321-6 terms shall have the respective meanings hereinafter set forth,
321-7 unless the context shall otherwise require:
321-8 (a) Affiliate. An "affiliate" of, or person
321-9 "affiliated" with, a specific person, is a person that directly, or
321-10 indirectly through one or more intermediaries, controls, or is
321-11 controlled by, or is under common control with, the person
321-12 specified.
321-13 (b) Commercially Domiciled Insurer. The term
321-14 "commercially domiciled insurer" means a foreign or alien insurer
321-15 authorized to do business in this state that during its three
321-16 preceding fiscal years taken together, or any lesser period if it
321-17 has been licensed to transact business in this state only for that
321-18 lesser period, has written an average of more gross premiums in
321-19 this state than it has written in its state of domicile during the
321-20 same period, with those gross premiums constituting 20 percent or
321-21 more of its total gross premiums everywhere in the United States
321-22 for that three-year or lesser period, as reported in its three most
321-23 recent annual statements.
321-24 (c) Commissioner. The term "Commissioner" shall mean
321-25 the Commissioner of Insurance, the commissioner's deputies, or the
321-26 State Board of Insurance, as appropriate.
321-27 (d) <(c)> Control. The term "control," including the
322-1 terms "controlling," "controlled by," and "under common control
322-2 with," means the possession, direct or indirect, of the power to
322-3 direct or cause the direction of the management and policies of a
322-4 person, whether through the ownership of voting securities, by
322-5 contract other than a commercial contract for goods or
322-6 non-management services, or otherwise, unless the power is the
322-7 result of an official position with or corporate office held by the
322-8 person. Control shall be presumed to exist if any person, directly
322-9 or indirectly, or with members of the person's immediate family,
322-10 owns, controls, or holds with the power to vote, or if any person
322-11 other than a corporate officer or director of a person holds
322-12 proxies representing, 10 percent or more of the voting securities
322-13 or authority of any other person, or if any person by contract or
322-14 <contractor> agreement is designated as an attorney-in-fact for a
322-15 Lloyd's Plan insurer under Article 18.02 of this code or for a
322-16 reciprocal or interinsurance exchange under Articles 19.02 and
322-17 19.10 of this code. This presumption may be rebutted by a showing
322-18 made in the manner provided by Section 3(j) that control does not
322-19 exist in fact and that the person rebutting the presumption is in
322-20 compliance with Sections 5(a) through (c) of this article. The
322-21 commissioner may determine, after furnishing all persons in
322-22 interest notice and opportunity to be heard and making specific
322-23 findings of fact to support such determination, that control exists
322-24 in fact, notwithstanding the absence of a presumption to that
322-25 effect, where a person exercises directly or indirectly either
322-26 alone or pursuant to an agreement with one or more other persons
322-27 such a controlling influence over the management or policies of an
323-1 authorized insurer as to make it necessary or appropriate in the
323-2 public interest or for the protection of the policyholders of the
323-3 insurer that the person be deemed to control the insurer.
323-4 (e) <(d)> Holding Company. The term "holding company"
323-5 means any person who directly or indirectly controls any insurer.
323-6 (f) <(e)> Controlled Insurer. The term "controlled
323-7 insurer" means an insurer controlled directly or indirectly by a
323-8 holding company.
323-9 (g) <(f)> Controlled Person. The term "controlled
323-10 person" means any person, other than a controlled insurer who is
323-11 controlled directly or indirectly by a holding company.
323-12 (h) Domestic Insurer. The term "domestic insurer"
323-13 includes a commercially domiciled insurer.
323-14 (i) <(g)> Insurance Holding Company System. The term
323-15 "insurance holding company system" consists of two or more
323-16 affiliated persons, one or more of which is an insurer.
323-17 (j) <(h)> Insurer. The term "insurer" shall include
323-18 all insurance companies organized or chartered under the laws of
323-19 this State, commercially domiciled insurers, or insurers licensed
323-20 to do business in this State, including capital stock companies,
323-21 mutual companies, farm mutual insurance companies, title insurance
323-22 companies, fraternal benefit societies, local mutual aid
323-23 associations, Statewide mutual assessment companies, county mutual
323-24 insurance companies, Lloyds' Plan companies, reciprocal or
323-25 interinsurance exchanges, stipulated premium insurance companies,
323-26 and group hospital service companies, except that it shall not
323-27 include agencies, authorities, or instrumentalities of the United
324-1 States, its possessions and territories, the Commonwealth of Puerto
324-2 Rico, the District of Columbia, or a state or political subdivision
324-3 of a state.
324-4 (k) <(i)> Person. A "person" is an individual, a
324-5 corporation, a partnership, an association, a joint stock company,
324-6 a trust, an unincorporated organization, any similar entity or any
324-7 combination of the foregoing acting in concert, but shall not
324-8 include any securities broker performing no more than the usual and
324-9 customary broker's function.
324-10 (l) <(j)> Security holder. A "security holder" of a
324-11 specified person is one who owns any security of such person,
324-12 including common stock, preferred stock, debt obligations, and any
324-13 other security convertible into or evidencing the right to acquire
324-14 any of the foregoing.
324-15 (m) <(k)> Subsidiary. A "subsidiary" of a specified
324-16 person is an affiliate controlled by such person directly or
324-17 indirectly through one or more intermediaries.
324-18 (n) <(l)> Voting Security. The term "voting security"
324-19 means any security or other instrument which has the power to vote
324-20 at a meeting of shareholders of a person for or against the
324-21 election of directors or any other matter involving the direction
324-22 of the management and policies of such person, or any other
324-23 security or instrument which the State Board of Insurance deems to
324-24 be of similar nature and considers necessary or appropriate, by
324-25 which such rules and regulations as it may prescribe in the public
324-26 interest deems to treat as a voting security.
324-27 (o) <(m)> Notwithstanding any other provision of this
325-1 article, the following shall not be deemed holding companies: the
325-2 United States, a state or any political subdivision, agency, or
325-3 instrumentality thereof, or any corporation which is wholly owned
325-4 directly or indirectly by one or more of the foregoing.
325-5 (p) <(n)> Immediate Family. The term "immediate
325-6 family" means a person's spouse, father, mother, children,
325-7 brothers, sisters, and grandchildren, the father, mother, brothers,
325-8 and sisters of the person's spouse, and the spouse of the person's
325-9 child, brother or sister, mother, father, or grandparent.
325-10 (q) <(o)> Ultimate Controlling Person. The term
325-11 "ultimate controlling person" means that person who is not
325-12 controlled by another person.
325-13 (r) <(p)> Notwithstanding any other provision of this
325-14 article, this article shall not be applicable to any insurance
325-15 holding company system in which the insurer, the holding company,
325-16 if any, the subsidiaries, if any, the affiliates, if any, and each
325-17 and every other member thereof, if any, is privately owned by not
325-18 more than five (5) security holders, each of whom is and must be an
325-19 individual or a natural person, and the commissioner has found that
325-20 it is not necessary that such holding company system be regulated
325-21 under this article or certain provisions of this article and has
325-22 issued a total or partial exemption certificate to such holding
325-23 company which shall effect the exemption until revoked by the
325-24 commissioner.
325-25 (s) The commissioner may exempt from the provisions of
325-26 this article any commercially domiciled insurer if the commissioner
325-27 determines that the insurer has assets physically located in this
326-1 state or an asset to liability ratio sufficient to justify the
326-2 conclusion that there is no reasonable danger that the operations
326-3 or conduct of the business of the insurer could present a danger of
326-4 loss to the policyholders of this state.
326-5 SECTION 18.05. Sections 3(a) and (j), Article 21.49-1,
326-6 Insurance Code, are amended to read as follows:
326-7 (a) Registration. Every insurer which is authorized to do
326-8 business in this State and which is a member of an insurance
326-9 holding company system shall register with the commissioner, except
326-10 a foreign or non-domestic insurer subject to disclosure
326-11 requirements and standards adopted by statute or regulation in the
326-12 jurisdiction of its domicile which are substantially similar to
326-13 those contained in this article. The exemption from registration
326-14 for a foreign insurer does not apply to a commercially domiciled
326-15 insurer doing business in this state. Any insurer which is subject
326-16 to registration under this section shall register within 15 days
326-17 after it becomes subject to registration unless the commissioner
326-18 for good cause shown extends the time for registration, and then
326-19 within such extended time. The commissioner may require any
326-20 authorized insurer which is a member of an insurance holding
326-21 company system which is not subject to registration under this
326-22 section to furnish a copy of the registration statement or other
326-23 information filed by such insurance company with the insurance
326-24 regulatory authority of its domiciliary jurisdiction.
326-25 (j) Disclaimer. Any person may file with the commissioner a
326-26 disclaimer of affiliation with any authorized insurer or such a
326-27 disclaimer may be filed by such insurer or any member of an
327-1 insurance holding company system. The disclaimer shall fully
327-2 disclose all material relationships and bases for affiliation
327-3 between such person and such insurer as well as the basis for
327-4 disclaiming such affiliation. After a disclaimer has been filed,
327-5 the insurer shall be relieved of any duty to register or report
327-6 under this section which may arise out of the insurer's
327-7 relationship with such person unless and until the commissioner
327-8 disallows such a disclaimer. Unless disallowed by the
327-9 commissioner, a <A> disclaimer filed under this subsection relieves
327-10 <does not relieve> a person of the duty to comply with the
327-11 requirements of Sections 5(a) through (c) of this article. The
327-12 commissioner shall disallow such a disclaimer only after furnishing
327-13 all parties in interest with notice and opportunity to be heard and
327-14 after making specific findings of fact to support such
327-15 disallowance.
327-16 SECTION 18.06. Section 5(e), Article 21.49-1, Insurance
327-17 Code, is amended to read as follows:
327-18 (e) Exemptions. The provisions of this section shall not
327-19 apply to:
327-20 (1) any acquisition by a person who is a broker-dealer
327-21 under state or federal securities laws of any voting security
327-22 which, immediately prior to consummation of such acquisition, was
327-23 not issued and outstanding and which acquisition is solely for
327-24 resale under a plan approved by the commissioner that will not
327-25 reasonably result in an acquisition of control on resale and where
327-26 during the period prior to resale no actual positive act of control
327-27 by virtue of those shares is committed;
328-1 (2) any transaction which is subject to the provisions
328-2 of: (i) Article 21.25, Sections 1 through 5, of this code, dealing
328-3 with the merger or consolidation of two or more insurers and
328-4 complying with the terms of such article until the plan of merger
328-5 or consolidation has been filed by the domestic insurer with the
328-6 Commissioner of Insurance in accordance with such Article 21.25.
328-7 After the filing of such plan of merger or consolidation the
328-8 transaction shall be subject to the approval provisions of
328-9 Subsection (c) of Section 5 of this article, but the Commissioner
328-10 may exempt such transaction from any or all of the other provisions
328-11 and requirements of Section 5 of this article if the commissioner
328-12 finds that the notice, proxy statement, and other materials
328-13 furnished to shareholders and security holders in connection with
328-14 such merger or consolidation contained reasonable and adequate
328-15 factual and financial disclosure, material and information relating
328-16 to such transaction, (ii) Article 11.20 of this code, (iii) Article
328-17 11.21 of this code, (iv) Article 14.13 of this code, (v) Article
328-18 14.61 of this code, (vi) Article 14.63 of this code, (vii) Article
328-19 21.26 of this code, provided that the requirements of said article
328-20 are fully complied with, <and> (viii) Article 22.15 of this code,
328-21 provided that the requirements of said article are fully complied
328-22 with, and (ix) Article 22.19 of this code, provided that the
328-23 reinsurance is a total direct reinsurance agreement;
328-24 (3) any offer, request, invitation, agreement, or
328-25 acquisition which the commissioner by order shall exempt therefrom
328-26 as (i) not having been made or entered into for the purpose and not
328-27 having the effect of changing or influencing the control of a
329-1 domestic insurer, or (ii) as otherwise not comprehended within the
329-2 purposes of this section;
329-3 (4) any acquisition of a voting security of a domestic
329-4 insurer by a person in control of such domestic insurer if, after
329-5 such acquisition, such person, directly or indirectly, owns or
329-6 controls less than 50 percent of the then issued and outstanding
329-7 voting securities of such domestic insurer;
329-8 (5) any acquisition of a voting security of a domestic
329-9 insurer by a person that, directly or indirectly, owns or controls
329-10 as much as 10 percent but less than 50 percent of the then issued
329-11 and outstanding voting securities of such domestic insurer, and
329-12 such person would, after such acquisition, directly or indirectly,
329-13 own or control 50 percent or more of the then issued and
329-14 outstanding voting securities of such domestic insurer, provided
329-15 such person has made written application for such exemption and the
329-16 commissioner by order has determined that such acquisition will not
329-17 jeopardize the financial stability of the domestic insurer,
329-18 prejudice the interests of its policyholders, or adversely affect
329-19 the public interest; or
329-20 (6) any acquisition of a voting security of a domestic
329-21 insurer by a person that, prior thereto, directly or indirectly,
329-22 owns or controls more than 50 percent of the then issued and
329-23 outstanding voting securities of such domestic insurer.
329-24 SECTION 18.07. Article 21.49-2A(b), Insurance Code, is
329-25 amended to read as follows:
329-26 (b) Except as provided by Section (c) of this article, an
329-27 insurer may not cancel:
330-1 (1) a policy of liability insurance that is a renewal
330-2 or continuation policy; or
330-3 (2) a policy of liability insurance that is in its
330-4 initial policy period after the 60th day following the date on
330-5 which the policy was issued.
330-6 SECTION 18.08. Section 7(d), Article 21.49-2B, Insurance
330-7 Code, is amended to read as follows:
330-8 (d) An insurer may <shall> notify an insured who has filed
330-9 two claims in a period of less than three years that the insurer
330-10 may decline to renew the policy if the insured files a third claim
330-11 during the three-year period. If the insurer does not notify the
330-12 insured in accordance with this subsection, the insurer may not
330-13 refuse to renew the policy because of losses. The notice form must
330-14 list the policyholder's claims and contain the sentence: "Another
330-15 non-weather related loss could cause us to refuse to renew your
330-16 policy." <The notice must be in a form approved by the board.>
330-17 SECTION 18.09. Section 2(g), Article 22.13, Insurance Code,
330-18 is amended to read as follows:
330-19 (g) If a stipulated premium company ceases to write new
330-20 health, accident, sickness, or hospitalization policies, or any
330-21 combination of those policies, in an amount in excess of $10,000
330-22 for any one risk, and so notifies the commissioner, the
330-23 requirements imposed under Subsection (d) of this section relating
330-24 to increase of minimum capital shall be suspended until the date on
330-25 which the stipulated premium company resumes writing those health,
330-26 accident, sickness, or hospitalization policies, and upon such
330-27 resumption of writing of such policies, the stipulated premium
331-1 company shall be required to increase its capital to the amount
331-2 required by Subsection (d) as of the date of such resumption of
331-3 such policy writings. For purposes of this subsection, renewal of
331-4 a policy is not the writing of a new health, accident, sickness, or
331-5 hospitalization policy.
331-6 SECTION 18.10. Subsection (B), Section 2, Chapter 397, Acts
331-7 of the 54th Legislature, 1955 (Article 3.70-2, Vernon's Texas
331-8 Insurance Code), is amended to read as follows:
331-9 (B) No policy of accident and sickness insurance shall make
331-10 benefits contingent upon treatment or examination by a particular
331-11 practitioner or by particular practitioners of the healing arts
331-12 hereinafter designated unless such policy contains a provision
331-13 designating the practitioner or practitioners who will be
331-14 recognized by the insurer and those who will not be recognized by
331-15 the insurer. Such provision may be located in the "Exceptions" or
331-16 "Exceptions and Reductions" provisions, or elsewhere in the policy,
331-17 or by endorsement attached to the policy, at the insurer's option.
331-18 In designating the practitioners who will and will not be
331-19 recognized, such provision shall use the following terms: Doctor
331-20 of Medicine, Doctor of Osteopathy, Doctor of Dentistry, Doctor of
331-21 Chiropractic, Doctor of Optometry, Doctor of Podiatry, Licensed
331-22 Audiologist, Licensed Speech-language Pathologist, Doctor in
331-23 Psychology, Certified Social Worker--Advanced Clinical
331-24 Practitioner, Licensed Dietitian, Licensed Professional Counselor,
331-25 <and> Licensed Marriage and Family Therapist, and Licensed Hearing
331-26 Aid Fitter and Dispenser.
331-27 For purposes of this Act, such designations shall have the
332-1 following meanings:
332-2 Doctor of Medicine: One licensed by the Texas State Board of
332-3 Medical Examiners on the basis of the degree "Doctor of Medicine";
332-4 Doctor of Osteopathy: One licensed by the Texas State Board
332-5 of Medical Examiners on the basis of the degree of "Doctor of
332-6 Osteopathy";
332-7 Doctor of Dentistry: One licensed by the State Board of
332-8 Dental Examiners;
332-9 Doctor of Chiropractic: One licensed by the Texas Board of
332-10 Chiropractic Examiners;
332-11 Doctor of Optometry: One licensed by the Texas Optometry
332-12 Board;
332-13 Doctor of Podiatry: One licensed by the State Board of
332-14 Podiatry Examiners;
332-15 Licensed Audiologist: One with a master's or doctorate
332-16 degree in audiology from an accredited college or university and
332-17 who is licensed as an audiologist by the State Committee of
332-18 Examiners for Speech-Language Pathology and Audiology <certified by
332-19 the American Speech-language and Hearing Association>;
332-20 Licensed Speech-language Pathologist: One with a master's or
332-21 doctorate degree in speech pathology or speech-language pathology
332-22 from an accredited college or university and who is licensed as a
332-23 speech-language pathologist by the State Committee of Examiners for
332-24 Speech-Language Pathology and Audiology <certified by the American
332-25 Speech-language and Hearing Association>;
332-26 Doctor in Psychology: One licensed by the Texas State Board
332-27 of Examiners of Psychologists and certified as a Health Service
333-1 Provider;
333-2 Certified Social Worker--Advanced Clinical Practitioner: One
333-3 certified by the Texas Department of Human Services as a Certified
333-4 Social Worker with the order of recognition of Advanced Clinical
333-5 Practitioner;
333-6 Licensed Dietitian: One licensed by the Texas State Board of
333-7 Examiners of Dietitians;
333-8 Licensed Professional Counselor: One licensed by the Texas
333-9 State Board of Examiners of Professional Counselors; <and>
333-10 Licensed Marriage and Family Therapist: One licensed by the
333-11 Texas State Board of Examiners of Marriage and Family Therapists;
333-12 and
333-13 Licensed Hearing Aid Fitter and Dispenser: One licensed by
333-14 the Texas Board of Examiners in the Fitting and Dispensing of
333-15 Hearing Aids.
333-16 SECTION 18.11. Sections 1 and 3, Article 21.52, Insurance
333-17 Code, as amended by Chapters 242 and 824, Acts of the 72nd
333-18 Legislature, Regular Session, 1991, are reenacted and amended to
333-19 read as follows:
333-20 Sec. 1. DEFINITIONS. As used in this article:
333-21 (a) "health insurance policy" means any individual,
333-22 group, blanket, or franchise insurance policy, insurance agreement,
333-23 or group hospital service contract, providing benefits for medical
333-24 or surgical expenses incurred as a result of an accident or
333-25 sickness;
333-26 (b) "doctor of podiatric medicine" includes D.P.M.,
333-27 podiatrist, doctor of surgical chiropody, D.S.C. and chiropodist;
334-1 (c) "doctor of optometry" includes optometrist, doctor
334-2 of optometry, and O.D.;
334-3 (d) "doctor of chiropractic" means a person who is
334-4 licensed by the Texas Board of Chiropractic Examiners to practice
334-5 chiropractic;
334-6 (e) "licensed dentist" means a person who is licensed
334-7 to practice dentistry by the State Board of Dental Examiners;
334-8 (f) "licensed audiologist" means a person who has
334-9 received a master's or doctorate degree in audiology from an
334-10 accredited college or university and is licensed as an audiologist
334-11 by the State Committee of Examiners for Speech-Language Pathology
334-12 and Audiology <certified by the American Speech-language and
334-13 Hearing Association>;
334-14 (g) "licensed speech-language pathologist" means a
334-15 person who has received a master's or doctorate degree in
334-16 speech-language pathology from an accredited college or university
334-17 and is licensed as a speech-language pathologist by the State
334-18 Committee of Examiners for Speech-Language Pathology and Audiology
334-19 <certified by the American Speech-language and Hearing Association
334-20 to restore speech loss or correct a speech impairment>;
334-21 (h) "certified social worker--advanced clinical
334-22 practitioner" means a person who is certified by the Texas
334-23 Department of Human Services as a certified social worker with the
334-24 order of recognition of advanced clinical practitioner;
334-25 (i) "licensed dietitian" means a person who is
334-26 licensed by the Texas State Board of Examiners of Dietitians;
334-27 (j) "licensed professional counselor" means a person
335-1 who is licensed by the Texas State Board of Examiners of
335-2 Professional Counselors; <and>
335-3 (k) "psychologist" means a person licensed to practice
335-4 psychology by the Texas State Board of Examiners of Psychologists;
335-5 (l) <(k)> "licensed marriage and family therapist"
335-6 means a person who is licensed by the Texas State Board of
335-7 Examiners of Marriage and Family Therapists; and
335-8 (m) "licensed hearing aid fitter and dispenser" means
335-9 a person who is licensed by the Texas Board of Examiners in the
335-10 Fitting and Dispensing of Hearing Aids.
335-11 Sec. 3. SELECTION OF PRACTITIONERS. Any person who is
335-12 issued, who is a party to, or who is a beneficiary under any health
335-13 insurance policy delivered, renewed, or issued for delivery in this
335-14 state by any insurance company, association, or organization to
335-15 which this article applies may select a licensed doctor of
335-16 podiatric medicine, a licensed dentist, or a doctor of chiropractic
335-17 to perform the medical or surgical services or procedures scheduled
335-18 in the policy which fall within the scope of the license of that
335-19 practitioner, a licensed doctor of optometry to perform the
335-20 services or procedures scheduled in the policy which fall within
335-21 the scope of the license of that doctor of optometry, a licensed
335-22 <an> audiologist to measure hearing for the purpose of determining
335-23 the presence or extent of a hearing loss and to provide aural
335-24 rehabilitation services to a person with a hearing loss if those
335-25 services or procedures are scheduled in the policy, a licensed
335-26 speech-language pathologist to evaluate speech and language and to
335-27 provide habilitative and rehabilitative services to restore speech
336-1 or language loss or to correct a speech or language impairment if
336-2 those services or procedures are scheduled in the policy, a
336-3 certified social worker--advanced clinical practitioner to provide
336-4 the services that fall within the scope of the license of such
336-5 certified practitioner and which are specified as services within
336-6 the terms of the policy of insurance, including the provision of
336-7 direct, diagnostic, preventive, or clinical services to
336-8 individuals, families, and groups whose functioning is threatened
336-9 or affected by social or psychological stress or health impairment,
336-10 if those services or procedures are scheduled in the policy, a
336-11 licensed dietitian including a provisional licensed dietitian under
336-12 a licensed dietitian's supervision to provide the services that
336-13 fall within the scope of the license of that dietitian if those
336-14 services are scheduled in the policy, a licensed professional
336-15 counselor to provide the services that fall within the scope of the
336-16 license of that professional if those services are scheduled in the
336-17 policy, <or> a licensed marriage and family therapist to provide
336-18 the services that fall within the scope of the license of that
336-19 professional if those services are scheduled in the policy, <or> a
336-20 psychologist to perform the services or procedures scheduled in the
336-21 policy that fall within the scope of the license of that
336-22 psychologist, or a licensed hearing aid fitter and dispenser to
336-23 provide the services or procedures scheduled in the policy that
336-24 fall within the scope of the license of that practitioner. The
336-25 services of a certified social worker--advanced clinical
336-26 practitioner, licensed professional counselor, or licensed marriage
336-27 and family therapist that are included in this Act may require a
337-1 professional recommendation by a doctor of medicine or doctor of
337-2 osteopathy unless the health insurance policy terms do not require
337-3 such a recommendation. The payment or reimbursement by the
337-4 insurance company, association, or organization for those services
337-5 or procedures in accordance with the payment schedule or the
337-6 payment provisions in the policy shall not be denied because the
337-7 same were performed by a licensed doctor of podiatric medicine, a
337-8 licensed doctor of optometry, a licensed doctor of chiropractic, a
337-9 licensed dentist, a licensed <an> audiologist, a licensed
337-10 speech-language pathologist, a certified social worker--advanced
337-11 clinical practitioner, a licensed dietitian, a licensed
337-12 professional counselor, <or> a licensed marriage and family
337-13 therapist, <or> a psychologist, or a licensed hearing aid fitter
337-14 and dispenser. There shall not be any classification,
337-15 differentiation, or other discrimination in the payment schedule or
337-16 the payment provisions in a health insurance policy, nor in the
337-17 amount or manner of payment or reimbursement thereunder, between
337-18 scheduled services or procedures when performed by a doctor of
337-19 podiatric medicine, a doctor of optometry, a doctor of
337-20 chiropractic, a licensed dentist, a licensed <an> audiologist, a
337-21 licensed speech-language pathologist, a certified social
337-22 worker--advanced clinical practitioner, a licensed dietitian, a
337-23 licensed professional counselor, <or> a licensed marriage and
337-24 family therapist, <or> a psychologist, or a licensed hearing aid
337-25 fitter and dispenser which fall within the scope of his license or
337-26 certification and the same services or procedures when performed by
337-27 any other practitioner of the healing arts whose services or
338-1 procedures are covered by the policy. Any provision in a health
338-2 insurance policy contrary to or in conflict with the provisions of
338-3 this article shall, to the extent of the conflict, be void, but
338-4 such invalidity shall not affect the validity of the other
338-5 provisions of this policy. Any presently approved policy form
338-6 containing any provision in conflict with the requirements of this
338-7 Act shall be brought into compliance with this Act by the use of
338-8 riders and endorsements which have been approved by the State Board
338-9 of Insurance or by the filing of new or revised policy forms for
338-10 approval by the State Board of Insurance.
338-11 SECTION 18.12. Article 23.01, Insurance Code, is amended to
338-12 read as follows:
338-13 Art. 23.01. Incorporation; Definitions. (a) Any seven or
338-14 more persons on application to the secretary of state for a
338-15 corporate charter under the Texas Non-Profit Corporation Act as a
338-16 nonmembership corporation may be incorporated for the sole purpose
338-17 of establishing, maintaining, and operating non-profit legal
338-18 service plans, whereby legal services may be provided by such
338-19 corporation through contracting attorneys as is hereinafter
338-20 provided.
338-21 (b) As used in this chapter, the following words, unless the
338-22 context of their use clearly indicates otherwise, shall have the
338-23 following meanings:
338-24 (1) "Attorney" means a person <currently> licensed
338-25 <by the Supreme Court of Texas> to practice law in the jurisdiction
338-26 in which the legal services are to be provided.
338-27 (2) "Applicant" means a person applying for a legal
339-1 services contract for performance of legal services through a
339-2 corporation qualified under this chapter.
339-3 (3) "Benefit certificate" means a writing setting
339-4 forth the benefits and other required matters issued to a
339-5 participant under a group contract for legal services and also an
339-6 individual contract for legal services issued to a participant.
339-7 (4) "Contracting attorney" means an attorney who has
339-8 entered into the contract provided by Article 23.11 of this code.
339-9 (5) "Participant" means the person entitled to
339-10 performance of legal services under contract with a corporation
339-11 qualified under this chapter.
339-12 (6) "State Board of Insurance" means all of the
339-13 insurance regulatory officials whose duties and functions are
339-14 designated by the Insurance Code of Texas as such now exists or may
339-15 be amended in the future. Any duty stated by this chapter to be
339-16 performed by or to be placed on the State Board of Insurance is
339-17 placed upon and is to be performed by the insurance regulatory
339-18 official or group of officials on whom similar duties are placed or
339-19 to be performed for insurers or the business of insurance by the
339-20 Insurance Code. The multimember insurance regulatory body
339-21 designated by the Insurance Code as the uniform insurance
339-22 rule-making authority is authorized to enact rules designating the
339-23 proper insurance regulatory official to perform any duty placed by
339-24 this chapter on the insurance regulatory officials where such duty
339-25 is not similar to duties otherwise performed by a specific official
339-26 or group of such officials.
339-27 SECTION 18.13. Article 23.22, Insurance Code, is amended to
340-1 read as follows:
340-2 Art. 23.22. Complaints. The State Board of Insurance shall
340-3 refer a complaint <any complaints> received by it concerning the
340-4 performance of an <any> attorney licensed in this state who is
340-5 connected with a <any> corporation complying with this chapter to
340-6 the Supreme Court of the State of Texas or to any person designated
340-7 by the Supreme Court to receive attorney grievances from the
340-8 public. The board shall refer a complaint regarding an attorney
340-9 licensed in another jurisdiction who is connected with a
340-10 corporation complying with this chapter to the appropriate
340-11 licensing agency of the other jurisdiction.
340-12 SECTION 18.14. (a) Section 6, Article 21.52B, Insurance
340-13 Code, is repealed.
340-14 (b) This section takes effect August 30, 1993.
340-15 SECTION 18.15. Effective August 30, 1993, Section 41.02,
340-16 Chapter 817, Acts of the 65th Legislature, Regular Session, 1977,
340-17 is repealed.
340-18 SECTION 18.16. (a) The change in law made to Articles
340-19 23.01 and 23.22, Insurance Code, by this article apply only to a
340-20 contract entered into or renewed by a nonprofit legal services
340-21 corporation on or after January 1, 1994. A contract that is
340-22 entered into or renewed before January 1, 1994, is governed by the
340-23 law as it existed immediately before the effective date of this
340-24 Act, and that law is continued in effect for that purpose.
340-25 (b) This article applies only to an insurance policy that is
340-26 delivered, issued for delivery, or renewed on or after January 1,
340-27 1994. A policy that is delivered, issued for delivery, or renewed
341-1 before January 1, 1994, is governed by the law as it existed
341-2 immediately before the effective date of this Act, and that law is
341-3 continued in effect for that purpose.
341-4 ARTICLE 19. CONTINUATION AND FUNCTIONS OF
341-5 OFFICE OF PUBLIC INSURANCE COUNSEL
341-6 SECTION 19.01. Article 1.35A, Insurance Code, is amended to
341-7 read as follows:
341-8 Art. 1.35A. Office of Public Insurance Counsel<.>
341-9 Sec. 1. CREATION; PURPOSE. <(a)> The independent office of
341-10 public insurance counsel is created to represent the interests of
341-11 insurance consumers in Texas.
341-12 Sec. 2. APPOINTMENT, QUALIFICATIONS, AND REMOVAL OF PUBLIC
341-13 COUNSEL. (a) <(b)> The governor with the advice and consent of
341-14 the senate shall appoint a public counsel who shall serve as the
341-15 executive director of the office of public insurance counsel.
341-16 (b) <(c)> To be eligible to serve as public counsel for the
341-17 office of public insurance counsel, a person must be a resident of
341-18 Texas and be eligible to practice law in Texas. The public counsel
341-19 shall be a person who has demonstrated a strong commitment and
341-20 involvement in efforts to safeguard the rights of the public and
341-21 who possesses the knowledge and experience necessary to practice
341-22 effectively in insurance proceedings.
341-23 (c) A person is not eligible for appointment as public
341-24 counsel if the person or the person's spouse:
341-25 (1) is employed by or participates in the management
341-26 of a business entity or other organization regulated by the
341-27 department or receiving funds from the department;
342-1 (2) owns or controls, directly or indirectly, more
342-2 than a 10 percent interest in a business entity or other
342-3 organization regulated by the department or receiving funds from
342-4 the department or the office of public insurance counsel; or
342-5 (3) uses or receives a substantial amount of tangible
342-6 goods, services, or funds from the department or the office of
342-7 public insurance counsel, other than compensation or reimbursement
342-8 authorized by law for department or office of public insurance
342-9 counsel membership, attendance, or expenses.
342-10 (d) Appointment of the public counsel shall be made without
342-11 regard to the race, color, handicap, sex, religion, age, or
342-12 national origin of the appointee.
342-13 (e) <(d)> The public counsel shall serve for a term of two
342-14 years expiring on February 1 of each odd-numbered year.
342-15 (f) It is a ground for removal from office if the public
342-16 counsel:
342-17 (1) does not have at the time of appointment the
342-18 qualifications required by Subsection (b) of this section;
342-19 (2) does not maintain during service as public counsel
342-20 the qualifications required by Subsection (b) of this section;
342-21 (3) violates a prohibition established by Subsection
342-22 (c) of this section or Section 4 of this article; or
342-23 (4) cannot discharge the public counsel's duties for a
342-24 substantial part of the term for which the public counsel is
342-25 appointed because of illness or disability.
342-26 (g) The validity of an action of the office of public
342-27 insurance counsel is not affected by the fact that it is taken when
343-1 a ground for removal of the public counsel exists.
343-2 Sec. 3. ADMINISTRATION. (a) <(e)> The public counsel, as
343-3 executive director of the office of public insurance counsel, shall
343-4 be charged with the responsibility of administering, enforcing, and
343-5 carrying out the provisions of this article, including preparation
343-6 and submission to the legislature of a budget for the office,
343-7 employing all necessary professional, technical, and other
343-8 employees to carry out the provisions of this article, approval of
343-9 expenditures for professional services, travel, per diem, and other
343-10 actual and necessary expenses incurred in administering the office.
343-11 Expenses for the office shall be paid from the assessment imposed
343-12 in Article 1.35B of this chapter. The compensation for employees
343-13 of the office of public insurance counsel shall be fixed by the
343-14 legislature as provided by the General Appropriations Act.
343-15 (b) The office of public insurance counsel shall file
343-16 annually with the governor and the presiding officer of each house
343-17 of the legislature a complete and detailed written report
343-18 accounting for all funds received and disbursed by the office of
343-19 public insurance counsel during the preceding fiscal year. The
343-20 annual report must be in the form and reported in the time provided
343-21 by the General Appropriations Act.
343-22 (c) All money paid to the office of public insurance counsel
343-23 under this article shall be deposited in the state treasury.
343-24 (d) The public counsel or the public counsel's designee
343-25 shall prepare and maintain a written policy statement to ensure
343-26 implementation of a program of equal employment opportunity under
343-27 which all personnel transactions are made without regard to race,
344-1 color, disability, sex, religion, age, or national origin. The
344-2 policy statement must include:
344-3 (1) personnel policies, including policies relating to
344-4 recruitment, evaluation, selection, appointment, training, and
344-5 promotion of personnel that are in compliance with the Texas
344-6 Commission on Human Rights Act (Article 5221k, Vernon's Texas Civil
344-7 Statutes) and its subsequent amendments;
344-8 (2) a comprehensive analysis of the office of public
344-9 insurance counsel work force that meets federal and state
344-10 guidelines;
344-11 (3) procedures by which a determination can be made of
344-12 significant underuse in the office of public insurance counsel work
344-13 force of all persons for whom federal or state guidelines encourage
344-14 a more equitable balance; and
344-15 (4) reasonable methods to appropriately address those
344-16 areas of significant underuse.
344-17 (e) A policy statement prepared under Subsection (d) of this
344-18 section must cover an annual period, be updated at least annually
344-19 and reviewed by the Commission on Human Rights for compliance with
344-20 Subsection (d)(1) of this section, and be filed with the governor's
344-21 office.
344-22 (f) The governor's office shall deliver a biennial report to
344-23 the legislature based on the information received under Subsection
344-24 (e) of this section. The report may be made separately or as a
344-25 part of other biennial reports made to the legislature.
344-26 (g) The public counsel or the public counsel's designee
344-27 shall develop an intra-agency career ladder program. The program
345-1 shall require intra-agency posting of all nonentry level positions
345-2 concurrently with any public posting.
345-3 (h) The public counsel or the public counsel's designee
345-4 shall develop a system of annual performance evaluations. All
345-5 merit pay for office of public insurance counsel employees must be
345-6 based on the system established under this subsection.
345-7 (i) The office of public insurance counsel shall provide to
345-8 its public counsel and employees, as often as necessary,
345-9 information regarding their qualification for office or employment
345-10 under this article and their responsibilities under applicable laws
345-11 relating to standards of conduct for state officers or employees.
345-12 Sec. 4. CONFLICT OF INTEREST. (a) A person may not serve
345-13 as the public counsel or act as the general counsel for the office
345-14 of public insurance counsel if the person is required to register
345-15 as a lobbyist under Chapter 305, Government Code, because of the
345-16 person's activities for compensation related to the operation of
345-17 the department or the office of public insurance counsel.
345-18 (b) <(f)> A person serving as the public counsel may not,
345-19 for a period of two years after the date the person ceases to be
345-20 public counsel, represent any person in a proceeding before the
345-21 board or receive compensation for services rendered on behalf of
345-22 any person regarding a case pending before the rate board,
345-23 commissioner, or department <board>.
345-24 (c) An officer, employee, or paid consultant of a trade
345-25 association in the field of insurance may not serve as the public
345-26 counsel or be an employee of the office of public insurance counsel
345-27 who is exempt from the state's position classification plan or is
346-1 compensated at or above the amount prescribed by the General
346-2 Appropriations Act for step 1, salary group 17, of the position
346-3 classification salary schedule.
346-4 (d) A person who is the spouse of an officer, manager, or
346-5 paid consultant of a trade association in the field of insurance
346-6 may not serve as the public counsel and may not be an office of
346-7 public insurance counsel employee who is exempt from the state's
346-8 position classification plan or is compensated at or above the
346-9 amount prescribed by the General Appropriations Act for step 1,
346-10 salary group 17, of the position classification salary schedule.
346-11 (e) For purposes of this section, a trade association is a
346-12 nonprofit, cooperative, and voluntarily joined association of
346-13 business or professional competitors designed to assist its members
346-14 and its industry or profession in dealing with mutual business or
346-15 professional problems and in promoting their common interest.
346-16 Sec. 5. POWERS AND DUTIES. (a) <(g)> The office of public
346-17 insurance counsel may assess the impact of insurance rates, rules,
346-18 and forms on insurance consumers in Texas and, in its own name,
346-19 shall act as an advocate of positions that are most advantageous to
346-20 a substantial number of insurance consumers as determined by the
346-21 public counsel for the office.
346-22 (b) <(h)> The public counsel:
346-23 (1) may appear or intervene as a matter of right
346-24 before the rate board, commissioner, or department <State Board of
346-25 Insurance> as a party or otherwise on behalf of insurance consumers
346-26 as a class in:
346-27 (A) matters involving rates, rules, and forms
347-1 affecting property and casualty insurance;
347-2 (B) matters involving rates, rules, and forms
347-3 affecting title insurance;
347-4 (C) matters involving rules affecting life,
347-5 health, and accident insurance;
347-6 (D) matters involving rates, rules, and forms
347-7 affecting credit life, and credit accident and health insurance;
347-8 (E) matters involving rates, rules, and forms
347-9 affecting all other lines of insurance for which the rate board,
347-10 commissioner, or department <State Board of Insurance> promulgates,
347-11 sets, or approves rates, rules, and/or forms; and
347-12 (F) matters involving withdrawal of approval of
347-13 policy forms under Article 3.42(f) and 3.42(g) of this code if the
347-14 public counsel determines that such forms do not comply with this
347-15 code or any valid rule relating thereto duly adopted by the rate
347-16 board or commissioner <State Board of Insurance> or is otherwise
347-17 contrary to law;
347-18 (2) may initiate or intervene as a matter of right or
347-19 otherwise appear in a judicial proceeding involving or arising out
347-20 of any action taken by an administrative agency in a proceeding in
347-21 which the public counsel appeared under the authority granted by
347-22 this article;
347-23 (3) is entitled to access to any records of the
347-24 department that are available to any party other than the board's
347-25 staff in a proceeding before the board;
347-26 (4) is entitled to obtain discovery under the
347-27 Administrative Procedure and Texas Register Act (Article 6252-13a,
348-1 Vernon's Texas Civil Statutes) of any nonprivileged matter that is
348-2 relevant to the subject matter involved in any proceeding or
348-3 submission before the rate board, commissioner, or department
348-4 <State Board of Insurance>;
348-5 (5) may recommend legislation to the legislature that,
348-6 in the judgment of the public counsel, would affect positively the
348-7 interests of insurance consumers;
348-8 (6) may appear or intervene as a matter of right as a
348-9 party or otherwise on behalf of insurance consumers as a class in
348-10 all proceedings in which the public counsel determines that
348-11 insurance consumers need representation, except that the public
348-12 counsel may not intervene in any enforcement or parens patriae
348-13 proceeding brought by the attorney general; and
348-14 (7) shall submit to the department for adoption a
348-15 consumer bill of rights appropriate to each personal line of
348-16 insurance regulated by the board to be distributed upon the
348-17 issuance of a policy by insurers to each policyholder under rules
348-18 adopted by the department.
348-19 (c) <(i)> The public counsel may not intervene in hearings
348-20 before the board or commissioner that relate to approval or
348-21 consideration of individual charters, licenses, acquisitions,
348-22 mergers, or examinations, proceedings concerning the solvency of
348-23 individual insurers after a receiver is appointed, or other matters
348-24 affecting individual insurer or agent licenses. The
348-25 confidentiality requirements applicable to examination reports
348-26 under Article 1.18 of this code and to the commissioner under
348-27 Section 3A, Article 21.28, of this code shall apply to the public
349-1 counsel.
349-2 (d) The public counsel may not appear or intervene in
349-3 hearings before the rate board or commissioner that relate to
349-4 approval or consideration of rates, rules, or forms affecting
349-5 commercial insurance, except that the public counsel may represent
349-6 a class of commercial consumers in a hearing if the class includes
349-7 at least one commercial insurance consumer who paid less than
349-8 $250,000 in total insurance premiums in the calendar year before
349-9 the year in which the hearing is held.
349-10 (e) <(j)> Any order of the board which determines, approves,
349-11 or sets a rate under this code and is appealed shall be and remain
349-12 in effect during the pendency of an appeal. During the pendency of
349-13 the appeal, an insurer shall use the rate provided in the order
349-14 being appealed. Such rate shall be lawful and valid during such
349-15 appeal, and an insurer shall not be required to make any refund
349-16 therefrom after a decision on the appeal. If a decision on appeal
349-17 shall vacate the order, the rate established by the board prior to
349-18 the rendition of the vacated order shall be in effect from and
349-19 after the date of remand and until the board shall make a further
349-20 determination; however, the board shall consider the order of the
349-21 court in setting future rates.
349-22 Sec. 6. PUBLIC ACCESS AND INFORMATION. (a) The office of
349-23 public insurance counsel shall prepare information of public
349-24 interest describing the functions of the office. The office of
349-25 public insurance counsel shall make the information available to
349-26 the public and appropriate state agencies.
349-27 (b) The office of public insurance counsel shall prepare and
350-1 maintain a written plan that describes how a person who does not
350-2 speak English can be provided reasonable access to the office of
350-3 public insurance counsel's programs. The office of public
350-4 insurance counsel shall also comply with federal and state laws for
350-5 program and facility accessibility.
350-6 Sec. 7. APPLICABILITY OF SUNSET ACT. <(k)> The office of
350-7 public insurance counsel is subject to Chapter 325, Government Code
350-8 (Texas Sunset Act). Unless continued in existence as provided by
350-9 that chapter, the office is abolished September 1, 2005 <1993>.
350-10 ARTICLE 20. REDESIGNATION OF PROVISIONS WITH
350-11 DUPLICATE DESIGNATIONS; CONFORMING AMENDMENTS
350-12 SECTION 20.01. Article 3.77, Insurance Code, as added by
350-13 Chapter 800, Acts of the 71st Legislature, Regular Session, 1989,
350-14 is reenacted and redesignated as Article 3.78, Insurance Code, to
350-15 read as follows:
350-16 Art. 3.78 <3.77>. Eligibility for Benefits for Alzheimer's
350-17 Disease. If an individual or group policy, contract, or
350-18 certificate, or evidence of coverage providing coverage for
350-19 Alzheimer's disease is delivered or issued for delivery in this
350-20 state by an insurer, including a group hospital service corporation
350-21 under Chapter 20 of this code, and the policy, contract,
350-22 certificate, or evidence requires demonstrable proof of organic
350-23 disease or other proof before the insurer will authorize payment of
350-24 benefits for Alzheimer's disease, a clinical diagnosis of
350-25 Alzheimer's disease by a physician licensed in this state,
350-26 including history and physical, neurological, psychological and/or
350-27 psychiatric evaluations, and laboratory studies, shall satisfy the
351-1 requirement for demonstrable proof of organic disease or other
351-2 proof under the coverage.
351-3 SECTION 20.02. Subsection (e), Section 2, Article 21.48A,
351-4 Insurance Code, as added by Section 2, Chapter 327, Acts of the
351-5 72nd Legislature, Regular Session, 1991, is reenacted and
351-6 redesignated as Subsection (f) to read as follows:
351-7 (f) <(e)> A Lender that requires a Borrower to secure
351-8 insurance coverage before the Lender will provide a residential
351-9 mortgage loan shall accept an insurance binder as evidence of the
351-10 required insurance if:
351-11 (1) the insurance binder is issued by a licensed local
351-12 recording agent as that term is defined by Article 21.14 of this
351-13 code and, if requested to do so, the agent shall furnish
351-14 appropriate evidence to the Lender;
351-15 (2) the local recording agent is appointed to
351-16 represent the insurance company whose name appears on the binder
351-17 and is authorized to issue binders and, if requested to do so, the
351-18 agent shall furnish appropriate evidence to the Lender;
351-19 (3) the insurance binder is accompanied by evidence of
351-20 payment of the required premium; and
351-21 (4) the insurance binder will be replaced by an
351-22 original insurance policy for the required coverage within 30 days
351-23 of the date of the issuance of the insurance binder.
351-24 If the foregoing conditions are met, a Lender may not require
351-25 a Borrower to provide an original insurance policy in lieu of the
351-26 insurance binder.
351-27 SECTION 20.03. Article 21.49-14, Insurance Code, as added by
352-1 Section 5.08, Chapter 1, Acts of the 70th Legislature, 1st Called
352-2 Session, 1987, is reenacted and redesignated as Article 21.49-13,
352-3 Insurance Code, to read as follows:
352-4 Art. 21.49-13 <21.49-14>. Excess Liability Pools
352-5 Sec. 1. Definitions. In this article:
352-6 (1) "Pool" means an excess liability pool created
352-7 under this article.
352-8 (2) "Fund" means an excess liability fund.
352-9 (3) "Board" means the board of trustees of a pool.
352-10 (4) "County" means a county in this state.
352-11 (5) "School district" means a public school district
352-12 created under the laws of this state.
352-13 (6) "Junior college district" means a junior college
352-14 district organized under the laws of this state.
352-15 (7) "Entity" means a county, school district, or
352-16 junior college district.
352-17 Sec. 2. Creation of pools. (a) Separate excess liability
352-18 pools may be created for counties, school districts, and junior
352-19 college districts as provided by this article.
352-20 (b) An excess liability pool may be created:
352-21 (1) for counties, on written agreement to create the
352-22 pool by the county judges of not fewer than five counties in this
352-23 state;
352-24 (2) for school districts, on written agreement to
352-25 create the pool by the presidents of the boards of trustees, acting
352-26 on behalf of their boards, of not fewer than five school districts
352-27 in this state; or
353-1 (3) for junior college districts, on written agreement
353-2 to create the pool by the presiding officers of the boards of
353-3 trustees, acting on behalf of their boards, of not fewer than five
353-4 junior college districts in this state.
353-5 (c) An excess liability pool is created to provide excess
353-6 liability insurance coverage as provided by this article and the
353-7 plan.
353-8 (d) An entity may participate only in a pool created for
353-9 that type of entity. There may not be more than one county excess
353-10 liability pool, one school district excess liability pool, and one
353-11 junior college district excess liability pool.
353-12 Sec. 3. Scope of coverage. (a) A pool shall insure an
353-13 entity and its officers and employees against liability for acts
353-14 and omissions under the laws governing that entity and its officers
353-15 and employees in their official or employment capacities.
353-16 (b) Under excess liability insurance coverage, a pool shall
353-17 pay that portion of a claim against an entity and its officers and
353-18 employees that is finally determined or settled or is included in a
353-19 final judgment of a court and that is in excess of $500,000, but
353-20 the amount paid by the pool may not be in excess of the amount
353-21 determined by the board to be actuarially sound for the pool.
353-22 (c) Under the insurance coverage, the pool may participate
353-23 in the evaluation, settlement, or defense of any claim.
353-24 Sec. 4. Participation in pool. An entity is entitled to
353-25 coverage from the pool on:
353-26 (1) submitting a complete application;
353-27 (2) providing any other information required by the
354-1 pool;
354-2 (3) meeting the underwriting standards established by
354-3 the pool; and
354-4 (4) paying the premiums required for the coverage.
354-5 Sec. 5. Payment of contributions and premiums. An entity
354-6 purchasing excess liability insurance coverage from the pool may
354-7 use funds of the entity to pay any contributions or premiums
354-8 required by the pool for the coverage.
354-9 Sec. 6. Plan of operation. (a) At the time the written
354-10 agreement is executed under Section 2 of this article, the creators
354-11 shall select nine persons to serve as a temporary board to draft
354-12 the plan of operation for a pool.
354-13 (b) Within 30 days after selection, the members of a
354-14 temporary board shall meet to prepare a detailed plan of operation
354-15 for the pool.
354-16 (c) The plan of operation may include any matters relating
354-17 to the organization and operation of the pool and the pool's
354-18 finances. The plan must include:
354-19 (1) the organizational structure of the pool,
354-20 including the method of selection of the board, the method of
354-21 procedure and operation of the board, and a summary of the method
354-22 for managing and operating the pool;
354-23 (2) a description of the contributions and other
354-24 financial arrangements necessary to cover the initial expenses of
354-25 the pool and estimates supported by statistical data of the amounts
354-26 of those contributions or other financial arrangements;
354-27 (3) underwriting standards and procedures for the
355-1 evaluation of risks;
355-2 (4) procedures for purchase of reinsurance;
355-3 (5) methods, procedures, and guidelines for
355-4 establishing rates for premiums for and maximum limits of excess
355-5 coverage available from the pool;
355-6 (6) procedures for the processing and payment of
355-7 claims;
355-8 (7) methods and procedures for defraying any losses
355-9 and expenses of the pool;
355-10 (8) methods, procedures, and guidelines for the
355-11 management and investment of the fund;
355-12 (9) guidelines for nonrenewal of coverage;
355-13 (10) minimum limits of capital and surplus to be
355-14 maintained by the pool; and
355-15 (11) minimum standards for reserve requirements for
355-16 the pool.
355-17 (d) The temporary board shall complete and adopt the plan of
355-18 operation within 90 days after the date of the appointment of the
355-19 temporary board.
355-20 (e) Within 15 days following the day on which the plan of
355-21 operation is adopted, the first board must be selected as provided
355-22 by the plan of operation. The members of the first board shall
355-23 take office not later than the 30th day following the date of the
355-24 adoption of the plan of operation.
355-25 Sec. 7. Board of trustees. (a) A pool is governed by a
355-26 board of nine trustees selected as provided by the plan of
355-27 operation.
356-1 (b) Members of the board serve for terms of two years with
356-2 the terms expiring at the time provided by the plan of operation.
356-3 (c) A vacancy on the board shall be filled as provided by
356-4 the plan of operation.
356-5 (d) A person serving on the board who is an officer or
356-6 employee of an entity covered by the pool performs duties on the
356-7 board as additional duties required of his original office or
356-8 employment.
356-9 (e) Each member of the board shall execute a bond in the
356-10 amount required by the plan of operation payable to the pool and
356-11 conditioned on the faithful performance of his duties. The pool
356-12 shall pay the cost of the bond.
356-13 (f) Members of the board are not entitled to compensation
356-14 for their service on the board.
356-15 (g) The board shall select from its membership persons to
356-16 serve as chairman, vice-chairman, and secretary. The persons
356-17 selected serve for terms of one year that expire as provided by the
356-18 plan of operation.
356-19 (h) The board shall hold meetings at the call of the
356-20 chairman and at times established by its rules.
356-21 (i) A majority of the members of the board constitutes a
356-22 quorum.
356-23 (j) In addition to other duties provided by this article and
356-24 the plan of operation, the board shall:
356-25 (1) approve contracts other than excess liability
356-26 insurance contracts issued to entities by the pool;
356-27 (2) consider and adopt premium rate schedules for the
357-1 pool;
357-2 (3) consider and adopt policy forms for the pool;
357-3 (4) receive service of summons on behalf of the pool;
357-4 and
357-5 (5) appoint and supervise the activities of the pool
357-6 manager.
357-7 (k) In addition to other authority provided by this article,
357-8 the board may:
357-9 (1) adopt necessary rules;
357-10 (2) delegate specific responsibilities to the pool
357-11 manager; and
357-12 (3) amend the plan of operation to assure the orderly
357-13 management and operation of the pool.
357-14 (l) A member of the board is not liable with respect to a
357-15 claim or judgment for which coverage is provided by the pool or for
357-16 a claim or judgment against an entity covered by the pool against
357-17 whom a claim is made.
357-18 Sec. 8. Pool Manager. (a) The board shall appoint a pool
357-19 manager who shall serve at the pleasure of the board.
357-20 (b) The pool manager is entitled to receive the compensation
357-21 authorized by the board.
357-22 (c) The pool manager shall execute a bond in the amount
357-23 determined by the board, payable to the pool, conditioned on the
357-24 faithful performance of his duties. The pool shall pay the cost of
357-25 the bond.
357-26 (d) The pool manager shall manage and conduct the affairs of
357-27 the pool under the general supervision of the board and shall
358-1 perform any other duties directed by the board.
358-2 (e) In addition to any other duties provided by this article
358-3 or by the board, the pool manager shall:
358-4 (1) receive and pass on applications from entities for
358-5 excess liability coverage from the pool;
358-6 (2) negotiate contracts for the pool;
358-7 (3) prepare premium rate schedules for the approval of
358-8 the board;
358-9 (4) collect and compile statistical data relating to
358-10 the excess liability coverage provided by the pool, including
358-11 relevant loss, expense, and premium data, and make that information
358-12 available to the board and to the public; and
358-13 (5) prepare and submit to the board for approval
358-14 proposed policy forms for pool coverage.
358-15 (f) The pool manager may refuse to renew the coverage of any
358-16 entity insured by the pool based on the guidelines provided by the
358-17 plan of operation.
358-18 Sec. 9. Employees and other personnel. (a) The pool
358-19 manager shall employ or contract with persons necessary to assist
358-20 the board and pool manager in carrying out the powers and duties of
358-21 the pool.
358-22 (b) The board shall approve compensation paid to employees
358-23 of the pool and contracts made with other persons under this
358-24 section.
358-25 (c) The board may require any employee or person with whom
358-26 it contracts under this section to execute a bond in an amount
358-27 determined by the board, payable to the board, and conditioned on
359-1 the faithful performance of the employee's or person's duties or
359-2 responsibilities to the pool.
359-3 (d) An employee or person with whom the pool has contracted
359-4 under this section is not liable with respect to any claim or
359-5 judgment for which coverage is provided by the pool or for any
359-6 claim or judgment against any entity covered by the pool against
359-7 whom a claim is made.
359-8 Sec. 10. Office. (a) A pool shall maintain its principal
359-9 office in Austin, Texas.
359-10 (b) The records, files, and other documents and information
359-11 relating to the pool must be maintained in the pool's principal
359-12 office.
359-13 Sec. 11. Rules. The board may adopt and amend rules to
359-14 carry out this article.
359-15 Sec. 12. General powers and duties. (a) A pool shall:
359-16 (1) issue excess liability coverage to each entity
359-17 entitled to coverage under this article;
359-18 (2) collect premiums for coverage issued or renewed by
359-19 the pool;
359-20 (3) process and pay valid claims; and
359-21 (4) maintain detailed data regarding the pool.
359-22 (b) The pool may:
359-23 (1) enter into contracts;
359-24 (2) purchase reinsurance;
359-25 (3) cancel or refuse to renew coverage; and
359-26 (4) perform any other acts necessary to carry out this
359-27 article, the plan of operation, and the rules adopted by the board.
360-1 Sec. 13. Excess liability fund. (a) On creation of a pool,
360-2 the first board shall create an excess liability fund.
360-3 (b) The fund is composed of:
360-4 (1) premiums paid by entities for coverage by the
360-5 pool;
360-6 (2) contributions and other money received by the pool
360-7 to cover the initial expenses of the fund;
360-8 (3) investments and money earned from investments of
360-9 the fund; and
360-10 (4) any other money received by the pool.
360-11 (c) The pool manager shall manage the fund under the general
360-12 supervision of the board.
360-13 (d) Administrative expenses of the pool may be paid from the
360-14 fund, but payments for this purpose during any fiscal year of the
360-15 pool may not exceed the amount established by the board.
360-16 (e) Money in the fund may not be used to pay punitive
360-17 damages, fines or penalties for violation of a civil or criminal
360-18 statute, or fines or penalties imposed for violation of an
360-19 administrative rule or regulation, or an order, rule, or ordinance.
360-20 (f) Money for a claim may not be paid from the fund under
360-21 excess liability insurance coverage unless and until all benefits
360-22 payable under any other underlying policy of liability insurance
360-23 covering the claim or judgment are exhausted.
360-24 (g) The board may select one or more banks to serve as
360-25 depository for money of the fund. Before the pool manager deposits
360-26 fund money in a depository bank in an amount that exceeds the
360-27 maximum amount secured by the Federal Deposit Insurance
361-1 Corporation, the bank must execute a bond or provide other security
361-2 in an amount sufficient to secure from loss the fund money that
361-3 exceeds the amount secured by the Federal Deposit Insurance
361-4 Corporation.
361-5 (h) Each year as provided by the plan of operation, the
361-6 board shall have an actuary who is a member of the American Academy
361-7 of Actuaries audit the capital, surplus, and reserves of the pool
361-8 and prepare for the pool and its members a formal report.
361-9 Sec. 14. Investments. (a) The fund manager, under the
361-10 general supervision of the board, shall manage and invest the money
361-11 in the fund in the manner provided by the plan of operation.
361-12 (b) Money earned by investment of money in the fund must be
361-13 deposited in the fund or reinvested for the fund.
361-14 Sec. 15. Contributions. The board shall determine the
361-15 amount of any contributions necessary to meet initial expenses of
361-16 the pool. The board shall make this determination based on the
361-17 data provided in the plan of operation.
361-18 Sec. 16. Premium rates; limits of coverage. (a) The board
361-19 shall determine the rates for premiums that will be charged and the
361-20 maximum limits of coverage provided to assure that the pool is
361-21 actuarially sound.
361-22 (b) The pool manager shall prepare the statistical data and
361-23 other information and the proposed rate schedules and maximum
361-24 limits of coverage for consideration of the board.
361-25 (c) The board shall periodically reexamine the rate
361-26 schedules and the maximum limits of coverage as conditions change.
361-27 Sec. 17. Coverage period. (a) On accepting coverage from
362-1 the pool, an entity shall maintain that coverage for a period not
362-2 less than 36 calendar months following the month the coverage is
362-3 issued.
362-4 (b) An entity that voluntarily discontinues coverage in the
362-5 pool may not again obtain coverage from the pool for at least 36
362-6 calendar months following the month in which the coverage was
362-7 discontinued.
362-8 Sec. 18. Coverage. Excess liability coverage provided by
362-9 the pool may be provided on a claims-made or an occurrence basis.
362-10 Sec. 19. Nonrenewal. (a) Except as provided by Subsection
362-11 (b) of this section, the pool may refuse to renew the coverage of
362-12 any entity that fails to comply with the pool's underwriting
362-13 standards.
362-14 (b) The pool may not refuse to renew the coverage of an
362-15 entity for the first 36 calendar months following the month in
362-16 which the entity was first insured by the pool.
362-17 (c) Section 17(b) of this article does not apply to
362-18 discontinuance of an entity's coverage if the pool refuses renewal
362-19 under this section. An entity whose coverage is not renewed is not
362-20 eligible to apply for new coverage during the 12 calendar months
362-21 beginning after the month in which the pool gave written notice
362-22 that it would not renew the coverage.
362-23 Sec. 20. Shortage of available money. (a) If money in the
362-24 fund will be exhausted by payment of all final and settled claims
362-25 and final judgments during the fiscal year, the amount paid by the
362-26 pool to each person having a claim or judgment shall be prorated,
362-27 with each person receiving an amount that is equal to the
363-1 percentage the amount owed to him by the pool bears to the total
363-2 amount owed, outstanding, and payable by the pool.
363-3 (b) The remaining amount that is due and unpaid to a person
363-4 who receives prorated payment under Subsection (a) of this section
363-5 must be paid in the immediately following fiscal year.
363-6 Sec. 21. Commissions. A pool may pay commissions from the
363-7 fund on approval of the board.
363-8 Sec. 22. Application of other laws. (a) Except as provided
363-9 by Subsection (b) of this section, the pool is not considered
363-10 insurance under the Insurance Code and other laws of this state,
363-11 and the State Board of Insurance has no jurisdiction over the pool.
363-12 (b) The pool shall collect the necessary data, information,
363-13 and statements and shall file with the State Board of Insurance the
363-14 reports and statements required by Articles 1.24A and 1.24B and is
363-15 subject to 21.21 of this code.
363-16 SECTION 20.04. Section 5, Article 17.25, Insurance Code, is
363-17 amended to read as follows:
363-18 Sec. 5. Policy Forms Prescribed. Each county mutual
363-19 insurance company shall be subject to the provisions of Article
363-20 5.06 and <of> Article 5.35 <and of Article 5.36> of this Code. The
363-21 Board of Insurance Commissioners pursuant to Article 5.35 may in
363-22 its discretion make, promulgate and establish uniform policies for
363-23 county mutual insurance companies different from the uniform
363-24 policies made, promulgated and established for use by companies
363-25 other than county mutual insurance companies, and shall prescribe
363-26 the conditions under which such policies may be adopted and used by
363-27 county mutual insurance companies, and the conditions under which
364-1 such companies shall adopt and use the same forms and no others as
364-2 are prescribed for other companies.
364-3 SECTION 20.05. Article 8.24(i), Insurance Code, is amended
364-4 to read as follows:
364-5 (i) The department shall have authority to suspend or revoke
364-6 the certificate of authority of any insurance carrier authorized to
364-7 do business in Texas under this Article, if the State Board of
364-8 Insurance, after notice and opportunity for hearing, shall find
364-9 that such carrier has systematically, with neglect and with willful
364-10 disregard, failed to comply with its obligations derived from the
364-11 contracts of insurance, and the laws applicable thereto, as
364-12 contained in policies issued in the State of Texas.
364-13 Any carrier aggrieved by an order of the State Board of
364-14 Insurance hereunder shall be entitled to appeal therefrom pursuant
364-15 to the provisions of Article 1.04 <1.04(f)> of this code <the
364-16 Insurance Code>.
364-17 SECTION 20.06. Section 7, Article 21.28-A, Insurance Code,
364-18 is amended to read as follows:
364-19 Sec. 7. Review and Stay of Action. During the period of
364-20 supervision and during the period of conservatorship, the insurance
364-21 company may request the Commissioner of Insurance or in his
364-22 absence, the duly appointed deputy for such purpose, to review an
364-23 action taken or proposed to be taken by the supervisor or
364-24 conservator, specifying wherein the action complained of is
364-25 believed not to be in the best interests of the insurance company,
364-26 and such request shall stay the action specified pending review of
364-27 such action by the Commissioner or his duly appointed deputy. Any
365-1 order entered by the Commissioner appointing a supervisor and
365-2 providing that the insurance company shall not do certain acts as
365-3 provided in Section 4 of this Article, any order entered by the
365-4 Commissioner appointing a conservator, and any order by the
365-5 Commissioner following the review of an action of the supervisor or
365-6 conservator as hereinabove provided may be appealed under Article
365-7 1.04 of this code <shall be immediately reviewed by the State Board
365-8 of Insurance upon the filing of an appeal by the insurance company.
365-9 The Board shall review the action complained of in a public hearing
365-10 and render its decision at the earliest possible date thereafter,
365-11 and the requirement of ten (10) days notice set out in Article
365-12 1.04(d) of this Code may be waived by the parties of record. The
365-13 Board may stay the effectiveness of any order of the Commissioner,
365-14 pending its review of such order. Such appeal shall have
365-15 precedence over all other business of a different nature pending
365-16 before the Board, and in the public hearing any and all evidence
365-17 and matters pertaining to the appeal may be submitted to the Board,
365-18 whether included in the appeal or not, and the Board shall make
365-19 such other rules and regulations with regard to such applications
365-20 and their consideration as it deems advisable. If such insurance
365-21 company be dissatisfied with any decision, regulation, order, rule,
365-22 act or administrative ruling adopted by the State Board of
365-23 Insurance, such dissatisfied insurance company after failing to get
365-24 relief from the State Board of Insurance, may initiate an action by
365-25 filing a petition setting forth the particular objection to such
365-26 decision, regulation, order, rule, act or administrative ruling, or
365-27 to either or all of them, in the District Court of Travis County,
366-1 Texas, and not elsewhere, against the State Board of Insurance as
366-2 defendant. Notwithstanding any other statute or rule of procedure,
366-3 the filing of a petition for the purpose of initiating such an
366-4 action with respect to this article does not stay or vacate the
366-5 decision, regulation, order, rule, act, or administrative ruling or
366-6 either or all of them unless the court that acquires jurisdiction,
366-7 after hearing and by order, specifically stays or vacates the
366-8 decision, regulation, order, rule, act, or administrative ruling
366-9 that is the subject of the action>. The action shall not be
366-10 limited to questions of law and the substantial evidence rule shall
366-11 not apply, except as interpretation of the Constitution may
366-12 require, but such action shall be tried and determined upon a trial
366-13 de novo to the same extent as now provided for in the case of an
366-14 appeal from the Justice Court to the County Court. Either party to
366-15 said action may appeal to the Appellate Court having jurisdiction
366-16 of said cause and said appeal shall be at once returnable to said
366-17 Appellate Court having jurisdiction of said cause and said action
366-18 so appealed shall have precedence in said Appellate Court over all
366-19 causes of a different character therein pending. <The Board shall
366-20 not be required to give any appeal bond in any cause arising
366-21 hereunder.>
366-22 SECTION 20.07. Section 9, Article 21.49, Insurance Code, is
366-23 amended to read as follows:
366-24 Sec. 9. Appeals. Any person insured pursuant to this Act,
366-25 or his duly authorized representative, or any affected insurer who
366-26 may be aggrieved by an act, ruling or decision of the Association,
366-27 may, within 30 days after such act, ruling or decision, appeal to
367-1 the commissioner. In the event the Association is aggrieved by the
367-2 action of the commissioner with respect to any ruling, order, or
367-3 determination of the commissioner, it may, within 30 days after
367-4 such action, make a written request to the commissioner, for a
367-5 hearing thereon. The commissioner shall hear the Association, or
367-6 the appeal from an act, ruling or decision of the Association,
367-7 within 30 days after receipt of such request or appeal and shall
367-8 give not less than 10 days' written notice of the time and place of
367-9 hearing to the Association making such request or the person, or
367-10 his duly authorized representative, appealing from the act, ruling
367-11 or decision of the Association. A hearing on an act, ruling or
367-12 decision of the Association relating to the payment of, the amount
367-13 of, or the denial of a particular claim shall be held, at the
367-14 request of the claimant, in either the county in which the covered
367-15 property is located or Travis County. Within 30 days after the
367-16 hearing, the commissioner shall affirm, reverse or modify its
367-17 previous action or the act, ruling or decision appealed to the
367-18 commissioner. Pending such hearing and decision thereon, the
367-19 commissioner may suspend or postpone the effective date of its
367-20 previous rule or of the act, ruling or decision appealed to the
367-21 commissioner. The Association, or the person aggrieved by any
367-22 order or decision of the commissioner, may thereafter appeal to
367-23 either a District Court of Travis County, Texas, or a District
367-24 Court in the county in which the covered property is located. An
367-25 action brought under this section is subject to the procedures
367-26 established under Article 1.04 <1.04(f)> of this code.
367-27 SECTION 20.08. Section 7(b), Article 21.49-3, Insurance
368-1 Code, is amended to read as follows:
368-2 (b) In the event any person insured or applying for
368-3 insurance is aggrieved by the final action of the board of
368-4 directors of the association, the aggrieved party may, within 30
368-5 days after such action, make a written request to the commissioner
368-6 for a hearing thereon. The commissioner shall hear the appeal from
368-7 an act, ruling, or decision of the association, within 30 days
368-8 after receipt of such request or appeal and shall give not less
368-9 than 10 days' written notice of the time and place of hearing to
368-10 the person, or his duly authorized representative, appealing from
368-11 the act, ruling, or decision of the board of directors of the
368-12 association. Within 30 days after such hearing, the commissioner
368-13 shall affirm, reverse, or modify the act, ruling, or decision
368-14 appealed to the commissioner. Pending such hearing and decision
368-15 thereon, the commissioner may suspend or postpone the effective
368-16 date of the rule or of the act, ruling, or decision appealed. The
368-17 association, or the person aggrieved by any order or decision of
368-18 the commissioner, may thereafter appeal in accordance with Article
368-19 1.04 <1.04(f)> of this code.
368-20 ARTICLE 21. CONSOLIDATION OF FUNDS
368-21 SECTION 21.01. The application of Sections 403.094 and
368-22 403.095, Government Code, to a fund or the permissible uses of
368-23 revenue or fund balances is not affected by this Act.
368-24 ARTICLE 22. EFFECTIVE DATE; EMERGENCY
368-25 SECTION 22.01. Except as otherwise provided by this Act,
368-26 this Act takes effect September 1, 1993.
368-27 SECTION 22.02. The importance of this legislation and the
369-1 crowded condition of the calendars in both houses create an
369-2 emergency and an imperative public necessity that the
369-3 constitutional rule requiring bills to be read on three several
369-4 days in each house be suspended, and this rule is hereby suspended,
369-5 and that this Act take effect and be in force according to its
369-6 terms, and it is so enacted.