By: Counts H.B. No. 1461
73R2795 DLF/PB-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to insurance regulation and to the continuation, powers,
1-3 and duties of the Texas Department of Insurance and the office of
1-4 public insurance counsel; providing administrative penalties.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 ARTICLE 1. ORGANIZATION OF TEXAS DEPARTMENT OF INSURANCE;
1-7 FUNCTIONS OF COMMISSIONER AND STATE BOARD OF INSURANCE
1-8 SECTION 1.01. Article 1.02, Insurance Code, is amended to
1-9 read as follows:
1-10 Art. 1.02. Operation of Department<; Board>. (a) A
1-11 provision of this code or another insurance law, including an
1-12 enactment or reenactment of a provision of this code or another
1-13 insurance law by the 73rd Legislature, Regular Session, 1993, that
1-14 references the State Board of Insurance or the Commissioner of
1-15 Insurance is not intended to conflict with this article. A
1-16 reference in this code or another insurance law to the State Board
1-17 of Insurance or the Commissioner of Insurance means the State Board
1-18 of Insurance, the Commissioner of Insurance, or the Texas
1-19 Department of Insurance, as consistent with the respective powers
1-20 and duties of those persons or entities under this article. <The
1-21 State Board of Insurance is composed of three members, all of whom
1-22 shall be citizens of Texas. They shall be appointed by the
1-23 Governor, by and with the advice and consent of the Senate of
1-24 Texas. The term of office of each member shall be as provided in
2-1 this Code. Each member of the Board shall be a person with at
2-2 least ten (10) years of successful experience in business,
2-3 professional or governmental activities, or a total of at least ten
2-4 (10) years in any combination of two or more of such activities.
2-5 Each member shall be available at all reasonable times for the
2-6 discharge of the duties and functions delegated to the members of
2-7 the Board by law, but the members shall act as a unit, and in no
2-8 event shall the individual members divide or confine their
2-9 activities to special fields of insurance regulation or attempt to
2-10 administer the functions hereinafter assigned to the Commissioner.>
2-11 (b) The powers, functions, authority, prerogatives, duties,
2-12 obligations, and responsibilities vested in the department shall be
2-13 exercised, performed, carried out, and administered by the
2-14 Commissioner as the chief executive and administrative officer of
2-15 the department in accordance with the pertinent laws of this state
2-16 and the rules and regulations for uniform application adopted by
2-17 the Commissioner <Board and subject to the general supervision and
2-18 direction of the Board>. The <duties of the State> Board <of
2-19 Insurance> shall promulgate rates in accordance with Chapter 5 of
2-20 this code and its subsequent amendments and may adopt rules and
2-21 procedures for ratemaking. The Board may not perform any function
2-22 that is not related to the promulgation of rates <be primarily in a
2-23 supervisory capacity, and the carrying out and administering the
2-24 details of the Insurance Code, other insurance laws of this state,
2-25 and other laws providing jurisdiction in or applicable to the
2-26 department or the Commissioner shall be primarily the duty and
2-27 responsibility of the Commissioner acting under the general
3-1 supervision and direction of the Board>.
3-2 (c) <On February 10th of each odd-numbered year, the
3-3 Governor shall appoint from among the membership of the Board a
3-4 Chairman who shall be known and designated as the Chairman of the
3-5 State Board of Insurance.>
3-6 <(d)> The Texas Department of Insurance is subject to
3-7 Chapter 325, Government Code (Texas Sunset Act). Unless continued
3-8 in existence as provided by that chapter, the department is
3-9 abolished September 1, 2005 <1993>.
3-10 <(e) Appointments to the board shall be made without regard
3-11 to the race, creed, sex, religion, or national origin of the
3-12 appointees. In making appointments under this section, the
3-13 governor shall attempt to appoint members of different minority
3-14 groups including females, African-Americans, Hispanic-Americans,
3-15 Native Americans, and Asian-Americans.>
3-16 <(f) In addition to grounds provided by other applicable law
3-17 providing for removal from office, it is a ground for removal from
3-18 the board that a member:>
3-19 <(1) does not have at the time of appointment the
3-20 qualifications required by this article for appointment to the
3-21 board;>
3-22 <(2) does not maintain during the service on the board
3-23 the qualifications required by this article for appointment to the
3-24 board; or>
3-25 <(3) violates a prohibition established by Article
3-26 1.06A of this code.>
3-27 <(g) The validity of an action of the board is not affected
4-1 by the fact that it was taken when a ground for removal of a member
4-2 of the board existed.>
4-3 (d) <(h)> The Commissioner or the Commissioner's designee
4-4 <board> shall prepare and maintain a written policy statement
4-5 <plan> to ensure <assure> implementation of a program of equal
4-6 employment opportunity under which <whereby> all personnel
4-7 transactions are made without regard to race, color, disability,
4-8 sex, religion, age, or national origin. The policy statement
4-9 <plan> must include:
4-10 (1) personnel policies, including policies relating to
4-11 <a comprehensive analysis of all employees by race, sex, ethnic
4-12 origin, class of position, and salary or wage;>
4-13 <(2) plans for> recruitment, evaluation, selection,
4-14 appointment, training, and promotion of<, and other> personnel that
4-15 are in compliance with the Commission on Human Rights Act (Article
4-16 5221k, Vernon's Texas Civil Statutes) and its subsequent amendments
4-17 <policies>;
4-18 (2) a comprehensive analysis of the department work
4-19 force that meets federal and state guidelines;
4-20 (3) procedures by which a determination can be made of
4-21 significant underuse in the department work force of all persons
4-22 for whom federal or state guidelines encourage a more equitable
4-23 balance; and
4-24 (4) reasonable methods to appropriately address those
4-25 areas of significant underuse
4-26 <(3) steps reasonably designed to overcome any
4-27 identified underutilization of minorities and women in the
5-1 department's work force; and>
5-2 <(4) objectives and goals, timetables for the
5-3 achievement of those objectives and goals, and assignments of
5-4 responsibility for their achievement>.
5-5 (e) A policy statement prepared under Subsection (d) of this
5-6 article must cover an annual period, be updated annually, be
5-7 reviewed by the Commission on Human Rights for compliance with
5-8 Subsection (d)(1) of this article, and be filed with the governor's
5-9 office.
5-10 (f) The governor's office shall deliver a biennial report to
5-11 the legislature based on the information received under Subsection
5-12 (e) of this article. The report may be made separately or as a
5-13 part of other biennial reports made to the legislature.
5-14 (g) The Commissioner shall develop and implement policies
5-15 that clearly define the respective responsibilities of the
5-16 Commissioner, the Board, and the staff of the department.
5-17 (h) The Commissioner shall provide to Board members and
5-18 department employees, as often as necessary, information regarding
5-19 their qualification for office or employment under this code and
5-20 their responsibilities under applicable laws relating to standards
5-21 of conduct for state officers or employees.
5-22 (i) The department is subject to the requirements of Article
5-23 13, State Purchasing and General Services Act (Article 601b,
5-24 Vernon's Texas Civil Statutes) and its subsequent amendments <The
5-25 plan required by Section (h) of this article shall be filed with
5-26 the governor's office within 60 days after the effective date of
5-27 that section, cover an annual period, and be updated at least
6-1 annually. Progress reports shall be submitted to the governor's
6-2 office within 30 days before November 1 and April 1 of each year
6-3 and shall include the steps the department has taken within the
6-4 reporting period to comply with those requirements>.
6-5 SECTION 1.02. Article 1.01A(a), Insurance Code, is amended
6-6 to read as follows:
6-7 (a) In this code and other insurance laws:
6-8 (1) "Board" means the <three-member> State Board of
6-9 Insurance.
6-10 (2) "Department" means the Texas Department of
6-11 Insurance.
6-12 (3) "Commissioner" means the Commissioner of Insurance
6-13 appointed under Article 1.09 of this code.
6-14 SECTION 1.03. Chapter 1, Insurance Code, is amended by
6-15 amending Articles 1.03 and 1.04 and adding Articles 1.03A, 1.04A,
6-16 1.04B, and 1.04C to read as follows:
6-17 Art. 1.03. STATE BOARD OF INSURANCE; APPOINTMENT; TERMS OF
6-18 OFFICE. (a) The State Board of Insurance is composed of six
6-19 members. Each member of the Board must:
6-20 (1) be a citizen of this state; and
6-21 (2) have at least 10 years of successful experience in
6-22 business, professional, or governmental activities.
6-23 (b) Each member of the Board shall be available at all
6-24 reasonable times for the discharge of the duties and functions
6-25 delegated to the members of the Board by law, but the members shall
6-26 act as a unit, and individual members may not divide or confine
6-27 their activities to a special field of insurance rate regulation or
7-1 attempt to administer the functions assigned to the Commissioner.
7-2 (c) In each odd-numbered year, the Governor shall appoint,
7-3 by and with the advice and consent of the Senate of Texas, two
7-4 members <a member> to the State Board of Insurance for terms <a
7-5 term> of six years which <term> shall begin on the first day of
7-6 February of each such year <years>. Each member shall serve until
7-7 the member's successor has qualified<; provided that the Governor
7-8 may remove from office any member of the Board who fails for any
7-9 reason to attend a meeting of the Board for three consecutive
7-10 months, and the Governor shall remove from office any member of the
7-11 Board who for any reason fails to attend a meeting of the Board for
7-12 six months. Such removal shall be by an instrument in writing
7-13 filed with the Secretary of State and the State Board of Insurance,
7-14 and the office of the member so removed shall be deemed vacant the
7-15 same as if the member had died or resigned>.
7-16 (d) <(b)> Vacancies occurring in any such office on the
7-17 Board during any term shall, with the advice and consent of the
7-18 Senate, be filled by appointment by the Governor, which appointment
7-19 shall extend only to the end of the unexpired term.
7-20 (e) A person is not eligible for appointment to the Board if
7-21 the person, the person's spouse, or any person that resides in the
7-22 same household as the person:
7-23 (1) is registered, certified, or licensed by the
7-24 department;
7-25 (2) is employed by or participates in the management
7-26 of a business entity or other organization regulated by the
7-27 department or receiving funds from the department;
8-1 (3) owns or controls, directly or indirectly, more
8-2 than a 10 percent interest in a business entity or other
8-3 organization regulated by the department or receiving funds from
8-4 the department; or
8-5 (4) uses or receives a substantial amount of tangible
8-6 goods, services, or funds from the department, other than
8-7 compensation or reimbursement authorized by law for Board
8-8 membership, attendance, or expenses.
8-9 (f) Appointments to the Board shall be made without regard
8-10 to the race, color, disability, sex, religion, age, or national
8-11 origin of the appointees.
8-12 (g) It is a ground for removal from the Board if a member:
8-13 (1) does not have at the time of appointment the
8-14 qualifications required by Subsection (a) of this article;
8-15 (2) does not maintain during service on the Board the
8-16 qualifications required by Subsection (a) of this article;
8-17 (3) violates a prohibition established by Article
8-18 1.06, 1.06A, or 1.06B of this code and any subsequent amendments;
8-19 (4) cannot discharge the member's duties for a
8-20 substantial part of the term for which the member is appointed
8-21 because of illness or disability; or
8-22 (5) is absent from more than half of the regularly
8-23 scheduled Board meetings that the member is eligible to attend
8-24 during a calendar year unless the absence is excused by majority
8-25 vote of the Board.
8-26 (h) The validity of an action of the Board is not affected
8-27 by the fact that it is taken when a ground for removal of a Board
9-1 member exists.
9-2 (i) If the Commissioner has knowledge that a potential
9-3 ground for removal exists, the Commissioner shall notify the
9-4 chairman of the Board of the ground. The chairman shall then
9-5 notify the Governor that a potential ground for removal exists.
9-6 Art. 1.03A. RULES FOR GENERAL APPLICATION. The Commissioner
9-7 may adopt <1.04. ><Duties and Organization of the State Board of
9-8 Insurance><. (a) The State Board of Insurance shall operate and
9-9 function as one body or a unit and a majority vote of the members
9-10 of the Board shall be necessary to transact any of its official
9-11 business. The Board shall maintain one official set of records of
9-12 its proceedings and actions.>
9-13 <(b) The State Board of Insurance shall determine policy for
9-14 the department, rules, rates, forms, and appeals as provided by
9-15 law, and shall assume other duties that are expressly assigned to
9-16 the Board by law, but otherwise the Board shall execute its duties
9-17 through the Commissioner as provided by law, in accordance with the
9-18 laws of this state and the rules and regulations for uniform
9-19 application as made by the Board.>
9-20 <(c) All> rules and regulations for the conduct and
9-21 execution of the duties and functions of the department, which
9-22 shall be rules for general and uniform application and shall be
9-23 <adopted and> published by the Commissioner <Board> on the basis of
9-24 a systematic organization of such rules by their subject matter and
9-25 content. <The Commissioner may make recommendations to the Board
9-26 regarding such rules and regulations, including amendments, changes
9-27 and additions.> Such published rules shall be kept current and
10-1 shall be available in a form convenient to all interested persons.
10-2 Art. 1.04. APPEAL OF DECISION OF BOARD OR COMMISSIONER.
10-3 (a) <(d) Any person or organization, private or public, that is
10-4 affected by any ruling or action of the Commissioner shall have the
10-5 right to have such ruling or action reviewed by the State Board of
10-6 Insurance by making an application to the Board. Such application
10-7 shall state the identities of the parties, the ruling or action
10-8 complained of, the interests of the parties in such ruling, the
10-9 grounds of such objections, the action sought of the Board and the
10-10 reasons and grounds for such action by the Board. The original
10-11 shall be filed with the Chief Clerk of the Board together with a
10-12 certification that a true and correct copy of such application has
10-13 been filed with the Commissioner. Within thirty (30) days after
10-14 the application is filed, and after ten (10) days written notice to
10-15 all parties of record, the Board shall review the action complained
10-16 of in a public hearing and render its decision at the earliest
10-17 possible date thereafter. The Board shall make such other rules
10-18 and regulations with regard to such applications and their
10-19 consideration as it deems advisable, not inconsistent with this
10-20 Article. Said application shall have precedence over all other
10-21 business of a different nature pending before the Board.>
10-22 <In the public hearing, any and all evidence and matters
10-23 pertinent to the appeal may be submitted to the Board, whether
10-24 included in the application or not.>
10-25 <(f)> If any insurance company or other party at interest be
10-26 dissatisfied with any ruling, action, decision, regulation, order,
10-27 <rate,> rule, form, act, or administrative ruling adopted by the
11-1 Commissioner or a decision, rate, or rule adopted by the State
11-2 Board of Insurance, such dissatisfied company or party at interest
11-3 after failing to get relief from the Commissioner or the State
11-4 Board of Insurance, as applicable, may file a petition setting
11-5 forth the particular objection to such ruling, action, decision,
11-6 regulation, order, rate, rule, form, act, or administrative ruling,
11-7 or to either or all of them, in the District Court of Travis
11-8 County, Texas, and not elsewhere, against the Commissioner or the
11-9 State Board of Insurance, as applicable, as defendant. Judicial
11-10 review of a ruling, action, decision, regulation, order, rate,
11-11 rule, form, act, or administrative ruling of the Commissioner or
11-12 the Board is subject to the substantial evidence rule and shall be
11-13 conducted under the Administrative Procedure and Texas Register Act
11-14 (Article 6252-13a, Vernon's Texas Civil Statutes). The filing of a
11-15 petition for judicial review of a ruling, action, decision,
11-16 regulation, order, rate, rule, form, act, or administrative ruling
11-17 of the Commissioner or the Board under this subsection does not
11-18 vacate a decision of the Commissioner or the Board. After notice
11-19 and hearing, the court may vacate the decision of the Commissioner
11-20 or the Board if the court finds it would serve the interest of
11-21 justice to do so. Any party to the action may appeal to the
11-22 Appellate Court having jurisdiction of the cause and the appeal
11-23 shall be at once returnable to the Appellate Court having
11-24 jurisdiction of the cause and the action so appealed shall have
11-25 precedence in the Appellate Court over all causes of a different
11-26 character therein pending.
11-27 (b) The Commissioner or the Board is not required to give
12-1 any appeal bond in any cause arising under this article
12-2 <hereunder>.
12-3 Art. 1.04A. SALARIED EXAMINERS. <(g)> In making
12-4 examinations of any insurance organization as provided by law, the
12-5 department may use its own salaried examiners or may use the
12-6 services of persons or firms qualified to perform such examinations
12-7 or assist in the performance of such examinations. Such
12-8 examination shall cover the period of time that the department
12-9 requests. In the event the department does not specify a longer
12-10 period of time, such examination shall be from the time of the last
12-11 examination theretofore made by the department to December 31st of
12-12 the year preceding the examination then being made. All fees paid
12-13 to those persons or firms whose services are used shall be paid at
12-14 the usual and customary rates charged for the performance of those
12-15 services, subject to the right of the Commissioner <Board> to
12-16 disapprove for payment any fees that are excessive in relation to
12-17 the services actually performed. Such payment shall be made by the
12-18 insurance organization being examined and all such examination fees
12-19 so paid shall be allowed as a credit on the amount of premium or
12-20 other taxes to be paid by any such insurance organization for the
12-21 taxable year during which examination fees are paid just as
12-22 examination fees are credited when the department uses its own
12-23 salaried examiners.
12-24 Art. 1.04B. POLICY HOLDER COMPLAINTS. <(h)> The department
12-25 shall establish a program to facilitate resolution of policy holder
12-26 complaints.
12-27 Art. 1.04C. PUBLIC ACCESS. (a) The Commissioner shall
13-1 prepare and maintain a written plan that describes how a person who
13-2 does not speak English can be provided reasonable access to the
13-3 department's programs. The department shall also comply with
13-4 federal and state laws for program and facility accessibility.
13-5 (b) The Commissioner shall develop and implement policies
13-6 that provide the public with a reasonable opportunity to appear
13-7 before the Commissioner and to speak on any issue under the
13-8 jurisdiction of the Commissioner. The Board shall develop and
13-9 implement policies that provide the public with a reasonable
13-10 opportunity to appear before the Board and to speak on any issue
13-11 under the jurisdiction of the Board.
13-12 SECTION 1.04. Chapter 1, Insurance Code, is amended by
13-13 amending Articles 1.06A, 1.06B, and 1.06D, and adding Article
13-14 1.06AA to read as follows:
13-15 Art. 1.06A. Conflict of Interest; Trade Associations.
13-16 (a) An <A member of the State Board of Insurance, the
13-17 commissioner, or an employee of the department may not be an>
13-18 officer, employee, or paid consultant of a trade association in the
13-19 field of insurance may not be commissioner, a member of the board,
13-20 or an employee of the department who is exempt from the state's
13-21 position classification plan or is compensated at or above the
13-22 amount prescribed by the General Appropriations Act for step 1,
13-23 salary group 17, of the position classification salary schedule
13-24 <industry>.
13-25 (b) A person who is the spouse of an officer, manager, or
13-26 paid consultant of a trade association in the field of insurance
13-27 may not be commissioner, a board member, or a department employee
14-1 who is exempt from the state's position classification plan or is
14-2 compensated at or above the amount prescribed by the General
14-3 Appropriations Act for step 1, salary group 17, of the position
14-4 classification salary schedule.
14-5 (c) For purposes of this article, a trade association is a
14-6 nonprofit, cooperative, and voluntarily joined association of
14-7 business or professional competitors designed to assist its members
14-8 and its industry or profession in dealing with mutual business or
14-9 professional problems and in promoting their common interest.
14-10 Art. 1.06AA. CONFLICT OF INTEREST; EXEMPT EMPLOYEES. A
14-11 <Any> person <whose employment commences after the effective date
14-12 of this Act> may not be <appointed as a member of the State Board
14-13 of Insurance or> employed in an exempt salary position as defined
14-14 by the General Appropriations Act who at the time of <appointment
14-15 or> employment resides in the same household as a person who is an
14-16 officer, managerial employee, or paid consultant in the insurance
14-17 industry.
14-18 Art. 1.06B. Lobbying Activities. A person may not serve as
14-19 commissioner or as a member of the board or act as the general
14-20 counsel to the commissioner or to the board if the person <who> is
14-21 required to register as a lobbyist under Chapter 305, Government
14-22 Code, because of the person's <by virtue of his> activities for
14-23 compensation <in or> on behalf of a profession related to the
14-24 operation of the department <may not serve as a member of the board
14-25 or act as the general counsel to the board>.
14-26 Art. 1.06D. Registration of Persons Representing Clients
14-27 Before Commissioner or Board. A person must register with the
15-1 secretary of state in the manner provided by Chapter 305,
15-2 Government Code, if the person represents a client before the
15-3 commissioner or the board, or any board, committee, or other body
15-4 appointed by the commissioner or the board, more than twice during
15-5 any calendar year.
15-6 SECTION 1.05. Article 1.09, Insurance Code, is amended by
15-7 amending Subsections (a), (b), (f), (g), and (h) and by adding
15-8 Subsections (i) and (j) to read as follows:
15-9 (a) The Commissioner of Insurance is <Board shall appoint a
15-10 commissioner of insurance, who shall be> the department's chief
15-11 executive and administrative officer charged with the primary
15-12 responsibility of administering, enforcing, and carrying out the
15-13 provisions of the Insurance Code, other insurance laws of this
15-14 state, and other laws providing jurisdiction in or applicable to
15-15 the department or commissioner <under the general supervision and
15-16 direction of the Board. He shall hold his position at the pleasure
15-17 of the Board and may be discharged at any time>.
15-18 (b) The governor, with the advice and consent of the senate,
15-19 shall appoint the Commissioner of Insurance for a two-year term
15-20 ending on February 1 of each odd-numbered year. The commissioner
15-21 must <shall be a resident citizen of Texas, for at least one (1)
15-22 year immediately prior to his/her appointment and shall> be a
15-23 competent and experienced administrator, <who shall> be well
15-24 informed and qualified in the field of insurance and insurance
15-25 regulation,<. He/she shall> have had at least 10 <ten (10)> years
15-26 of administrative or professional experience, and <shall> have had
15-27 training and experience in the field of insurance or insurance
16-1 regulation. The appointment of the commissioner shall be made
16-2 without regard to the race, color, disability, sex, religion, age,
16-3 or national origin of the appointee. No former or present member
16-4 of the Board shall be appointed Commissioner of Insurance. A
16-5 person is not eligible for appointment as commissioner if the
16-6 person, the person's spouse, or any person that resides in the same
16-7 household as the person:
16-8 (1) is registered, certified, or licensed by the
16-9 department;
16-10 (2) is employed by or participates in the management
16-11 of a business entity or other organization regulated by the
16-12 department or receiving funds from the department;
16-13 (3) owns or controls, directly or indirectly, more
16-14 than a 10 percent interest in a business entity or other
16-15 organization regulated by the department or receiving funds from
16-16 the department; or
16-17 (4) uses or receives a substantial amount of tangible
16-18 goods, services, or funds from the department, other than
16-19 compensation or reimbursement authorized by law.
16-20 (f) The commissioner shall appoint such deputies,
16-21 assistants, and other personnel as are necessary to carry out the
16-22 duties and functions devolving upon the commissioner <him> and the
16-23 department under the Insurance Code, other insurance laws of this
16-24 state, and other laws providing jurisdiction in or applicable to
16-25 the department or the commissioner, subject to the authorization by
16-26 the Legislature in its appropriations bills or otherwise<, and to
16-27 the rules of the Board>.
17-1 (g) The commissioner or the commissioner's <his> designee
17-2 shall develop an intra-agency <intraagency> career ladder program.
17-3 The program shall require intra-agency posting of all nonentry
17-4 level positions concurrently with any public posting<, one part of
17-5 which shall be the intraagency posting of each nonentry level
17-6 classified position for at least five days before the position is
17-7 filled. Notwithstanding any other law to the contrary, a posting
17-8 of a position is not required in the case of:>
17-9 <(1) a lateral intraagency transfer; or>
17-10 <(2) the promotion of a present employee to a position
17-11 in a higher pay group because of the employee's ability to assume
17-12 greater job responsibilities or additional duties or the employee's
17-13 greater expertise rather than for the mere purpose of filling an
17-14 existing vacancy>.
17-15 (h) The commissioner or the commissioner's <his> designee
17-16 shall develop a system of annual performance evaluations <reviews
17-17 that evaluate both the quality and quantity of the job tasks
17-18 performed>. All merit pay for department employees must be based
17-19 on the system established under this subsection <section>.
17-20 (i) It is a ground for removal from office if the
17-21 commissioner:
17-22 (1) does not have at the time of appointment the
17-23 qualifications required by Subsection (b) of this section;
17-24 (2) does not maintain during service as commissioner
17-25 the qualifications required by Subsection (b) of this section;
17-26 (3) violates a prohibition established by Subsection
17-27 (b) of this section or Article 1.06, 1.06A, or 1.06B of this code
18-1 and any subsequent amendments; or
18-2 (4) cannot discharge the commissioner's duties for a
18-3 substantial part of the term for which the commissioner is
18-4 appointed because of illness or disability.
18-5 (j) The validity of an action of the commissioner or the
18-6 department is not affected by the fact that it is taken when a
18-7 ground for removal of the commissioner exists.
18-8 SECTION 1.06. Article 1.09-1(b), Insurance Code, is amended
18-9 to read as follows:
18-10 (b) In all rate hearings before the Board and policy form
18-11 proceedings before the Commissioner <Board>, except for those rate
18-12 hearings and proceedings as provided in Section 5 <Subsections (g)
18-13 and (h)>, Article 1.35A, of this code, and its subsequent
18-14 amendments the Attorney General may intervene in the public
18-15 interest. The Board shall have and exercise the power of subpoena
18-16 and subpoena duces tecum for witnesses, documents, and other
18-17 evidence to the extent of the jurisdiction of this state for such
18-18 hearings and proceedings on its own motion or upon application of
18-19 the Attorney General.
18-20 SECTION 1.07. Article 1.10, Insurance Code, is amended to
18-21 read as follows:
18-22 Art. 1.10. DUTIES OF THE DEPARTMENT <BOARD>. In addition to
18-23 the other duties required of the Department, the Department <Board,
18-24 it> shall perform duties as follows:
18-25 1. Shall Execute the Laws. See that all laws
18-26 respecting insurance and insurance companies are faithfully
18-27 executed.
19-1 2. File Articles of Incorporation and Other Papers.
19-2 File and preserve in its office all acts or articles of
19-3 incorporation of insurance companies and all other papers required
19-4 by law to be deposited with the Department <Board> and, upon
19-5 application of any party interested therein, furnish certified
19-6 copies thereof upon payment of the fees prescribed by law.
19-7 3. Shall Calculate Reserve. For every company
19-8 transacting any kind of insurance business in this State, for which
19-9 no basis is prescribed by law, the Department <Board> shall
19-10 calculate the reinsurance reserve upon the same basis prescribed in
19-11 Article 6.01 of this code as to companies transacting fire
19-12 insurance business.
19-13 4. To Calculate Re-insurance Reserve. On the
19-14 thirty-first day of December of each and every year, or as soon
19-15 thereafter as may be practicable, the Department <Board> shall have
19-16 calculated in the Department <its office> the re-insurance reserve
19-17 for all unexpired risks of all insurance companies organized under
19-18 the laws of this state, or transacting business in this state,
19-19 transacting any kind of insurance other than life, fire, marine,
19-20 inland, lightning or tornado insurance, which calculation shall be
19-21 in accordance with the provisions of Paragraph 3 hereof.
19-22 5. When a Company's Surplus is Impaired. No
19-23 impairment of the capital stock of a stock company shall be
19-24 permitted. No impairment of the surplus of a stock company, or of
19-25 the minimum required aggregate surplus of a mutual, Lloyd's, or
19-26 reciprocal insurer, shall be permitted in excess of that provided
19-27 by this section. Having charged against a company other than a
20-1 life insurance company, the reinsurance reserve, as prescribed by
20-2 the laws of this State, and adding thereto all other debts and
20-3 claims against the company, the Commissioner shall, (i) if it is
20-4 determined that the surplus required by Article 2.02 or 2.20 of
20-5 this code and any subsequent amendments of a stock company doing
20-6 the kind or kinds of insurance business set out in its Certificate
20-7 of Authority is impaired to the extent of more than fifty (50%) per
20-8 cent of the required surplus for a capital stock insurance company,
20-9 or is less than the minimum level of surplus required by
20-10 Commissioner <Board> promulgated risk-based capital and surplus
20-11 regulations, or (ii) if it is determined that the required
20-12 aggregate surplus of a reciprocal or mutual company, or the
20-13 required aggregate of guaranty fund and surplus of a Lloyd's
20-14 company, other than a life insurance company, doing the kind or
20-15 kinds of insurance business set out in its Certificate of Authority
20-16 is impaired to the extent of more than twenty-five per cent (25%)
20-17 of the required aggregate surplus, or is less than the minimum
20-18 level of surplus required by Commissioner <Board> promulgated
20-19 risk-based capital and surplus regulations, the Commissioner shall
20-20 order the company to remedy the impairment of surplus to acceptable
20-21 levels specified by the Commissioner or to cease to do business
20-22 within this State. The Commissioner shall thereupon immediately
20-23 institute such proceedings as may be necessary to determine what
20-24 further actions shall be taken in the case.
20-25 6. Shall Publish Results of Investigation. The
20-26 Department <Board> shall publish the result of an <its> examination
20-27 of the affairs of any company whenever the Commissioner <Board>
21-1 deems it for the interest of the public.
21-2 7. May Order Sanctions. (a) After notice and
21-3 opportunity for a hearing, the Department <State Board of
21-4 Insurance> may cancel or revoke any permit, license, certificate of
21-5 authority, certificate of registration, or other authorization
21-6 issued or existing under its authority or the authorization of this
21-7 Code if the holder or possessor of same is found to be in violation
21-8 of, or to have failed to comply with, a specific provision of the
21-9 Code or any duly promulgated rule or regulation of the Commissioner
21-10 or the State Board of Insurance. In lieu of such cancellation or
21-11 revocation, the Department <State Board of Insurance> may order one
21-12 or more of the following sanctions if it determines from the facts
21-13 that such would be more fair, reasonable, or equitable:
21-14 (1) Suspend such authorization for a time
21-15 certain, not to exceed one year;
21-16 (2) Order the holder or possessor of such
21-17 authorization to cease and desist from the specified activity
21-18 determined to be in violation of specific provisions of this Code
21-19 or rules and regulations of the Commissioner or the State Board of
21-20 Insurance or from failure to comply with such provisions of this
21-21 Code or such rules and regulations;
21-22 (3) Direct the holder or possessor of such
21-23 authorization to pay an administrative penalty in accordance with
21-24 Article 1.10E of this code and its subsequent amendments <remit
21-25 within a specified time, not to exceed sixty (60) days, a specified
21-26 monetary forfeiture not to exceed Twenty-five Thousand ($25,000)
21-27 Dollars for such violation or failure to comply>; or
22-1 (4) Direct the holder or possessor of such
22-2 authorization to make complete restitution to all Texas residents,
22-3 Texas insureds, and entities operating in Texas harmed by the
22-4 violation or failure to comply.
22-5 (b) Restitution under Subdivision (4) of
22-6 Subsection (a) must be made in the form and amount and within the
22-7 period determined by the Department <State Board of Insurance>.
22-8 <(c) Any monetary forfeiture paid as a result of
22-9 an order issued pursuant to Subdivision (3) of Subsection (a) shall
22-10 be deposited with the State Treasurer to the credit of the General
22-11 Revenue Fund.>
22-12 (d) If it is found after hearing that any holder
22-13 or possessor has failed to comply with an order issued pursuant to
22-14 Subsection (a), the Department <State Board of Insurance> shall,
22-15 unless its order is lawfully stayed, cancel all authorizations of
22-16 such holder or possessor.
22-17 (e) The Department may <State Board of Insurance
22-18 shall have authority to> informally dispose of any matter specified
22-19 in this section by consent order, agreed settlement, stipulations,
22-20 or default.
22-21 (f) The Department <Board> shall give notice of
22-22 any action taken pursuant to this section to the Insurance
22-23 Commissioner or other similar officer of every state.
22-24 (g) The authority vested in the Department
22-25 <State Board of Insurance> in this Article shall be in addition to
22-26 and not in lieu of any other authority to enforce or cause to be
22-27 enforced any sanctions, penalties, fines, forfeitures, denials,
23-1 suspensions, or revocations otherwise authorized by law, and shall
23-2 be applicable to every form of authorization to any person or
23-3 entity holding or possessing the same.
23-4 (h) This section applies to all companies
23-5 regulated by the Department, <State Board of Insurance> including
23-6 but not limited to domestic and foreign, stock and mutual life,
23-7 health, and accident insurance companies; domestic and foreign,
23-8 stock and mutual, fire and casualty insurance companies; Mexican
23-9 casualty companies; domestic and foreign Lloyd's plan insurers;
23-10 domestic and foreign reciprocal or interinsurance exchanges;
23-11 domestic and foreign fraternal benefit societies; domestic and
23-12 foreign title insurance companies; attorney's title insurance
23-13 companies; stipulated premium insurance companies; nonprofit legal
23-14 service corporations; health maintenance organizations; statewide
23-15 mutual assessment companies; local mutual aid associations; local
23-16 mutual burial associations; exempt associations under Article 14.17
23-17 of this Code; nonprofit hospital, medical, or dental service
23-18 corporations including but not limited to companies subject to
23-19 Chapter 20 of this Code; county mutual insurance companies; and
23-20 farm mutual insurance companies. Also, this section applies to all
23-21 agents of those companies and generally to all other individuals,
23-22 corporations, associations, partnerships, and other natural or
23-23 artificial persons engaged in the business of insurance or that
23-24 hold a permit, certificate, registration, license, or other
23-25 authority under this Code or that are regulated by the Department
23-26 <State Board of Insurance>.
23-27 8. Report to Attorney General. The Department <It>
24-1 shall report promptly and in detail to the Attorney General any
24-2 violation of law relative to insurance companies or the business of
24-3 insurance.
24-4 9. Shall Furnish Blanks. The Department <It> shall
24-5 furnish to the companies required to report to the Department
24-6 <Board> the necessary blank forms for the statements required.
24-7 10. Shall Keep Records. The Department <It> shall
24-8 preserve in a permanent form a full record of the Department's
24-9 <its> proceedings and a concise statement of the condition of each
24-10 company or agency visited or examined.
24-11 11. Give Certified Copies. At the request of any
24-12 person, and on the payment of the legal fee, the Department <Board>
24-13 shall give certified copies of any record or papers in its office,
24-14 when the Commissioner <it> deems it not prejudicial to public
24-15 interest and shall give such other certificates as are provided for
24-16 by law. The fees collected by the Department <Board> under this
24-17 section shall be deposited in the State Treasury to the credit of
24-18 the Texas Department <State Board> of Insurance operating fund.
24-19 12. Report to Governor and Legislature. The
24-20 Department shall file annually with the Governor and the presiding
24-21 officer of each house of the Legislature a complete and detailed
24-22 written report accounting for all funds received and disbursed by
24-23 the Department during the preceding fiscal year. The annual report
24-24 must be in the form and reported in the time provided by the
24-25 General Appropriations Act. The report shall also contain the
24-26 Commissioner's and the Board's <It shall report annually to the
24-27 Governor the receipts and expenses of its department for the year,
25-1 its> official acts, the condition of companies doing business in
25-2 this State, and such other information as will exhibit the affairs
25-3 of the Department <said department>. Upon specific request by the
25-4 Governor, the Department <Board> shall report the names and
25-5 compensations of the Board's <its> clerks.
25-6 13. Send Copies of Reports To. The Department <Board>
25-7 shall send a copy of the <its> annual report to the Insurance
25-8 Commissioner or other similar officer of every state and, on
25-9 request, shall send a copy to each company doing business in Texas.
25-10 14. Report Laws to Other States. On request, the
25-11 Department <it> shall communicate to the Insurance Commissioner or
25-12 other similar officer of any other state, in which the substantial
25-13 provisions of the law of this State relative to insurance have
25-14 been, or shall be, enacted, any facts which by law it is his duty
25-15 to ascertain respecting the companies of this State doing business
25-16 within such other state.
25-17 15. See That No Company Does Business. The Department
25-18 <It> shall see that no company is permitted to transact the
25-19 business of life insurance in this State whose charter authorizes
25-20 it to do a fire, marine, lightning, tornado, or inland insurance
25-21 business, and that no company authorized to do a life insurance
25-22 business in this State be permitted to take fire, marine or inland
25-23 risks.
25-24 16. Admit Mutual Companies. The Department <Board>
25-25 shall admit into this State mutual insurance companies engaged in
25-26 cyclone, tornado, hail and storm insurance which are organized
25-27 under the laws of other states and which have Two Million
26-1 ($2,000,000.00) Dollars assets in excess of liabilities.
26-2 17. Voluntary Deposits. (a) In the event any
26-3 insurance company organized and doing business under the provisions
26-4 of this Code shall be required by any other state, country or
26-5 province as a requirement for permission to do an insurance
26-6 business therein to make or maintain a deposit with an officer of
26-7 any state, country, or province, such company, at its discretion,
26-8 may voluntarily deposit with the State Treasurer such securities as
26-9 may be approved by the Commissioner of Insurance to be of the type
26-10 and character authorized by law to be legal investments for such
26-11 company, or cash, in any amount sufficient to enable it to meet
26-12 such requirements. The State Treasurer is hereby authorized and
26-13 directed to receive such deposit and hold it exclusively for the
26-14 protection of all policyholders or creditors of the company
26-15 wherever they may be located, or for the protection of the
26-16 policyholders or creditors of a particular state, country or
26-17 province, as may be designated by such company at the time of
26-18 making such deposit. The company may, at its option, withdraw such
26-19 deposit or any part thereof, first having deposited with the
26-20 Treasurer, in lieu thereof, other securities of like class and of
26-21 equal amount and value to those withdrawn, which withdrawal and
26-22 substitution must be approved by the Commissioner of Insurance.
26-23 The proper officer of each insurance company making such deposit
26-24 shall be permitted at all reasonable times to examine such
26-25 securities and to detach coupons therefrom, and to collect interest
26-26 thereon, under such reasonable rules and regulations as may be
26-27 prescribed by the State Treasurer and the Commissioner of
27-1 Insurance. Any deposit so made for the protection of policyholders
27-2 or creditors of a particular state, country or province shall not
27-3 be withdrawn, except by substitution as provided above, by the
27-4 company, except upon filing with the Commissioner of Insurance
27-5 evidence satisfactory to him that the company has withdrawn from
27-6 business, and has no unsecured liabilities outstanding or potential
27-7 policyholder liabilities or obligations in such other state,
27-8 country or province requiring such deposit, and upon the filing of
27-9 such evidence the company may withdraw such deposit at any time
27-10 upon the approval of the Commissioner of Insurance. Any deposit so
27-11 made for the protection of all policyholders or creditors wherever
27-12 they may be located shall not be withdrawn, except by substitution
27-13 as provided above, by the company except upon filing with the
27-14 Commissioner of Insurance evidence satisfactory to him that the
27-15 company does not have any unsecured liabilities outstanding or
27-16 potential policy liabilities or obligations anywhere, and upon
27-17 filing such evidence the company may withdraw such deposit upon the
27-18 approval of the Commissioner of Insurance. For the purpose of
27-19 state, county and municipal taxation, the situs of any securities
27-20 deposited with the State Treasurer hereunder shall be in the city
27-21 and county where the principal business office of such company is
27-22 fixed by its charter.
27-23 (b) Any voluntary deposit <now> held by the
27-24 State Treasurer or the Department <State Board of Insurance>
27-25 heretofore made by any insurance company in this State, and which
27-26 deposit was made for the purpose of gaining admission to another
27-27 state, may be considered, at the option of such company, to be
28-1 hereinafter held under the provisions of this Act.
28-2 (c) When two or more companies merge or
28-3 consolidate or enter a total reinsurance contract by which the
28-4 ceding company is dissolved and its assets acquired and liabilities
28-5 assumed by the surviving company, and the companies have on deposit
28-6 with the State Treasurer two or more deposits made for identical
28-7 purposes under this section <either Section 17 of Article 1.10 of
28-8 the Texas Insurance Code, as amended,> or Article 4739, Revised
28-9 Civil Statutes of Texas (1925), as amended, and now repealed, all
28-10 such deposits, except the deposit of greatest amount and value, may
28-11 be withdrawn by the new surviving or reinsuring company, upon
28-12 proper showing of duplication of such deposits and that the company
28-13 is the owner thereof.
28-14 (d) Any company which has made a deposit or
28-15 deposits under this section <Article 1.10, Section 17, Texas
28-16 Insurance Code, as amended,> or Article 4739, Revised Civil
28-17 Statutes of Texas (1925), as amended and now repealed, shall be
28-18 entitled to a return of such deposits upon proper application
28-19 therefor and a showing before the Commissioner that such deposit or
28-20 deposits are no longer required under the laws of any state,
28-21 country or province in which such company sought or gained
28-22 admission to do business upon the strength of a certificate of such
28-23 deposit <by the State Board of Insurance or its predecessor>.
28-24 (e) Upon being furnished a certified copy of the
28-25 Commissioner's order issued under Subsection (c) or (d) above, the
28-26 Treasurer of the State of Texas shall release, transfer and deliver
28-27 such deposit or deposits to the owner as directed in said order.
29-1 18. Complaint File. The Department <State Board of
29-2 Insurance> shall keep <maintain> an information file about
29-3 <relating to> each <written> complaint <that is> filed with the
29-4 Department that the Department has authority to resolve <board
29-5 concerning an activity that is regulated by the board>.
29-6 19. Notice of Complaint Status. If a written
29-7 complaint is filed with the Department that the Department has
29-8 authority to resolve, the Department, at least quarterly and until
29-9 final disposition of the complaint, shall notify the parties to the
29-10 complaint of the status of the complaint unless the notice would
29-11 jeopardize an undercover investigation <State Board of Insurance
29-12 relating to an activity that is regulated by the board, the board,
29-13 at least quarterly and until final disposition of the complaint,
29-14 shall notify the person making the complaint and the person
29-15 complained against of the status of the complaint unless:>
29-16 <(A) the complaint relates to an entity in
29-17 supervision, conservatorship, or liquidation; or>
29-18 <(B) giving such notice would jeopardize the
29-19 investigation of a possible violation of a law that is enforceable
29-20 by a criminal penalty>.
29-21 20. Electronic Transfer of Funds. The Commissioner
29-22 <Board> shall adopt rules for the electronic transfer of any taxes,
29-23 fees, guarantee funds, or other money owed to or held for the
29-24 benefit of the state. The Commissioner <Board> shall require the
29-25 electronic transfer of any amounts held or owed in an amount
29-26 exceeding $500,000.
29-27 SECTION 1.08. Sections 1, 2, 3, 4, and 6, Article 1.31A,
30-1 Insurance Code, are amended to read as follows:
30-2 Sec. 1. Definition <Definitions>. In this article, "fund"<:>
30-3 <(1) "Board" means the State Board of Insurance.>
30-4 <(2) "Commissioner" means the commissioner of
30-5 insurance.>
30-6 <(3) "Fund"> means the Texas Department <State Board>
30-7 of Insurance operating fund.
30-8 Sec. 2. Creation of Fund. The Texas Department <State
30-9 Board> of Insurance operating fund is a fund <created> in the State
30-10 Treasury.
30-11 Sec. 3. Deposit of Revenues in Fund. Money received by the
30-12 commissioner or board from taxes and fees that are required by this
30-13 code to be credited to the fund and money received by the
30-14 commissioner or board from sales, reimbursements, and fees
30-15 authorized by law other than this code shall be deposited in the
30-16 fund.
30-17 Sec. 4. Certain Money Included. The money received from
30-18 sales, reimbursements, and other fees authorized by law other than
30-19 this code includes money received from the following:
30-20 (1) <fees received by the board for filing charters
30-21 and charter amendments under Article 3914, Revised Statutes, as
30-22 amended;>
30-23 <(2)> fees received by the board for providing copies
30-24 of public records under Chapter 424, Acts of the 63rd Legislature,
30-25 Regular Session, 1973, as amended (Article 6252-17a, Vernon's Texas
30-26 Civil Statutes);
30-27 <(3) money received by the state fire marshal for
31-1 licenses under Chapter 498, Acts of the 55th Legislature, Regular
31-2 Session, 1957, as amended (Article 9205, Vernon's Texas Civil
31-3 Statutes);>
31-4 (2) <(4)> money or credits received by the board for
31-5 surplus or salvage property under Sections 9.04 and 9.05, State
31-6 Purchasing and General Services Act <Chapter 773, Acts of the 66th
31-7 Legislature, Regular Session, 1979> (Article 601b, Vernon's Texas
31-8 Civil Statutes);
31-9 (3) <(5)> money received by the board from the sale of
31-10 publications and other printed material under Chapter 248, Acts of
31-11 the 55th Legislature, Regular Session, 1957 (Article 4413(33),
31-12 Vernon's Texas Civil Statutes);
31-13 (4) <(6)> receipts to the board from miscellaneous
31-14 transactions and sources under Section 403.011 or 403.012,
31-15 Government Code <Article 4344, Revised Statutes>, as amended;
31-16 (5) <(7)> money received by the board from charges for
31-17 postage spent to serve legal process under Section 17.025, Civil
31-18 Practice and Remedies Code <Chapter 288, Acts of the 67th
31-19 Legislature, Regular Session, 1981 (Article 2041b, Vernon's Texas
31-20 Civil Statutes)>;
31-21 (6) <(8)> receipts to the board for furnishing
31-22 necessary and authorized special or technical services under
31-23 Chapter 741, Government Code <the Interagency Cooperation Act,> as
31-24 amended <(Article 4413(32), Vernon's Texas Civil Statutes)>;
31-25 (7) <(9)> receipts to the board from the State
31-26 Treasurer involving warrants for which payment is barred under
31-27 Chapter 404, Government Code <Article 4371, Revised Statutes>, as
32-1 amended;
32-2 (8) <(10)> money received by the board from sales or
32-3 reimbursements authorized by the General Appropriations Act; and
32-4 (9) <(11)> money received by the board from the sale
32-5 of any property purchased with money from the <State Board of
32-6 Insurance operating> fund or a predecessor fund.
32-7 Sec. 6. Administration of Fund. (a) The commissioner shall
32-8 administer and may spend money from the fund pursuant to laws of
32-9 the state, rules adopted by the commissioner <of the board>, and
32-10 the General Appropriations Act.
32-11 (b) The commissioner <board> is responsible for the
32-12 development and maintenance of an accounting procedure for the
32-13 receipt, allocation, and disbursement of money deposited in the
32-14 fund. The procedure shall require adequate records for the
32-15 commissioner <board> to adjust the tax assessments and fee
32-16 schedules as authorized by this code and for the State Auditor to
32-17 determine the source of all receipts and expenditures.
32-18 SECTION 1.09. Article 1.37, Insurance Code, is amended to
32-19 read as follows:
32-20 Art. 1.37. INFORMATION CONCERNING DEPARTMENT <STATE BOARD>
32-21 OF INSURANCE. (a) The department <State Board of Insurance> shall
32-22 prepare information of public <consumer> interest describing the
32-23 <regulatory> functions of the department <board> and describing the
32-24 department's <board's> procedures by which <consumer> complaints
32-25 are filed with and resolved by the department <board>. The
32-26 department <board> shall make the information available <on
32-27 request> to the <general> public and appropriate state agencies.
33-1 (b) The commissioner by rule shall establish methods by
33-2 which consumers and service recipients are notified of the name,
33-3 mailing address, and telephone number of the department for the
33-4 purpose of directing complaints to the department. The
33-5 commissioner may provide for that notification:
33-6 (1) on each registration form, application, or written
33-7 contract for services of an individual or entity regulated under
33-8 this code or other insurance law of this state;
33-9 (2) on a sign prominently displayed in the place of
33-10 business of each individual or entity regulated under this code or
33-11 other insurance law of this state; or
33-12 (3) in a bill for service provided by an individual or
33-13 entity regulated under this code or other insurance law of this
33-14 state.
33-15 SECTION 1.10. Section 323.007, Government Code, is amended
33-16 by adding Subsection (d) to read as follows:
33-17 (d) The council shall prepare a revision of the Insurance
33-18 Code and other insurance laws of this state that are included in
33-19 Vernon's Texas Insurance Code for consideration by the 75th
33-20 Legislature during its regular session. This subsection expires
33-21 June 1, 1997.
33-22 SECTION 1.11. (a) Sections 3.22(c), 3.25(c), and 3.26(d),
33-23 Texas Workers' Compensation Act (Articles 8308-3.22, 8308-3.25, and
33-24 8308-3.26, Vernon's Texas Civil Statutes), are repealed.
33-25 (b) Section 3.27, Texas Workers' Compensation Act (Article
33-26 8308-3.27, Vernon's Texas Civil Statutes), is repealed.
33-27 (c) Sections 3(g) and 4(e), Article 1.10A, Insurance Code,
34-1 are repealed.
34-2 SECTION 1.12. (a) This section applies to any act of the
34-3 State Board of Insurance performed before the effective date of
34-4 this Act that, after the effective date of this Act, is an act that
34-5 shall or may be performed only by the Commissioner of Insurance,
34-6 including:
34-7 (1) issuance of a license, certificate, or other
34-8 similar form of permission;
34-9 (2) promulgation of a rule, standard, regulation, or
34-10 order;
34-11 (3) promulgation or approval of policy forms or policy
34-12 form endorsements; or
34-13 (4) adoption or approval of a plan of operation for an
34-14 organization subject to the jurisdiction of the department.
34-15 (b) An act governed by this section remains in effect until:
34-16 (1) it expires under its own terms or in accordance
34-17 with applicable law; or
34-18 (2) it is superseded by an act of the Commissioner of
34-19 Insurance.
34-20 SECTION 1.13. (a) As soon as possible on or after the
34-21 effective date of this Act, the governor shall appoint six persons
34-22 to serve on the six-member State Board of Insurance in accordance
34-23 with Article 1.03, Insurance Code, as amended by this Act.
34-24 (b) In making the appointments under Subsection (a) of this
34-25 section, the governor shall designate two members for terms ending
34-26 February 1, 1995, two members for terms ending February 1, 1997,
34-27 and two members for terms ending February 1, 1999.
35-1 (c) Until a majority of the six-member State Board of
35-2 Insurance takes office under Subsection (a) of this section, the
35-3 members serving on the three-member State Board of Insurance
35-4 immediately before the effective date of this Act shall exercise
35-5 the authority granted to the six-member State Board of Insurance
35-6 under Article 1.02(b), Insurance Code, as amended by this Act, but
35-7 may not exercise any authority granted to the commissioner of
35-8 insurance under that article. On the date that a majority of the
35-9 six-member State Board of Insurance takes office under Subsection
35-10 (a) of this section, the three-member State Board of Insurance, as
35-11 it existed before the effective date of this Act, is abolished.
35-12 (d) As soon as possible on or after the effective date of
35-13 this Act, the governor shall appoint a commissioner of insurance.
35-14 The initial term of the commissioner ends on February 1, 1995.
35-15 (e) Until the commissioner of insurance takes office under
35-16 Subsection (d) of this section, the commissioner of insurance
35-17 serving immediately before the effective date of this Act shall
35-18 exercise the authority granted to the commissioner under Article
35-19 1.02(b), Insurance Code, as amended by this Act.
35-20 SECTION 1.14. The responsibility of the Texas Department of
35-21 Insurance for review under Article 13, State Purchasing and General
35-22 Services Act (Article 601b, Vernon's Texas Civil Statutes), is
35-23 limited to one definable activity during the first two years that
35-24 Article 1.02(h), Insurance Code, as added by this Act, is in
35-25 effect.
35-26 SECTION 1.15. On the effective date of this Act, the
35-27 comptroller shall redesignate the State Board of Insurance
36-1 operating fund (Fund No. 36) as the Texas Department of Insurance
36-2 operating fund. All money in the State Board of Insurance
36-3 operating fund on the effective date of this Act shall remain in
36-4 the Texas Department of Insurance operating fund on the
36-5 redesignation of the fund.
36-6 ARTICLE 2. TRANSFER OF CERTAIN FUNCTIONS TO STATE OFFICE OF
36-7 ADMINISTRATIVE HEARINGS
36-8 SECTION 2.01. Chapter 1, Insurance Code, is amended by
36-9 adding Article 1.33B to read as follows:
36-10 Art. 1.33B. CERTAIN HEARINGS HELD BY STATE OFFICE OF
36-11 ADMINISTRATIVE HEARINGS. (a) Except as provided by Subsections
36-12 (b) and (c) of this article, the State Office of Administrative
36-13 Hearings established under Chapter 591, Acts of the 72nd
36-14 Legislature, Regular Session, 1991 (Article 6252-13f, Vernon's
36-15 Texas Civil Statutes), and its subsequent amendments, shall conduct
36-16 any administrative hearing required to be held or that may be held
36-17 under this code or another insurance law of this state.
36-18 (b) This article applies only to hearings required to be
36-19 held before a decision may be rendered or action taken by the
36-20 commissioner, the board, or the department.
36-21 (c) This article does not apply to a hearing or proceeding:
36-22 (1) relating to the promulgation or approval of rates;
36-23 (2) relating to the promulgation of rules;
36-24 (3) relating to the promulgation or approval of a
36-25 policy form or policy form endorsement;
36-26 (4) relating to the adoption or approval of a plan of
36-27 operation for an organization subject to the jurisdiction of the
37-1 department; and
37-2 (5) conducted in accordance with Article 1.33C of this
37-3 code and its subsequent amendments.
37-4 (d) The commissioner and the chief administrative law judge
37-5 of the State Office of Administrative Hearings by rule shall adopt
37-6 a memorandum of understanding governing hearings held by the State
37-7 Office of Administrative Hearings under this code and other
37-8 insurance laws of this state. The memorandum of understanding
37-9 shall require the chief administrative law judge and the
37-10 commissioner to cooperate in conducting hearings under this article
37-11 and may authorize the State Office of Administrative Hearings to
37-12 perform any procedural act, including giving of notice, that is
37-13 required to be performed by the commissioner or the board under
37-14 this code or another insurance law of this state.
37-15 (e) Any provision of this code or another insurance law of
37-16 this state that provides that the board or commissioner shall take
37-17 an action at a hearing subject to this article means that the board
37-18 or commissioner shall take the action after the receipt of a report
37-19 from the State Office of Administrative Hearings regarding the
37-20 hearing conducted by that agency.
37-21 (f) This article governs in the event of a conflict with
37-22 another provision of this code or another insurance law of this
37-23 state, unless the other provision or insurance law states that this
37-24 article does not apply.
37-25 SECTION 2.02. Articles 1.06C(b), (c), and (d), Insurance
37-26 Code, are amended to read as follows:
37-27 (b) A person, other than a person subject to Subsection (a)
38-1 of this section, who is employed by the department or board or who
38-2 is employed by the State Office of Administrative Hearings and who
38-3 is involved in hearing cases under this code or another insurance
38-4 law of this state may not, for a period of two years after the date
38-5 the person terminates service with the department, <or> board, or
38-6 State Office of Administrative Hearings represent any person in a
38-7 matter before the department or State Office of Administrative
38-8 Hearings or receive compensation for services rendered on behalf of
38-9 any person regarding a matter pending before the department or
38-10 State Office of Administrative Hearings. This subsection does
38-11 apply to an employee exempt from the state's position
38-12 classification plan, but does not apply to an employee who was
38-13 compensated at a salary less than the salary prescribed by the
38-14 General Appropriations Act for step 1, salary group 17, of the
38-15 position classification salary schedule.
38-16 (c) A former member of the board, a former commissioner, a
38-17 former general counsel, a former public counsel, a former head of a
38-18 department division, or a former employee of the board, <or>
38-19 department, or State Office of Administrative Hearings described by
38-20 Subsection (b) of this section may not represent any person or
38-21 receive compensation for services rendered on behalf of any person
38-22 regarding a matter with which the former member, commissioner,
38-23 general counsel, public counsel, division head, or employee was
38-24 directly concerned during the period of service or employment on or
38-25 with the board, <or> department, or State Office of Administrative
38-26 Hearings or as commissioner, either through personal involvement or
38-27 because the matter was within the member's, commissioner's, general
39-1 counsel's, public counsel's, division head's, or employee's
39-2 official responsibility while associated with the board or State
39-3 Office of Administrative Hearings.
39-4 (d) A former member or employee of the board, <or>
39-5 department, or State Office of Administrative Hearings or a former
39-6 commissioner, general counsel, or public counsel commits an offense
39-7 if the former member, employee, commissioner, general counsel, or
39-8 public counsel violates this section. An offense under this
39-9 subsection is a Class A misdemeanor.
39-10 SECTION 2.03. Article 1.09-4, Insurance Code, is repealed.
39-11 SECTION 2.04. (a) Not later than December 31, 1993, the
39-12 commissioner of insurance and the chief administrative law judge of
39-13 the State Office of Administrative Hearings shall adopt the
39-14 memorandum of understanding required by Article 1.33B, Insurance
39-15 Code, as added by this Act.
39-16 (b) This article applies only to a hearing that is not held
39-17 before or pending on January 1, 1994. Unless the commissioner of
39-18 insurance and the chief administrative law judge of the State
39-19 Office of Administrative Hearings agree to apply Article 1.33B,
39-20 Insurance Code, as added by this Act, a hearing that is held before
39-21 or pending on January 1, 1994, is governed by the law in effect
39-22 immediately before the effective date of this Act, and that law is
39-23 continued in effect for this purpose.
39-24 ARTICLE 3. TRANSFER OF CERTAIN TAX COLLECTION AND AUDIT
39-25 FUNCTIONS TO OFFICE OF THE COMPTROLLER
39-26 SECTION 3.01. Chapter 1, Insurance Code, is amended by
39-27 adding Article 1.33C to read as follows:
40-1 Art. 1.33C. TAX COLLECTION AND AUDIT FUNCTIONS PERFORMED BY
40-2 OFFICE OF THE COMPTROLLER. (a) This article applies to a premium
40-3 tax, maintenance tax, retaliatory tax, or occupation tax required
40-4 to be paid to the board, commissioner, department, or state
40-5 treasurer under Article 1.14-1, 1.14-2, 1.14-3, 3.25, 3.59, 4.05,
40-6 4.10, 4.11, 4.11B, 4.17, 5.12, 5.24, 5.49, 5.68, 5.91, 8.24, 9.31,
40-7 9.46, 9.59, 15.18, 19.11, 21.03, 21.07-6, 21.46, 21.54, 21.58A,
40-8 22.18, 22.23A, or 23.08 of this code, and any subsequent
40-9 amendments, or under Section 33, Texas Health Maintenance
40-10 Organization Act (Article 20A.33, Vernon's Texas Insurance Code),
40-11 and its subsequent amendments. This article also applies to the
40-12 collection of the assessment imposed under Article 1.35B of this
40-13 code and its subsequent amendments and the maintenance tax
40-14 surcharge imposed under Section 10, Article 5.76-5, of this code
40-15 and its subsequent amendments.
40-16 (b) Notwithstanding any other provision of law, a tax
40-17 subject to this article shall be reported and paid to the
40-18 comptroller, and the comptroller shall perform the functions
40-19 necessary to collect and enforce the tax. The comptroller shall
40-20 collect and enforce any interest or other penalty to be paid on a
40-21 delinquent tax subject to this article.
40-22 (c) The comptroller shall deposit taxes collected under this
40-23 article as provided by applicable law.
40-24 (d) The comptroller and the commissioner, by rule, shall
40-25 adopt a memorandum of understanding governing collection of taxes
40-26 by the comptroller under this article. The memorandum of
40-27 understanding shall require the comptroller and the department to
41-1 cooperate in the collection of taxes and may:
41-2 (1) authorize the comptroller to perform any
41-3 procedural act that the commissioner or the board is required or
41-4 authorized to perform under this code or another insurance law of
41-5 this state in connection with the collection of taxes, including
41-6 authorizing a refund and requesting the attorney general to bring
41-7 suit for collection of delinquent taxes;
41-8 (2) authorize the comptroller to develop tax returns,
41-9 annual statements, or other reports to be provided in connection
41-10 with the payment of taxes;
41-11 (3) require the comptroller and the department to
41-12 share financial information and reports of audits of any entity
41-13 regulated by this code or another insurance law of this state
41-14 obtained by the comptroller or the department;
41-15 (4) coordinate the electronic transfer of funds;
41-16 (5) authorize the comptroller to collect a tax, fee,
41-17 or assessment that may be collected by the board, commissioner, or
41-18 department and that is not described by Subsection (a) of this
41-19 article; or
41-20 (6) address any other relevant matter.
41-21 (e) The comptroller may exercise any authority granted to
41-22 the board under Article 4.16 of this code and its subsequent
41-23 amendments.
41-24 (f) The office of comptroller of public accounts shall
41-25 conduct any administrative hearing required in connection with the
41-26 collection of taxes under this code or another insurance law of
41-27 this state.
42-1 (g) This article does not affect the authority of the board
42-2 or commissioner to establish the rate of a tax or the amount of an
42-3 assessment under this code or other insurance law of this state.
42-4 SECTION 3.02. Article 1.11(a), Insurance Code, is amended to
42-5 read as follows:
42-6 (a) The Board may, from time to time, make such changes in
42-7 the forms of the annual statements required of insurance companies
42-8 of any kind, as shall seem to it best adapted to elicit a true
42-9 exhibit of their condition and methods of transacting business.
42-10 Such form shall elicit only such information as shall pertain to
42-11 the business of the company.
42-12 If any annual statement, report, financial statement, tax
42-13 return, or tax payment required to be filed or deposited in the
42-14 offices of the State Board of Insurance or the Comptroller of
42-15 Public Accounts<,> is delivered by the United States Postal Service
42-16 to the offices of the State Board of Insurance or the Comptroller
42-17 of Public Accounts, as applicable, after the prescribed date on
42-18 which the annual statement, report, financial statement, tax
42-19 return, or tax payment is to be filed, the date of the United
42-20 States Postal Service postmark stamped on the cover in which the
42-21 annual statement is mailed, or any other evidence of mailing
42-22 authorized by the United States Postal Service reflected on the
42-23 cover in which the annual statement is mailed, shall be deemed to
42-24 be the date of filing, unless otherwise specifically made an
42-25 exception to this general statute.
42-26 SECTION 3.03. (a) Not later than September 1, 1993, the
42-27 comptroller and the commissioner of insurance shall adopt the
43-1 memorandum of understanding required by Article 1.33C, Insurance
43-2 Code, as added by this Act. The initial memorandum of
43-3 understanding adopted under this subsection may be adopted as if it
43-4 were an emergency rule under Section 5(d), Administrative Procedure
43-5 and Texas Register Act (Article 6252-13a, Vernon's Texas Civil
43-6 Statutes), and must take effect September 1, 1993. The initial
43-7 memorandum of understanding must include provisions relating to the
43-8 transfer of information and records in the possession of the Texas
43-9 Department of Insurance to the comptroller and to the collection of
43-10 taxes that are delinquent on the effective date of the memorandum
43-11 of understanding and may address the transfer of department
43-12 employees.
43-13 (b) This article applies only to the collection of a premium
43-14 tax, maintenance tax, retaliatory tax, occupation tax, or
43-15 maintenance tax surcharge, including a delinquent tax or tax
43-16 surcharge, on or after September 1, 1993.
43-17 ARTICLE 4. ADMINISTRATIVE PENALTIES
43-18 SECTION 4.01. Chapter 1, Insurance Code, is amended by
43-19 adding Article 1.10E to read as follows:
43-20 Art. 1.10E. ADMINISTRATIVE PENALTIES
43-21 Sec. 1. DEFINITION. In this article, "person" means an
43-22 individual, corporation, trust, partnership, association, or any
43-23 other legal entity.
43-24 Sec. 2. PENALTY AUTHORIZED. If a person licensed or
43-25 regulated under this code or another insurance law of this state
43-26 violates this code, another insurance law of this state, or a rule
43-27 or order adopted by the commissioner or the board, the department
44-1 may assess an administrative penalty against the person as provided
44-2 by this article.
44-3 Sec. 3. AMOUNT OF PENALTY. (a) The penalty for each
44-4 violation may be in an amount not to exceed $25,000, unless a
44-5 greater or lesser penalty is specified by a provision of this code
44-6 or another insurance law of this state. Each day a violation
44-7 continues or occurs may be considered a separate violation for
44-8 purposes of penalty assessments.
44-9 (b) In determining the amount of the penalty, the department
44-10 shall consider:
44-11 (1) the seriousness of the violation, including the
44-12 nature, circumstances, extent, and gravity of the prohibited act,
44-13 and the hazard or potential hazard created to the health, safety,
44-14 or economic welfare of the public;
44-15 (2) the economic harm to the public's interests or
44-16 confidences caused by the violation;
44-17 (3) the economic damage to property caused by the
44-18 violation;
44-19 (4) the history of previous violations;
44-20 (5) the amount necessary to deter future violations;
44-21 (6) efforts to correct the violation;
44-22 (7) whether the violation was intentional or
44-23 unintentional; and
44-24 (8) any other matter that justice may require.
44-25 Sec. 4. PROCEDURES FOR ASSESSING PENALTY. (a) If, after
44-26 investigation of a possible violation and the facts surrounding
44-27 that possible violation, the department determines that a violation
45-1 has occurred, the department may issue a violation report stating
45-2 the facts on which the conclusion that a violation occurred is
45-3 based, recommending that an administrative penalty under this
45-4 article be imposed on the person charged and recommending the
45-5 amount of that proposed penalty. The department shall base the
45-6 recommended amount of the proposed penalty on the seriousness of
45-7 the violation determined by consideration of the factors set forth
45-8 in Section 3(b) of this article.
45-9 (b) Not later than the 14th day after the date on which the
45-10 report is issued, the department shall give written notice of the
45-11 report to the person charged. The notice shall include a brief
45-12 summary of the charges, a statement of the amount of the penalty
45-13 recommended, and a statement of the right of the person charged to
45-14 a hearing on the occurrence of the violation, the amount of the
45-15 penalty, or both the occurrence of the violation and the amount of
45-16 the penalty.
45-17 (c) Not later than the 20th day after the date on which
45-18 notice is received, the person charged may accept the determination
45-19 of the department made under Subsection (a) of this section,
45-20 including the recommended penalty, or make a written request for a
45-21 hearing on the determination.
45-22 (d) If the person charged with the violation accepts the
45-23 determination of the department, the commissioner shall issue an
45-24 order approving the determination and ordering the payment of the
45-25 recommended penalty.
45-26 (e) If the person charged requests a hearing or fails to
45-27 timely respond to the notice, the department shall set a hearing
46-1 and give notice of the hearing. The hearing shall be held by the
46-2 State Office of Administrative Hearings in accordance with Article
46-3 1.33B of this code and its subsequent amendments. The
46-4 administrative law judge shall make findings of fact and
46-5 conclusions of law and issue promptly to the commissioner a
46-6 proposal for decision as to the occurrence of the violation,
46-7 including a recommendation as to the amount of the proposed penalty
46-8 if a penalty is warranted. Based on the findings of fact,
46-9 conclusions of law, and recommendations of the administrative law
46-10 judge, the commissioner by order may find that a violation has
46-11 occurred and may assess a penalty or may find that no violation has
46-12 occurred. All proceedings under this subsection are subject to the
46-13 Administrative Procedure and Texas Register Act (Article 6252-13a,
46-14 Vernon's Texas Civil Statutes), and its subsequent amendments.
46-15 (f) The department shall give notice of the commissioner's
46-16 order to the person charged. The notice shall include:
46-17 (1) the findings of fact and conclusions of law
46-18 separately stated;
46-19 (2) the amount of the penalty ordered, if any;
46-20 (3) a statement of the right, if any, of the person
46-21 charged to judicial review of the commissioner's order; and
46-22 (4) other information required by law.
46-23 (g) Not later than the 30th day after the date on which the
46-24 order becomes final as provided by Section 16(c), Administrative
46-25 Procedure and Texas Register Act (Article 6252-13a, Vernon's Texas
46-26 Civil Statutes), and its subsequent amendments, the person charged
46-27 with the penalty shall:
47-1 (1) pay the penalty in full; or
47-2 (2) if the person files a petition of judicial review
47-3 contesting either the amount of the penalty or the occurrence of
47-4 the violation or contesting both the occurrence of the violation
47-5 and the amount of the penalty:
47-6 (A) forward the amount to the department for
47-7 placement in an escrow account; or
47-8 (B) in lieu of payment into escrow, post with
47-9 the department a supersedeas bond in a form approved by the
47-10 department for the amount of the penalty, the bond to be effective
47-11 until all judicial review of the order or decision is final.
47-12 (h) If a person charged is financially unable to either
47-13 forward the amount of the penalty for placement in an escrow
47-14 account or post a supersedeas bond for the amount of the penalty,
47-15 the person may satisfy the requirements of Subsection (g)(2) of
47-16 this section by filing with the department an affidavit sworn by
47-17 the person charged, stating that the person is financially unable
47-18 to either forward the amount of the penalty or post a bond.
47-19 (i) Failure to forward the money, post the bond, or file the
47-20 affidavit with the department within the time provided by
47-21 Subsection (g) of this section results in a waiver of all legal
47-22 rights to judicial review.
47-23 (j) If the person charged fails to pay the penalty in full
47-24 as provided under Subsection (g)(1) of this section, or fails to
47-25 forward the money, post the bond, or file the affidavit as provided
47-26 by Subsection (g) or (h) of this section, the department may
47-27 forward the matter to the attorney general for enforcement.
48-1 (k) Judicial review of the order or decision of the
48-2 commissioner assessing the penalty shall be under the substantial
48-3 evidence rule and shall be instituted by filing a petition with a
48-4 district court in Travis County, as provided by Section 19,
48-5 Administrative Procedure and Texas Register Act (Article 6252-13a,
48-6 Vernon's Texas Civil Statutes), and its subsequent amendments.
48-7 (l) If the penalty is reduced or is not assessed by the
48-8 court, the department shall remit to the person charged the
48-9 appropriate amount plus accrued interest if the penalty has been
48-10 paid or shall execute a release of the bond if a supersedeas bond
48-11 has been posted. The accrued interest on amounts remitted by the
48-12 department under this subsection shall be paid at a rate equal to
48-13 the rate charged on loans to depository institutions by the New
48-14 York Federal Reserve Bank and shall be paid for the period
48-15 beginning on the date the penalty is paid to the department under
48-16 Subsection (g) of this section and ending on the date the penalty
48-17 is remitted.
48-18 Sec. 5. DEPOSIT TO GENERAL REVENUE FUND. A penalty
48-19 collected under this article for a violation by a person licensed
48-20 or regulated under this code or another insurance law of this state
48-21 shall be deposited in the general revenue fund.
48-22 Sec. 6. APPLICATION. This article applies to any monetary
48-23 penalty imposed by the department, commissioner, or board under
48-24 this code or another insurance law of this state.
48-25 SECTION 4.02. Section 17A, Article 1.14-2, Insurance Code,
48-26 is amended to read as follows:
48-27 Sec. 17A. Administrative penalty. <(a)> If a surplus lines
49-1 agent violates Section 8 of this article or a rule, regulation, or
49-2 order adopted under that provision, the State Board of Insurance
49-3 may assess an administrative <a> penalty against that agent as
49-4 provided by Article 1.10E of this code and its subsequent
49-5 amendments <Section 7, Article 1.10, of this code.>
49-6 <(b) In determining the amount of the penalty, the State
49-7 Board of Insurance shall consider:>
49-8 <(1) the nature, circumstances, extent, and gravity of
49-9 the violation;>
49-10 <(2) any economic benefit gained through the
49-11 violation;>
49-12 <(3) the amount necessary to deter future violations;
49-13 and>
49-14 <(4) any other matters that justice may require>.
49-15 SECTION 4.03. Section 19, Managing General Agents' Licensing
49-16 Act (Article 21.07-3, Vernon's Texas Insurance Code), is amended to
49-17 read as follows:
49-18 Sec. 19. Violations of act. Any person, firm, or
49-19 corporation who violates any of the provisions of this Act or any
49-20 rule, regulation, or order adopted under this Act shall be subject
49-21 to sanctions under Section 7, Article 1.10, Insurance Code. <In
49-22 determining the amount of any penalty, the State Board of Insurance
49-23 shall consider:>
49-24 <(1) the nature, circumstances, extent, and gravity of
49-25 the violation;>
49-26 <(2) any economic benefit gained through the
49-27 violation;>
50-1 <(3) the amount necessary to deter future violations;
50-2 and>
50-3 <(4) any other matters that justice may require.>
50-4 SECTION 4.04. Section 6, Article 21.11-1, Insurance Code, is
50-5 amended to read as follows:
50-6 Sec. 6. If it is found, after notice and an opportunity to
50-7 be heard as determined by the board, that an insurance company has
50-8 violated this article, the insurance company shall be subject to an
50-9 administrative <a civil> penalty under Article 1.10E of this code
50-10 and its subsequent amendments <of not less than $1,000 nor more
50-11 than $10,000>, and it shall be subject to a civil suit by the agent
50-12 for damages suffered because of the premature termination of the
50-13 contract by the company.
50-14 SECTION 4.05. Sections 7(c) and (d), Article 21.21,
50-15 Insurance Code, are amended to read as follows:
50-16 (c) Any person who violates the terms of a cease and desist
50-17 order under this section is subject to an administrative penalty
50-18 under Article 1.10E of this code and its subsequent amendments
50-19 <shall be given notice to appear and show cause, at a hearing to be
50-20 held in conformity with Section 6 of this Article, why he should
50-21 not forfeit and pay to the state a civil penalty of not more than
50-22 $1,000 per violation and not to exceed a total of $5,000>. In
50-23 determining whether or not a cease and desist order has been
50-24 violated, the Board shall take into consideration the maintenance
50-25 of procedures reasonably adapted to insure compliance with the
50-26 order.
50-27 (d) An order of the Board awarding an administrative penalty
51-1 <civil penalties> under Subsection (c) of this section applies only
51-2 to violations of this order incurred prior to the awarding of the
51-3 penalty order.
51-4 SECTION 4.06. Section 5(k), Article 21.49-1, Insurance Code,
51-5 is amended to read as follows:
51-6 (k) Additional Violations. Each director or officer of an
51-7 insurance company subject to this article, or of an insurance
51-8 holding company system subject to this article, who knowingly and
51-9 wilfully violates, participates in, or assents to or who knowingly
51-10 and wilfully permits any of the officers, agents, or employees of
51-11 the insurer or holding company system to engage in transactions or
51-12 make investments that have not been properly reported or submitted
51-13 under this article or that knowingly and wilfully violate this
51-14 article is subject to an administrative penalty under Article 1.10E
51-15 of this code and its subsequent amendments<, shall pay, in the
51-16 person's individual capacity, a civil penalty of not more than
51-17 $10,000 for each violation, after notice and an opportunity for
51-18 hearing before the commissioner. In determining the amount of the
51-19 civil penalty, the commissioner shall consider the appropriateness
51-20 of the penalty with respect to the gravity of the violation, the
51-21 history of previous violations, and any other matters that justice
51-22 requires>.
51-23 SECTION 4.07. Section 17(a), Article 21.49-3b, Insurance
51-24 Code, is amended to read as follows:
51-25 (a) An association that violates this article or any rule or
51-26 order adopted under this article is subject to sanctions under
51-27 Section 7, Article 1.10 of this code. <In determining the amount
52-1 of any penalty, the board shall consider:>
52-2 <(1) the nature, circumstances, extent, and gravity of
52-3 the violation;>
52-4 <(2) any economic benefit gained through the
52-5 violation;>
52-6 <(3) the amount necessary to deter future violations;
52-7 and>
52-8 <(4) any other matters that justice may require.>
52-9 SECTION 4.08. This article applies only to the assessment of
52-10 an administrative penalty on or after January 1, 1994. Assessment
52-11 of an administrative penalty before January 1, 1994, is governed by
52-12 the law in effect immediately before the effective date of this
52-13 Act, and that law is continued in effect for this purpose.
52-14 ARTICLE 5. RATE AND POLICY FORM REGULATION
52-15 SECTION 5.01. Chapter 5, Insurance Code, is amended by
52-16 adding Subchapters N and O to read as follows:
52-17 SUBCHAPTER N. FUNCTIONS OF BOARD AND COMMISSIONER
52-18 Art. 5.121. RATEMAKING BY BOARD. The board shall promulgate
52-19 rates in accordance with this chapter and, in accordance with this
52-20 chapter, shall adopt rules and procedures for promulgation of
52-21 rates.
52-22 Art. 5.122. POLICY FORM PROMULGATION BY COMMISSIONER.
52-23 Notwithstanding any other provision of law, the commissioner shall
52-24 promulgate or approve policy forms and policy form endorsements in
52-25 accordance with this chapter and, in accordance with this chapter,
52-26 shall adopt rules and procedures for promulgation or approval of
52-27 policy forms and policy form endorsements.
53-1 SUBCHAPTER O. RATE INFORMATION FROM CERTAIN HEALTH INSURERS
53-2 Art. 5.131. HEALTH INSURER REPORTING. (a) This article
53-3 applies to any insurance company, group hospital service
53-4 corporation, or health maintenance organization that issues:
53-5 (1) an individual, group, blanket, or franchise
53-6 insurance policy, or an insurance agreement, a group hospital
53-7 service contract, or an evidence of coverage, that provides
53-8 benefits for medical or surgical expenses incurred as a result of
53-9 an accident or sickness; or
53-10 (2) a long-term care insurance policy, as that term is
53-11 defined by Section 2, Article 3.70-12, of this code and its
53-12 subsequent amendments.
53-13 (b) Each insurer subject to this article shall submit to the
53-14 department information required by the department relating to:
53-15 (1) the underwriting principles and guidelines used by
53-16 the insurer; and
53-17 (2) the insurer's loss experience, overhead, and
53-18 operating expenses.
53-19 (c) The commissioner shall adopt rules governing the
53-20 submission of information under this article. The rules may not
53-21 require an insurer to submit the information more than annually.
53-22 SECTION 5.02. Chapter 1, Insurance Code, is amended by
53-23 adding Article 1.50 to read as follows:
53-24 Art. 1.50. SELECT COMMITTEE ON RATE AND POLICY FORM
53-25 REGULATION
53-26 Sec. 1. DEFINITION. In this article, "committee" means the
53-27 select committee on rate and policy form regulation established
54-1 under this article.
54-2 Sec. 2. COMPOSITION OF COMMITTEE. (a) The select committee
54-3 on rate and policy form regulation is composed of:
54-4 (1) three members, appointed by the governor;
54-5 (2) three members of the senate, appointed by the
54-6 lieutenant governor; and
54-7 (3) three members of the house of representatives,
54-8 appointed by the speaker of the house of representatives.
54-9 (b) The governor shall designate a member of the committee
54-10 to serve as presiding officer of the committee.
54-11 Sec. 3. PURPOSE; DUTIES; MEETINGS. (a) The committee shall
54-12 study insurance rate and policy form regulation in this state. The
54-13 committee shall assess:
54-14 (1) the effects of changes made by the 72nd
54-15 Legislature in insurance regulation to identify whether the purpose
54-16 of the department should be further changed from insurance rate and
54-17 policy form regulation and directed to:
54-18 (A) regulation of the financial conditions of
54-19 companies and market conduct; and
54-20 (B) provision of consumer services; and
54-21 (2) the nature and growth of competition in the
54-22 insurance industry in this state.
54-23 (b) The committee shall meet monthly or as needed to carry
54-24 out its duties under this section.
54-25 Sec. 4. REPORT. (a) Not later than December 1, 1994, the
54-26 committee shall issue a report of its findings. The committee
54-27 shall file copies of the report with the Legislative Reference
55-1 Library, the governor's office, the secretary of the senate, the
55-2 chief clerk of the house of representatives, the department, and
55-3 the office of public insurance counsel. The department shall make
55-4 copies of the report available to the public at cost.
55-5 (b) The report shall include recommended rule or statutory
55-6 changes to implement the committee's recommendations.
55-7 Sec. 5. STAFF. On request of the committee, the office of
55-8 public insurance counsel, Texas Legislative Council, governor's
55-9 office, senate, and house of representatives shall provide staff as
55-10 necessary to carry out the duties of the committee.
55-11 Sec. 6. WITNESSES; PROCESS. The committee may issue a
55-12 subpoena or other process to a witness at any place in this state,
55-13 compel the attendance of the witness, and compel the production of
55-14 a book, record, document, or instrument that the committee
55-15 requires. If necessary to obtain compliance with a subpoena or
55-16 other process, the committee may issue a writ of attachment. A
55-17 subpoena or other process issued by the committee may be addressed
55-18 to and served by any peace officer of this state or a political
55-19 subdivision of this state. The presiding officer shall issue, in
55-20 the name of the committee, a subpoena or other process as the
55-21 committee directs. If the presiding officer is absent, the
55-22 assistant presiding officer or a designee of the presiding officer
55-23 may issue a subpoena or other process in the same manner as the
55-24 presiding officer. A witness attending proceedings of the
55-25 committee under process is entitled to the same mileage and per
55-26 diem payments as a witness before a grand jury in this state. The
55-27 testimony given at any hearing conducted under this article shall
56-1 be given under oath subject to the penalties of perjury.
56-2 Sec. 7. COOPERATION OF OTHER AGENCIES. If necessary to the
56-3 discharge of its duties, the committee may request the assistance
56-4 of a state agency, department, or office. The agency, department,
56-5 or office shall provide the requested assistance.
56-6 Sec. 8. EXPENSES. The operating expenses of the committee
56-7 shall be paid from available funds of the Texas Department of
56-8 Insurance operating fund. A member of the committee appointed
56-9 under Section 2(a)(4) of this article is entitled to reimbursement
56-10 from those funds for expenses incurred in carrying out official
56-11 duties as a member of the committee at the rate specified in the
56-12 General Appropriations Act. Other members of the committee are not
56-13 entitled to reimbursement for their expenses.
56-14 Sec. 9. PROGRESS REPORT. Not later than December 1, 1996,
56-15 the department shall issue a report on the department's progress in
56-16 implementing recommendations for rule changes made by the committee
56-17 and in implementing any changes in law made by the 74th Legislature
56-18 in response to the recommendations of the committee.
56-19 Sec. 10. COMMITTEE ABOLISHED; EXPIRATION OF ARTICLE. (a)
56-20 The committee is abolished effective on the date it issues its
56-21 report under Section 4 of this article.
56-22 (b) This article expires January 1, 1997.
56-23 SECTION 5.03. Section 3(c), Article 5.101, Insurance Code,
56-24 is amended to read as follows:
56-25 (c) Each initial flexibility band is based on a benchmark
56-26 rate promulgated by the board. On or before January 1, 1992, and
56-27 annually thereafter, the board shall conduct hearings to determine
57-1 the benchmark rates and flexibility bands by line. The
57-2 determination of the rate shall not include disallowed expenses
57-3 under Subsection (h) of this section. An insurer, the public
57-4 insurance counsel, and any other interested person may present
57-5 testimony at the hearing and may file information for consideration
57-6 by the board. An advisory organization which collects ratemaking
57-7 data shall not be a party to the hearing. A trade association that
57-8 does not collect historical data and that does not provide
57-9 statistical plans, prospective loss costs, or supplementary rating
57-10 information to its members may, on behalf of its members that are
57-11 small or medium-sized insurers, as defined by the commissioner,
57-12 present ratemaking data and make recommendations to the board at
57-13 the hearing. An insurer shall use that benchmark rate and the
57-14 flexibility band to develop rates used for the line for the year
57-15 following the setting of the benchmark rate and the flexibility
57-16 band.
57-17 SECTION 5.04. Article 5.101, Insurance Code, is amended by
57-18 adding Section 7 to read as follows:
57-19 Sec. 7. STREAMLINED PROCESS. The department shall study and
57-20 the board may adopt and implement procedures for streamlining
57-21 insurance rate proceedings under this article. The procedures must
57-22 ensure due process to all affected parties.
57-23 SECTION 5.05. Article 1.09-5(c), Insurance Code, is amended
57-24 to read as follows:
57-25 (c) An employee of the department may appear before the
57-26 board or its designated hearings officer only as follows:
57-27 (1) a member of the department's legal staff may
58-1 assist the board or its designated hearings officer in the
58-2 prehearing process and in aligning parties to board proceedings;
58-3 (2) one or more employees of the department may appear
58-4 as a party, present evidence, and question witnesses in a
58-5 proceeding in which the public counsel under Section 5(b)(1),
58-6 Article 1.35A<(h)(1)> of this code is not authorized by law to
58-7 appear;
58-8 (3) an employee responsible for collecting and
58-9 compiling rate data may appear and present evidence relating to the
58-10 validity of the compiled data and a licensed attorney employed as
58-11 part of the legal staff of the department may assist such employee
58-12 in making the presentation;
58-13 (4) an employee of the department may appear as a
58-14 resource witness subject to cross-examination and may present
58-15 evidence at the request of a party to the proceeding;
58-16 (5) <(4)> the general counsel or an assistant general
58-17 counsel may assist the board in any proceeding in which insurance
58-18 rates are set; and
58-19 (6) <(5)> the general counsel or an assistant general
58-20 counsel may be designated by the board and may serve as a hearings
58-21 officer in any proceeding in which insurance rates are set or any
58-22 prehearing proceeding provided that any final decision relating to
58-23 rates to be set must be set by the board.
58-24 SECTION 5.06. Sections 1 and 2, Article 5.73, Insurance
58-25 Code, are amended to read as follows:
58-26 Sec. 1. Every insurer transacting business in the state may,
58-27 but is not required to, subscribe to an advisory organization and
59-1 is permitted to submit to and receive from any advisory
59-2 organization statistical information relating to loss costs <plans,
59-3 historical data, prospective loss costs, supplementary rating
59-4 information, policy forms and endorsements, research and
59-5 performance of inspections except final rates or recommendations
59-6 regarding profit or expense provisions, other than loss adjustment
59-7 expenses>.
59-8 Sec. 2. No advisory organization shall compile or
59-9 distribute, and no insurer may accept from an advisory
59-10 organization, information other than loss-cost statistical
59-11 information <recommendations for rates or for profit and expenses
59-12 other than loss adjustment expenses>.
59-13 SECTION 5.07. Article 3.42, Insurance Code, is amended by
59-14 adding Section (k) to read as follows:
59-15 (k) The department shall develop and implement rules to
59-16 improve procedures for approval of policy forms under this article.
59-17 SECTION 5.08. Section 5, Article 5.73, Insurance Code, is
59-18 repealed.
59-19 ARTICLE 6. FINANCIAL SUPERVISION OF ENTITIES REGULATED
59-20 BY TEXAS DEPARTMENT OF INSURANCE
59-21 SECTION 6.01. Section 2A(b), Article 3.28, Insurance Code,
59-22 is amended to read as follows:
59-23 (b) Actuarial Analysis of Reserves and Assets Supporting
59-24 Such Reserves. Every life insurance company, except as exempted by
59-25 or pursuant to rule adopted by the Board, shall also annually
59-26 include in the opinion required by Subsection (a)(1) of this
59-27 section, an opinion of the same person who certifies to the opinion
60-1 under Subsection (a)(1) of this section as to whether the reserves
60-2 and related actuarial items held in support of the policies and
60-3 contracts specified by Board rule, when considered in light of the
60-4 assets held by the company with respect to the reserves and related
60-5 actuarial items, including but not limited to the investment
60-6 earnings on the assets and the considerations anticipated to be
60-7 received and retained under the policies and contracts, make
60-8 adequate provision for the company's obligations under the policies
60-9 and contracts, including but not limited to the benefits under and
60-10 expenses associated with the policies and contracts. <The rules
60-11 adopted by the Board under this section shall exempt those
60-12 companies that would be exempted from the requirements stated in
60-13 this subsection (b) according to the most recently adopted
60-14 regulation by the National Association of Insurance Commissioners
60-15 entitled "Model Actuarial Opinion and Memorandum Regulation" or its
60-16 successor regulation.>
60-17 SECTION 6.02. Article 1.15, Insurance Code, is amended by
60-18 adding Sections 8, 9, and 10 to read as follows:
60-19 Sec. 8. In conducting an examination under this article, the
60-20 department shall use audits and work papers prepared by an
60-21 accountant or accounting firm that meets the requirements of
60-22 Section 12, Article 1.15A, of this code, and its subsequent
60-23 amendments, that are made available to the department by the
60-24 carrier. If necessary, the department may conduct a separate audit
60-25 of the carrier.
60-26 Sec. 9. A final or preliminary examination report, and any
60-27 information obtained during the course of an examination, is
61-1 confidential and is not subject to disclosure under the open
61-2 records law, Chapter 424, Acts of the 63rd Legislature, Regular
61-3 Session, 1973 (Article 6252-17a, Vernon's Texas Civil Statutes),
61-4 and its subsequent amendments. This section applies if the carrier
61-5 examined is under supervision or conservation, but does not apply
61-6 to an examination conducted in connection with a liquidation or a
61-7 disciplinary action under this code or another insurance law of
61-8 this state.
61-9 Sec. 10. If the Board determines that the financial strength
61-10 of a carrier justifies less-frequent examinations than are required
61-11 by Section 1 of this article, the Board may conduct the examination
61-12 of a carrier once every five years. The Board shall adopt rules
61-13 governing the determination of whether the financial strength of a
61-14 carrier justifies examination under this section. This section
61-15 applies only to examination of a carrier that has been incorporated
61-16 or organized for more than three years.
61-17 SECTION 6.03. Section 10, Article 1.15A, Insurance Code, is
61-18 amended by adding Subsection (f) to read as follows:
61-19 (f) The audited financial report must also include
61-20 information required by the department to conduct the examination
61-21 of the insurer under Article 1.15 of this code and its subsequent
61-22 amendments. The commissioner shall adopt rules governing the
61-23 information to be included in the report under this subsection.
61-24 SECTION 6.04. Chapter 1, Insurance Code, is amended by
61-25 adding Article 1.15B to read as follows:
61-26 Art. 1.15B. CONFIDENTIALITY OF EARLY WARNING SYSTEM
61-27 INFORMATION. Any information relating to the financial solvency of
62-1 any organization regulated by the department under this code or
62-2 another insurance law of this state obtained by the department's
62-3 early warning system is confidential and is not subject to
62-4 disclosure under the open records law, Chapter 424, Acts of the
62-5 63rd Legislature, Regular Session, 1973 (Article 6252-17a, Vernon's
62-6 Texas Civil Statutes), and its subsequent amendments.
62-7 SECTION 6.05. Sections 8(b) and (c), Article 1.14-2,
62-8 Insurance Code, are amended to read as follows:
62-9 (b) No surplus lines agent shall place any coverage with an
62-10 unauthorized insurer unless the insurer has met the eligibility
62-11 requirements of this section and the stamping office provides
62-12 evidence that the insurer has met the requirements to the State
62-13 Board of Insurance. An unauthorized insurer shall not be eligible
62-14 unless the insurer has a minimum capital and surplus of $15 million
62-15 <that are not less than the following amounts for the following
62-16 dates:>
62-17 <(1) $4.5 million capital and surplus as of December
62-18 31, 1991; or>
62-19 <(2) $6 million capital and surplus as of December 31,
62-20 1992>.
62-21 (c) An unauthorized insurer may be exempt from the minimum
62-22 capital and surplus requirements provided by Subsection (b) of this
62-23 section if the Commissioner of Insurance finds, after public
62-24 hearing, that the exemption is warranted based on factors such as
62-25 quality of management, capital and surplus of any parent company,
62-26 company underwriting profit and investment income trends,
62-27 reinsurance contracts, company record and reputation within the
63-1 industry, and other information the commissioner requires to make a
63-2 determination. The commissioner, by rule, shall exempt an
63-3 unauthorized insurer from the minimum capital and surplus
63-4 requirements of Subsection (b) of this section if the insurer
63-5 writes less than a minimum level of insurance premium in this
63-6 state. The rules must specify the minimum level of insurance
63-7 premium.
63-8 SECTION 6.06. Section 3A, Article 21.39-A, Insurance Code,
63-9 is amended by adding Subsection (c) to read as follows:
63-10 (c) This Act does not apply to a reinsurance agreement or
63-11 any trust account related to the reinsurance agreement if the
63-12 agreement and trust account meet the requirements of Article 3.10
63-13 or 5.75-1 of this code and any subsequent amendments.
63-14 SECTION 6.07. Section 4(a), Article 21.39-B, Insurance Code,
63-15 is amended to read as follows:
63-16 (a) A domestic insurance company may evidence its ownership
63-17 of securities through definitive certificates or uncertificated
63-18 securities as provided by Section 6 of this article, or it may
63-19 deposit or arrange for the deposit of securities held in or
63-20 purchased for its general account or its separate accounts in a
63-21 clearing corporation or the Federal Reserve Book Entry System.
63-22 When securities are deposited with a clearing corporation directly
63-23 or deposited indirectly through a participating custodian bank,
63-24 certificates representing securities of the same class of the same
63-25 issuer may be merged and held in bulk in the name of nominee of
63-26 such clearing corporation with any other securities deposited with
63-27 such clearing corporation by any person, regardless of the
64-1 ownership of such securities, and certificates representing
64-2 securities of small denominations may be merged into one or more
64-3 certificates of larger denominations. The records of member banks
64-4 through which an insurance company holds securities in the Federal
64-5 Reserve Book Entry System and the record of any custodian banks
64-6 through which an insurance company holds securities in a clearing
64-7 corporation shall at all times show that such securities are held
64-8 for such insurance company and for which accounts thereof. To be
64-9 eligible to act as a participating custodian bank under this
64-10 subsection, a bank must enter a custodial agreement with the
64-11 insurance company for which it is to act as a participating
64-12 custodian bank.
64-13 SECTION 6.08. Article 21.39-B, Insurance Code, is amended by
64-14 adding Section 6 to read as follows:
64-15 Sec. 6. The State Board of Insurance shall adopt rules
64-16 authorizing a domestic insurance company to demonstrate ownership
64-17 of a security that is not evidenced by a certificate. The rules
64-18 shall establish:
64-19 (1) standards for the types of uncertificated
64-20 securities that may be held;
64-21 (2) the manner in which ownership of the security may
64-22 be demonstrated; and
64-23 (3) adequate financial safeguards relating to the
64-24 ownership of uncertificated securities.
64-25 SECTION 6.09. Notwithstanding Section 8(b), Article 1.14-2,
64-26 Insurance Code, as amended by this Act, each unauthorized insurer
64-27 subject to the minimum capital and surplus requirements of that
65-1 section shall have a minimum capital and surplus of not less than:
65-2 (1) $9 million not later than December 31, 1993;
65-3 (2) $12 million not later than December 31, 1994; and
65-4 (3) $15 million not later than December 31, 1995.
65-5 ARTICLE 7. REGULATION OF CERTAIN LICENSE HOLDERS
65-6 SECTION 7.01. Subchapter A, Chapter 21, Insurance Code, is
65-7 amended by adding Article 21.01-2 to read as follows:
65-8 Art. 21.01-2. GENERAL PROVISIONS APPLICABLE TO CERTAIN
65-9 LICENSE HOLDERS
65-10 Sec. 1. APPLICATION. Except as otherwise provided by this
65-11 article, this article applies to licensing of persons under:
65-12 (1) Section 4, Article 1.14-2, Insurance Code;
65-13 (2) Article 9.36, Insurance Code;
65-14 (3) Article 9.42 or 9.43, Insurance Code;
65-15 (4) Section 6, Article 9.56, Insurance Code;
65-16 (5) Section 15 or 15A, Texas Health Maintenance
65-17 Organization Act (Section 20A.15 or 20A.15A, Vernon's Texas
65-18 Insurance Code);
65-19 (6) Article 21.07, Insurance Code;
65-20 (7) Chapter 213, Acts of the 54th Legislature, Regular
65-21 Session, 1955 (Article 21.07-1, Vernon's Texas Insurance Code);
65-22 (8) Chapter 29, Acts of the 54th Legislature, Regular
65-23 Session, 1955 (Article 21.07-2, Vernon's Texas Insurance Code);
65-24 (9) the Managing General Agents' Licensing Act
65-25 (Article 21.07-3, Vernon's Texas Insurance Code);
65-26 (10) Chapter 407, Acts of the 63rd Legislature,
65-27 Regular Session, 1973 (Article 21.07-4, Vernon's Texas Insurance
66-1 Code);
66-2 (11) Article 21.07-6, Insurance Code;
66-3 (12) Article 21.07-7, Insurance Code;
66-4 (13) Article 21.14, Insurance Code;
66-5 (14) Article 21.14-1, Insurance Code; or
66-6 (15) Article 21.14-2, Insurance Code.
66-7 Sec. 2. RENEWAL OF LICENSES. (a) A person may renew an
66-8 unexpired license by paying to the department before the expiration
66-9 date of the license the required renewal fee.
66-10 (b) If a person's license has been expired for 90 days or
66-11 less, the person may renew the license by paying to the department
66-12 the required renewal fee and a fee that is equal to one-half of the
66-13 examination fee, if any, for the license.
66-14 (c) If a person's license has been expired for longer than
66-15 90 days but less than one year, the person may renew the license by
66-16 paying to the department all unpaid renewal fees and a fee that is
66-17 equal to the examination fee, if any, for the license.
66-18 (d) If a person's license has been expired for one year or
66-19 longer, the person may not renew the license. The person may
66-20 obtain a new license by submitting to reexamination, if examination
66-21 is required for original issuance of the license, and complying
66-22 with the requirements and procedures for obtaining an original
66-23 license. However, the department may renew without reexamination
66-24 an expired license of a person who was licensed in this state,
66-25 moved to another state, and is currently licensed and has been in
66-26 practice in the other state for the two years preceding
66-27 application. The person must pay to the department a fee that is
67-1 equal to the examination fee for the license. If there is not an
67-2 examination fee, the person must pay a fee that is equal to the fee
67-3 for original issuance of the license.
67-4 (e) At least 30 days before the expiration of a person's
67-5 license, the department shall send written notice of the impending
67-6 license expiration to the person at the person's last known address
67-7 according to the records of the department.
67-8 (f) The commissioner by rule may adopt a system under which
67-9 licenses expire on various dates during a licensing period. For
67-10 the licensing period in which the license expiration is changed,
67-11 license fees shall be prorated on a monthly basis so that each
67-12 license holder shall pay only that portion of the license fee that
67-13 is allocable to the number of months during which the license is
67-14 valid. On renewal of the license on the new expiration date, the
67-15 total license renewal fee is payable.
67-16 (g) This section is not applicable to a license issued under
67-17 Article 21.07-6 of this code.
67-18 Sec. 3. LICENSING BY ENDORSEMENT. The department may waive
67-19 any license requirement for an applicant with a valid license from
67-20 another state having license requirements substantially equivalent
67-21 to those of this state.
67-22 Sec. 4. CONTINUING EDUCATION. (a) The board may recognize,
67-23 prepare, or administer continuing education programs for persons
67-24 whose licenses are subject to this article.
67-25 (b) Except as otherwise provided by this code or another
67-26 insurance law of this state, participation in continuing education
67-27 programs is voluntary.
68-1 Sec. 5. DISCIPLINE OF LICENSE HOLDERS. (a) The department
68-2 shall refuse to issue an original license, revoke, suspend, or
68-3 refuse to renew a license, place on probation a person whose
68-4 license has been suspended, or reprimand a license holder for a
68-5 violation of this code, another insurance law of this state, or a
68-6 rule of the commissioner or the board. If a license suspension is
68-7 probated, the commissioner may require the person to:
68-8 (1) report regularly to the department on matters that
68-9 are the basis of the probation;
68-10 (2) limit the person's practice to the areas
68-11 prescribed by the department; or
68-12 (3) continue or review professional education until
68-13 the person attains a degree of skill satisfactory to the
68-14 commissioner in those areas that are the basis of the probation.
68-15 (b) If the department proposes to refuse to issue an
68-16 original license, or to suspend, revoke, or refuse to renew a
68-17 license, the person affected is entitled to a hearing conducted by
68-18 the State Office of Administrative Hearings in accordance with
68-19 Article 1.33B of this code. Notice of the hearing shall be
68-20 provided to the person and to any insurance carrier appearing on
68-21 the application as desiring that the license be issued. The
68-22 commissioner shall prescribe procedures by which all decisions to
68-23 suspend or revoke a license are made by or are appealable to the
68-24 commissioner.
68-25 Sec. 6. STATUTORY REFERENCES. A reference in this article
68-26 to a statutory provision applies to all reenactments, revisions, or
68-27 amendments of that provision.
69-1 SECTION 7.02. Article 21.01-1, Insurance Code, is amended to
69-2 read as follows:
69-3 Art. 21.01-1. Agents' Qualifying Examination <to be
69-4 Prescribed by the Board>. (a) The State Board of Insurance may,
69-5 at its discretion, accept examinations administered by a testing
69-6 service as satisfying the examination requirements of persons
69-7 seeking license as agents, solicitors, counselors, or adjusters
69-8 under this code. The State Board of Insurance may negotiate
69-9 agreements with such testing services to include performance of
69-10 examination development, test scheduling, examination site
69-11 arrangements, and test administration, grading, reporting and
69-12 analysis. The State Board of Insurance may require such testing
69-13 services to correspond directly with the applicants with regard to
69-14 the administration of such examinations and that such testing
69-15 services collect fees for administering such examinations directly
69-16 from the applicants. The State Board of Insurance may stipulate
69-17 that any agreements with such testing services provide for the
69-18 administration of examinations in specific locales and at specified
69-19 frequencies. The State Board of Insurance shall retain the
69-20 authority to establish the scope and type of all examinations.
69-21 Prior to negotiating and making any agreement with any testing
69-22 service as authorized hereby, the State Board of Insurance shall
69-23 hold a public hearing thereon in accordance with the provisions of
69-24 Section 5 of the Administrative Procedure and Texas Register Act
69-25 (Article 6252-13a, Vernon's Texas Civil Statutes), and shall adopt
69-26 such rules, regulations, and standards as may be deemed appropriate
69-27 by the Board to implement the authority granted in this Article.
70-1 (b) The commissioner may appoint advisory boards consisting
70-2 of any of the following persons: persons holding a license for
70-3 which the respective examinations are intended, persons who are
70-4 employed by insurance companies appointing such licensees, persons
70-5 acting as general agents or managers, persons teaching insurance at
70-6 an accredited college or university in Texas, persons who are
70-7 citizens of the State of Texas but who are not of any of the
70-8 preceding descriptions, or any combination of such persons. The
70-9 function of such advisory boards will be to make recommendations to
70-10 the State Board of Insurance or the testing service with respect to
70-11 the scope, type, and conduct of such examinations and the times and
70-12 places within the state where they shall be held. The members of
70-13 such advisory boards shall serve without pay but shall be
70-14 reimbursed for their reasonable expenses in attending meetings of
70-15 their respective advisory boards.
70-16 (c) In the absence of an agreement with a testing service,
70-17 the State Board of Insurance shall administer any required
70-18 qualifying examination in accordance with the provisions of the
70-19 respective statutes governing the issuance of the license sought by
70-20 the applicant.
70-21 (d) Not later than the 30th day after the date on which a
70-22 licensing examination is administered under this code, the
70-23 department shall notify each examinee of the results of the
70-24 examination. However, if an examination is graded or reviewed by a
70-25 testing service, the department shall notify examinees of the
70-26 results of the examination not later than the 14th day after the
70-27 date on which the department receives the results from the testing
71-1 service. If the notice of examination results graded or reviewed
71-2 by a testing service will be delayed for longer than 90 days after
71-3 the examination date, the department shall notify the examinee of
71-4 the reason for the delay before the 90th day.
71-5 (e) If requested in writing by a person who fails a
71-6 licensing examination administered under this code, the department
71-7 shall furnish the person with an analysis of the person's
71-8 performance on the examination.
71-9 SECTION 7.03. Sections 4(c) and (d), Article 1.14-2,
71-10 Insurance Code, are amended to read as follows:
71-11 (c) Unless the State Board of Insurance adopts a system for
71-12 staggered renewal of licenses, as provided by Article 21.01-2 of
71-13 this code and its subsequent amendments <this section>, each
71-14 license issued under this section is for a two-year term that
71-15 expires on December 31; however, the term of the initial licensing
71-16 period shall expire on December 31 of the year following the year
71-17 in which the license is issued. A license may be renewed for
71-18 periods of two years.
71-19 (d) By filing a completed written application in the form
71-20 prescribed by the State Board of Insurance and paying the
71-21 nonrefundable renewal fee set by the board in an amount not to
71-22 exceed $50, an unexpired license may be renewed on or before the
71-23 expiration date of the license. <If a license has been expired for
71-24 not longer than 90 days, the licensee may renew the license by
71-25 filing a completed written application for renewal and by paying to
71-26 the board the required nonrefundable renewal fee and a
71-27 nonrefundable fee that is one-half of the original fee for the
72-1 license. If a license has been expired for more than 90 days, the
72-2 license may not be renewed. A new license may be obtained by
72-3 complying with the requirements and procedures for obtaining an
72-4 original license. This subsection may not be construed to prevent
72-5 the board from denying or refusing to renew a license under
72-6 applicable law or rules of the State Board of Insurance.>
72-7 SECTION 7.04. Section 2(b), Article 9.36, Insurance Code, is
72-8 amended to read as follows:
72-9 (b) Unless a staggered renewal system is adopted under
72-10 Article 21.01-2 of this code and its subsequent amendments <Section
72-11 5 of this article>, a license shall continue in force until June 1
72-12 after the second anniversary of the date on which the license was
72-13 issued unless previously cancelled.
72-14 SECTION 7.05. Sections B and E, Article 9.37, Insurance
72-15 Code, are amended to read as follows:
72-16 B. The department may discipline <license of> any agent or
72-17 direct operation or deny an application under Section 5, Article
72-18 21.01-2, of this code and its subsequent amendments <may be denied,
72-19 or a license duly issued may be suspended or revoked or a renewal
72-20 thereof refused by the Board,> if<, after notice and hearing as
72-21 hereafter provided,> it finds that the applicant for or holder of
72-22 such license:
72-23 (1) Has wilfully violated any provision of this Act;
72-24 <or>
72-25 (2) Has intentionally made a material misstatement in
72-26 the application for such license; <or>
72-27 (3) Has obtained, or attempted to obtain, such license
73-1 by fraud or misrepresentation; <or>
73-2 (4) Has misappropriated or converted to his own use or
73-3 illegally withheld money belonging to a title insurance company, an
73-4 insured or any other person; <or>
73-5 (5) <Has otherwise demonstrated lack of
73-6 trustworthiness or competence to act as an agent or direct
73-7 operation; or>
73-8 <(6)> Has been guilty of fraudulent or dishonest
73-9 practices; <or>
73-10 (6) <(7)> Has materially misrepresented the terms and
73-11 conditions of title insurance policies or contracts; or
73-12 (7) <(8) Is not of good character or reputation; or>
73-13 <(9)> Has failed to maintain a separate and distinct
73-14 accounting of escrow funds, and has failed to maintain an escrow
73-15 bank account or accounts separate and apart from all other
73-16 accounts.
73-17 E. A disciplinary action or denial of an application under
73-18 this article may be appealed under Article 1.04 of this code and
73-19 its subsequent amendments, except that judicial review of the
73-20 disciplinary <If the Board shall refuse an application for any
73-21 license provided for in this Act, or shall suspend, revoke or
73-22 refuse to renew any such license at said hearing, then any such
73-23 applicant or licensee, and any title insurance company or companies
73-24 concerned, may appeal from said order by filing suit against the
73-25 Board as defendant in any of the District Courts of Travis County,
73-26 Texas, and not elsewhere, within twenty (20) days from the date of
73-27 the order of said Board. The> action shall not be limited to
74-1 questions of law and shall be tried and determined upon a trial de
74-2 novo to the same extent as now provided for in the case of an
74-3 appeal from the justice court to the county court. <Any party to
74-4 said action may appeal to the appellate court having jurisdiction
74-5 of said cause, and said appeal shall be at once returnable to said
74-6 appellate court having jurisdiction of said cause and said action
74-7 so appealed shall have precedence in said appellate court over all
74-8 causes of a different character therein pending. The Board shall
74-9 not be required to give any appeal bond in any cause arising
74-10 hereunder.>
74-11 SECTION 7.06. Section 1(b), Article 9.42, Insurance Code, is
74-12 amended to read as follows:
74-13 (b) Unless a system of staggered renewal is adopted under
74-14 Article 21.01-2 of this code and its subsequent amendments <Section
74-15 2 of this article>, a license shall continue in force until the
74-16 second June 1 after its issuance, unless previously cancelled.
74-17 Provided, however, that if any title insurance agent or direct
74-18 operation surrenders its license or has its license revoked by the
74-19 Board, all existing licenses of its escrow officers shall
74-20 automatically terminate without notice.
74-21 SECTION 7.07. Section B, Article 9.43, Insurance Code, is
74-22 amended to read as follows:
74-23 B. Such application shall contain the following:
74-24 (1) that the proposed escrow officer is a natural
74-25 person, a bona fide resident of the State of Texas, and either an
74-26 attorney or a bona fide employee of an attorney licensed as an
74-27 escrow officer, a bona fide employee of a title insurance agent, or
75-1 a bona fide employee of a direct operation;
75-2 (2) that the proposed escrow officer has reasonable
75-3 experience or instruction in the field of title insurance; and
75-4 (3) that <the proposed escrow officer is known to the
75-5 direct operation or title insurance agent to have a good business
75-6 reputation and is worthy of the public trust and> the direct
75-7 operation or title insurance agent knows of no fact or condition
75-8 which would disqualify the proposed escrow officer from receiving a
75-9 license.
75-10 SECTION 7.08. Sections 2 and 5, Article 9.44, Insurance
75-11 Code, are amended to read as follows:
75-12 Sec. 2. The department may discipline an <license of any>
75-13 escrow officer or deny an application under Section 5, Article
75-14 21.01-2, of this code and its subsequent amendments <may be denied,
75-15 or a license duly issued may be suspended or revoked or a renewal
75-16 thereof refused by the Board,> if<, after notice and hearing as
75-17 hereafter provided,> it finds that the applicant for or holder of
75-18 such license:
75-19 (1) has wilfully violated any provision of this Act;
75-20 (2) has intentionally made a material misstatement in
75-21 the application for such license;
75-22 (3) has obtained, or attempted to obtain, such license
75-23 by fraud or misrepresentation;
75-24 (4) has misappropriated or converted to the escrow
75-25 officer's own use or illegally withheld money belonging to a direct
75-26 operation, title insurance agent, or any other person;
75-27 (5) <has otherwise demonstrated lack of
76-1 trustworthiness or competence to act as escrow officer;>
76-2 <(6)> has been guilty of fraudulent or dishonest
76-3 practices;
76-4 (6) <(7)> has materially misrepresented the terms and
76-5 conditions of title insurance policies or contracts;
76-6 <(8) is not of good character or reputation;> or
76-7 (7) <(9)> has failed to complete all educational
76-8 requirements.
76-9 Sec. 5. A disciplinary action or denial of an application
76-10 under this article may be appealed under Article 1.04 of this code
76-11 and its subsequent amendments, except that judicial review of the
76-12 <If the Board shall refuse an application for any license provided
76-13 for in this Article, or shall suspend, revoke or refuse to renew
76-14 any such license at said hearing, then any such applicant may
76-15 appeal from said order by filing suit against the Board as
76-16 defendant in any of the District Courts of Travis County, Texas,
76-17 and not elsewhere, within twenty (20) days from the date of the
76-18 order of said Board. The> action shall not be limited to questions
76-19 of law and shall be tried and determined upon a trial de novo to
76-20 the same extent as now provided for in the case of an appeal from
76-21 the justice court to the county court. <Either party to said
76-22 action may appeal to the appellate court having jurisdiction of
76-23 said cause, and said appeal shall be at once returnable to said
76-24 appellate court having jurisdiction of said cause and said action
76-25 so appealed shall have precedence in said appellate court over all
76-26 causes of a different character therein pending. The Board shall
76-27 not be required to give any appeal bond in any cause arising
77-1 hereunder.>
77-2 SECTION 7.09. Section 6(b), Article 9.56, Insurance Code, is
77-3 amended to read as follows:
77-4 (b) Unless a system of staggered renewal is adopted under
77-5 Section 21.01-2 of this code and its subsequent amendments
77-6 <Subsection (d) of this section>, on or before the first day of
77-7 June of each year, every attorney's title insurance company
77-8 operating under the provisions of this Chapter 9 shall certify to
77-9 the board, on forms provided by the board, the names and addresses
77-10 of every title attorney of said attorney's title insurance company,
77-11 and shall apply for and pay a fee in an amount not to exceed $50 as
77-12 determined by the board for an annual license in the name of each
77-13 title attorney included in said list; if any such attorney's title
77-14 insurance company shall terminate any licensed title attorney, it
77-15 shall immediately notify the board in writing of such act and
77-16 request cancellation of such license, notifying the title attorney
77-17 of such action. No such attorney's title insurance company shall
77-18 permit any title attorney appointed by it to write, sign, or
77-19 deliver title insurance policies within the state until the
77-20 foregoing conditions have been complied with, and the board has
77-21 granted said license. The board shall deliver such license to the
77-22 attorney's title insurance company for transmittal to the title
77-23 attorney.
77-24 Unless a system of staggered renewal is adopted under Section
77-25 21.01-2 of this code and its subsequent amendments <Subsection (d)
77-26 of this section>, licenses shall continue until the first day of
77-27 the next June unless previously cancelled; provided, however, that
78-1 if any attorney's title insurance company surrenders or has its
78-2 certificate of authority revoked by the board, all existing
78-3 licenses of its title attorneys shall automatically terminate
78-4 without notice.
78-5 The board shall keep a record of the names and addresses of
78-6 all licensed title attorneys in such manner that the title
78-7 attorneys appointed by any attorney's title insurance company
78-8 authorized to transact the business of an attorney's title
78-9 insurance company within the State of Texas may be conveniently
78-10 ascertained and inspected by any person upon request.
78-11 SECTION 7.10. Sections 8(b) and (e), Article 9.56, Insurance
78-12 Code, are amended to read as follows:
78-13 (b) The department may discipline a <license of any> title
78-14 attorney or deny an application under Section 5, Article 21.01-2,
78-15 of this code and its subsequent amendments <may be denied, or a
78-16 license duly issued may be suspended or revoked or a renewal
78-17 thereof refused by the board,> if<, after notice and hearing as
78-18 hereafter provided,> it finds that the applicant for or holder of
78-19 such license:
78-20 (1) has wilfully violated any provision of this
78-21 Chapter 9; <or>
78-22 (2) has intentionally made a material misstatement in
78-23 the application for such license; <or>
78-24 (3) has obtained, or attempted to obtain, such license
78-25 by fraud or misrepresentation; <or>
78-26 (4) has misappropriated or converted to his own use or
78-27 illegally withheld money belonging to an attorney's title insurance
79-1 company, an insured, or any other person; <or>
79-2 (5) <has otherwise demonstrated lack of
79-3 trustworthiness or competence to act as a title attorney; or>
79-4 <(6)> has been guilty of fraudulent or dishonest
79-5 practices; <or>
79-6 (6) <(7)> has materially misrepresented the terms and
79-7 conditions of title insurance policies or contracts; <or>
79-8 <(8) is not of good character or reputation; or>
79-9 (7) <(9)> has failed to maintain a separate and
79-10 distinct accounting of escrow funds, and has failed to maintain an
79-11 escrow bank account or accounts separate and apart from all other
79-12 accounts; <or>
79-13 (8) <(10)> has failed to remain a member of the State
79-14 Bar of Texas, or has been disbarred; or
79-15 (9) <(11)> is no longer actively engaged in the
79-16 practice of law.
79-17 (e) A disciplinary action or denial of an application under
79-18 this article may be appealed under Article 1.04 of this code and
79-19 its subsequent amendments, except that judicial review of the <If
79-20 the board shall refuse an application for any license provided for
79-21 in this Act, or shall suspend, revoke, or refuse to renew any such
79-22 license at said hearing, then any such applicant or licensee, and
79-23 any attorney's title insurance company concerned, may appeal from
79-24 said order by filing suit against the board as defendant in any of
79-25 the district courts of Travis County, Texas, and not elsewhere,
79-26 within 20 days from the date of the order of said board. The>
79-27 action shall not be limited to questions of law and shall be tried
80-1 and determined upon a trial de novo to the same extent as now
80-2 provided for in the case of an appeal from the justice court to the
80-3 county court. <Any party to said action may appeal to the
80-4 appellate court having jurisdiction of said cause, and said appeal
80-5 shall be at once returnable to said appellate court having
80-6 jurisdiction of said cause and said action so appealed shall have
80-7 precedence in said appellate court over all causes of a different
80-8 character therein pending. The board shall not be required to give
80-9 any appeal bond in any cause arising hereunder.>
80-10 SECTION 7.11. Section 15(c), Texas Health Maintenance
80-11 Organization Act (Section 20A.15, Vernon's Texas Insurance Code),
80-12 is amended to read as follows:
80-13 (c) Except as may be provided by a staggered renewal system
80-14 adopted under Article 21.01-2, Insurance Code, and its subsequent
80-15 amendments <Subsection (i) of this section>, each license issued to
80-16 a health maintenance organization agent shall expire two years
80-17 following the date of issue, unless prior thereto it is suspended
80-18 or revoked by the commissioner or the authority of the agent to act
80-19 for the health maintenance organization is terminated.
80-20 SECTION 7.12. Sections 15A(c) and (i), Texas Health
80-21 Maintenance Organization Act (Section 20A.15A, Vernon's Texas
80-22 Insurance Code), are amended to read as follows:
80-23 (c) Except as may be provided by a staggered renewal system
80-24 adopted under Article 21.01-2, Insurance Code, and its subsequent
80-25 amendments <Section 15(i) of this Act>, each license issued to a
80-26 health maintenance organization agent under this section shall
80-27 expire two years following the date of issuance, unless before that
81-1 time the license is suspended or revoked by the commissioner or the
81-2 authority of the agent to act for the health maintenance
81-3 organization is terminated.
81-4 (i) A licensee may renew an unexpired license issued under
81-5 this section by filing the required renewal application and paying
81-6 a nonrefundable fee with the State Board of Insurance on or before
81-7 the expiration date of the license. <If a license has been expired
81-8 for not longer than 90 days, the licensee may renew the license by
81-9 filing a completed application and paying to the State Board of
81-10 Insurance the required nonrefundable renewal fee and a
81-11 nonrefundable fee that is one-half of the original license fee. If
81-12 a license has been expired for more than 90 days, the license may
81-13 not be renewed. A new license may be obtained by complying with
81-14 the requirements and procedures for obtaining an original license.
81-15 At least 30 days before the expiration of a license, the
81-16 commissioner shall send written notice of the impending license
81-17 expiration to the licensee at the licensee's last known address.
81-18 This section does not prevent the State Board of Insurance from
81-19 denying or refusing to renew a license under applicable law or
81-20 rules.>
81-21 SECTION 7.13. Article 21.06, Insurance Code, is amended to
81-22 read as follows:
81-23 Art. 21.06. Certificates for Agents. Each such foreign
81-24 insurance company shall, by resolution of its board of directors,
81-25 designate some officer or agent who is empowered to appoint or
81-26 employ its agents or solicitors in this State, and such officer or
81-27 agent shall promptly notify the Board in writing of the name, title
82-1 and address of each person so appointed or employed. Upon receipt
82-2 of this notice, <if such person is of good reputation and
82-3 character,> the Board shall issue to him a certificate which shall
82-4 include a copy of the certificate of authority authorizing the
82-5 company requesting it to do business in this State, and the name
82-6 and title of the person to whom the certificate is issued. Such
82-7 certificate, unless sooner revoked by the Board for cause or
82-8 cancelled at the request of the company employing the holder
82-9 thereof, shall continue in force until the first day of March next
82-10 after its issuance, and must be renewed annually.
82-11 SECTION 7.14. Section 2(b), Article 21.07, Insurance Code,
82-12 is amended to read as follows:
82-13 (b) The application must bear a signed endorsement by an
82-14 officer or properly authorized representative of the insurance
82-15 carrier that the individual applicant or each member of the
82-16 partnership or each officer, director, and shareholder of the
82-17 corporation is <trustworthy, of good character and good reputation,
82-18 and> qualified to hold himself or the partnership or the
82-19 corporation out in good faith to the general public as an insurance
82-20 agent, and that the insurance carrier desires that the applicant
82-21 act as an insurance agent to represent it in this State.
82-22 SECTION 7.15. Section 3, Article 21.07, Insurance Code, is
82-23 amended to read as follows:
82-24 Sec. 3. Issuance of License Under Certain Circumstances.
82-25 The <After the State Board of Insurance has determined that such
82-26 applicant is of good character and trustworthy, the> State Board of
82-27 Insurance shall issue a license to a <such> person or corporation
83-1 in such form as it may prepare authorizing such applicant to write
83-2 the types of insurance authorized by law to be issued by
83-3 applicant's appointing insurance carrier, except that:
83-4 (a) Such applicant shall not be authorized to write
83-5 health and accident insurance unless: (i) applicant, if not a
83-6 partnership or corporation, shall have first passed a written
83-7 examination as provided for in this Article 21.07, as amended, or
83-8 (ii) applicant will act only as a ticket-selling agent of a public
83-9 carrier with respect to accident life insurance covering risks of
83-10 travel or as an agent selling credit life, health and accident
83-11 insurance issued exclusively in connection with credit
83-12 transactions, or (iii) applicant will write policies or riders to
83-13 policies providing only lump sum cash benefits in the event of the
83-14 accidental death, or death by accidental means, or dismemberment,
83-15 or providing only ambulance expense benefits in the event of
83-16 accident or sickness; and
83-17 (b) Such applicant, if not a partnership or
83-18 corporation, shall not be authorized to write life insurance in
83-19 excess of $5,000 upon any one life unless: (i) applicant, if not a
83-20 partnership or corporation, shall have first passed a written
83-21 examination as provided for in this Article 21.07, as amended, or
83-22 (ii) applicant will act only as a ticket-selling agent of a public
83-23 carrier with respect to accident life insurance covering risks of
83-24 travel or as an agent selling credit life, health and accident
83-25 insurance issued exclusively in connection with credit
83-26 transactions, or (iii) applicant will write policies or riders to
83-27 policies providing only lump sum cash benefits in the event of the
84-1 accidental death, or death by accidental means, or dismemberment,
84-2 or providing only ambulance expense benefits in the event of
84-3 accident or sickness.
84-4 SECTION 7.16. Section 4(c), Article 21.07, Insurance Code,
84-5 is amended to read as follows:
84-6 (c) After the State Board of Insurance shall determine that
84-7 such applicant has successfully passed the written examination or
84-8 it has been waived, <and is a person of good character and
84-9 reputation,> the State Board of Insurance shall forthwith issue a
84-10 license to such applicant which shall also authorize such applicant
84-11 to write health and accident insurance for the designated insurance
84-12 carrier.
84-13 SECTION 7.17. Section 4A(c), Article 21.07, Insurance Code,
84-14 is amended to read as follows:
84-15 (c) After the State Board of Insurance shall determine that
84-16 such applicant has successfully passed the written examination or
84-17 it has been waived <and is a person of good character and
84-18 reputation>, the State Board of Insurance shall forthwith issue a
84-19 license to such applicant which shall also authorize such applicant
84-20 to write life insurance upon any one life in excess of Five
84-21 Thousand Dollars ($5,000.00) for the designated insurance carrier.
84-22 SECTION 7.18. Sections 5, 8, and 11, Article 21.07,
84-23 Insurance Code, are amended to read as follows:
84-24 Sec. 5. Failure of Applicant to Qualify for License. If
84-25 <the State Board of Insurance is not satisfied that> the applicant
84-26 for a license <is trustworthy and of good character, or, if
84-27 applicable, that the applicant>, if required to do so, has not
85-1 passed the written examination to the satisfaction of the State
85-2 Board of Insurance, the State Board of Insurance shall forthwith
85-3 notify the applicant and the insurance carrier in writing that the
85-4 license will not be issued to the applicant.
85-5 Sec. 8. Temporary license. The department<, if it is
85-6 satisfied with the honesty and trustworthiness of any applicant who
85-7 desires to write health and accident insurance,> may issue a
85-8 temporary agent's license, authorizing the applicant to write
85-9 health and accident insurance, as well as all other insurance
85-10 authorized to be written by the appointing insurance carrier,
85-11 effective for ninety (90) days, without requiring the applicant to
85-12 pass a written examination, as follows:
85-13 To any applicant who has been appointed or who is being
85-14 considered for appointment as an agent by an insurance carrier
85-15 authorized to write health and accident insurance immediately upon
85-16 receipt by the department of an application executed by such person
85-17 in the form required by this Article, together with a nonrefundable
85-18 filing fee of $100 and a certificate signed by an officer or
85-19 properly authorized representative of such insurance carrier
85-20 certifying:
85-21 (a) <that such insurance carrier has
85-22 investigated the character and background of such person and is
85-23 satisfied that he is trustworthy and of good character;>
85-24 <(b)> that such person has been appointed or is
85-25 being considered for appointment by such insurance carrier as its
85-26 agent; and
85-27 (b) <(c)> that such insurance carrier desires
86-1 that such person be issued a temporary license; provided that if
86-2 such temporary license shall not have been received from the
86-3 department within seven days from the date on which the application
86-4 and certificate were delivered to or mailed to the department, the
86-5 insurance carrier may assume that such temporary license will be
86-6 issued in due course and the applicant may proceed to act as an
86-7 agent; provided, however, that no temporary license shall be
86-8 renewable or issued more than once in a consecutive six months
86-9 period to the same applicant; and provided further, that no
86-10 temporary license shall be granted to any person who does not
86-11 intend to actively sell health and accident insurance to the public
86-12 generally and it is intended to prohibit the use of a temporary
86-13 license to obtain commissions from sales to persons of family
86-14 employment or business relationships to the temporary licensee, to
86-15 accomplish which purposes an insurance carrier is hereby prohibited
86-16 from knowingly paying directly or indirectly to the holder of a
86-17 temporary license under this Section any commissions on the sale of
86-18 a contract of health and accident insurance to any person related
86-19 to temporary licensee by blood or marriage, and the holder of a
86-20 temporary license is hereby prohibited from receiving or accepting
86-21 commissions on the sale of a contract of health and accident
86-22 insurance to any person included in the foregoing classes of
86-23 relationship.
86-24 Sec. 11. Judicial review of acts of State Board of
86-25 Insurance. If the commissioner refuses an application for license
86-26 as provided by this Article, or suspends, revokes, or refuses to
86-27 renew a license at a hearing as provided by this Article, <and this
87-1 action is upheld on review to the Board as provided by this code,>
87-2 and if the applicant or accused is dissatisfied with the action of
87-3 the commissioner <and the Board>, the applicant or accused may
87-4 appeal from the action as provided by <Section (f),> Article
87-5 1.04<,> of this code.
87-6 SECTION 7.19. Section 10(a), Article 21.07, Insurance Code,
87-7 is amended to read as follows:
87-8 (a) The department may discipline a <A> license holder or
87-9 deny an application under Section 5, Article 21.01-2, of this code
87-10 and its subsequent amendments <may be denied, or a license duly
87-11 issued may be suspended or revoked or the renewal thereof refused
87-12 by the State Board of Insurance> if<, after notice and hearing as
87-13 hereafter provided,> it finds that the applicant, individually or
87-14 through any officer, director, or shareholder, for, or holder of,
87-15 such license:
87-16 (1) Has wilfully violated any provision of the
87-17 insurance laws of this State; <or>
87-18 (2) Has intentionally made a material misstatement in
87-19 the application for such license; <or>
87-20 (3) Has obtained, or attempted to obtain, such license
87-21 by fraud or misrepresentation; <or>
87-22 (4) Has misappropriated or converted to his or its own
87-23 use or illegally withheld money belonging to an insurance carrier
87-24 or an insured or beneficiary; <or>
87-25 (5) <Has otherwise demonstrated lack of
87-26 trustworthiness or competence to act as an agent; or>
87-27 <(6)> Has been guilty of fraudulent or dishonest
88-1 practices; <or>
88-2 (6) <(7)> Has materially misrepresented the terms and
88-3 conditions of any insurance policy or contract; <or>
88-4 (7) <(8)> Has made or issued, or caused to be made or
88-5 issued, any statement misrepresenting or making incomplete
88-6 comparisons regarding the terms or conditions of any insurance
88-7 contract legally issued by any insurance carrier, for the purpose
88-8 of inducing or attempting to induce the owner of such contract to
88-9 forfeit or surrender such contract or allow it to lapse for the
88-10 purpose of replacing such contract with another; <or>
88-11 <(9) Is not of good character or reputation;> or
88-12 (8) <(10)> Is convicted of a felony.
88-13 SECTION 7.20. Section 19(b), Article 21.07, Insurance Code,
88-14 is amended to read as follows:
88-15 (b) The State Board of Insurance may, upon request of such
88-16 insurer on application forms furnished by the State Board of
88-17 Insurance and upon payment of a nonrefundable license fee in an
88-18 amount not to exceed $50 as determined by the State Board of
88-19 Insurance, issue such license to such person which will be valid
88-20 only for such limited representation of such insurer as provided
88-21 herein. The application shall be accompanied by a certificate, on
88-22 forms to be prescribed and furnished by the State Board of
88-23 Insurance and signed by an officer or properly authorized
88-24 representative of the insurance company the applicant proposes to
88-25 represent, stating that the insurance company <has investigated the
88-26 character and background of the applicant and is satisfied that the
88-27 applicant is trustworthy and qualified to hold himself out in good
89-1 faith as an insurance agent, and that the insurance company>
89-2 desires that the applicant act as an insurance agent to represent
89-3 the insurance company. The insurer shall also certify to the State
89-4 Board of Insurance that it has provided the applicant with at least
89-5 forty (40) hours of training, has tested the applicant and found
89-6 the applicant qualified to represent the insurer, and that the
89-7 insurer is willing to be bound by the acts of such applicant within
89-8 the scope of such limited representation.
89-9 SECTION 7.21. Section 4(b), Chapter 213, Acts of the 54th
89-10 Legislature, Regular Session, 1955 (Article 21.07-1, Vernon's Texas
89-11 Insurance Code), is amended to read as follows:
89-12 (b) The application shall be accompanied by a certificate on
89-13 forms furnished by the Commissioner and signed by an officer or
89-14 properly authorized representative of the life insurance company
89-15 the applicant proposes to represent, stating that <the insurer has
89-16 investigated the character and background of the applicant and is
89-17 satisfied that the applicant or the partners of the partnership or
89-18 the officers, directors, and shareholders of the corporation are
89-19 trustworthy and qualified to act as a life insurance agent, that>
89-20 the applicant has completed the educational requirements as
89-21 provided in this Act, and that the insurer desires that the
89-22 applicant be licensed as a life insurance agent to represent it in
89-23 this State.
89-24 SECTION 7.22. Section 6, Chapter 213, Acts of the 54th
89-25 Legislature, Regular Session, 1955 (Article 21.07-1, Vernon's Texas
89-26 Insurance Code), is amended to read as follows:
89-27 Sec. 6. Issuance or Denial of License. After <If the
90-1 Commissioner is satisfied that the applicant is trustworthy and
90-2 competent and after> the applicant, if required to do so, has
90-3 passed the written examination to the satisfaction of the
90-4 Commissioner, a license shall be issued forthwith. If the license
90-5 is denied for any of the reasons set forth in Section 12 of this
90-6 Act, the Commissioner shall notify the applicant and the insurer in
90-7 writing that the license will not be issued to the applicant.
90-8 SECTION 7.23. Section 9(a), Chapter 213, Acts of the 54th
90-9 Legislature, Regular Session, 1955 (Article 21.07-1, Vernon's Texas
90-10 Insurance Code), is amended to read as follows:
90-11 (a) Except as may be provided by a staggered renewal system
90-12 adopted under Article 21.01-2, Insurance Code, and its subsequent
90-13 amendments <Subsection (e) of this section>, each license issued to
90-14 a life insurance agent shall expire two years following the date of
90-15 issue, unless prior thereto it is suspended or revoked by the
90-16 Commissioner.
90-17 SECTION 7.24. Section 10, Chapter 213, Acts of the 54th
90-18 Legislature, Regular Session, 1955 (Article 21.07-1, Vernon's Texas
90-19 Insurance Code), is amended to read as follows:
90-20 Sec. 10. Temporary License. (a) The department<, if it is
90-21 satisfied with the honesty and trustworthiness of the applicant,>
90-22 may issue a temporary life insurance agent's license, effective for
90-23 ninety days, without requiring the applicant to pass a written
90-24 examination, as follows:
90-25 (1) <(a)> To an applicant who has fulfilled the
90-26 provisions of Section 4 of this Act where such applicant will
90-27 actually collect the premiums on industrial life insurance
91-1 contracts during the period of such temporary license; provided,
91-2 however, that if such temporary license is not received from the
91-3 department within seven days from the date the application was sent
91-4 to the department, the company may assume that the temporary
91-5 license will be issued in due course and the applicant may proceed
91-6 to act as an agent. For the purpose of this subsection an
91-7 industrial life insurance contract shall mean a contract for which
91-8 the premiums are payable at monthly or more frequent intervals
91-9 directly by the owner thereof, or by a person representing the
91-10 owner, to a representative of the company;
91-11 (2) <(b)> To any person who is being considered for
91-12 appointment as an agent by an insurer immediately upon receipt by
91-13 the department of an application executed by such person in the
91-14 form required by Section 4 of this Act, together with a
91-15 nonrefundable filing fee of $100 and a certificate signed by an
91-16 officer or properly authorized representative of such insurer
91-17 stating:
91-18 (A) <(1) that such insurer has investigated the
91-19 character and background of such person and is satisfied that he is
91-20 trustworthy;>
91-21 <(2)> that such person is being considered for
91-22 appointment by such insurer as its full-time agent; <and>
91-23 (B) <(3)> that such insurer desires that such
91-24 person be issued a temporary license; provided that if such
91-25 temporary license shall not have been received from the department
91-26 within seven days from the date on which the application and
91-27 certificate were delivered to or mailed to the department the
92-1 insurer may assume that such temporary license will be issued in
92-2 due course and the applicant may proceed to act as an agent;
92-3 provided, however, that no temporary license shall be renewable nor
92-4 issued more than once in a consecutive six months period to the
92-5 same applicant; and provided further, that no temporary license
92-6 shall be granted to any person who does not intend to apply for a
92-7 license to sell life insurance to the public generally and it is
92-8 intended to prohibit the use of a temporary license to obtain
92-9 commissions from sales to persons of family employment or business
92-10 relationships to the temporary licensee, to accomplish which
92-11 purposes an insurer is hereby prohibited from knowingly paying
92-12 directly or indirectly to the holder of a temporary license under
92-13 this subsection any commissions on the sale of a contract of
92-14 insurance on the life of the temporary licensee, or on the life of
92-15 any person related to him by blood or marriage, or on the life of
92-16 any person who is or has been during the past six months his
92-17 employer either as an individual or as a member of a partnership,
92-18 association, firm or corporation, or on the life of any person who
92-19 is or who has been during the past six months his employee, and the
92-20 holder of a temporary license is hereby prohibited from receiving
92-21 or accepting commissions on the sale of a contract of insurance to
92-22 any person included in the foregoing classes of relationship;
92-23 (C) <(4)> that a person who has been issued a
92-24 temporary license under this subsection and is acting under the
92-25 authority of the temporary license may not engage in any insurance
92-26 solicitation, sale, or other agency transaction that results in or
92-27 is intended to result in the replacement of any existing individual
93-1 life insurance policy form or annuity contract that is in force or
93-2 receive, directly or indirectly, any commission or other
93-3 compensation that may or does result from such solicitation, sale,
93-4 or other agency transaction; and that any person holding a
93-5 permanent license may not circumvent or attempt to circumvent the
93-6 intent of this subdivision by acting for or with a person holding
93-7 such a temporary license. As used in this subdivision,
93-8 "replacement" means any transaction in which a new life insurance
93-9 or annuity contract is to be purchased, and it is known or should
93-10 be known to the temporary agent that by reason of the solicitation,
93-11 sale, or other transaction the existing life insurance or annuity
93-12 contract has been or is to be:
93-13 (i) <(A)> lapsed, forfeited, surrendered,
93-14 or otherwise terminated;
93-15 (ii) <(B)> converted to reduced paid-up
93-16 insurance, continued as extended term insurance, or otherwise
93-17 reduced in value by the use of nonforfeiture benefits or other
93-18 policy values;
93-19 (iii) <(C)> amended so as to effect either
93-20 a reduction in benefits or in the term for which coverage would
93-21 otherwise remain in force or for which benefits would be paid;
93-22 (iv) <(D)> reissued with any reduction in
93-23 cash value; or
93-24 (v) <(E)> pledged as collateral or
93-25 subjected to borrowing, whether in a single loan or under a
93-26 schedule of borrowing over a period of time for amounts in the
93-27 aggregate exceeding 25 percent of the loan value set forth in the
94-1 policy; and
94-2 (D) <(5)> that such person will complete, under
94-3 such insurer's supervision, at least forty hours of training as
94-4 prescribed by Subsection (c) of this Section within fourteen days
94-5 from the date on which the application and certificate were
94-6 delivered or mailed to the department.
94-7 (b) <(6)> The department shall have the authority to cancel,
94-8 suspend, or revoke the temporary appointment powers of any life
94-9 insurance company, if, after notice and hearing, he finds that such
94-10 company has abused such temporary appointment powers. In
94-11 considering such abuse, the department may consider, but is not
94-12 limited to, the number of temporary appointments made by a company
94-13 as provided by Subsection (f) <(e)> of this Section, the percentage
94-14 of appointees sitting for the examination as life insurance agents
94-15 under this Article as it may be in violation of Subsection (e)
94-16 <(d)> of this Section, and the number of appointees successfully
94-17 passing said examination in accordance with Subsection (e) <(d)>.
94-18 Appeals from the department's decision shall be made in accordance
94-19 with Section 13 hereof.
94-20 (c) At least forty hours of training must be administered to
94-21 any applicant for a temporary license as herein defined within
94-22 fourteen days from the date on which the application and
94-23 certificate were delivered or mailed to the department. Of this
94-24 forty-hour requirement, ten hours must be taught in a classroom
94-25 setting, including but not limited to an accredited college,
94-26 university, junior or community college, business school, or
94-27 private institute or classes sponsored by the insurer and
95-1 especially established for this purpose. Such training program
95-2 shall be constructed so as to provide an applicant with the basic
95-3 knowledge of:
95-4 (1) the broad principles of insurance, licensing, and
95-5 regulatory laws of this State; and
95-6 (2) the obligations and duties of a life insurance
95-7 agent.
95-8 (d) The Commissioner of Insurance may, in his discretion,
95-9 require that the <such> training program required by Subsection (c)
95-10 of this Section <shall> be filed with the department for approval
95-11 in the event the commissioner <he> finds an abuse of temporary
95-12 appointment powers under Subsection (b)<(6)> of this Section.
95-13 (e) <(d)> Each insurer is responsible for requiring that not
95-14 less than 70 percent of such insurer's applicants for temporary
95-15 licenses sit for an examination during any two consecutive calendar
95-16 quarters. At least 50 percent of those applicants sitting for the
95-17 examination must pass during such a period.
95-18 (f) <(e)> Each insurer may make no more than two hundred and
95-19 fifty temporary licensee appointments during a calendar year under
95-20 Subsection (a)(2) <(b)> of this Section.
95-21 SECTION 7.25. Section 12(a), Chapter 213, Acts of the 54th
95-22 Legislature, Regular Session, 1955 (Article 21.07-1, Vernon's Texas
95-23 Insurance Code), is amended to read as follows:
95-24 (a) The department may discipline a <A> license holder or
95-25 deny an application under Section 5, Article 21.01-2, Insurance
95-26 Code, and its subsequent amendments <may be denied, or a license
95-27 duly issued may be suspended or revoked or the renewal thereof
96-1 refused by the Commissioner> if<, after notice and hearing as
96-2 hereafter provided,> the Commissioner finds that the applicant,
96-3 individually or through any officer, director, or shareholder, for,
96-4 or holder of such license:
96-5 (1) Has wilfully violated any provision of the
96-6 insurance laws of this State;
96-7 (2) Has intentionally made a material misstatement in
96-8 the application for such license;
96-9 (3) Has obtained, or attempted to obtain, such license
96-10 by fraud or misrepresentation;
96-11 (4) Has misappropriated or converted to the
96-12 applicant's or licensee's own use or illegally withheld money
96-13 belonging to an insurer or an insured or beneficiary;
96-14 (5) <Has otherwise demonstrated lack of
96-15 trustworthiness or competence to act as a life insurance agent;>
96-16 <(6)> Has been guilty of fraudulent or dishonest
96-17 practices;
96-18 (6) <(7)> Has materially misrepresented the terms and
96-19 conditions of life insurance policies or contracts;
96-20 (7) <(8)> Has made or issued, or caused to be made or
96-21 issued, any statement misrepresenting or making incomplete
96-22 comparisons regarding the terms or conditions of any insurance or
96-23 annuity contract legally issued by any insurer, for the purpose of
96-24 inducing or attempting to induce the owner of such contract to
96-25 forfeit or surrender such contract or allow it to lapse for the
96-26 purpose of replacing such contract with another;
96-27 (8) <(9)> Has obtained, or attempted to obtain such
97-1 license, not for the purpose of holding himself or itself out to
97-2 the general public as a life insurance agent, but primarily for the
97-3 purpose of soliciting, negotiating or procuring life insurance or
97-4 annuity contracts covering the applicant or licensee, members of
97-5 the applicant's or licensee's family, or the applicant's or
97-6 licensee's business associates;
97-7 <(10) Is not of good character or reputation;> or
97-8 (9) <(11)> Is convicted of a felony.
97-9 SECTION 7.26. Section 13, Chapter 213, Acts of the 54th
97-10 Legislature, Regular Session, 1955 (Article 21.07-1, Vernon's Texas
97-11 Insurance Code), is amended to read as follows:
97-12 Sec. 13. Judicial review of acts of commissioner. If the
97-13 Commissioner refuses an application for license as provided by this
97-14 Act or suspends, revokes, or refuses to renew a license at a
97-15 hearing provided by this Act, <and the action is upheld on review
97-16 to the Board as provided by this Code,> and if the applicant or
97-17 accused is dissatisfied with the action of the Commissioner and the
97-18 Board, the applicant or accused may appeal from that action in
97-19 accordance with <Section (f),> Article 1.04, Insurance Code.
97-20 SECTION 7.27. Section 16(h), Chapter 213, Acts of the 54th
97-21 Legislature, Regular Session, 1955 (Article 21.07-1, Vernon's Texas
97-22 Insurance Code), is amended to read as follows:
97-23 (h) After the State Board of Insurance determines that an
97-24 applicant has successfully passed the written examination or is
97-25 exempt therefrom as provided in Subsection (d) above, <and the
97-26 board has determined the applicant to be of good character and
97-27 reputation,> has been appointed to act as an agent by one or more
98-1 legal reserve life insurance companies, and has paid a
98-2 nonrefundable license fee not to exceed $50 as determined by the
98-3 board, the board shall issue a license to such applicant
98-4 authorizing the applicant to act as an accident and health
98-5 insurance agent for the appointing insurance carrier.
98-6 SECTION 7.28. Section 5, Chapter 29, Acts of the 54th
98-7 Legislature, Regular Session, 1955 (Article 21.07-2, Vernon's Texas
98-8 Insurance Code), is amended to read as follows:
98-9 Sec. 5. Mode of Licensing and Regulation. (a) The
98-10 licensing and regulation of a Life Insurance Counselor, as that
98-11 term is defined herein, shall be in the same manner and subject to
98-12 the same requirements as applicable to the licensing of agents of
98-13 legal reserve life insurance companies as provided in Article
98-14 21.07-1 of the Texas Insurance Code, 1951, or as provided by any
98-15 existing or subsequent applicable law governing the licensing of
98-16 such agents, and all the provisions thereof are hereby made
98-17 applicable to applicants and licensees under this Act, except that
98-18 a Life Insurance Counselor shall not advertise in any manner and
98-19 shall not circulate materials indicating professional superiority
98-20 or the performance of professional service in a superior manner;
98-21 provided, however, that an appointment to act for an insurer shall
98-22 not be a condition to the licensing of a Life Insurance Counselor.
98-23 (b) In addition to the above requirements, the applicant for
98-24 licensure as a Life Insurance Counselor shall submit to the
98-25 Commissioner <evidence of high moral and ethical character,>
98-26 documentation that he has been licensed as a life insurance agent
98-27 in excess of three years. After the Insurance Commissioner has
99-1 satisfied himself as to these requirements, he shall then cause the
99-2 applicant for a Life Insurance Counselor's license to sit for an
99-3 examination which shall include the following<:>
99-4 <Such examination shall consist of> five subjects and subject
99-5 areas:
99-6 (1) <(a)> Fundamentals of life and health insurance;
99-7 (2) <(b)> Group life insurance, pensions and health
99-8 insurance;
99-9 (3) <(c)> Law, trust and taxation;
99-10 (4) <(d)> Finance and economics; and
99-11 (5) <(e)> Business insurance and estate planning.
99-12 (c) No license shall be granted until such individual shall
99-13 have successfully passed each of the five parts under Subsection
99-14 (b) of this section <above enumerated>. Such examinations may be
99-15 given and scheduled by the Commissioner at his discretion.
99-16 Individuals currently holding Life Insurance Counselor licenses
99-17 issued by the Texas State Board of Insurance, who do not have the
99-18 equivalent of the requirements above listed, shall have one year
99-19 from the date of enactment hereof to so qualify.
99-20 <Unless the State Board of Insurance accepts a qualifying
99-21 examination administered by a testing service, as provided under
99-22 Article 21.01-1, Insurance Code, as amended, not later than the
99-23 30th day after the day on which a licensing examination is
99-24 administered under this Section, the Commissioner shall send notice
99-25 to each examinee of the results of the examination. If an
99-26 examination is graded or reviewed by a testing service, the
99-27 Commissioner shall send, or require the testing service to send,
100-1 notice to the examinees of the results of the examination within
100-2 two weeks after the date on which the Commissioner receives the
100-3 results from the testing service. If the notice of the examination
100-4 results will be delayed for longer than 90 days after the
100-5 examination date, the Commissioner shall send, or require the
100-6 testing service to send, notice to the examinee of the reason for
100-7 the delay before the 90th day. If requested in writing by a person
100-8 who fails the licensing examination administered under this
100-9 Section, the Commissioner shall send, or require the testing
100-10 service to send, to the person an analysis of the person's
100-11 performance on the examination.>
100-12 SECTION 7.29. Sections 9, 12, and 14, Managing General
100-13 Agents' Licensing Act (Article 21.07-3, Vernon's Texas Insurance
100-14 Code), are amended to read as follows:
100-15 Sec. 9. Expiration of License; Renewal. <(a)> Except as
100-16 may be provided by a staggered renewal system adopted under Article
100-17 21.01-2, Insurance Code, and its subsequent amendments <Subsection
100-18 (c) of this section>, every license issued under this Act expires
100-19 two years from the date of issuance, unless a completed application
100-20 to qualify for renewal of such license shall be filed with the
100-21 commissioner and a nonrefundable fee paid on or before such date,
100-22 in which event the license sought to be renewed shall continue in
100-23 full force and effect until renewed or renewal is denied.
100-24 <(b) An unexpired license may be renewed by paying the
100-25 required nonrefundable renewal fee to the board not later than the
100-26 expiration date of the license. If a license has been expired for
100-27 not longer than 90 days, the licensee may renew the license by
101-1 paying to the board the required nonrefundable renewal fee and a
101-2 nonrefundable fee that is one-half of the original license fee. If
101-3 a license has been expired for more than 90 days, the license may
101-4 not be renewed. A new license may be obtained by complying with
101-5 the requirements and procedures for obtaining an original license.
101-6 At least 30 days before the expiration of a license, the
101-7 commissioner shall send written notice of the impending license
101-8 expiration to the licensee at the licensee's last known address.
101-9 This subsection may not be construed to prevent the board from
101-10 denying or refusing to renew a license under applicable law or
101-11 rules of the State Board of Insurance.>
101-12 <(c) The State Board of Insurance by rule may adopt a system
101-13 under which licenses expire on various dates during the year. For
101-14 the period in which the license is valid for less than two years,
101-15 the license fee shall be prorated on a monthly basis so that each
101-16 licensee shall pay only that portion of the license fee that is
101-17 allocable to the number of months during which the license is
101-18 valid. On each subsequent renewal of the license, the total
101-19 license renewal fee is payable.>
101-20 Sec. 12. Denial, Refusal, Suspension, or Revocation of
101-21 Licenses. The department may discipline a <A> license holder or
101-22 deny an application under Section 5, Article 21.01-2, Insurance
101-23 Code, and its subsequent amendments, if it <may be denied,
101-24 suspended for a period of time, revoked or the renewal thereof
101-25 refused by the commissioner if, after notice and hearing as
101-26 hereinafter provided, he> finds that the applicant for, or holder
101-27 of such license:
102-1 (a) has wilfully violated or participated in the
102-2 violation of any provisions of this Act or any of the insurance
102-3 laws of this state; <or>
102-4 (b) has intentionally made a material misstatement in
102-5 the application for such license; <or>
102-6 (c) has obtained, or attempted to obtain such license
102-7 by fraud or misrepresentation; <or>
102-8 (d) has misappropriated or converted to his own use or
102-9 has illegally withheld moneys required to be held in a fiduciary
102-10 capacity; <or>
102-11 (e) has with intent to deceive materially
102-12 misrepresented the terms or effect of any contract of insurance, or
102-13 has engaged in any fraudulent transaction; or
102-14 (f) has been convicted of a felony, or of any
102-15 misdemeanor of which criminal fraud is an essential element<; or>
102-16 <(g) has shown himself to be, and is so deemed by the
102-17 commissioner, incompetent, or untrustworthy, or not of good
102-18 character and reputation>.
102-19 Sec. 14. Judicial review of acts of commissioner and the
102-20 board. If the commissioner shall refuse an application for license
102-21 as provided in this Act, or shall suspend, revoke or refuse to
102-22 renew any license at a hearing as provided by this Act, <and such
102-23 action is upheld upon review to the board as in this Code
102-24 provided,> and if the applicant or accused thereafter is
102-25 dissatisfied with the action of the commissioner <and the board>,
102-26 the applicant or accused may appeal from that action in accordance
102-27 with <Section (f),> Article 1.04, Insurance Code.
103-1 SECTION 7.30. Sections 10 and 18, Chapter 407, Acts of the
103-2 63rd Legislature, Regular Session, 1973 (Article 21.07-4, Vernon's
103-3 Texas Insurance Code), are amended to read as follows:
103-4 Sec. 10. Examination for License. <(a)> Each applicant for
103-5 a license as an adjuster shall, prior to the issuance of such
103-6 license, personally take and pass, to the satisfaction of the
103-7 commissioner, an examination as a test of his qualifications and
103-8 competency; but the requirement of an examination shall not apply
103-9 to any of the following:
103-10 (1) an applicant who for the 90-day period next
103-11 preceding the effective date of this Act has been principally
103-12 engaged in the investigation, adjustment, or supervision of losses
103-13 and who is so engaged on the effective date of this Act;
103-14 (2) an applicant for the renewal of a license issued
103-15 hereunder; <or>
103-16 (3) an applicant who is licensed as an insurance
103-17 adjuster, as defined by this statute, in another state with which
103-18 state a reciprocal agreement has been entered into by the
103-19 commissioner; or
103-20 (4) any person who has completed a course or training
103-21 program in adjusting of losses as prescribed and approved by the
103-22 commissioner and is certified to the commissioner upon completion
103-23 of the course that such person has completed said course or
103-24 training program, and has passed an examination testing his
103-25 knowledge and qualification, as prescribed by the commissioner.
103-26 <(b) Unless the State Board of Insurance accepts a
103-27 qualifying examination administered by a testing service, as
104-1 provided under Article 21.01-1, Insurance Code, as amended, not
104-2 later than the 30th day after the day on which a licensing
104-3 examination is administered under this section, the commissioner
104-4 shall send notice to each examinee of the results of the
104-5 examination. If an examination is graded or reviewed by a testing
104-6 service, the commissioner shall send, or require the testing
104-7 service to send, notice to the examinees of the results of the
104-8 examination within two weeks after the date on which the
104-9 commissioner receives the results from the testing service. If the
104-10 notice of the examination results will be delayed for longer than
104-11 90 days after the examination date, the commissioner shall send, or
104-12 require the testing service to send, notice to the examinee of the
104-13 reason for the delay before the 90th day.>
104-14 <(c) If requested in writing by a person who fails the
104-15 licensing examination administered under this section, the
104-16 commissioner shall send, or require the testing service to send, to
104-17 the person an analysis of the person's performance on the
104-18 examination.>
104-19 Sec. 18. Automatic <Procedure for Refusal, Suspension, or>
104-20 Revocation. <(a)> The commissioner may revoke or refuse to renew
104-21 any license of an adjuster immediately and without hearing, upon
104-22 the licensee's conviction of a felony, by final judgment, in any
104-23 court of competent jurisdiction.
104-24 <(b) The commissioner may deny, suspend, revoke, or refuse
104-25 to renew a license:>
104-26 <(1) by order or notice given to the licensee not less
104-27 than 15 days in advance of the effective date of the order or
105-1 notice, subject to the right of the licensee to demand in writing,
105-2 a hearing, before the board after receipt of notice and before the
105-3 effective date of the revocation. Pending such hearing, the
105-4 license may be suspended.>
105-5 <(2) by an order after a hearing which is effective 10
105-6 days after the order is issued subject to appeal to a district
105-7 court in Travis County.>
105-8 SECTION 7.31. Section 16(a), Chapter 407, Acts of the 63rd
105-9 Legislature, Regular Session, 1973 (Article 21.07-4, Vernon's Texas
105-10 Insurance Code), is amended to read as follows:
105-11 Sec. 16. (a) Except as may be provided by a staggered
105-12 renewal system adopted under Article 21.01-2, Insurance Code, and
105-13 its subsequent amendments <Subsection (e) of this section>, an
105-14 adjuster's license expires two years after the date of issuance.
105-15 SECTION 7.32. Section 17(a), Chapter 407, Acts of the 63rd
105-16 Legislature, Regular Session, 1973 (Article 21.07-4, Vernon's Texas
105-17 Insurance Code), is amended to read as follows:
105-18 (a) The department <commissioner> may discipline an adjuster
105-19 or deny an application under Section 5, Article 21.01-2, Insurance
105-20 Code, and its subsequent amendments, <deny, suspend, revoke, or
105-21 refuse to renew any adjuster's license> for any of the following
105-22 causes:
105-23 (1) for any cause for which issuance of the license
105-24 could have been refused had it been existent and been known to the
105-25 board;
105-26 (2) if the applicant or licensee willfully violates or
105-27 knowingly participates in the violation of any provision of this
106-1 Act;
106-2 (3) if the applicant or licensee has obtained or
106-3 attempted to obtain any such license through willful
106-4 misrepresentation or fraud, or has failed to pass any examination
106-5 required under this Act;
106-6 (4) if the applicant or licensee has misappropriated,
106-7 or converted to the applicant's or licensee's own use, or has
106-8 illegally withheld moneys required to be held in a fiduciary
106-9 capacity;
106-10 (5) if the applicant or licensee has, with intent to
106-11 deceive, materially misrepresented the terms or effect of an
106-12 insurance contract, or has engaged in any fraudulent transactions;
106-13 or
106-14 (6) if the applicant or licensee is convicted, by
106-15 final judgment, of a felony<; or>
106-16 <(7) if in the conduct of the licensee's affairs under
106-17 the license, the licensee has proven to be, and is so deemed by the
106-18 commissioner, incompetent, untrustworthy, or a source of injury to
106-19 the public>.
106-20 SECTION 7.33. Section 5(a), Article 21.07-6, Insurance Code,
106-21 is amended to read as follows:
106-22 (a) The commissioner shall approve an application for a
106-23 certificate of authority to conduct a business in this state as an
106-24 administrator if the commissioner is satisfied that the application
106-25 meets the following criteria:
106-26 (1) the granting of the application would not violate
106-27 a federal or state law;
107-1 (2) the <competence, trustworthiness, experience,>
107-2 financial condition<, or integrity> of an administrator applicant
107-3 or those persons who would operate or control an administrator
107-4 applicant are such that the granting of a certificate of authority
107-5 would not be adverse to the public interest;
107-6 (3) the applicant has not attempted through fraud or
107-7 bad faith to obtain the certificate of authority;
107-8 (4) the applicant has complied with this article and
107-9 rules adopted by the board under this article; and
107-10 (5) the name under which the applicant will conduct
107-11 business in this state is not so similar to that of another
107-12 administrator or insurer that it is likely to mislead the public.
107-13 SECTION 7.34. Section 3(e), Article 21.07-7, Insurance Code,
107-14 is amended to read as follows:
107-15 (e) The department <commissioner> may discipline a license
107-16 holder or deny an application under Section 5, Article 21.01-2, of
107-17 this code and its subsequent amendments if it <deny a license
107-18 application or suspend, revoke, or refuse to renew a license if,
107-19 after notice and hearing as provided by this code, the
107-20 commissioner> determines that the applicant for or holder of a
107-21 license, or any person who would be authorized to act on behalf of
107-22 the applicant or the license holder under Subsection (c) of this
107-23 section has:
107-24 (1) wilfully violated or participated in the violation
107-25 of this article or any of the insurance laws of this state;
107-26 (2) intentionally made a material misstatement in the
107-27 license application;
108-1 (3) obtained or attempted to obtain the license by
108-2 fraud or misrepresentation;
108-3 (4) misappropriated, converted to his own use, or
108-4 illegally withheld money required to be held in a fiduciary
108-5 capacity;
108-6 (5) materially misrepresented the terms or effect of
108-7 any contract of insurance or reinsurance, or engaged in any
108-8 fraudulent transaction; or
108-9 (6) been convicted of a felony or of any misdemeanor
108-10 of which criminal fraud is an essential element<; or>
108-11 <(7) shown himself to be, and is so determined to be
108-12 by the commissioner, incompetent, untrustworthy, or not of good
108-13 character and reputation>.
108-14 SECTION 7.35. Section 3(a), Article 21.14, Insurance Code,
108-15 is amended to read as follows:
108-16 (a) When any person, partnership or corporation shall desire
108-17 to engage in business as a local recording agent for an insurance
108-18 company, or insurance carrier, he or it shall make application for
108-19 a license to the State Board of Insurance, in such form as the
108-20 Board may require. Such application shall bear a signed
108-21 endorsement by a general, state or special agent of a qualified
108-22 insurance company, or insurance carrier that applicant or each
108-23 member of the partnership or each stockholder of the corporation is
108-24 a resident of this state <Texas, trustworthy, of good character and
108-25 good reputation, and is worthy of a license>.
108-26 SECTION 7.36. Sections 5, 8, and 18, Article 21.14,
108-27 Insurance Code, are amended to read as follows:
109-1 Sec. 5. Active agents or solicitors only to be licensed. No
109-2 license shall be granted to any person, firm, partnership or
109-3 corporation as a local recording agent or to a person as a
109-4 solicitor, for the purpose of writing any form of insurance, unless
109-5 it is found by the State Board of Insurance that such person, firm,
109-6 partnership or corporation, is or intends to be, actively engaged
109-7 in the soliciting or writing of insurance for the public generally;
109-8 that each person or individual of a firm is a resident of Texas<,
109-9 of good character and good reputation, worthy of a license,> and is
109-10 to be actively engaged in good faith in the business of insurance,
109-11 and that the application is not being made in order to evade the
109-12 laws against rebating and discrimination either for the applicant
109-13 or for some other person, firm, partnership or corporation.
109-14 Nothing herein contained shall prohibit an applicant insuring
109-15 property which the applicant owns or in which the applicant has an
109-16 interest; but it is the intent of this Section to prohibit coercion
109-17 of insurance and to preserve to each citizen the right to choose
109-18 his own agent or insurance carrier, and to prohibit the licensing
109-19 of an individual, firm, partnership or corporation to engage in the
109-20 insurance business principally to handle business which the
109-21 applicant controls only through ownership, mortgage or sale, family
109-22 relationship or employment, which shall be taken to mean that an
109-23 applicant who is making an original application for license shall
109-24 show the State Board of Insurance that the applicant has a bona
109-25 fide intention to engage in business in which, in any calendar
109-26 year, at least twenty-five per cent (25%) of the total volume of
109-27 premiums shall be derived from persons or organizations other than
110-1 applicant and from property other than that on which the applicant
110-2 shall control the placing of insurance through ownership, mortgage,
110-3 sale, family relationship or employment. Nothing herein contained
110-4 shall be construed to authorize a partnership or corporation to
110-5 receive a license as a solicitor.
110-6 Sec. 8. Expiration of License; Renewal. <(a)> Except as
110-7 may be provided by a staggered renewal system adopted under Section
110-8 21.01-2 of this code and its subsequent amendments <Subsection (c)
110-9 of this section>, every license issued to a local recording agent
110-10 or a solicitor shall expire two years from the date of its issue,
110-11 unless a completed application to qualify for the renewal of any
110-12 such license shall be filed with the State Board of Insurance and a
110-13 nonrefundable fee paid on or before such date, in which event the
110-14 license sought to be renewed shall continue in full force and
110-15 effect until renewed or renewal is denied.
110-16 <(b) An unexpired license may be renewed by filing a
110-17 completed application and paying the required nonrefundable renewal
110-18 fee to the State Board of Insurance not later than the expiration
110-19 date of the license. If a license has been expired for not longer
110-20 than 90 days, the licensee may renew the license by paying to the
110-21 State Board of Insurance the required nonrefundable renewal fee and
110-22 a nonrefundable fee that is one-half of the original license fee.
110-23 If a license has been expired for more than 90 days, the license
110-24 may not be renewed. A new license may be obtained by complying
110-25 with the requirements and procedures for obtaining an original
110-26 license. At least 30 days before the expiration of a license, the
110-27 commissioner shall send written notice of the impending license
111-1 expiration to the licensee at the licensee's last known address.
111-2 This subsection may not be construed to prevent the board from
111-3 denying or refusing to renew a license under applicable law or
111-4 rules of the State Board of Insurance.>
111-5 <(c) The State Board of Insurance by rule may adopt a system
111-6 under which licenses expire on various dates during the year. For
111-7 the period in which the license is valid for less than two years,
111-8 the license fee shall be prorated on a monthly basis so that each
111-9 licensee shall pay only that portion of the license fee that is
111-10 allocable to the number of months during which the license is
111-11 valid. On each subsequent renewal of the license, the total
111-12 license renewal fee is payable.>
111-13 Sec. 18. Appeal. If the Commissioner refuses an application
111-14 for license as provided by this article, or suspends, revokes, or
111-15 refuses to renew any license at a hearing as provided by this
111-16 article, <and the action is upheld on review to the Board as
111-17 provided by this Code,> and if the applicant or accused is
111-18 dissatisfied with the action of the Commissioner <and the Board>,
111-19 the applicant or accused may appeal from the action in accordance
111-20 with <Section (f),> Article 1.04<,> of this Code.
111-21 SECTION 7.37. Section 16, Article 21.14, Insurance Code, as
111-22 amended by Chapters 242 and 790, Acts of the 72nd Legislature,
111-23 Regular Session, 1991, is reenacted and amended to read as follows:
111-24 Sec. 16. Suspension or revocation of license. (a) The
111-25 license of any local recording agent shall be suspended during a
111-26 period in which the agent does not have outstanding a valid
111-27 appointment to act as an agent for an insurance company. The Board
112-1 shall end the suspension on receipt of evidence satisfactory to the
112-2 board that the agent has a valid appointment. The Board shall
112-3 cancel the license of a solicitor if the solicitor does not have
112-4 outstanding a valid appointment to act as a solicitor for a local
112-5 recording agent, and shall suspend the license during a period that
112-6 the solicitor's local recording agent does not have outstanding a
112-7 valid appointment to act as an agent under this Article.
112-8 (b) The department may discipline <license of> any local
112-9 recording agent or solicitor or deny an application under Section
112-10 5, Article 21.01-2, of this code and its subsequent amendments <may
112-11 be denied or a license duly issued may be suspended or revoked or
112-12 the renewal thereof refused by the State Board of Insurance> if<,
112-13 after notice and hearing as hereafter provided,> it finds that the
112-14 applicant, individually or through any officer, director, or
112-15 shareholder, for or holder of such license:
112-16 (1) Has wilfully violated any provision of the
112-17 insurance laws of this state;
112-18 (2) Has intentionally made a material misstatement in
112-19 the application for such license;
112-20 (3) Has obtained, or attempted to obtain, such license
112-21 by fraud or misrepresentation;
112-22 (4) Has misappropriated or converted to the
112-23 applicant's or licensee's own use or illegally withheld money
112-24 belonging to an insurer or an insured or beneficiary;
112-25 (5) <Has otherwise demonstrated lack of
112-26 trustworthiness or competence to act as an insurance agent;>
112-27 <(6)> Has been guilty of fraudulent or dishonest acts;
113-1 (6) <(7)> Has materially misrepresented the terms and
113-2 conditions of any insurance policies or contracts;
113-3 (7) <(8)> Has made or issued, or caused to be made or
113-4 issued, any statement misrepresenting or making incomplete
113-5 comparisons regarding the terms or conditions of any insurance
113-6 contract legally issued by an insurance carrier for the purpose of
113-7 inducing or attempting to induce the owner of such contract to
113-8 forfeit or surrender such contract or allow it to expire for the
113-9 purpose of replacing such contract with another;
113-10 (8) <(9) Is not of good character or reputation;>
113-11 <(10)> Is convicted of a felony;
113-12 (9) <(11)> Is guilty of rebating any insurance premium
113-13 or discriminating as between insureds; <or>
113-14 (10) <(12)> Is not engaged in the soliciting or
113-15 writing of insurance for the public generally as required by
113-16 Section 5 of this Article; or
113-17 (11) <(12)> Is afflicted with a disability as that
113-18 term is defined by Subsection (a) of Article 21.15-6 of this code.
113-19 (c) <(b)> The State Board of Insurance may order that a
113-20 local recording agent or solicitor who is afflicted with a
113-21 disability be placed on disability probation under the terms and
113-22 conditions specified under Article 21.15-6 of this code instead of
113-23 taking disciplinary action under Subsection (b) <(a)> of this
113-24 section.
113-25 (d) <(c)> A license applicant or licensee whose license
113-26 application or license has been denied, refused, or revoked under
113-27 this section may not apply for any license as an insurance agent
114-1 before the first anniversary of the effective date of the denial,
114-2 refusal, or revocation, or, if the applicant or licensee seeks
114-3 judicial review of the denial, refusal, or revocation before the
114-4 first anniversary of the date of the final court order or decree
114-5 affirming that action. The Commissioner may deny an application
114-6 timely filed if the applicant does not show good cause why the
114-7 denial, refusal, or revocation of the previous license application
114-8 or license should not be considered a bar to the issuance of a new
114-9 license. This subsection does not apply to an applicant whose
114-10 license application was denied for failure to pass a required
114-11 written examination.
114-12 SECTION 7.38. Section 18, Article 21.14, Insurance Code, is
114-13 amended to read as follows:
114-14 Sec. 18. Appeal. If the Commissioner refuses an application
114-15 for license as provided by this article, or suspends, revokes, or
114-16 refuses to renew any license at a hearing as provided by this
114-17 article, <and the action is upheld on review to the Board as
114-18 provided by this Code,> and if the applicant or accused is
114-19 dissatisfied with the action of the Commissioner and the Board, the
114-20 applicant or accused may appeal from the action in accordance with
114-21 <Section (f),> Article 1.04<,> of this Code.
114-22 SECTION 7.39. Sections 5, 8, and 10, Article 21.14-1,
114-23 Insurance Code, are amended to read as follows:
114-24 Sec. 5. Qualifications for risk manager's license. To
114-25 qualify for a license under this article, a person must:
114-26 (1) be at least 18 years of age;
114-27 (2) maintain a place of business in this state;
115-1 (3) <be a trustworthy and competent person;>
115-2 <(4)> meet the application requirements required by
115-3 this article and rules of the board;
115-4 (4) <(5)> take and pass the licensing examination; and
115-5 (5) <(6)> pay the examination and licensing fees.
115-6 Sec. 8. License renewal; renewal fee. Except as provided by
115-7 a staggered renewal system adopted under Section 21.01-2 of this
115-8 code and its subsequent amendments, a <(a) A> license issued under
115-9 this article expires two years after the date of issuance. A
115-10 licensee may renew an unexpired license by filing a completed
115-11 application for renewal with the board and paying the nonrefundable
115-12 renewal fee, in an amount not to exceed $50 as determined by the
115-13 board, on or before the expiration date of the license. The
115-14 commissioner shall issue a renewal certificate to the licensee at
115-15 the time of the renewal if the commissioner determines the licensee
115-16 continues to be eligible for the license.
115-17 <(b) If a person's license has been expired for not longer
115-18 than 90 days, the licensee may renew the license by paying the
115-19 nonrefundable renewal fee plus a nonrefundable late fee in an
115-20 amount not to exceed one-half of the original license fee as
115-21 determined by the board.>
115-22 <(c) If the license has been expired for more than 90 days,
115-23 the person may not renew the license. The person may obtain a new
115-24 license by submitting to reexamination, if the person was
115-25 originally required to take the examination, and complying with the
115-26 requirements and procedures for obtaining an original license.>
115-27 <(d) The commissioner shall notify each licensee in writing
116-1 at the licensee's last known address of the pending license
116-2 expiration not later than the 30th day before the date on which the
116-3 license expires.>
116-4 Sec. 10. Denial, suspension, or revocation of a license.
116-5 <(a)> The department may discipline a risk manager or deny an
116-6 application under Section 5, Article 21.01-2, of this code and its
116-7 subsequent amendments <State Board of Insurance may deny an
116-8 application or suspend, revoke, or refuse to renew a risk manager's
116-9 license for any of the following reasons>:
116-10 (1) for any cause for which issuance of the license
116-11 could have been refused had it been known to the board;
116-12 (2) if the licensee wilfully violates or knowingly
116-13 participates in the violation of this article, any insurance law of
116-14 this state, or rules of the board;
116-15 (3) if the licensee has obtained or attempted to
116-16 obtain a license through wilful misrepresentation or fraud, or has
116-17 failed to pass the examination required under this article; or
116-18 (4) if a licensee is convicted, by final judgment, of
116-19 a felony<; or>
116-20 <(5) if in the conduct of his affairs under the
116-21 license, the licensee has shown himself to be, and is so deemed by
116-22 the commissioner, incompetent, untrustworthy, or a source of injury
116-23 to the public.>
116-24 <(b) A risk manager's license may not be suspended or
116-25 revoked without notice and hearing by the board>.
116-26 SECTION 7.40. Sections 2(a) and (c), Article 21.14-2,
116-27 Insurance Code, are amended to read as follows:
117-1 (a) To obtain a license to act as an agent under this
117-2 article, an applicant must submit a completed written application
117-3 to the commissioner of insurance on a form prescribed by the State
117-4 Board of Insurance and pay a $50 nonrefundable fee. The
117-5 application must bear an endorsement signed by an agent of an
117-6 insurance company that meets the requirements of Section 1 of this
117-7 article and must state that the applicant is a resident of this
117-8 state<, is of good character and good reputation, and is worthy of
117-9 a license>.
117-10 (c) Except as provided by a staggered renewal system adopted
117-11 under Section 21.01-2 of this code and its subsequent amendments, a
117-12 <A> license issued under this article expires two years after the
117-13 date of its issuance unless a completed application to renew the
117-14 license is filed with the commissioner and the $50 nonrefundable
117-15 renewal fee is paid on or before that date, in which case the
117-16 license continues in full force and effect until renewed or the
117-17 renewal is denied. <If a license has been expired for not longer
117-18 than 90 days, the licensee may renew the license by filing with the
117-19 State Board of Insurance the required nonrefundable renewal fee and
117-20 a nonrefundable fee that is one-half of the original license fee.
117-21 If a license has been expired for more than 90 days, the license
117-22 may not be renewed. A new license may be obtained by complying
117-23 with the procedures for obtaining an original license. At least 30
117-24 days before the expiration of a license the commissioner of
117-25 insurance shall send written notice of the impending license
117-26 expiration to the licensee at the licensee's last known address.
117-27 This section may not be construed to prevent the board from denying
118-1 or refusing to renew a license under applicable law or the rules of
118-2 the State Board of Insurance.>
118-3 SECTION 7.41. Section 3, Article 21.14-2, Insurance Code, is
118-4 amended to read as follows:
118-5 Sec. 3. The license of an agent is automatically suspended
118-6 or canceled if the agent does not have outstanding a valid
118-7 appointment to act as an agent for an insurance company described
118-8 in Section 1 of this article. The department may discipline a
118-9 licensee or deny an application under Section 5, Article 21.01-2,
118-10 of this code and its subsequent amendments if it <commissioner of
118-11 insurance may deny a license application and may suspend or revoke
118-12 a license or deny the renewal of a license if, after notice and
118-13 hearing, the commissioner> determines that the license applicant or
118-14 licensee:
118-15 (1) has intentionally or knowingly violated the
118-16 insurance laws of this state;
118-17 (2) has obtained or attempted to obtain a license by
118-18 fraud or misrepresentation;
118-19 (3) has misappropriated, converted, or illegally
118-20 withheld money belonging to an insurer or an insured or
118-21 beneficiary;
118-22 (4) <has otherwise demonstrated lack of
118-23 trustworthiness or competence to act as an insurance agent;>
118-24 <(5)> has been guilty of fraudulent or dishonest acts;
118-25 (5) <(6)> has materially misrepresented the terms and
118-26 conditions of an insurance policy or contract;
118-27 (6) <(7)> has made or issued or caused to be made or
119-1 issued any statement misrepresenting or making incomplete
119-2 comparisons regarding the terms or conditions of an insurance
119-3 contract legally issued by an insurance carrier for the purpose of
119-4 inducing or attempting to induce the owner of the contract to
119-5 forfeit or surrender the contract or allow the contract to expire
119-6 or for the purpose of replacing the contract with another contract;
119-7 (7) <(8)> has been convicted of a felony; or
119-8 (8) <(9)> is guilty of rebating an insurance premium
119-9 or discriminating between insureds.
119-10 SECTION 7.42. Article 21.15, Insurance Code, is amended to
119-11 read as follows:
119-12 Art. 21.15. Revocation of Agent's Certificate. Cause for
119-13 the discipline under Section 5, Article 21.01-2, of this code and
119-14 its subsequent amendments <revocation of the certificate of
119-15 authority> of an agent or solicitor for an insurance company may
119-16 exist <for violation of any of the insurance laws, or> if <it shall
119-17 appear to the Board upon due proof, after notice that> such agent
119-18 or solicitor has knowingly deceived or defrauded a policyholder or
119-19 a person having been solicited for insurance<,> or <that such agent
119-20 or solicitor> has unreasonably failed and neglected to pay over to
119-21 the company, or its agent entitled thereto, any premium or part
119-22 thereof collected by him on any policy of insurance or application
119-23 therefor. The Board shall publish such revocation in such manner
119-24 as it deems proper for the protection of the public; and no person
119-25 whose certificate of authority as agent or solicitor has been
119-26 revoked shall be entitled to again receive a certificate of
119-27 authority as such agent or solicitor for any insurance company in
120-1 this State for a period of one year.
120-2 SECTION 7.43. The following laws are repealed:
120-3 (1) Section 4(e), Article 1.14-2, Insurance Code;
120-4 (2) Sections 5, 6, and 7, Article 9.36, Insurance
120-5 Code;
120-6 (3) Section C, Article 9.37, Insurance Code;
120-7 (4) Sections 2, 3, and 4, Article 9.42, Insurance
120-8 Code;
120-9 (5) Section 3, Article 9.44, Insurance Code;
120-10 (6) Sections 6(d), (e), (f), and (g) and Section 8(c),
120-11 Article 9.56, Insurance Code;
120-12 (7) Sections 15(h), (i), (j), (k), and (l), Texas
120-13 Health Maintenance Organization Act (Section 20A.15, Vernon's Texas
120-14 Insurance Code);
120-15 (8) Section 15A(j), Texas Health Maintenance
120-16 Organization Act (Section 20A.15A, Vernon's Texas Insurance Code);
120-17 (9) Sections 4(e) and (f), Article 21.07, Insurance
120-18 Code;
120-19 (10) Section 10(b), Article 21.07, Insurance Code;
120-20 (11) Sections 3A and 15A, Article 21.07, Insurance
120-21 Code;
120-22 (12) Sections 5(e), 9(d) and (e), and 12(b), Chapter
120-23 213, Acts of the 54th Legislature, Regular Session, 1955 (Article
120-24 21.07-1, Vernon's Texas Insurance Code);
120-25 (13) Section 5A, Managing General Agents' Licensing
120-26 Act (Article 21.07-3, Vernon's Texas Insurance Code);
120-27 (14) Sections 16(c), (d), and (e), Chapter 407, Acts
121-1 of the 63rd Legislature, Regular Session, 1973 (Article 21.07-4,
121-2 Vernon's Texas Insurance Code);
121-3 (15) Sections 3(j) and (k), Article 21.07-7, Insurance
121-4 Code;
121-5 (16) Article 21.13, Insurance Code;
121-6 (17) Sections 7a and 17, Article 21.14, Insurance
121-7 Code; and
121-8 (18) Sections 6(f) and (h), Article 21.14-1, Insurance
121-9 Code.
121-10 SECTION 7.44. This article applies only to issuance or
121-11 renewal of a license or discipline of a license holder on or after
121-12 January 1, 1994. Issuance or renewal of a license or discipline of
121-13 a license holder before January 1, 1994, is governed by the law in
121-14 effect immediately before the effective date of this Act, and that
121-15 law is continued in effect for this purpose.
121-16 ARTICLE 8. PARTICULAR FUNCTIONS OF TEXAS DEPARTMENT
121-17 OF INSURANCE
121-18 SECTION 8.01. Subchapter B, Chapter 21, Insurance Code, is
121-19 amended by adding Article 21.20-1 to read as follows:
121-20 Art. 21.20-1. RULES RESTRICTING COMPETITIVE BIDDING OR
121-21 ADVERTISING. (a) The commissioner may not adopt rules restricting
121-22 competitive bidding or advertising by a person regulated by the
121-23 department except to prohibit false, misleading, or deceptive
121-24 practices by the person.
121-25 (b) The commissioner may not include in rules adopted under
121-26 Subsection (a) of this article or under any other provision of this
121-27 code or another insurance law of this state a rule that:
122-1 (1) restricts the use of any medium of advertising;
122-2 (2) restricts the person's personal appearance or use
122-3 of the person's voice in an advertisement;
122-4 (3) relates to the size or duration of an
122-5 advertisement by the person; or
122-6 (4) restricts the person's advertisement under a trade
122-7 name.
122-8 SECTION 8.02. Section 2, Article 1.10D, Insurance Code, is
122-9 amended by adding Subsection (d-1) to read as follows:
122-10 (d-1) An authorized governmental agency and any state
122-11 licensing agency shall furnish any materials, documents, reports,
122-12 complaints, or other evidence to the insurance fraud unit on the
122-13 request of the unit. Compliance with this subsection by an
122-14 authorized governmental agency or state licensing agency does not
122-15 constitute waiver of any privilege or requirement of
122-16 confidentiality otherwise applicable. Notwithstanding Section 5(a)
122-17 of this article, the commissioner may not release evidence obtained
122-18 under this subsection for public inspection if release of the
122-19 evidence would violate a privilege held by or a requirement of
122-20 confidentiality imposed on the agency from which the evidence was
122-21 obtained.
122-22 SECTION 8.03. Section 3(j), Article 21.49-1, Insurance Code,
122-23 is amended to read as follows:
122-24 (j) Disclaimer. Any person may file with the commissioner a
122-25 disclaimer of affiliation with any authorized insurer or such a
122-26 disclaimer may be filed by such insurer or any member of an
122-27 insurance holding company system. The disclaimer shall fully
123-1 disclose all material relationships and bases for affiliation
123-2 between such person and such insurer as well as the basis for
123-3 disclaiming such affiliation. After a disclaimer has been filed,
123-4 the insurer shall be relieved of any duty to register or report
123-5 under this section which may arise out of the insurer's
123-6 relationship with such person unless and until the commissioner
123-7 disallows such a disclaimer. Unless disallowed by the
123-8 commissioner, a <A> disclaimer filed under this subsection relieves
123-9 <does not relieve> a person of the duty to comply with the
123-10 requirements of Sections 5(a) through (c) of this article. The
123-11 commissioner shall disallow such a disclaimer only after furnishing
123-12 all parties in interest with notice and opportunity to be heard and
123-13 after making specific findings of fact to support such
123-14 disallowance.
123-15 SECTION 8.04. Subsection (B), Section 2, Chapter 397, Acts
123-16 of the 54th Legislature, Regular Session, 1955 (Article 3.70-2,
123-17 Vernon's Texas Insurance Code), is amended to read as follows:
123-18 (B) No policy of accident and sickness insurance shall make
123-19 benefits contingent upon treatment or examination by a particular
123-20 practitioner or by particular practitioners of the healing arts
123-21 hereinafter designated unless such policy contains a provision
123-22 designating the practitioner or practitioners who will be
123-23 recognized by the insurer and those who will not be recognized by
123-24 the insurer. Such provision may be located in the "Exceptions" or
123-25 "Exceptions and Reductions" provisions, or elsewhere in the policy,
123-26 or by endorsement attached to the policy, at the insurer's option.
123-27 In designating the practitioners who will and will not be
124-1 recognized, such provision shall use the following terms: Doctor
124-2 of Medicine, Doctor of Osteopathy, Doctor of Dentistry, Doctor of
124-3 Chiropractic, Doctor of Optometry, Doctor of Podiatry, Audiologist,
124-4 Speech-language Pathologist, Doctor in Psychology, Certified Social
124-5 Worker--Advanced Clinical Practitioner, Licensed Dietitian,
124-6 Licensed Professional Counselor, and Licensed Marriage and Family
124-7 Therapist.
124-8 For purposes of this Act, such designations shall have the
124-9 following meanings:
124-10 Doctor of Medicine: One licensed by the Texas State Board of
124-11 Medical Examiners on the basis of the degree "Doctor of Medicine";
124-12 Doctor of Osteopathy: One licensed by the Texas State Board
124-13 of Medical Examiners on the basis of the degree of "Doctor of
124-14 Osteopathy";
124-15 Doctor of Dentistry: One licensed by the State Board of
124-16 Dental Examiners;
124-17 Doctor of Chiropractic: One licensed by the Texas Board of
124-18 Chiropractic Examiners;
124-19 Doctor of Optometry: One licensed by the Texas Optometry
124-20 Board;
124-21 Doctor of Podiatry: One licensed by the State Board of
124-22 Podiatry Examiners;
124-23 Audiologist: One licensed as an audiologist by the State
124-24 Committee of Examiners for Speech-Language Pathology and Audiology
124-25 <with a master's or doctorate degree in audiology from an
124-26 accredited college or university and who is certified by the
124-27 American Speech-language and Hearing Association>;
125-1 Speech-language Pathologist: One licensed as a
125-2 speech-language pathologist by the State Committee of Examiners for
125-3 Speech-Language Pathology and Audiology <with a master's or
125-4 doctorate degree in speech pathology or speech-language pathology
125-5 from an accredited college or university and who is certified by
125-6 the American Speech-language and Hearing Association>;
125-7 Doctor in Psychology: One licensed by the Texas State Board
125-8 of Examiners of Psychologists and certified as a Health Service
125-9 Provider;
125-10 Certified Social Worker--Advanced Clinical Practitioner: One
125-11 certified by the Texas Department of Human Services as a Certified
125-12 Social Worker with the order of recognition of Advanced Clinical
125-13 Practitioner;
125-14 Licensed Dietitian: One licensed by the Texas State Board of
125-15 Examiners of Dietitians;
125-16 Licensed Professional Counselor: One licensed by the Texas
125-17 State Board of Examiners of Professional Counselors; and
125-18 Licensed Marriage and Family Therapist: One licensed by the
125-19 Texas State Board of Examiners of Marriage and Family Therapists.
125-20 SECTION 8.05. Section 1, Article 21.52, Insurance Code, as
125-21 amended by Chapters 242 and 824, Acts of the 72nd Legislature,
125-22 Regular Session, 1991, is amended to read as follows:
125-23 Sec. 1. Definitions. As used in this article:
125-24 (a) "health insurance policy" means any individual,
125-25 group, blanket, or franchise insurance policy, insurance agreement,
125-26 or group hospital service contract, providing benefits for medical
125-27 or surgical expenses incurred as a result of an accident or
126-1 sickness;
126-2 (b) "doctor of podiatric medicine" includes D.P.M.,
126-3 podiatrist, doctor of surgical chiropody, D.S.C. and chiropodist;
126-4 (c) "doctor of optometry" includes optometrist, doctor
126-5 of optometry, and O.D.;
126-6 (d) "doctor of chiropractic" means a person who is
126-7 licensed by the Texas Board of Chiropractic Examiners to practice
126-8 chiropractic;
126-9 (e) "licensed dentist" means a person who is licensed
126-10 to practice dentistry by the State Board of Dental Examiners;
126-11 (f) "audiologist" means a person who is licensed as an
126-12 audiologist by the State Committee of Examiners for Speech-Language
126-13 Pathology and Audiology <has received a master's or doctorate
126-14 degree in audiology from an accredited college or university and is
126-15 certified by the American Speech-language and Hearing Association>;
126-16 (g) "speech-language pathologist" means a person who
126-17 is licensed as a speech-language pathologist by the State Committee
126-18 of Examiners for Speech-Language Pathology and Audiology <has
126-19 received a master's or doctorate degree in speech-language
126-20 pathology from an accredited college or university and is certified
126-21 by the American Speech-language and Hearing Association to restore
126-22 speech loss or correct a speech impairment>;
126-23 (h) "certified social worker--advanced clinical
126-24 practitioner" means a person who is certified by the Texas
126-25 Department of Human Services as a certified social worker with the
126-26 order of recognition of advanced clinical practitioner;
126-27 (i) "licensed dietitian" means a person who is
127-1 licensed by the Texas State Board of Examiners of Dietitians;
127-2 (j) "licensed professional counselor" means a person
127-3 who is licensed by the Texas State Board of Examiners of
127-4 Professional Counselors; and
127-5 (k) "psychologist" means a person licensed to practice
127-6 psychology by the Texas State Board of Examiners of Psychologists.
127-7 (l) <(k)> "licensed marriage and family therapist"
127-8 means a person who is licensed by the Texas State Board of
127-9 Examiners of Marriage and Family Therapists.
127-10 SECTION 8.06. Sections 8.04 and 8.05 of this Act apply only
127-11 to an insurance policy that is delivered, issued for delivery, or
127-12 renewed on or after January 1, 1994. A policy that is delivered,
127-13 issued for delivery, or renewed before January 1, 1994, is governed
127-14 by the law as it existed immediately before the effective date of
127-15 this Act, and that law is continued in effect for that purpose.
127-16 ARTICLE 9. CONTINUATION AND FUNCTIONS OF
127-17 OFFICE OF PUBLIC INSURANCE COUNSEL
127-18 SECTION 9.01. Article 1.35A, Insurance Code, is amended to
127-19 read as follows:
127-20 Art. 1.35A. Office of Public Insurance Counsel<.>
127-21 Sec. 1. CREATION; PURPOSE. <(a)> The independent office of
127-22 public insurance counsel is created to represent the interests of
127-23 insurance consumers in Texas.
127-24 Sec. 2. APPOINTMENT, QUALIFICATIONS, AND REMOVAL OF PUBLIC
127-25 COUNSEL. (a) <(b)> The governor with the advice and consent of
127-26 the senate shall appoint a public counsel who shall serve as the
127-27 executive director of the office of public insurance counsel.
128-1 (b) <(c)> To be eligible to serve as public counsel for the
128-2 office of public insurance counsel, a person must be a resident of
128-3 Texas and be eligible to practice law in Texas. The public counsel
128-4 shall be a person who has demonstrated a strong commitment and
128-5 involvement in efforts to safeguard the rights of the public and
128-6 who possesses the knowledge and experience necessary to practice
128-7 effectively in insurance proceedings.
128-8 (c) A person is not eligible for appointment as public
128-9 counsel if the person or the person's spouse:
128-10 (1) is employed by or participates in the management
128-11 of a business entity or other organization regulated by the
128-12 department or receiving funds from the department;
128-13 (2) owns or controls, directly or indirectly, more
128-14 than a 10 percent interest in a business entity or other
128-15 organization regulated by the department or receiving funds from
128-16 the department or the office of public insurance counsel; or
128-17 (3) uses or receives a substantial amount of tangible
128-18 goods, services, or funds from the department or the office of
128-19 public insurance counsel, other than compensation or reimbursement
128-20 authorized by law for department or office of public insurance
128-21 counsel membership, attendance, or expenses.
128-22 (d) Appointment of the public counsel shall be made without
128-23 regard to the race, color, handicap, sex, religion, age, or
128-24 national origin of the appointee.
128-25 (e) <(d)> The public counsel shall serve for a term of two
128-26 years expiring on February 1 of each odd-numbered year.
128-27 (f) It is a ground for removal from office if the public
129-1 counsel:
129-2 (1) does not have at the time of appointment the
129-3 qualifications required by Subsection (b) of this section;
129-4 (2) does not maintain during service as public counsel
129-5 the qualifications required by Subsection (b) of this section;
129-6 (3) violates a prohibition established by Subsection
129-7 (c) of this section or Section 4 of this article; or
129-8 (4) cannot discharge the public counsel's duties for a
129-9 substantial part of the term for which the public counsel is
129-10 appointed because of illness or disability.
129-11 (g) The validity of an action of the office of public
129-12 insurance counsel is not affected by the fact that it is taken when
129-13 a ground for removal of the public counsel exists.
129-14 Sec. 3. ADMINISTRATION. (a) <(e)> The public counsel, as
129-15 executive director of the office of public insurance counsel, shall
129-16 be charged with the responsibility of administering, enforcing, and
129-17 carrying out the provisions of this article, including preparation
129-18 and submission to the legislature of a budget for the office,
129-19 employing all necessary professional, technical, and other
129-20 employees to carry out the provisions of this article, approval of
129-21 expenditures for professional services, travel, per diem, and other
129-22 actual and necessary expenses incurred in administering the office.
129-23 Expenses for the office shall be paid from the assessment imposed
129-24 in Article 1.35B of this chapter. The compensation for employees
129-25 of the office of public insurance counsel shall be fixed by the
129-26 legislature as provided by the General Appropriations Act.
129-27 (b) The office of public insurance counsel shall file
130-1 annually with the governor and the presiding officer of each house
130-2 of the legislature a complete and detailed written report
130-3 accounting for all funds received and disbursed by the office of
130-4 public insurance counsel during the preceding fiscal year. The
130-5 annual report must be in the form and reported in the time provided
130-6 by the General Appropriations Act.
130-7 (c) All money paid to the office of public insurance counsel
130-8 under this article shall be deposited in the state treasury.
130-9 (d) The public counsel or the public counsel's designee
130-10 shall prepare and maintain a written policy statement to ensure
130-11 implementation of a program of equal employment opportunity under
130-12 which all personnel transactions are made without regard to race,
130-13 color, disability, sex, religion, age, or national origin. The
130-14 policy statement must include:
130-15 (1) personnel policies, including policies relating to
130-16 recruitment, evaluation, selection, appointment, training, and
130-17 promotion of personnel that are in compliance with the Texas
130-18 Commission on Human Rights Act (Article 5221k, Vernon's Texas Civil
130-19 Statutes) and its subsequent amendments;
130-20 (2) a comprehensive analysis of the office of public
130-21 insurance counsel work force that meets federal and state
130-22 guidelines;
130-23 (3) procedures by which a determination can be made of
130-24 significant underuse in the office of public insurance counsel work
130-25 force of all persons for whom federal or state guidelines encourage
130-26 a more equitable balance; and
130-27 (4) reasonable methods to appropriately address those
131-1 areas of significant underuse.
131-2 (e) A policy statement prepared under Subsection (d) of this
131-3 section must cover an annual period, be updated at least annually
131-4 and reviewed by the Commission on Human Rights for compliance with
131-5 Subsection (d)(1) of this section, and be filed with the governor's
131-6 office.
131-7 (f) The governor's office shall deliver a biennial report to
131-8 the legislature based on the information received under Subsection
131-9 (e) of this section. The report may be made separately or as a
131-10 part of other biennial reports made to the legislature.
131-11 (g) The public counsel or the public counsel's designee
131-12 shall develop an intra-agency career ladder program. The program
131-13 shall require intra-agency posting of all nonentry level positions
131-14 concurrently with any public posting.
131-15 (h) The public counsel or the public counsel's designee
131-16 shall develop a system of annual performance evaluations. All
131-17 merit pay for office of public insurance counsel employees must be
131-18 based on the system established under this subsection.
131-19 (i) The office of public insurance counsel shall provide to
131-20 its public counsel and employees, as often as necessary,
131-21 information regarding their qualification for office or employment
131-22 under this article and their responsibilities under applicable laws
131-23 relating to standards of conduct for state officers or employees.
131-24 (j) The office of public insurance counsel is subject to the
131-25 requirements of Article 13, State Purchasing and General Services
131-26 Act (Article 601b, Vernon's Texas Civil Statutes) and its
131-27 subsequent amendments.
132-1 Sec. 4. CONFLICT OF INTEREST. (a) A person may not serve
132-2 as the public counsel or act as the general counsel for the office
132-3 of public insurance counsel if the person is required to register
132-4 as a lobbyist under Chapter 305, Government Code, because of the
132-5 person's activities for compensation related to the operation of
132-6 the department or the office of public insurance counsel.
132-7 (b) <(f)> A person serving as the public counsel may not,
132-8 for a period of two years after the date the person ceases to be
132-9 public counsel, represent any person in a proceeding before the
132-10 board or receive compensation for services rendered on behalf of
132-11 any person regarding a case pending before the department <board>.
132-12 (c) An officer, employee, or paid consultant of a trade
132-13 association in the field of insurance may not serve as the public
132-14 counsel or be an employee of the office of public insurance counsel
132-15 who is exempt from the state's position classification plan or is
132-16 compensated at or above the amount prescribed by the General
132-17 Appropriations Act for step 1, salary group 17, of the position
132-18 classification salary schedule.
132-19 (d) A person who is the spouse of an officer, manager, or
132-20 paid consultant of a trade association in the field of insurance
132-21 may not serve as the public counsel and may not be an office of
132-22 public insurance counsel employee who is exempt from the state's
132-23 position classification plan or is compensated at or above the
132-24 amount prescribed by the General Appropriations Act for step 1,
132-25 salary group 17, of the position classification salary schedule.
132-26 (e) For purposes of this section, a trade association is a
132-27 nonprofit, cooperative, and voluntarily joined association of
133-1 business or professional competitors designed to assist its members
133-2 and its industry or profession in dealing with mutual business or
133-3 professional problems and in promoting their common interest.
133-4 Sec. 5. POWERS AND DUTIES. (a) <(g)> The office of public
133-5 insurance counsel may assess the impact of insurance rates, rules,
133-6 and forms on insurance consumers in Texas and, in its own name,
133-7 shall act as an advocate of positions that are most advantageous to
133-8 a substantial number of insurance consumers as determined by the
133-9 public counsel for the office.
133-10 (b) <(h)> The public counsel:
133-11 (1) may appear or intervene as a matter of right
133-12 before the department <State Board of Insurance> as a party or
133-13 otherwise on behalf of insurance consumers as a class in:
133-14 (A) matters involving rates, rules, and forms
133-15 affecting property and casualty insurance;
133-16 (B) matters involving rates, rules, and forms
133-17 affecting title insurance;
133-18 (C) matters involving rules affecting life,
133-19 health, and accident insurance;
133-20 (D) matters involving rates, rules, and forms
133-21 affecting credit life, and credit accident and health insurance;
133-22 (E) matters involving rates, rules, and forms
133-23 affecting all other lines of insurance for which the department
133-24 <State Board of Insurance> promulgates, sets, or approves rates,
133-25 rules, and/or forms; and
133-26 (F) matters involving withdrawal of approval of
133-27 policy forms under Article 3.42(f) and 3.42(g) of this code if the
134-1 public counsel determines that such forms do not comply with this
134-2 code or any valid rule relating thereto duly adopted by the
134-3 department <State Board of Insurance> or is otherwise contrary to
134-4 law;
134-5 (2) may initiate or intervene as a matter of right or
134-6 otherwise appear in a judicial proceeding involving or arising out
134-7 of any action taken by an administrative agency in a proceeding in
134-8 which the public counsel appeared under the authority granted by
134-9 this article;
134-10 (3) is entitled to access to any records of the
134-11 department that are available to any party other than the board's
134-12 staff in a proceeding before the board;
134-13 (4) is entitled to obtain discovery under the
134-14 Administrative Procedure and Texas Register Act (Article 6252-13a,
134-15 Vernon's Texas Civil Statutes) of any nonprivileged matter that is
134-16 relevant to the subject matter involved in any proceeding or
134-17 submission before the department <State Board of Insurance>;
134-18 (5) may recommend legislation to the legislature that,
134-19 in the judgment of the public counsel, would affect positively the
134-20 interests of insurance consumers;
134-21 (6) may appear or intervene as a matter of right as a
134-22 party or otherwise on behalf of insurance consumers as a class in
134-23 all proceedings in which the public counsel determines that
134-24 insurance consumers need representation, except that the public
134-25 counsel may not intervene in any enforcement or parens patriae
134-26 proceeding brought by the attorney general; and
134-27 (7) shall submit to the department for adoption a
135-1 consumer bill of rights appropriate to each personal line of
135-2 insurance regulated by the board to be distributed upon the
135-3 issuance of a policy by insurers to each policyholder under rules
135-4 adopted by the department.
135-5 (c) <(i)> The public counsel may not intervene in hearings
135-6 before the board or commissioner that relate to approval or
135-7 consideration of individual charters, licenses, acquisitions,
135-8 mergers, or examinations, proceedings concerning the solvency of
135-9 individual insurers after a receiver is appointed, or other matters
135-10 affecting individual insurer or agent licenses. The
135-11 confidentiality requirements applicable to examination reports
135-12 under Article 1.18 of this code and to the commissioner under
135-13 Section 3A, Article 21.28, of this code shall apply to the public
135-14 counsel.
135-15 (d) The public counsel may not appear or intervene in
135-16 hearings before the board or commissioner that relate to approval
135-17 or consideration of rates, rules, or forms affecting commercial
135-18 insurance, except that the public counsel may represent a class of
135-19 commercial consumers in a hearing if the class includes at least
135-20 one commercial insurance consumer who paid less than $250,000 in
135-21 total insurance premiums in the calendar year before the year in
135-22 which the hearing is held.
135-23 (e) <(j)> Any order of the board which determines, approves,
135-24 or sets a rate under this code and is appealed shall be and remain
135-25 in effect during the pendency of an appeal. During the pendency of
135-26 the appeal, an insurer shall use the rate provided in the order
135-27 being appealed. Such rate shall be lawful and valid during such
136-1 appeal, and an insurer shall not be required to make any refund
136-2 therefrom after a decision on the appeal. If a decision on appeal
136-3 shall vacate the order, the rate established by the board prior to
136-4 the rendition of the vacated order shall be in effect from and
136-5 after the date of remand and until the board shall make a further
136-6 determination; however, the board shall consider the order of the
136-7 court in setting future rates.
136-8 Sec. 6. PUBLIC ACCESS AND INFORMATION. (a) The office of
136-9 public insurance counsel shall prepare information of public
136-10 interest describing the functions of the office. The office of
136-11 public insurance counsel shall make the information available to
136-12 the public and appropriate state agencies.
136-13 (b) The office of public insurance counsel shall prepare and
136-14 maintain a written plan that describes how a person who does not
136-15 speak English can be provided reasonable access to the office of
136-16 public insurance counsel's programs. The office of public
136-17 insurance counsel shall also comply with federal and state laws for
136-18 program and facility accessibility.
136-19 Sec. 7. APPLICABILITY OF SUNSET ACT. <(k)> The office of
136-20 public insurance counsel is subject to Chapter 325, Government Code
136-21 (Texas Sunset Act). Unless continued in existence as provided by
136-22 that chapter, the office is abolished September 1, 2005 <1993>.
136-23 SECTION 9.02. Article 1.09-1(b), Insurance Code, is amended
136-24 to read as follows:
136-25 (b) In all rate hearings and policy form proceedings before
136-26 the Board, except for those rate hearings and proceedings as
136-27 provided in Section 5 <Subsections (g) and (h)>, Article 1.35A, of
137-1 this code, the Attorney General may intervene in the public
137-2 interest. The Board shall have and exercise the power of subpoena
137-3 and subpoena duces tecum for witnesses, documents, and other
137-4 evidence to the extent of the jurisdiction of this state for such
137-5 hearings and proceedings on its own motion or upon application of
137-6 the Attorney General.
137-7 SECTION 9.03. The responsibility of the office of public
137-8 insurance counsel for review under Article 13, State Purchasing and
137-9 General Services Act (Article 601b, Vernon's Texas Civil Statutes),
137-10 is limited to one definable activity during the first two years
137-11 that Section 3(j), Article 1.35A, Insurance Code, as added by this
137-12 Act, is in effect.
137-13 ARTICLE 10. REDESIGNATION OF PROVISIONS WITH
137-14 DUPLICATE DESIGNATIONS; CONFORMING AMENDMENTS
137-15 SECTION 10.01. Article 3.77, Insurance Code, as added by
137-16 Chapter 800, Acts of the 71st Legislature, Regular Session, 1989,
137-17 is reenacted and redesignated as Article 3.78, Insurance Code, to
137-18 read as follows:
137-19 Art. 3.78 <3.77>. Eligibility for Benefits for Alzheimer's
137-20 Disease. If an individual or group policy, contract, or
137-21 certificate, or evidence of coverage providing coverage for
137-22 Alzheimer's disease is delivered or issued for delivery in this
137-23 state by an insurer, including a group hospital service corporation
137-24 under Chapter 20 of this code, and the policy, contract,
137-25 certificate, or evidence requires demonstrable proof of organic
137-26 disease or other proof before the insurer will authorize payment of
137-27 benefits for Alzheimer's disease, a clinical diagnosis of
138-1 Alzheimer's disease by a physician licensed in this state,
138-2 including history and physical, neurological, psychological and/or
138-3 psychiatric evaluations, and laboratory studies, shall satisfy the
138-4 requirement for demonstrable proof of organic disease or other
138-5 proof under the coverage.
138-6 SECTION 10.02. Subsection (e), Section 2, Article 21.48A,
138-7 Insurance Code, as added by Section 2, Chapter 327, Acts of the
138-8 72nd Legislature, Regular Session, 1991, is reenacted and
138-9 redesignated as Subsection (f) to read as follows:
138-10 (f) <(e)> A Lender that requires a Borrower to secure
138-11 insurance coverage before the Lender will provide a residential
138-12 mortgage loan shall accept an insurance binder as evidence of the
138-13 required insurance if:
138-14 (1) the insurance binder is issued by a licensed local
138-15 recording agent as that term is defined by Article 21.14 of this
138-16 code and, if requested to do so, the agent shall furnish
138-17 appropriate evidence to the Lender;
138-18 (2) the local recording agent is appointed to
138-19 represent the insurance company whose name appears on the binder
138-20 and is authorized to issue binders and, if requested to do so, the
138-21 agent shall furnish appropriate evidence to the Lender;
138-22 (3) the insurance binder is accompanied by evidence of
138-23 payment of the required premium; and
138-24 (4) the insurance binder will be replaced by an
138-25 original insurance policy for the required coverage within 30 days
138-26 of the date of the issuance of the insurance binder.
138-27 If the foregoing conditions are met, a Lender may not require
139-1 a Borrower to provide an original insurance policy in lieu of the
139-2 insurance binder.
139-3 SECTION 10.03. Article 21.49-14, Insurance Code, as added by
139-4 Section 5.08, Chapter 1, Acts of the 70th Legislature, 1st Called
139-5 Session, 1987, is reenacted and redesignated as Article 21.49-13,
139-6 Insurance Code, to read as follows:
139-7 Art. 21.49-13 <21.49-14>. Excess Liability Pools
139-8 Sec. 1. Definitions. In this article:
139-9 (1) "Pool" means an excess liability pool created
139-10 under this article.
139-11 (2) "Fund" means an excess liability fund.
139-12 (3) "Board" means the board of trustees of a pool.
139-13 (4) "County" means a county in this state.
139-14 (5) "School district" means a public school district
139-15 created under the laws of this state.
139-16 (6) "Junior college district" means a junior college
139-17 district organized under the laws of this state.
139-18 (7) "Entity" means a county, school district, or
139-19 junior college district.
139-20 Sec. 2. Creation of pools. (a) Separate excess liability
139-21 pools may be created for counties, school districts, and junior
139-22 college districts as provided by this article.
139-23 (b) An excess liability pool may be created:
139-24 (1) for counties, on written agreement to create the
139-25 pool by the county judges of not fewer than five counties in this
139-26 state;
139-27 (2) for school districts, on written agreement to
140-1 create the pool by the presidents of the boards of trustees, acting
140-2 on behalf of their boards, of not fewer than five school districts
140-3 in this state; or
140-4 (3) for junior college districts, on written agreement
140-5 to create the pool by the presiding officers of the boards of
140-6 trustees, acting on behalf of their boards, of not fewer than five
140-7 junior college districts in this state.
140-8 (c) An excess liability pool is created to provide excess
140-9 liability insurance coverage as provided by this article and the
140-10 plan.
140-11 (d) An entity may participate only in a pool created for
140-12 that type of entity. There may not be more than one county excess
140-13 liability pool, one school district excess liability pool, and one
140-14 junior college district excess liability pool.
140-15 Sec. 3. Scope of coverage. (a) A pool shall insure an
140-16 entity and its officers and employees against liability for acts
140-17 and omissions under the laws governing that entity and its officers
140-18 and employees in their official or employment capacities.
140-19 (b) Under excess liability insurance coverage, a pool shall
140-20 pay that portion of a claim against an entity and its officers and
140-21 employees that is finally determined or settled or is included in a
140-22 final judgment of a court and that is in excess of $500,000, but
140-23 the amount paid by the pool may not be in excess of the amount
140-24 determined by the board to be actuarially sound for the pool.
140-25 (c) Under the insurance coverage, the pool may participate
140-26 in the evaluation, settlement, or defense of any claim.
140-27 Sec. 4. Participation in pool. An entity is entitled to
141-1 coverage from the pool on:
141-2 (1) submitting a complete application;
141-3 (2) providing any other information required by the
141-4 pool;
141-5 (3) meeting the underwriting standards established by
141-6 the pool; and
141-7 (4) paying the premiums required for the coverage.
141-8 Sec. 5. Payment of contributions and premiums. An entity
141-9 purchasing excess liability insurance coverage from the pool may
141-10 use funds of the entity to pay any contributions or premiums
141-11 required by the pool for the coverage.
141-12 Sec. 6. Plan of operation. (a) At the time the written
141-13 agreement is executed under Section 2 of this article, the creators
141-14 shall select nine persons to serve as a temporary board to draft
141-15 the plan of operation for a pool.
141-16 (b) Within 30 days after selection, the members of a
141-17 temporary board shall meet to prepare a detailed plan of operation
141-18 for the pool.
141-19 (c) The plan of operation may include any matters relating
141-20 to the organization and operation of the pool and the pool's
141-21 finances. The plan must include:
141-22 (1) the organizational structure of the pool,
141-23 including the method of selection of the board, the method of
141-24 procedure and operation of the board, and a summary of the method
141-25 for managing and operating the pool;
141-26 (2) a description of the contributions and other
141-27 financial arrangements necessary to cover the initial expenses of
142-1 the pool and estimates supported by statistical data of the amounts
142-2 of those contributions or other financial arrangements;
142-3 (3) underwriting standards and procedures for the
142-4 evaluation of risks;
142-5 (4) procedures for purchase of reinsurance;
142-6 (5) methods, procedures, and guidelines for
142-7 establishing rates for premiums for and maximum limits of excess
142-8 coverage available from the pool;
142-9 (6) procedures for the processing and payment of
142-10 claims;
142-11 (7) methods and procedures for defraying any losses
142-12 and expenses of the pool;
142-13 (8) methods, procedures, and guidelines for the
142-14 management and investment of the fund;
142-15 (9) guidelines for nonrenewal of coverage;
142-16 (10) minimum limits of capital and surplus to be
142-17 maintained by the pool; and
142-18 (11) minimum standards for reserve requirements for
142-19 the pool.
142-20 (d) The temporary board shall complete and adopt the plan of
142-21 operation within 90 days after the date of the appointment of the
142-22 temporary board.
142-23 (e) Within 15 days following the day on which the plan of
142-24 operation is adopted, the first board must be selected as provided
142-25 by the plan of operation. The members of the first board shall
142-26 take office not later than the 30th day following the date of the
142-27 adoption of the plan of operation.
143-1 Sec. 7. Board of trustees. (a) A pool is governed by a
143-2 board of nine trustees selected as provided by the plan of
143-3 operation.
143-4 (b) Members of the board serve for terms of two years with
143-5 the terms expiring at the time provided by the plan of operation.
143-6 (c) A vacancy on the board shall be filled as provided by
143-7 the plan of operation.
143-8 (d) A person serving on the board who is an officer or
143-9 employee of an entity covered by the pool performs duties on the
143-10 board as additional duties required of his original office or
143-11 employment.
143-12 (e) Each member of the board shall execute a bond in the
143-13 amount required by the plan of operation payable to the pool and
143-14 conditioned on the faithful performance of his duties. The pool
143-15 shall pay the cost of the bond.
143-16 (f) Members of the board are not entitled to compensation
143-17 for their service on the board.
143-18 (g) The board shall select from its membership persons to
143-19 serve as chairman, vice-chairman, and secretary. The persons
143-20 selected serve for terms of one year that expire as provided by the
143-21 plan of operation.
143-22 (h) The board shall hold meetings at the call of the
143-23 chairman and at times established by its rules.
143-24 (i) A majority of the members of the board constitutes a
143-25 quorum.
143-26 (j) In addition to other duties provided by this article and
143-27 the plan of operation, the board shall:
144-1 (1) approve contracts other than excess liability
144-2 insurance contracts issued to entities by the pool;
144-3 (2) consider and adopt premium rate schedules for the
144-4 pool;
144-5 (3) consider and adopt policy forms for the pool;
144-6 (4) receive service of summons on behalf of the pool;
144-7 and
144-8 (5) appoint and supervise the activities of the pool
144-9 manager.
144-10 (k) In addition to other authority provided by this article,
144-11 the board may:
144-12 (1) adopt necessary rules;
144-13 (2) delegate specific responsibilities to the pool
144-14 manager; and
144-15 (3) amend the plan of operation to assure the orderly
144-16 management and operation of the pool.
144-17 (l) A member of the board is not liable with respect to a
144-18 claim or judgment for which coverage is provided by the pool or for
144-19 a claim or judgment against an entity covered by the pool against
144-20 whom a claim is made.
144-21 Sec. 8. Pool Manager. (a) The board shall appoint a pool
144-22 manager who shall serve at the pleasure of the board.
144-23 (b) The pool manager is entitled to receive the compensation
144-24 authorized by the board.
144-25 (c) The pool manager shall execute a bond in the amount
144-26 determined by the board, payable to the pool, conditioned on the
144-27 faithful performance of his duties. The pool shall pay the cost of
145-1 the bond.
145-2 (d) The pool manager shall manage and conduct the affairs of
145-3 the pool under the general supervision of the board and shall
145-4 perform any other duties directed by the board.
145-5 (e) In addition to any other duties provided by this article
145-6 or by the board, the pool manager shall:
145-7 (1) receive and pass on applications from entities for
145-8 excess liability coverage from the pool;
145-9 (2) negotiate contracts for the pool;
145-10 (3) prepare premium rate schedules for the approval of
145-11 the board;
145-12 (4) collect and compile statistical data relating to
145-13 the excess liability coverage provided by the pool, including
145-14 relevant loss, expense, and premium data, and make that information
145-15 available to the board and to the public; and
145-16 (5) prepare and submit to the board for approval
145-17 proposed policy forms for pool coverage.
145-18 (f) The pool manager may refuse to renew the coverage of any
145-19 entity insured by the pool based on the guidelines provided by the
145-20 plan of operation.
145-21 Sec. 9. Employees and other personnel. (a) The pool
145-22 manager shall employ or contract with persons necessary to assist
145-23 the board and pool manager in carrying out the powers and duties of
145-24 the pool.
145-25 (b) The board shall approve compensation paid to employees
145-26 of the pool and contracts made with other persons under this
145-27 section.
146-1 (c) The board may require any employee or person with whom
146-2 it contracts under this section to execute a bond in an amount
146-3 determined by the board, payable to the board, and conditioned on
146-4 the faithful performance of the employee's or person's duties or
146-5 responsibilities to the pool.
146-6 (d) An employee or person with whom the pool has contracted
146-7 under this section is not liable with respect to any claim or
146-8 judgment for which coverage is provided by the pool or for any
146-9 claim or judgment against any entity covered by the pool against
146-10 whom a claim is made.
146-11 Sec. 10. Office. (a) A pool shall maintain its principal
146-12 office in Austin, Texas.
146-13 (b) The records, files, and other documents and information
146-14 relating to the pool must be maintained in the pool's principal
146-15 office.
146-16 Sec. 11. Rules. The board may adopt and amend rules to
146-17 carry out this article.
146-18 Sec. 12. General powers and duties. (a) A pool shall:
146-19 (1) issue excess liability coverage to each entity
146-20 entitled to coverage under this article;
146-21 (2) collect premiums for coverage issued or renewed by
146-22 the pool;
146-23 (3) process and pay valid claims; and
146-24 (4) maintain detailed data regarding the pool.
146-25 (b) The pool may:
146-26 (1) enter into contracts;
146-27 (2) purchase reinsurance;
147-1 (3) cancel or refuse to renew coverage; and
147-2 (4) perform any other acts necessary to carry out this
147-3 article, the plan of operation, and the rules adopted by the board.
147-4 Sec. 13. Excess liability fund. (a) On creation of a pool,
147-5 the first board shall create an excess liability fund.
147-6 (b) The fund is composed of:
147-7 (1) premiums paid by entities for coverage by the
147-8 pool;
147-9 (2) contributions and other money received by the pool
147-10 to cover the initial expenses of the fund;
147-11 (3) investments and money earned from investments of
147-12 the fund; and
147-13 (4) any other money received by the pool.
147-14 (c) The pool manager shall manage the fund under the general
147-15 supervision of the board.
147-16 (d) Administrative expenses of the pool may be paid from the
147-17 fund, but payments for this purpose during any fiscal year of the
147-18 pool may not exceed the amount established by the board.
147-19 (e) Money in the fund may not be used to pay punitive
147-20 damages, fines or penalties for violation of a civil or criminal
147-21 statute, or fines or penalties imposed for violation of an
147-22 administrative rule or regulation, or an order, rule, or ordinance.
147-23 (f) Money for a claim may not be paid from the fund under
147-24 excess liability insurance coverage unless and until all benefits
147-25 payable under any other underlying policy of liability insurance
147-26 covering the claim or judgment are exhausted.
147-27 (g) The board may select one or more banks to serve as
148-1 depository for money of the fund. Before the pool manager deposits
148-2 fund money in a depository bank in an amount that exceeds the
148-3 maximum amount secured by the Federal Deposit Insurance
148-4 Corporation, the bank must execute a bond or provide other security
148-5 in an amount sufficient to secure from loss the fund money that
148-6 exceeds the amount secured by the Federal Deposit Insurance
148-7 Corporation.
148-8 (h) Each year as provided by the plan of operation, the
148-9 board shall have an actuary who is a member of the American Academy
148-10 of Actuaries audit the capital, surplus, and reserves of the pool
148-11 and prepare for the pool and its members a formal report.
148-12 Sec. 14. Investments. (a) The fund manager, under the
148-13 general supervision of the board, shall manage and invest the money
148-14 in the fund in the manner provided by the plan of operation.
148-15 (b) Money earned by investment of money in the fund must be
148-16 deposited in the fund or reinvested for the fund.
148-17 Sec. 15. Contributions. The board shall determine the
148-18 amount of any contributions necessary to meet initial expenses of
148-19 the pool. The board shall make this determination based on the
148-20 data provided in the plan of operation.
148-21 Sec. 16. Premium rates; limits of coverage. (a) The board
148-22 shall determine the rates for premiums that will be charged and the
148-23 maximum limits of coverage provided to assure that the pool is
148-24 actuarially sound.
148-25 (b) The pool manager shall prepare the statistical data and
148-26 other information and the proposed rate schedules and maximum
148-27 limits of coverage for consideration of the board.
149-1 (c) The board shall periodically reexamine the rate
149-2 schedules and the maximum limits of coverage as conditions change.
149-3 Sec. 17. Coverage period. (a) On accepting coverage from
149-4 the pool, an entity shall maintain that coverage for a period not
149-5 less than 36 calendar months following the month the coverage is
149-6 issued.
149-7 (b) An entity that voluntarily discontinues coverage in the
149-8 pool may not again obtain coverage from the pool for at least 36
149-9 calendar months following the month in which the coverage was
149-10 discontinued.
149-11 Sec. 18. Coverage. Excess liability coverage provided by
149-12 the pool may be provided on a claims-made or an occurrence basis.
149-13 Sec. 19. Nonrenewal. (a) Except as provided by Subsection
149-14 (b) of this section, the pool may refuse to renew the coverage of
149-15 any entity that fails to comply with the pool's underwriting
149-16 standards.
149-17 (b) The pool may not refuse to renew the coverage of an
149-18 entity for the first 36 calendar months following the month in
149-19 which the entity was first insured by the pool.
149-20 (c) Section 17(b) of this article does not apply to
149-21 discontinuance of an entity's coverage if the pool refuses renewal
149-22 under this section. An entity whose coverage is not renewed is not
149-23 eligible to apply for new coverage during the 12 calendar months
149-24 beginning after the month in which the pool gave written notice
149-25 that it would not renew the coverage.
149-26 Sec. 20. Shortage of available money. (a) If money in the
149-27 fund will be exhausted by payment of all final and settled claims
150-1 and final judgments during the fiscal year, the amount paid by the
150-2 pool to each person having a claim or judgment shall be prorated,
150-3 with each person receiving an amount that is equal to the
150-4 percentage the amount owed to him by the pool bears to the total
150-5 amount owed, outstanding, and payable by the pool.
150-6 (b) The remaining amount that is due and unpaid to a person
150-7 who receives prorated payment under Subsection (a) of this section
150-8 must be paid in the immediately following fiscal year.
150-9 Sec. 21. Commissions. A pool may pay commissions from the
150-10 fund on approval of the board.
150-11 Sec. 22. Application of other laws. (a) Except as provided
150-12 by Subsection (b) of this section, the pool is not considered
150-13 insurance under the Insurance Code and other laws of this state,
150-14 and the State Board of Insurance has no jurisdiction over the pool.
150-15 (b) The pool shall collect the necessary data, information,
150-16 and statements and shall file with the State Board of Insurance the
150-17 reports and statements required by Articles 1.24A and 1.24B and is
150-18 subject to 21.21 of this code.
150-19 SECTION 10.04. Section 5, Article 17.25, Insurance Code, is
150-20 amended to read as follows:
150-21 Sec. 5. Policy Forms Prescribed. Each county mutual
150-22 insurance company shall be subject to the provisions of Article
150-23 5.06 and <of> Article 5.35 <and of Article 5.36> of this Code. The
150-24 Board of Insurance Commissioners pursuant to Article 5.35 may in
150-25 its discretion make, promulgate and establish uniform policies for
150-26 county mutual insurance companies different from the uniform
150-27 policies made, promulgated and established for use by companies
151-1 other than county mutual insurance companies, and shall prescribe
151-2 the conditions under which such policies may be adopted and used by
151-3 county mutual insurance companies, and the conditions under which
151-4 such companies shall adopt and use the same forms and no others as
151-5 are prescribed for other companies.
151-6 SECTION 10.05. Article 8.24(i), Insurance Code, is amended
151-7 to read as follows:
151-8 (i) The department shall have authority to suspend or revoke
151-9 the certificate of authority of any insurance carrier authorized to
151-10 do business in Texas under this Article, if the State Board of
151-11 Insurance, after notice and opportunity for hearing, shall find
151-12 that such carrier has systematically, with neglect and with willful
151-13 disregard, failed to comply with its obligations derived from the
151-14 contracts of insurance, and the laws applicable thereto, as
151-15 contained in policies issued in the State of Texas.
151-16 Any carrier aggrieved by an order of the State Board of
151-17 Insurance hereunder shall be entitled to appeal therefrom pursuant
151-18 to the provisions of Article 1.04 <1.04(f)> of this code <the
151-19 Insurance Code>.
151-20 SECTION 10.06. Section 7, Article 21.28-A, Insurance Code,
151-21 is amended to read as follows:
151-22 Sec. 7. Review and Stay of Action. During the period of
151-23 supervision and during the period of conservatorship, the insurance
151-24 company may request the Commissioner of Insurance or in his
151-25 absence, the duly appointed deputy for such purpose, to review an
151-26 action taken or proposed to be taken by the supervisor or
151-27 conservator, specifying wherein the action complained of is
152-1 believed not to be in the best interests of the insurance company,
152-2 and such request shall stay the action specified pending review of
152-3 such action by the Commissioner or his duly appointed deputy. Any
152-4 order entered by the Commissioner appointing a supervisor and
152-5 providing that the insurance company shall not do certain acts as
152-6 provided in Section 4 of this Article, any order entered by the
152-7 Commissioner appointing a conservator, and any order by the
152-8 Commissioner following the review of an action of the supervisor or
152-9 conservator as hereinabove provided may be appealed under Article
152-10 1.04 of this code and its subsequent amendments <shall be
152-11 immediately reviewed by the State Board of Insurance upon the
152-12 filing of an appeal by the insurance company. The Board shall
152-13 review the action complained of in a public hearing and render its
152-14 decision at the earliest possible date thereafter, and the
152-15 requirement of ten (10) days notice set out in Article 1.04(d) of
152-16 this Code may be waived by the parties of record. The Board may
152-17 stay the effectiveness of any order of the Commissioner, pending
152-18 its review of such order. Such appeal shall have precedence over
152-19 all other business of a different nature pending before the Board,
152-20 and in the public hearing any and all evidence and matters
152-21 pertaining to the appeal may be submitted to the Board, whether
152-22 included in the appeal or not, and the Board shall make such other
152-23 rules and regulations with regard to such applications and their
152-24 consideration as it deems advisable. If such insurance company be
152-25 dissatisfied with any decision, regulation, order, rule, act or
152-26 administrative ruling adopted by the State Board of Insurance, such
152-27 dissatisfied insurance company after failing to get relief from the
153-1 State Board of Insurance, may initiate an action by filing a
153-2 petition setting forth the particular objection to such decision,
153-3 regulation, order, rule, act or administrative ruling, or to either
153-4 or all of them, in the District Court of Travis County, Texas, and
153-5 not elsewhere, against the State Board of Insurance as defendant.
153-6 Notwithstanding any other statute or rule of procedure, the filing
153-7 of a petition for the purpose of initiating such an action with
153-8 respect to this article does not stay or vacate the decision,
153-9 regulation, order, rule, act, or administrative ruling or either or
153-10 all of them unless the court that acquires jurisdiction, after
153-11 hearing and by order, specifically stays or vacates the decision,
153-12 regulation, order, rule, act, or administrative ruling that is the
153-13 subject of the action>. The action shall not be limited to
153-14 questions of law and the substantial evidence rule shall not apply,
153-15 except as interpretation of the Constitution may require, but such
153-16 action shall be tried and determined upon a trial de novo to the
153-17 same extent as now provided for in the case of an appeal from the
153-18 Justice Court to the County Court. Either party to said action may
153-19 appeal to the Appellate Court having jurisdiction of said cause and
153-20 said appeal shall be at once returnable to said Appellate Court
153-21 having jurisdiction of said cause and said action so appealed shall
153-22 have precedence in said Appellate Court over all causes of a
153-23 different character therein pending. <The Board shall not be
153-24 required to give any appeal bond in any cause arising hereunder.>
153-25 SECTION 10.07. Section 9, Article 21.49, Insurance Code, is
153-26 amended to read as follows:
153-27 Sec. 9. Appeals. Any person insured pursuant to this Act,
154-1 or his duly authorized representative, or any affected insurer who
154-2 may be aggrieved by an act, ruling or decision of the Association,
154-3 may, within 30 days after such act, ruling or decision, appeal to
154-4 the commissioner. In the event the Association is aggrieved by the
154-5 action of the commissioner with respect to any ruling, order, or
154-6 determination of the commissioner, it may, within 30 days after
154-7 such action, make a written request to the commissioner, for a
154-8 hearing thereon. The commissioner shall hear the Association, or
154-9 the appeal from an act, ruling or decision of the Association,
154-10 within 30 days after receipt of such request or appeal and shall
154-11 give not less than 10 days' written notice of the time and place of
154-12 hearing to the Association making such request or the person, or
154-13 his duly authorized representative, appealing from the act, ruling
154-14 or decision of the Association. A hearing on an act, ruling or
154-15 decision of the Association relating to the payment of, the amount
154-16 of, or the denial of a particular claim shall be held, at the
154-17 request of the claimant, in either the county in which the covered
154-18 property is located or Travis County. Within 30 days after the
154-19 hearing, the commissioner shall affirm, reverse or modify its
154-20 previous action or the act, ruling or decision appealed to the
154-21 commissioner. Pending such hearing and decision thereon, the
154-22 commissioner may suspend or postpone the effective date of its
154-23 previous rule or of the act, ruling or decision appealed to the
154-24 commissioner. The Association, or the person aggrieved by any
154-25 order or decision of the commissioner, may thereafter appeal to
154-26 either a District Court of Travis County, Texas, or a District
154-27 Court in the county in which the covered property is located. An
155-1 action brought under this section is subject to the procedures
155-2 established under Article 1.04 <1.04(f)> of this code.
155-3 SECTION 10.08. Section 7(b), Article 21.49-3, Insurance
155-4 Code, is amended to read as follows:
155-5 (b) In the event any person insured or applying for
155-6 insurance is aggrieved by the final action of the board of
155-7 directors of the association, the aggrieved party may, within 30
155-8 days after such action, make a written request to the commissioner
155-9 for a hearing thereon. The commissioner shall hear the appeal from
155-10 an act, ruling, or decision of the association, within 30 days
155-11 after receipt of such request or appeal and shall give not less
155-12 than 10 days' written notice of the time and place of hearing to
155-13 the person, or his duly authorized representative, appealing from
155-14 the act, ruling, or decision of the board of directors of the
155-15 association. Within 30 days after such hearing, the commissioner
155-16 shall affirm, reverse, or modify the act, ruling, or decision
155-17 appealed to the commissioner. Pending such hearing and decision
155-18 thereon, the commissioner may suspend or postpone the effective
155-19 date of the rule or of the act, ruling, or decision appealed. The
155-20 association, or the person aggrieved by any order or decision of
155-21 the commissioner, may thereafter appeal in accordance with Article
155-22 1.04 <1.04(f)> of this code.
155-23 SECTION 10.09. Section 13.09, State Purchasing and General
155-24 Services Act (Article 601b, Vernon's Texas Civil Statutes), is
155-25 amended to read as follows:
155-26 Sec. 13.09. Application. The state agencies subject to this
155-27 article are:
156-1 (1) the Texas Department of Mental Health and Mental
156-2 Retardation;
156-3 (2) the Texas Department of Human Services;
156-4 (3) the Texas Department of Criminal Justice;
156-5 (4) the Department of Agriculture;
156-6 (5) the Central Education Agency;
156-7 (6) the Texas Higher Education Coordinating Board;
156-8 (7) the State Department of Highways and Public
156-9 Transportation;
156-10 (8) the Texas Department of Insurance;
156-11 (9) the office of public insurance counsel; and
156-12 (10) <(8)> the commission.
156-13 ARTICLE 11. EFFECTIVE DATE; EMERGENCY
156-14 SECTION 11.01. This Act takes effect September 1, 1993.
156-15 SECTION 11.02. The importance of this legislation and the
156-16 crowded condition of the calendars in both houses create an
156-17 emergency and an imperative public necessity that the
156-18 constitutional rule requiring bills to be read on three several
156-19 days in each house be suspended, and this rule is hereby suspended.