1-1 By: Counts (Senate Sponsor - Parker) H.B. No. 1461
1-2 (In the Senate - Received from the House May 10, 1993;
1-3 May 11, 1993, read first time and referred to Committee on Economic
1-4 Development; May 22, 1993, reported adversely, with favorable
1-5 Committee Substitute by the following vote: Yeas 11, Nays 0;
1-6 May 22, 1993, sent to printer.)
1-7 COMMITTEE VOTE
1-8 Yea Nay PNV Absent
1-9 Parker x
1-10 Lucio x
1-11 Ellis x
1-12 Haley x
1-13 Harris of Dallas x
1-14 Harris of Tarrant x
1-15 Leedom x
1-16 Madla x
1-17 Rosson x
1-18 Shapiro x
1-19 Wentworth x
1-20 COMMITTEE SUBSTITUTE FOR H.B. No. 1461 By: Parker
1-21 A BILL TO BE ENTITLED
1-22 AN ACT
1-23 relating to insurance regulation and to the continuation, powers
1-24 and duties of the Texas Department of Insurance and the office of
1-25 public insurance counsel; providing administrative penalties;
1-26 making an appropriation.
1-27 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-28 ARTICLE 1. ORGANIZATION OF TEXAS DEPARTMENT OF INSURANCE;
1-29 FUNCTIONS OF COMMISSIONER; ELIMINATION OF STATE BOARD OF INSURANCE
1-30 SECTION 1.01. Article 1.02, Insurance Code, is amended to
1-31 read as follows:
1-32 Art. 1.02. Operation of Department<; Board>. (a) A
1-33 provision of this code or another insurance law, including an
1-34 enactment or reenactment of a provision of this code or another
1-35 insurance law by the 73rd Legislature, Regular Session, 1993, that
1-36 references the State Board of Insurance is not intended to conflict
1-37 with this article. A reference in this code or another insurance
1-38 law to the State Board of Insurance means the Commissioner of
1-39 Insurance or the Texas Department of Insurance, as consistent with
1-40 the respective powers and duties of the Commissioner and the
1-41 department under this article. <The State Board of Insurance is
1-42 composed of three members, all of whom shall be citizens of Texas.
1-43 They shall be appointed by the Governor, by and with the advice and
1-44 consent of the Senate of Texas. The term of office of each member
1-45 shall be as provided in this Code. Each member of the Board shall
1-46 be a person with at least ten (10) years of successful experience
1-47 in business, professional or governmental activities, or a total of
1-48 at least ten (10) years in any combination of two or more of such
1-49 activities. Each member shall be available at all reasonable times
1-50 for the discharge of the duties and functions delegated to the
1-51 members of the Board by law, but the members shall act as a unit,
1-52 and in no event shall the individual members divide or confine
1-53 their activities to special fields of insurance regulation or
1-54 attempt to administer the functions hereinafter assigned to the
1-55 Commissioner.>
1-56 (b) The powers, functions, authority, prerogatives, duties,
1-57 obligations, and responsibilities vested in the department shall be
1-58 exercised, performed, carried out, and administered by the
1-59 Commissioner as the chief executive and administrative officer of
1-60 the department in accordance with the pertinent laws of this state
1-61 and the rules and regulations for uniform application adopted by
1-62 the Commissioner <Board and subject to the general supervision and
1-63 direction of the Board. The duties of the State Board of Insurance
1-64 shall be primarily in a supervisory capacity, and the carrying out
1-65 and administering the details of the Insurance Code, other
1-66 insurance laws of this state, and other laws providing jurisdiction
1-67 in or applicable to the department or the Commissioner shall be
1-68 primarily the duty and responsibility of the Commissioner acting
2-1 under the general supervision and direction of the Board>.
2-2 (c) <On February 10th of each odd-numbered year, the
2-3 Governor shall appoint from among the membership of the Board a
2-4 Chairman who shall be known and designated as the Chairman of the
2-5 State Board of Insurance.>
2-6 <(d)> The Texas Department of Insurance is subject to
2-7 Chapter 325, Government Code (Texas Sunset Act). Unless continued
2-8 in existence as provided by that chapter, the department is
2-9 abolished September 1, 2005 <1993>.
2-10 <(e) Appointments to the board shall be made without regard
2-11 to the race, creed, sex, religion, or national origin of the
2-12 appointees. In making appointments under this section, the
2-13 governor shall attempt to appoint members of different minority
2-14 groups including females, African-Americans, Hispanic-Americans,
2-15 Native Americans, and Asian-Americans.>
2-16 <(f) In addition to grounds provided by other applicable law
2-17 providing for removal from office, it is a ground for removal from
2-18 the board that a member:>
2-19 <(1) does not have at the time of appointment the
2-20 qualifications required by this article for appointment to the
2-21 board;>
2-22 <(2) does not maintain during the service on the board
2-23 the qualifications required by this article for appointment to the
2-24 board; or>
2-25 <(3) violates a prohibition established by Article
2-26 1.06A of this code.>
2-27 <(g) The validity of an action of the board is not affected
2-28 by the fact that it was taken when a ground for removal of a member
2-29 of the board existed.>
2-30 (d) <(h)> The Commissioner or the Commissioner's designee
2-31 <board> shall prepare and maintain a written policy statement
2-32 <plan> to ensure <assure> implementation of a program of equal
2-33 employment opportunity under which <whereby> all personnel
2-34 transactions are made without regard to race, color, disability,
2-35 sex, religion, age, or national origin. The policy statement
2-36 <plan> must include:
2-37 (1) personnel policies, including policies relating to
2-38 <a comprehensive analysis of all employees by race, sex, ethnic
2-39 origin, class of position, and salary or wage;>
2-40 <(2) plans for> recruitment, evaluation, selection,
2-41 appointment, training, and promotion of<, and other> personnel that
2-42 are in compliance with the Commission on Human Rights Act (Article
2-43 5221k, Vernon's Texas Civil Statutes) <policies>;
2-44 (2) a comprehensive analysis of the department work
2-45 force that meets federal and state guidelines;
2-46 (3) procedures by which a determination can be made of
2-47 significant underuse in the department work force of all persons
2-48 for whom federal or state guidelines encourage a more equitable
2-49 balance; and
2-50 (4) reasonable methods to appropriately address those
2-51 areas of significant underuse
2-52 <(3) steps reasonably designed to overcome any
2-53 identified underutilization of minorities and women in the
2-54 department's work force; and>
2-55 <(4) objectives and goals, timetables for the
2-56 achievement of those objectives and goals, and assignments of
2-57 responsibility for their achievement>.
2-58 (e) A policy statement prepared under Subsection (d) of this
2-59 article must cover an annual period, be updated annually, be
2-60 reviewed by the Commission on Human Rights for compliance with
2-61 Subsection (d)(1) of this article, and be filed with the governor's
2-62 office.
2-63 (f) The governor's office shall deliver a biennial report to
2-64 the legislature based on the information received under Subsection
2-65 (e) of this article. The report may be made separately or as a
2-66 part of other biennial reports made to the legislature.
2-67 (g) The Commissioner shall develop and implement policies
2-68 that clearly define the respective responsibilities of the
2-69 Commissioner and the staff of the department.
2-70 (h) The Commissioner shall provide to department employees,
3-1 as often as necessary, information regarding their qualification
3-2 for office or employment under this code and their responsibilities
3-3 under applicable laws relating to standards of conduct for state
3-4 employees.
3-5 <(i) The plan required by Section (h) of this article shall
3-6 be filed with the governor's office within 60 days after the
3-7 effective date of that section, cover an annual period, and be
3-8 updated at least annually. Progress reports shall be submitted to
3-9 the governor's office within 30 days before November 1 and April 1
3-10 of each year and shall include the steps the department has taken
3-11 within the reporting period to comply with those requirements.>
3-12 SECTION 1.02. Article 1.01A, Insurance Code, is amended to
3-13 read as follows:
3-14 Art. 1.01A. Creation and Structure of the Texas Department
3-15 of Insurance. (a) In this code and other insurance laws:
3-16 (1) <"Board" means the three-member State Board of
3-17 Insurance.>
3-18 <(2)> "Department" means the Texas Department of
3-19 Insurance.
3-20 (2) <(3)> "Commissioner" means the Commissioner of
3-21 Insurance appointed under Article 1.09 of this code.
3-22 (b) The Texas Department of Insurance is created to regulate
3-23 the business of insurance in this state. The department is
3-24 composed of <the board,> the Commissioner<,> and other officers and
3-25 employees required to efficiently implement the purpose of this
3-26 code, other insurance laws of this state, and other laws providing
3-27 jurisdiction in or applicable to the department<, board,> or
3-28 Commissioner.
3-29 (c) Except as otherwise provided by law, all references in
3-30 this code and other statutes of this state to the board, the Board
3-31 of Insurance Commissioners, the State Board of Insurance, or
3-32 individual commissioners mean the department<, the board,> or the
3-33 Commissioner as consistent with the respective duties of the
3-34 Commissioner or the department <those persons or entities> under
3-35 this code and other laws relating to the business of insurance in
3-36 this state.
3-37 SECTION 1.03. Chapter 1, Insurance Code, is amended by
3-38 amending Article 1.04 and adding Articles 1.03A, 1.04A, 1.04B, and
3-39 1.04C to read as follows:
3-40 Art. 1.03A. RULES FOR GENERAL APPLICATION. The Commissioner
3-41 may adopt <1.04. ><Duties and Organization of the State Board of
3-42 Insurance><. (a) The State Board of Insurance shall operate and
3-43 function as one body or a unit and a majority vote of the members
3-44 of the Board shall be necessary to transact any of its official
3-45 business. The Board shall maintain one official set of records of
3-46 its proceedings and actions.>
3-47 <(b) The State Board of Insurance shall determine policy for
3-48 the department, rules, rates, forms, and appeals as provided by
3-49 law, and shall assume other duties that are expressly assigned to
3-50 the Board by law, but otherwise the Board shall execute its duties
3-51 through the Commissioner as provided by law, in accordance with the
3-52 laws of this state and the rules and regulations for uniform
3-53 application as made by the Board.>
3-54 <(c) All> rules and regulations for the conduct and
3-55 execution of the duties and functions of the department only as
3-56 explicitly authorized by a statute. Rules and regulations adopted
3-57 in accordance with this subsection must <shall> be <rules> for
3-58 general and uniform application and shall be <adopted and>
3-59 published by the Commissioner <Board> on the basis of a systematic
3-60 organization of such rules by their subject matter and content.
3-61 <The Commissioner may make recommendations to the Board regarding
3-62 such rules and regulations, including amendments, changes and
3-63 additions.> Such published rules shall be kept current and shall
3-64 be available in a form convenient to all interested persons.
3-65 Art. 1.04. APPEAL OF DECISION OF COMMISSIONER.
3-66 (a) <(d) Any person or organization, private or public, that is
3-67 affected by any ruling or action of the Commissioner shall have the
3-68 right to have such ruling or action reviewed by the State Board of
3-69 Insurance by making an application to the Board. Such application
3-70 shall state the identities of the parties, the ruling or action
4-1 complained of, the interests of the parties in such ruling, the
4-2 grounds of such objections, the action sought of the Board and the
4-3 reasons and grounds for such action by the Board. The original
4-4 shall be filed with the Chief Clerk of the Board together with a
4-5 certification that a true and correct copy of such application has
4-6 been filed with the Commissioner. Within thirty (30) days after
4-7 the application is filed, and after ten (10) days written notice to
4-8 all parties of record, the Board shall review the action complained
4-9 of in a public hearing and render its decision at the earliest
4-10 possible date thereafter. The Board shall make such other rules
4-11 and regulations with regard to such applications and their
4-12 consideration as it deems advisable, not inconsistent with this
4-13 Article. Said application shall have precedence over all other
4-14 business of a different nature pending before the Board.>
4-15 <In the public hearing, any and all evidence and matters
4-16 pertinent to the appeal may be submitted to the Board, whether
4-17 included in the application or not.>
4-18 <(f)> If any insurance company or other party at interest be
4-19 dissatisfied with any ruling, action, decision, regulation, order,
4-20 rate, rule, form, act, or administrative ruling adopted by the
4-21 Commissioner <State Board of Insurance>, such dissatisfied company
4-22 or party at interest after failing to get relief from the
4-23 Commissioner <State Board of Insurance>, may file a petition
4-24 setting forth the particular objection to such ruling, action,
4-25 decision, regulation, order, rate, rule, form, act, or
4-26 administrative ruling, or to either or all of them, in the District
4-27 Court of Travis County, Texas, and not elsewhere, against the
4-28 Commissioner <State Board of Insurance> as defendant. Judicial
4-29 review of a ruling, action, decision, regulation, order, rate,
4-30 rule, form, act, or administrative ruling of the Commissioner
4-31 <Board> is subject to the substantial evidence rule and shall be
4-32 conducted under the Administrative Procedure and Texas Register Act
4-33 (Article 6252-13a, Vernon's Texas Civil Statutes). The filing of a
4-34 petition for judicial review of a ruling, action, decision,
4-35 regulation, order, rate, rule, form, act, or administrative ruling
4-36 of the Commissioner <Board> under this subsection does not vacate a
4-37 decision of the Commissioner <Board>. After notice and hearing,
4-38 the court may vacate the decision of the Commissioner <Board> if
4-39 the court finds it would serve the interest of justice to do so.
4-40 Any party to the action may appeal to the Appellate Court having
4-41 jurisdiction of the cause and the appeal shall be at once
4-42 returnable to the Appellate Court having jurisdiction of the cause
4-43 and the action so appealed shall have precedence in the Appellate
4-44 Court over all causes of a different character therein pending.
4-45 (b) The Commissioner <Board> is not required to give any
4-46 appeal bond in any cause arising under this article <hereunder>.
4-47 Art. 1.04A. SALARIED EXAMINERS. <(g)> In making
4-48 examinations of any insurance organization as provided by law, the
4-49 department may use its own salaried examiners or may use the
4-50 services of persons or firms qualified to perform such examinations
4-51 or assist in the performance of such examinations. Such
4-52 examination shall cover the period of time that the department
4-53 requests. In the event the department does not specify a longer
4-54 period of time, such examination shall be from the time of the last
4-55 examination theretofore made by the department to December 31st of
4-56 the year preceding the examination then being made. All fees paid
4-57 to those persons or firms whose services are used shall be paid at
4-58 the usual and customary rates charged for the performance of those
4-59 services, subject to the right of the Commissioner <Board> to
4-60 disapprove for payment any fees that are excessive in relation to
4-61 the services actually performed. Such payment shall be made by the
4-62 insurance organization being examined and all such examination fees
4-63 so paid shall be allowed as a credit on the amount of premium or
4-64 other taxes to be paid by any such insurance organization for the
4-65 taxable year during which examination fees are paid just as
4-66 examination fees are credited when the department uses its own
4-67 salaried examiners.
4-68 Art. 1.04B. POLICY HOLDER COMPLAINTS. <(h)> The department
4-69 shall establish a program to facilitate resolution of policy holder
4-70 complaints.
5-1 Art. 1.04C. PUBLIC ACCESS. (a) The Commissioner shall
5-2 prepare and maintain a written plan that describes how a person who
5-3 does not speak English can be provided reasonable access to the
5-4 department's programs. The department shall also comply with
5-5 federal and state laws for program and facility accessibility.
5-6 (b) The Commissioner shall develop and implement policies
5-7 that provide the public with a reasonable opportunity to appear
5-8 before the Commissioner and to speak on any issue under the
5-9 jurisdiction of the Commissioner.
5-10 SECTION 1.04. Chapter 1, Insurance Code, is amended by
5-11 amending Articles 1.06A and 1.06B, and adding Article 1.06AA to
5-12 read as follows:
5-13 Art. 1.06A. Conflict of Interest; Trade Associations.
5-14 (a) An <A member of the State Board of Insurance, the
5-15 commissioner, or an employee of the department may not be an>
5-16 officer, employee, or paid consultant of a trade association in the
5-17 field of insurance may not be commissioner or an employee of the
5-18 department who is exempt from the state's position classification
5-19 plan or is compensated at or above the amount prescribed by the
5-20 General Appropriations Act for step 1, salary group 17, of the
5-21 position classification salary schedule <industry>.
5-22 (b) A person who is the spouse of an officer, manager, or
5-23 paid consultant of a trade association in the field of insurance
5-24 may not be commissioner or a department employee who is exempt from
5-25 the state's position classification plan or is compensated at or
5-26 above the amount prescribed by the General Appropriations Act for
5-27 step 1, salary group 17, of the position classification salary
5-28 schedule.
5-29 (c) For purposes of this article, a trade association is a
5-30 nonprofit, cooperative, and voluntarily joined association of
5-31 business or professional competitors designed to assist its members
5-32 and its industry or profession in dealing with mutual business or
5-33 professional problems and in promoting their common interest.
5-34 Art. 1.06AA. CONFLICT OF INTEREST; EXEMPT EMPLOYEES. A
5-35 <Any> person <whose employment commences after the effective date
5-36 of this Act> may not be <appointed as a member of the State Board
5-37 of Insurance or> employed in an exempt salary position as defined
5-38 by the General Appropriations Act who at the time of <appointment
5-39 or> employment resides in the same household as a person who is an
5-40 officer, managerial employee, or paid consultant in the insurance
5-41 industry.
5-42 Art. 1.06B. Lobbying Activities. A person may not serve as
5-43 commissioner or act as the general counsel to the commissioner if
5-44 the person <who> is required to register as a lobbyist under
5-45 Chapter 305, Government Code, because of the person's <by virtue of
5-46 his> activities for compensation <in or> on behalf of a profession
5-47 related to the operation of the department <may not serve as a
5-48 member of the board or act as the general counsel to the board>.
5-49 SECTION 1.05. Article 1.09, Insurance Code, is amended by
5-50 amending Subsections (a), (b), (f), (g), and (h) and by adding
5-51 Subsections (i), (j), and (k) to read as follows:
5-52 (a) The Commissioner of Insurance is <Board shall appoint a
5-53 commissioner of insurance, who shall be> the department's chief
5-54 executive and administrative officer charged with the primary
5-55 responsibility of administering, enforcing, and carrying out the
5-56 provisions of the Insurance Code, other insurance laws of this
5-57 state, and other laws providing jurisdiction in or applicable to
5-58 the department or commissioner, except for responsibilities
5-59 relating to the reporting, collection, enforcement, and
5-60 administration of taxes and certain fees as described under this
5-61 code or another insurance law of this state that are assigned to
5-62 the comptroller of public accounts <under the general supervision
5-63 and direction of the Board. He shall hold his position at the
5-64 pleasure of the Board and may be discharged at any time>.
5-65 (b) The governor, with the advice and consent of the senate,
5-66 shall appoint the commissioner for a two-year term ending on
5-67 February 1 of each odd-numbered year. The commissioner must
5-68 <Commissioner of Insurance shall be a resident citizen of Texas,
5-69 for at least one (1) year immediately prior to his/her appointment
5-70 and shall> be a competent and experienced administrator, <who
6-1 shall> be well informed and qualified in the field of insurance and
6-2 insurance regulation,<. He/she shall> have had at least 10 <ten
6-3 (10)> years of <administrative or professional> experience as an
6-4 executive in the administration of business or government, or as a
6-5 practicing attorney or certified public accountant, and at least
6-6 five years of that <shall have had training and> experience in the
6-7 field of insurance or insurance regulation. The appointment of the
6-8 commissioner shall be made without regard to the race, color,
6-9 disability, sex, religion, age, or national origin of the
6-10 appointee. No former or present member of the State Board of
6-11 Insurance shall be appointed commissioner <Commissioner of
6-12 Insurance>. A person is not eligible for appointment as
6-13 commissioner if the person, the person's spouse, or any person that
6-14 resides in the same household as the person:
6-15 (1) is registered, certified, or licensed by the
6-16 department;
6-17 (2) is employed by or participates in the management
6-18 of a business entity or other organization regulated by the
6-19 department or receiving funds from the department;
6-20 (3) owns or controls, directly or indirectly, more
6-21 than a 10 percent interest in a business entity or other
6-22 organization regulated by the department or receiving funds from
6-23 the department; or
6-24 (4) uses or receives a substantial amount of tangible
6-25 goods, services, or funds from the department, other than
6-26 compensation or reimbursement authorized by law.
6-27 (f) The commissioner shall appoint such deputies,
6-28 assistants, and other personnel as are necessary to carry out the
6-29 duties and functions devolving upon the commissioner <him> and the
6-30 department under the Insurance Code, other insurance laws of this
6-31 state, and other laws providing jurisdiction in or applicable to
6-32 the department or the commissioner, subject to the authorization by
6-33 the Legislature in its appropriations bills or otherwise<, and to
6-34 the rules of the Board>. A person appointed under this subsection
6-35 must have the professional, administrative, and insurance
6-36 experience necessary to qualify the person for the particular
6-37 position to which the person is appointed. An associate or deputy
6-38 commissioner, or a person holding an equivalent position, must have
6-39 at least five years of the experience required for appointment as
6-40 Commissioner of Insurance under Subsection (b) of this article and
6-41 at least two years of this experience must be in work related to
6-42 the position to be held.
6-43 (g) The commissioner or the commissioner's <his> designee
6-44 shall develop an intra-agency <intraagency> career ladder program.
6-45 The program shall require intra-agency posting of all nonentry
6-46 level positions concurrently with any public posting<, one part of
6-47 which shall be the intraagency posting of each nonentry level
6-48 classified position for at least five days before the position is
6-49 filled. Notwithstanding any other law to the contrary, a posting
6-50 of a position is not required in the case of:>
6-51 <(1) a lateral intraagency transfer; or>
6-52 <(2) the promotion of a present employee to a position
6-53 in a higher pay group because of the employee's ability to assume
6-54 greater job responsibilities or additional duties or the employee's
6-55 greater expertise rather than for the mere purpose of filling an
6-56 existing vacancy>.
6-57 (h) The commissioner or the commissioner's <his> designee
6-58 shall develop a system of annual performance evaluations <reviews
6-59 that evaluate both the quality and quantity of the job tasks
6-60 performed>. All merit pay for department employees must be based
6-61 on the system established under this subsection <section>.
6-62 (i) It is a ground for removal from office if the
6-63 commissioner:
6-64 (1) does not have at the time of appointment the
6-65 qualifications required by Subsection (b) of this section;
6-66 (2) does not maintain during service as commissioner
6-67 the qualifications required by Subsection (b) of this section;
6-68 (3) violates a prohibition established by Subsection
6-69 (b) of this section or Article 1.06, 1.06A, or 1.06B of this code;
6-70 or
7-1 (4) cannot discharge the commissioner's duties for a
7-2 substantial part of the term for which the commissioner is
7-3 appointed because of illness or disability.
7-4 (j) The validity of an action of the commissioner or the
7-5 department is not affected by the fact that it is taken when a
7-6 ground for removal of the commissioner exists.
7-7 (k) If a court determines that an appointee does not satisfy
7-8 the experience requirements of Subsection (b) of this article, the
7-9 time the appointee serves as Commissioner of Insurance may not be
7-10 counted towards the required experience and the appointment
7-11 terminates on the date of the determination. Not later than the
7-12 first anniversary of the date on which an appointee assumes the
7-13 duties of Commissioner of Insurance, a member of the legislature or
7-14 any insurer holding a certificate of authority issued by the
7-15 department may contest the qualifications of the appointee in a
7-16 proceeding brought in a district court in Travis County. If a
7-17 court makes a finding that an appointee does not satisfy the
7-18 experience requirements, the appointee may not be appointed to
7-19 serve as Commissioner of Insurance after the date of that finding.
7-20 SECTION 1.06. Article 1.09-1(b), Insurance Code, is amended
7-21 to read as follows:
7-22 (b) <In all rate hearings and policy form proceedings before
7-23 the Board, except for those rate hearings and proceedings as
7-24 provided in Subsections (g) and (h), Article 1.35A, of this code,
7-25 the Attorney General may intervene in the public interest.> The
7-26 Commissioner <Board> shall have and exercise the power of subpoena
7-27 and subpoena duces tecum for witnesses, documents, and other
7-28 evidence to the extent of the jurisdiction of this state for such
7-29 hearings and proceedings on its own motion <or upon application of
7-30 the Attorney General>.
7-31 SECTION 1.07. Article 1.10, Insurance Code, is amended to
7-32 read as follows:
7-33 Art. 1.10. DUTIES OF THE DEPARTMENT <BOARD>. In addition to
7-34 the other duties required of the Department, the Department <Board,
7-35 it> shall perform duties as follows:
7-36 1. Shall Execute the Laws. See that all laws
7-37 respecting insurance and insurance companies are faithfully
7-38 executed.
7-39 2. File Articles of Incorporation and Other Papers.
7-40 File and preserve in its office all acts or articles of
7-41 incorporation of insurance companies and all other papers required
7-42 by law to be deposited with the Department <Board> and, upon
7-43 application of any party interested therein, furnish certified
7-44 copies thereof upon payment of the fees prescribed by law.
7-45 3. Shall Calculate Reserve. For every company
7-46 transacting any kind of insurance business in this State, for which
7-47 no basis is prescribed by law, the Department <Board> shall
7-48 calculate the reinsurance reserve upon the same basis prescribed in
7-49 Article 6.01 of this code as to companies transacting fire
7-50 insurance business.
7-51 4. To Calculate Re-insurance Reserve. On the
7-52 thirty-first day of December of each and every year, or as soon
7-53 thereafter as may be practicable, the Department <Board> shall have
7-54 calculated in the Department <its office> the re-insurance reserve
7-55 for all unexpired risks of all insurance companies organized under
7-56 the laws of this state, or transacting business in this state,
7-57 transacting any kind of insurance other than life, fire, marine,
7-58 inland, lightning or tornado insurance, which calculation shall be
7-59 in accordance with the provisions of Paragraph 3 hereof.
7-60 5. When a Company's Surplus is Impaired. No
7-61 impairment of the capital stock of a stock company shall be
7-62 permitted. No impairment of the surplus of a stock company, or of
7-63 the minimum required aggregate surplus of a mutual, Lloyd's, or
7-64 reciprocal insurer, shall be permitted in excess of that provided
7-65 by this section. Having charged against a company other than a
7-66 life insurance company, the reinsurance reserve, as prescribed by
7-67 the laws of this State, and adding thereto all other debts and
7-68 claims against the company, the Commissioner shall, (i) if it is
7-69 determined that the surplus required by Article 2.02 or 2.20 of
7-70 this code of a stock company doing the kind or kinds of insurance
8-1 business set out in its Certificate of Authority is impaired to the
8-2 extent of more than fifty (50%) per cent of the required surplus
8-3 for a capital stock insurance company, or is less than the minimum
8-4 level of surplus required by Commissioner <Board> promulgated
8-5 risk-based capital and surplus regulations, or (ii) if it is
8-6 determined that the required aggregate surplus of a reciprocal or
8-7 mutual company, or the required aggregate of guaranty fund and
8-8 surplus of a Lloyd's company, other than a life insurance company,
8-9 doing the kind or kinds of insurance business set out in its
8-10 Certificate of Authority is impaired to the extent of more than
8-11 twenty-five per cent (25%) of the required aggregate surplus, or is
8-12 less than the minimum level of surplus required by Commissioner
8-13 <Board> promulgated risk-based capital and surplus regulations, the
8-14 Commissioner shall order the company to remedy the impairment of
8-15 surplus to acceptable levels specified by the Commissioner or to
8-16 cease to do business within this State. The Commissioner shall
8-17 thereupon immediately institute such proceedings as may be
8-18 necessary to determine what further actions shall be taken in the
8-19 case.
8-20 6. Shall Publish Results of Investigation. The
8-21 Department <Board> shall publish the result of an <its> examination
8-22 of the affairs of any company whenever the Commissioner <Board>
8-23 deems it for the interest of the public.
8-24 7. May Order Sanctions. (a) After notice and
8-25 opportunity for a hearing, the Commissioner <State Board of
8-26 Insurance> may cancel or revoke any permit, license, certificate of
8-27 authority, certificate of registration, or other authorization
8-28 issued or existing under its authority or the authorization of this
8-29 Code if the holder or possessor of same is found to be in violation
8-30 of, or to have failed to comply with, a specific provision of the
8-31 Code or any duly promulgated rule or regulation of the Commissioner
8-32 <State Board of Insurance>. In lieu of such cancellation or
8-33 revocation, the Commissioner <State Board of Insurance> may order
8-34 one or more of the following sanctions if it determines from the
8-35 facts that such would be more fair, reasonable, or equitable:
8-36 (1) Suspend such authorization for a time
8-37 certain, not to exceed one year;
8-38 (2) Order the holder or possessor of such
8-39 authorization to cease and desist from the specified activity
8-40 determined to be in violation of specific provisions of this Code
8-41 or rules and regulations of the Commissioner <State Board of
8-42 Insurance> or from failure to comply with such provisions of this
8-43 Code or such rules and regulations;
8-44 (3) Direct the holder or possessor of such
8-45 authorization to pay an administrative penalty in accordance with
8-46 Article 1.10E of this code <remit within a specified time, not to
8-47 exceed sixty (60) days, a specified monetary forfeiture not to
8-48 exceed Twenty-five Thousand ($25,000) Dollars for such violation or
8-49 failure to comply>; or
8-50 (4) Direct the holder or possessor of such
8-51 authorization to make complete restitution to all Texas residents,
8-52 Texas insureds, and entities operating in Texas harmed by the
8-53 violation or failure to comply.
8-54 (b) Restitution under Subdivision (4) of
8-55 Subsection (a) must be made in the form and amount and within the
8-56 period determined by the Commissioner <State Board of Insurance>.
8-57 (c) <Any monetary forfeiture paid as a result of
8-58 an order issued pursuant to Subdivision (3) of Subsection (a) shall
8-59 be deposited with the State Treasurer to the credit of the General
8-60 Revenue Fund.>
8-61 <(d)> If it is found after hearing that any
8-62 holder or possessor has failed to comply with an order issued
8-63 pursuant to Subsection (a), the Commissioner <State Board of
8-64 Insurance> shall, unless its order is lawfully stayed, cancel all
8-65 authorizations of such holder or possessor.
8-66 (d) <(e)> The Commissioner may <State Board of
8-67 Insurance shall have authority to> informally dispose of any matter
8-68 specified in this section by consent order, agreed settlement,
8-69 stipulations, or default. An informal disposition or consent order
8-70 may include a provision under which the holder or possessor agrees
9-1 to a sanction under this section with the express reservation that:
9-2 (1) the holder or possessor is not
9-3 admitting any violation of this code or of a rule or regulation;
9-4 and
9-5 (2) the existence of a violation is in
9-6 dispute.
9-7 (e) <(f)> The Commissioner <Board> shall give
9-8 notice of any action taken pursuant to this section to the
9-9 Insurance Commissioner or other similar officer of every state.
9-10 (f) <(g)> The authority vested in the
9-11 Commissioner <State Board of Insurance> in this Article shall be in
9-12 addition to and not in lieu of any other authority to enforce or
9-13 cause to be enforced any sanctions, penalties, fines, forfeitures,
9-14 denials, suspensions, or revocations otherwise authorized by law,
9-15 and shall be applicable to every form of authorization to any
9-16 person or entity holding or possessing the same.
9-17 (g) <(h)> This section applies to all companies
9-18 regulated by the Commissioner, <State Board of Insurance> including
9-19 but not limited to domestic and foreign, stock and mutual life,
9-20 health, and accident insurance companies; domestic and foreign,
9-21 stock and mutual, fire and casualty insurance companies; Mexican
9-22 casualty companies; domestic and foreign Lloyd's plan insurers;
9-23 domestic and foreign reciprocal or interinsurance exchanges;
9-24 domestic and foreign fraternal benefit societies; domestic and
9-25 foreign title insurance companies; attorney's title insurance
9-26 companies; stipulated premium insurance companies; nonprofit legal
9-27 service corporations; health maintenance organizations; statewide
9-28 mutual assessment companies; local mutual aid associations; local
9-29 mutual burial associations; exempt associations under Article 14.17
9-30 of this Code; nonprofit hospital, medical, or dental service
9-31 corporations including but not limited to companies subject to
9-32 Chapter 20 of this Code; county mutual insurance companies; and
9-33 farm mutual insurance companies. Also, this section applies to all
9-34 agents of those companies and generally to all other individuals,
9-35 corporations, associations, partnerships, and other natural or
9-36 artificial persons engaged in the business of insurance or that
9-37 hold a permit, certificate, registration, license, or other
9-38 authority under this Code or that are regulated by the Commissioner
9-39 <State Board of Insurance>.
9-40 8. Report to Attorney General. The Department <It>
9-41 shall report promptly and in detail to the Attorney General any
9-42 violation of law relative to insurance companies or the business of
9-43 insurance.
9-44 9. Shall Furnish Blanks. The Department <It> shall
9-45 furnish to the companies required to report to the Department
9-46 <Board> the necessary blank forms for the statements required.
9-47 10. Shall Keep Records. The Department <It> shall
9-48 preserve in a permanent form a full record of the Department's
9-49 <its> proceedings and a concise statement of the condition of each
9-50 company or agency visited or examined.
9-51 11. Give Certified Copies. At the request of any
9-52 person, and on the payment of the legal fee, the Department <Board>
9-53 shall give certified copies of any record or papers in its office,
9-54 when the Commissioner <it> deems it not prejudicial to public
9-55 interest and shall give such other certificates as are provided for
9-56 by law. The fees collected by the Department <Board> under this
9-57 section shall be deposited in the State Treasury to the credit of
9-58 the Texas Department <State Board> of Insurance operating fund.
9-59 12. Report to Governor and Legislature. The
9-60 Department shall file annually with the Governor and the presiding
9-61 officer of each house of the Legislature a complete and detailed
9-62 written report accounting for all funds received and disbursed by
9-63 the Department during the preceding fiscal year. The annual report
9-64 must be in the form and reported in the time provided by the
9-65 General Appropriations Act. The report shall also contain the
9-66 Commissioner's <It shall report annually to the Governor the
9-67 receipts and expenses of its department for the year, its> official
9-68 acts, the condition of companies doing business in this State, and
9-69 such other information as will exhibit the affairs of the
9-70 Department <said department>. <Upon specific request by the
10-1 Governor, the Board shall report the names and compensations of its
10-2 clerks.>
10-3 13. Send Copies of Reports To. The Department <Board>
10-4 shall send a copy of the <its> annual report to the Insurance
10-5 Commissioner or other similar officer of every state and, on
10-6 request, shall send a copy to each company doing business in Texas.
10-7 14. Report Laws to Other States. On request, the
10-8 Department <it> shall communicate to the Insurance Commissioner or
10-9 other similar officer of any other state, in which the substantial
10-10 provisions of the law of this State relative to insurance have
10-11 been, or shall be, enacted, any facts which by law it is his duty
10-12 to ascertain respecting the companies of this State doing business
10-13 within such other state.
10-14 15. See That No Company Does Business. The
10-15 Commissioner <It> shall see that no company is permitted to
10-16 transact the business of life insurance in this State whose charter
10-17 authorizes it to do a fire, marine, lightning, tornado, or inland
10-18 insurance business, and that no company authorized to do a life
10-19 insurance business in this State be permitted to take fire, marine
10-20 or inland risks.
10-21 16. Admit Mutual Companies. The Commissioner <Board>
10-22 shall admit into this State mutual insurance companies engaged in
10-23 cyclone, tornado, hail and storm insurance which are organized
10-24 under the laws of other states and which have Two Million
10-25 ($2,000,000.00) Dollars assets in excess of liabilities.
10-26 17. Voluntary Deposits. (a) In the event any
10-27 insurance company organized and doing business under the provisions
10-28 of this Code shall be required by any other state, country or
10-29 province as a requirement for permission to do an insurance
10-30 business therein to make or maintain a deposit with an officer of
10-31 any state, country, or province, such company, at its discretion,
10-32 may voluntarily deposit with the State Treasurer such securities as
10-33 may be approved by the Commissioner of Insurance to be of the type
10-34 and character authorized by law to be legal investments for such
10-35 company, or cash, in any amount sufficient to enable it to meet
10-36 such requirements. The State Treasurer is hereby authorized and
10-37 directed to receive such deposit and hold it exclusively for the
10-38 protection of all policyholders or creditors of the company
10-39 wherever they may be located, or for the protection of the
10-40 policyholders or creditors of a particular state, country or
10-41 province, as may be designated by such company at the time of
10-42 making such deposit. The company may, at its option, withdraw such
10-43 deposit or any part thereof, first having deposited with the
10-44 Treasurer, in lieu thereof, other securities of like class and of
10-45 equal amount and value to those withdrawn, which withdrawal and
10-46 substitution must be approved by the Commissioner of Insurance.
10-47 The proper officer of each insurance company making such deposit
10-48 shall be permitted at all reasonable times to examine such
10-49 securities and to detach coupons therefrom, and to collect interest
10-50 thereon, under such reasonable rules and regulations as may be
10-51 prescribed by the State Treasurer and the Commissioner of
10-52 Insurance. Any deposit so made for the protection of policyholders
10-53 or creditors of a particular state, country or province shall not
10-54 be withdrawn, except by substitution as provided above, by the
10-55 company, except upon filing with the Commissioner of Insurance
10-56 evidence satisfactory to him that the company has withdrawn from
10-57 business, and has no unsecured liabilities outstanding or potential
10-58 policyholder liabilities or obligations in such other state,
10-59 country or province requiring such deposit, and upon the filing of
10-60 such evidence the company may withdraw such deposit at any time
10-61 upon the approval of the Commissioner of Insurance. Any deposit so
10-62 made for the protection of all policyholders or creditors wherever
10-63 they may be located shall not be withdrawn, except by substitution
10-64 as provided above, by the company except upon filing with the
10-65 Commissioner of Insurance evidence satisfactory to him that the
10-66 company does not have any unsecured liabilities outstanding or
10-67 potential policy liabilities or obligations anywhere, and upon
10-68 filing such evidence the company may withdraw such deposit upon the
10-69 approval of the Commissioner of Insurance. For the purpose of
10-70 state, county and municipal taxation, the situs of any securities
11-1 deposited with the State Treasurer hereunder shall be in the city
11-2 and county where the principal business office of such company is
11-3 fixed by its charter.
11-4 (b) Any voluntary deposit <now> held by the
11-5 State Treasurer or the Department <State Board of Insurance>
11-6 heretofore made by any insurance company in this State, and which
11-7 deposit was made for the purpose of gaining admission to another
11-8 state, may be considered, at the option of such company, to be
11-9 hereinafter held under the provisions of this Act.
11-10 (c) When two or more companies merge or
11-11 consolidate or enter a total reinsurance contract by which the
11-12 ceding company is dissolved and its assets acquired and liabilities
11-13 assumed by the surviving company, and the companies have on deposit
11-14 with the State Treasurer two or more deposits made for identical
11-15 purposes under this section <either Section 17 of Article 1.10 of
11-16 the Texas Insurance Code, as amended,> or Article 4739, Revised
11-17 <Civil> Statutes <of Texas (1925)>, as amended, and now repealed,
11-18 all such deposits, except the deposit of greatest amount and value,
11-19 may be withdrawn by the new surviving or reinsuring company, upon
11-20 proper showing of duplication of such deposits and that the company
11-21 is the owner thereof.
11-22 (d) Any company which has made a deposit or
11-23 deposits under this section <Article 1.10, Section 17, Texas
11-24 Insurance Code, as amended,> or Article 4739, Revised <Civil>
11-25 Statutes <of Texas (1925)>, as amended and now repealed, shall be
11-26 entitled to a return of such deposits upon proper application
11-27 therefor and a showing before the Commissioner that such deposit or
11-28 deposits are no longer required under the laws of any state,
11-29 country or province in which such company sought or gained
11-30 admission to do business upon the strength of a certificate of such
11-31 deposit <by the State Board of Insurance or its predecessor>.
11-32 (e) Upon being furnished a certified copy of the
11-33 Commissioner's order issued under Subsection (c) or (d) above, the
11-34 Treasurer of the State of Texas shall release, transfer and deliver
11-35 such deposit or deposits to the owner as directed in said order.
11-36 18. Complaint File. The Department <State Board of
11-37 Insurance> shall keep <maintain> an information file about
11-38 <relating to> each <written> complaint <that is> filed with the
11-39 Department concerning an activity that is regulated by the
11-40 Department or Commissioner <board concerning an activity that is
11-41 regulated by the board>.
11-42 19. Notice of Complaint Status. If a written
11-43 complaint is filed with the Department, the Department, at least
11-44 quarterly and until final disposition of the complaint, shall
11-45 notify the parties to the complaint of the status of the complaint
11-46 unless the notice would jeopardize an undercover investigation
11-47 <State Board of Insurance relating to an activity that is regulated
11-48 by the board, the board, at least quarterly and until final
11-49 disposition of the complaint, shall notify the person making the
11-50 complaint and the person complained against of the status of the
11-51 complaint unless:>
11-52 <(A) the complaint relates to an entity in
11-53 supervision, conservatorship, or liquidation; or>
11-54 <(B) giving such notice would jeopardize the
11-55 investigation of a possible violation of a law that is enforceable
11-56 by a criminal penalty>.
11-57 20. Electronic Transfer of Funds. The Commissioner
11-58 <Board> shall adopt rules for the electronic transfer of any taxes,
11-59 fees, guarantee funds, or other money owed to or held for the
11-60 benefit of the state and for which the Department has the
11-61 responsibility to administer under this code or another insurance
11-62 law of this state. The Commissioner <Board> shall require the
11-63 electronic transfer of any amounts held or owed in an amount
11-64 exceeding $500,000.
11-65 SECTION 1.08. Chapter 1, Insurance Code, is amended by
11-66 adding Articles 1.24D and 1.27 to read as follows:
11-67 Art. 1.24D. CONFIDENTIALITY OF UNDERWRITING GUIDELINES. (a)
11-68 An insurer may refuse to release underwriting guidelines and
11-69 information relating to underwriting guidelines if, in the opinion
11-70 of the insurer, release of the guidelines or information would give
12-1 an advantage to the insurer's competitors.
12-2 (b) The department may request and receive copies of an
12-3 insurer's underwriting guidelines. Underwriting guidelines
12-4 obtained by the department under this subsection are confidential
12-5 and the department may not make the guidelines available to the
12-6 public.
12-7 Art. 1.27. APPLICATION OF PROVISIONS ADOPTED BY NATIONAL
12-8 ASSOCIATION OF INSURANCE COMMISSIONERS. The department may not
12-9 require an insurer to comply with any rule, regulation, directive,
12-10 or standard adopted by the National Association of Insurance
12-11 Commissioners unless application of the rule, regulation,
12-12 directive, or standard, including policy reserves, is expressly
12-13 authorized by statute and approved by the commissioner.
12-14 SECTION 1.09. Sections 1, 2, 3, 4, and 6, Article 1.31A,
12-15 Insurance Code, are amended to read as follows:
12-16 Sec. 1. Definition <Definitions>. In this article, "fund"<:>
12-17 <(1) "Board" means the State Board of Insurance.>
12-18 <(2) "Commissioner" means the commissioner of
12-19 insurance.>
12-20 <(3) "Fund"> means the Texas Department <State Board>
12-21 of Insurance operating fund.
12-22 Sec. 2. Creation of Fund. The Texas Department <State
12-23 Board> of Insurance operating fund is a fund <created> in the State
12-24 Treasury.
12-25 Sec. 3. Deposit of Revenues in Fund. Money received by the
12-26 commissioner or comptroller <board> from taxes and fees that are
12-27 required by this code to be credited to the fund and money received
12-28 by the commissioner <board> from sales, reimbursements, and fees
12-29 authorized by law other than this code shall be deposited in the
12-30 fund.
12-31 Sec. 4. Certain Money Included. The money received from
12-32 sales, reimbursements, and other fees authorized by law other than
12-33 this code includes money received from the following:
12-34 (1) <fees received by the board for filing charters
12-35 and charter amendments under Article 3914, Revised Statutes, as
12-36 amended;>
12-37 <(2)> fees received by the department <board> for
12-38 providing copies of public records under Chapter 424, Acts of the
12-39 63rd Legislature, Regular Session, 1973, as amended (Article
12-40 6252-17a, Vernon's Texas Civil Statutes);
12-41 <(3) money received by the state fire marshal for
12-42 licenses under Chapter 498, Acts of the 55th Legislature, Regular
12-43 Session, 1957, as amended (Article 9205, Vernon's Texas Civil
12-44 Statutes);>
12-45 (2) <(4)> money or credits received by the department
12-46 <board> for surplus or salvage property under Sections 9.04 and
12-47 9.05, State Purchasing and General Services Act <Chapter 773, Acts
12-48 of the 66th Legislature, Regular Session, 1979> (Article 601b,
12-49 Vernon's Texas Civil Statutes);
12-50 (3) <(5)> money received by the department <board>
12-51 from the sale of publications and other printed material under
12-52 Chapter 248, Acts of the 55th Legislature, Regular Session, 1957
12-53 (Article 4413(33), Vernon's Texas Civil Statutes);
12-54 (4) <(6)> receipts to the department <board> from
12-55 miscellaneous transactions and sources under Section 403.011 or
12-56 403.012, Government Code <Article 4344, Revised Statutes>, as
12-57 amended;
12-58 (5) <(7)> money received by the department <board>
12-59 from charges for postage spent to serve legal process under Section
12-60 17.025, Civil Practice and Remedies Code <Chapter 288, Acts of the
12-61 67th Legislature, Regular Session, 1981 (Article 2041b, Vernon's
12-62 Texas Civil Statutes)>;
12-63 (6) <(8)> receipts to the department <board> for
12-64 furnishing necessary and authorized special or technical services
12-65 under Chapter 741, Government Code <the Interagency Cooperation
12-66 Act,> as amended <(Article 4413(32), Vernon's Texas Civil
12-67 Statutes)>;
12-68 (7) <(9)> receipts to the department <board> from the
12-69 State Treasurer involving warrants for which payment is barred
12-70 under Chapter 404, Government Code <Article 4371, Revised
13-1 Statutes>, as amended;
13-2 (8) <(10)> money received by the department <board>
13-3 from sales or reimbursements authorized by the General
13-4 Appropriations Act; and
13-5 (9) <(11)> money received by the department <board>
13-6 from the sale of any property purchased with money from the <State
13-7 Board of Insurance operating> fund or a predecessor fund.
13-8 Sec. 6. Administration of Fund. (a) The commissioner shall
13-9 administer and may spend money from the fund pursuant to laws of
13-10 the state, rules adopted by the commissioner <of the board>, and
13-11 the General Appropriations Act.
13-12 (b) The commissioner <board> is responsible for the
13-13 development and maintenance of an accounting procedure for the
13-14 receipt, allocation, and disbursement of money deposited in the
13-15 fund. The procedure shall require adequate records for the
13-16 commissioner or comptroller, if applicable, <board> to adjust the
13-17 tax assessments and fee schedules as authorized by this code and
13-18 for the State Auditor to determine the source of all receipts and
13-19 expenditures.
13-20 SECTION 1.10. Article 1.35, Insurance Code, is amended to
13-21 read as follows:
13-22 Art. 1.35. Notice of Policyholder Complaint Procedures.
13-23 (a) Each insurance policy delivered or issued for delivery in this
13-24 state <on or after September 1, 1984,> shall be accompanied by a
13-25 brief written notice of suggested procedure to be followed by the
13-26 policyholder in the event of a dispute concerning a policyholder's
13-27 claim or premium.
13-28 (b) The notice must include the name and address of the
13-29 department and the toll-free telephone number maintained under
13-30 Article 1.35D of this code <State Board of Insurance>.
13-31 (c) The commissioner <State Board of Insurance> shall
13-32 promulgate the proper wording for the written notice.
13-33 SECTION 1.11. Article 1.35D(b), Insurance Code, is amended
13-34 to read as follows:
13-35 (b) The department, through the toll-free telephone number,
13-36 shall provide only the following to the public:
13-37 (1) information collected or maintained by the
13-38 department relating to the number of justified, verified as
13-39 accurate, and documented as valid complaints received against a
13-40 particular insurer, as a percentage of the number of insurance
13-41 policies written by the insurer and in force on the preceding
13-42 December 31, and the disposition of the complaints;
13-43 (2) the rating of the insurer, if any, as published by
13-44 a nationally recognized rating organization;
13-45 (3) the types of coverages available to a consumer
13-46 through any insurer writing insurance in this state; <and>
13-47 (4) the insurer's admitted assets-to-liabilities
13-48 ratio; and
13-49 (5) other appropriate information collected and
13-50 maintained by the department.
13-51 SECTION 1.12. Article 1.37, Insurance Code, is amended to
13-52 read as follows:
13-53 Art. 1.37. INFORMATION CONCERNING DEPARTMENT <STATE BOARD>
13-54 OF INSURANCE. The department <State Board of Insurance> shall
13-55 prepare information of public <consumer> interest describing the
13-56 <regulatory> functions of the department <board> and describing the
13-57 department's <board's> procedures by which <consumer> complaints
13-58 are filed with and resolved by the department <board>. The
13-59 department <board> shall make the information available <on
13-60 request> to the <general> public and appropriate state agencies.
13-61 SECTION 1.13. Chapter 1, Insurance Code, is amended by
13-62 adding Article 1.41 to read as follows:
13-63 Art. 1.41. LIMITATION ON DISCIPLINE. (a) Except as
13-64 provided by Subsections (b) and (c) of this article, the department
13-65 or commissioner may not commence an action to impose a sanction,
13-66 penalty, or fine, including an administrative penalty, against any
13-67 insurer, agent, or other licensee subject to the jurisdiction of
13-68 the department for any conduct that is in violation of this code or
13-69 another insurance law of this state after the earlier of:
13-70 (1) the fifth anniversary of the date on which the
14-1 conduct occurred; or
14-2 (2) the second anniversary of the earlier of:
14-3 (A) the date on which the conduct was first
14-4 discovered by the department; or
14-5 (B) the date on which the conduct was made known
14-6 to the department.
14-7 (b) The department or commissioner may not commence an
14-8 action to impose a sanction, penalty, or fine, including an
14-9 administrative penalty, against any insurer, agent, or other
14-10 licensee subject to the jurisdiction of the department for any
14-11 conduct that is in violation of this code or another insurance law
14-12 of this state and that involves fraud on the part of the insurer,
14-13 agent, or licensee after the fifth anniversary of the earlier of:
14-14 (1) the date on which the conduct was first discovered
14-15 by the department; or
14-16 (2) the date on which the conduct was made known to
14-17 the department.
14-18 (c) This article does not apply to a violation that is
14-19 ongoing at the time the department seeks to impose the sanction,
14-20 penalty, or fine.
14-21 SECTION 1.14. Chapter 1, Insurance Code, is amended by
14-22 adding Article 1.03B to read as follows:
14-23 Art. 1.03B. FISCAL IMPACT OF DEPARTMENT RULES. (a) This
14-24 article applies to any rule adopted by the commissioner in
14-25 accordance with the Administrative Procedure and Texas Register Act
14-26 (Article 6252-13a, Vernon's Texas Civil Statutes).
14-27 (b) If the fiscal note or the public benefit-cost note
14-28 required by Subdivisions (4) and (5), Section 5(a), Administrative
14-29 Procedure and Texas Register Act (Article 6252-13a, Vernon's Texas
14-30 Civil Statutes), fails to accurately state the actual costs
14-31 required, and the actual costs required exceed the costs stated by
14-32 at least 25 percent of the costs stated, the rule is void effective
14-33 on the date the rule is adopted.
14-34 SECTION 1.15. Section 323.007, Government Code, is amended
14-35 by adding Subsection (d) to read as follows:
14-36 (d) The council shall prepare a revision of the Insurance
14-37 Code and other insurance laws of this state that are included in
14-38 Vernon's Texas Insurance Code for consideration by the 75th
14-39 Legislature during its regular session. This subsection expires
14-40 June 1, 1997.
14-41 SECTION 1.16. Section 3.22(c), Texas Workers' Compensation
14-42 Act (Article 8308-3.22, Vernon's Texas Civil Statutes), is amended
14-43 to read as follows:
14-44 (c) The filing required under this section shall be filed
14-45 with the commission <State Board of Insurance> pursuant to Section
14-46 3.27 of this Act.
14-47 SECTION 1.17. Section 3.25(c), Texas Workers' Compensation
14-48 Act (Article 8308-3.25, Vernon's Texas Civil Statutes), is amended
14-49 to read as follows:
14-50 (c) The notice required under this section shall be filed
14-51 with the commission <State Board of Insurance> pursuant to Section
14-52 3.27 of this Act.
14-53 SECTION 1.18. Section 3.26(d), Texas Workers' Compensation
14-54 Act (Article 8308-3.26, Vernon's Texas Civil Statutes), is amended
14-55 to read as follows:
14-56 (d) The notice required under this section shall be filed
14-57 with the commission <State Board of Insurance> pursuant to Section
14-58 3.27 of this Act.
14-59 SECTION 1.19. Section 3.27, Texas Workers' Compensation Act
14-60 (Article 8308-3.27, Vernon's Texas Civil Statutes), is amended to
14-61 read as follows:
14-62 Art. 8308-3.27. Collecting, Maintaining, and Monitoring and
14-63 Enforcing Compliance <Cooperation between State Board of Insurance
14-64 and Texas Workers' Compensation Commission>. (a) The commission
14-65 <On and after September 1, 1991, the State Board of Insurance>
14-66 shall collect and maintain the information required <to be
14-67 provided> under this chapter and <shall provide this information in
14-68 the time and manner prescribed by the commission. The State Board
14-69 of Insurance> shall monitor compliance with the requirements <and
14-70 notify the commission of possible violations in the time and manner
15-1 prescribed by the commission>. The commission <State Board of
15-2 Insurance> is authorized to adopt rules as necessary to enforce
15-3 this chapter.
15-4 (b) The commission shall enforce the administrative
15-5 penalties established in this chapter according to Article 10 of
15-6 this Act.
15-7 SECTION 1.20. Section 3.28(e), Texas Workers' Compensation
15-8 Act (Article 8308-3.28, Vernon's Texas Civil Statutes), is amended
15-9 to read as follows:
15-10 (e) The notice required under this section shall be filed
15-11 with the commission <State Board of Insurance pursuant to Section
15-12 3.27 of this Act>.
15-13 SECTION 1.21. (a) Sections 3(g) and 4(e), Article 1.10A,
15-14 Insurance Code, are repealed.
15-15 (b) Articles 1.03, 1.05, 1.06D, and 1.08, Insurance Code,
15-16 are repealed.
15-17 (c) Subsection (e), Article 1.09, Insurance Code, is
15-18 repealed.
15-19 SECTION 1.22. (a) This section applies to any act of the
15-20 State Board of Insurance performed before September 1, 1994, that,
15-21 after September 1, 1994, is an act that shall or may be performed
15-22 only by the commissioner of insurance, including:
15-23 (1) issuance of a license, certificate, or other
15-24 similar form of permission;
15-25 (2) promulgation of a rule, standard, regulation, or
15-26 order;
15-27 (3) promulgation or approval of policy forms or policy
15-28 form endorsements; or
15-29 (4) adoption or approval of a plan of operation for an
15-30 organization subject to the jurisdiction of the Texas Department of
15-31 Insurance.
15-32 (b) An act governed by this section remains in effect until:
15-33 (1) it expires under its own terms or in accordance
15-34 with applicable law; or
15-35 (2) it is superseded by an act of the commissioner of
15-36 insurance.
15-37 SECTION 1.23. (a) As soon as possible on or after the
15-38 effective date of this Act, but not later than March 1, 1994, the
15-39 governor shall appoint a commissioner of insurance. The initial
15-40 term of the commissioner ends on February 1, 1995.
15-41 (b) On the effective date of this Act, the commissioner of
15-42 insurance serving immediately before the effective date of this Act
15-43 shall assume authority over any area of activity of the Texas
15-44 Department of Insurance not subject to the authority of the State
15-45 Board of Insurance under Subsection (c) of this section.
15-46 (c) On the effective date of this Act, the State Board of
15-47 Insurance serving immediately before the effective date of this Act
15-48 shall relinquish authority over all areas of activity of the Texas
15-49 Department of Insurance except:
15-50 (1) promulgation and approval of rates;
15-51 (2) promulgation and approval of policy forms and
15-52 policy form endorsements; and
15-53 (3) hearings, proceedings, and rules related to the
15-54 activities described by Subdivision (1) or (2) of this section.
15-55 (d) On the date a commissioner of insurance is appointed
15-56 under Subsection (a) of this section, that commissioner shall
15-57 assume the authority granted to the commissioner under Subsection
15-58 (b) of this section. On and after that date, the commissioner
15-59 shall cooperate with the State Board of Insurance to assume the
15-60 authority granted to the board under Subsection (c) of this section
15-61 and shall adopt rules as necessary to govern those activities in
15-62 accordance with Article 1.33C, Insurance Code, as added by this
15-63 Act. As soon as possible after the appointment of the commissioner
15-64 under Subsection (a) of this section but not later than September
15-65 1, 1994, the commissioner shall assume the authority granted to the
15-66 board under Subsection (c) of this section. After the commissioner
15-67 has assumed this authority, the board may advise the commissioner
15-68 with respect to that authority.
15-69 (e) A decision, rate, rule, or other act of the State Board
15-70 of Insurance is appealable in the same manner as a decision of the
16-1 commissioner of insurance under Article 1.04, Insurance Code, as
16-2 amended by this Act.
16-3 (f) Effective September 1, 1994, the State Board of
16-4 Insurance is abolished.
16-5 SECTION 1.24. On the effective date of this Act, the
16-6 comptroller shall redesignate the State Board of Insurance
16-7 operating fund (Fund No. 36) as the Texas Department of Insurance
16-8 operating account in the general revenue fund. All money in the
16-9 State Board of Insurance operating fund on the effective date of
16-10 this Act shall be transferred to the Texas Department of Insurance
16-11 operating account.
16-12 ARTICLE 2. TRANSFER OF CERTAIN FUNCTIONS TO STATE OFFICE OF
16-13 ADMINISTRATIVE HEARINGS
16-14 SECTION 2.01. Chapter 1, Insurance Code, is amended by
16-15 adding Article 1.33B to read as follows:
16-16 Art. 1.33B. CERTAIN HEARINGS HELD BY STATE OFFICE OF
16-17 ADMINISTRATIVE HEARINGS. (a) This article does not apply to a
16-18 hearing or proceeding:
16-19 (1) relating to the approval or review of rates or
16-20 rating manuals filed by individual companies, unless they are
16-21 contested;
16-22 (2) relating to the promulgation of rules;
16-23 (3) relating to the promulgation or approval of a
16-24 policy form or policy form endorsement;
16-25 (4) relating to the adoption or approval of a plan of
16-26 operation for an organization subject to the jurisdiction of the
16-27 department; or
16-28 (5) conducted in accordance with Article 1.04D of this
16-29 code.
16-30 (b) The State Office of Administrative Hearings established
16-31 under Chapter 591, Acts of the 72nd Legislature, Regular Session,
16-32 1991 (Article 6252-13f, Vernon's Texas Civil Statutes), and its
16-33 subsequent amendments shall conduct any administrative hearing
16-34 required to be held or that may be held under this code or another
16-35 insurance law of this state. This article applies only to hearings
16-36 required to be held before a decision may be rendered or action
16-37 taken by the commissioner or the department; provided that,
16-38 notwithstanding any other provision of this code, any interested
16-39 party may require that such proceeding be conducted under the
16-40 provisions of the Administrative Procedure and Texas Register Act
16-41 (Article 6252-13a, Vernon's Texas Civil Statutes).
16-42 (c)(1) Rate promulgation proceedings shall be governed by
16-43 the provisions of this subsection and shall be treated as a
16-44 contested case under the Administrative Procedure and Texas
16-45 Register Act (Article 6252-13a, Vernon's Texas Civil Statutes).
16-46 Accordingly, the procedures before the commissioner shall be guided
16-47 by the principles and procedures for contested cases as provided in
16-48 the Administrative Procedure and Texas Register Act (Article
16-49 6252-13a, Vernon's Texas Civil Statutes) and the Texas Rules of
16-50 Civil Procedure to the extent not inconsistent with the provisions
16-51 of this subsection.
16-52 (2) Opportunity must be afforded all interested
16-53 parties to respond to and present evidence and argument concerning
16-54 all issues involved in the proceeding. The testimony of a witness,
16-55 other than an expert witness, may be presented either orally by the
16-56 witness at the hearing or by affidavit. Each party to the
16-57 proceeding shall be accorded the right to cross-examine each
16-58 witness called to testify by any other party to the proceeding.
16-59 Accordingly, the attendance of any person providing testimony by
16-60 affidavit shall be required if any party files a written request
16-61 that the witness appear for cross-examination. If the person
16-62 providing testimony by affidavit fails to appear for
16-63 cross-examination after the filing of a written request that the
16-64 person appear, the administrative law judge shall exclude the
16-65 affidavit from evidence and shall not consider the affidavit of
16-66 that person for any purpose. The direct testimony of each expert
16-67 witness to be called must be prefiled in accordance with a schedule
16-68 to be established by the administrative law judge. The
16-69 administrative law judge shall also establish reasonable deadlines
16-70 for the filing of affidavits, the designation of witnesses, and
17-1 such other matters as are necessary or appropriate.
17-2 (3) The commissioner may not attempt to influence the
17-3 administrative law judge's findings of fact, conclusions of law, or
17-4 the administrative law judge's application of the law to the facts
17-5 in any proceedings.
17-6 (4) The proposal for decision prepared by the
17-7 administrative law judge, which shall include the proposed findings
17-8 of fact and conclusions of law, shall be served by registered mail
17-9 upon the parties by the administrative law judge, and an
17-10 opportunity shall be given to each party to file exceptions to the
17-11 proposal and briefs related to the issues addressed in the proposal
17-12 for decision.
17-13 (5) The commissioner shall thereafter in open meeting
17-14 consider the proposal for decision prepared by the administrative
17-15 law judge, the exceptions of the parties, and the briefs and
17-16 arguments of the parties. The commissioner may amend the proposal
17-17 for decision, including any finding of fact, but any such amendment
17-18 thereto and the order of the commissioner promulgating the rate
17-19 shall be based solely upon the record made before the
17-20 administrative law judge. Any such amendment by the commissioner
17-21 shall be accompanied by an explanation of the basis of the
17-22 amendment. The commissioner may also refer the matter back to the
17-23 administrative law judge to reconsider findings and conclusions set
17-24 forth in the proposal for decision or to take additional evidence
17-25 or to make additional findings of fact or conclusions of law. The
17-26 commissioner shall serve a copy of the commissioner's order,
17-27 including the commissioner's findings of fact and conclusions of
17-28 law, upon each party.
17-29 (d) The commissioner and the chief administrative law judge
17-30 of the State Office of Administrative Hearings by rule shall adopt
17-31 a memorandum of understanding governing hearings held by the State
17-32 Office of Administrative Hearings under this code and other
17-33 insurance laws of this state. The memorandum of understanding
17-34 shall require the chief administrative law judge and the
17-35 commissioner to cooperate in conducting hearings under this article
17-36 and may authorize the State Office of Administrative Hearings to
17-37 perform any procedural act, including giving of notice, that is
17-38 required to be performed by the commissioner under this code or
17-39 another insurance law of this state.
17-40 (e) Any provision of this code or another insurance law of
17-41 this state that provides that the commissioner shall take an action
17-42 at a hearing subject to this article means that the commissioner
17-43 shall take the action after the receipt of a report from the State
17-44 Office of Administrative Hearings regarding the hearing conducted
17-45 by that agency.
17-46 (f) This article governs in the event of a conflict with
17-47 another provision of this code or another insurance law of this
17-48 state, unless the other provision or insurance law states that this
17-49 article does not apply.
17-50 SECTION 2.02. Chapter 1, Insurance Code, is amended by
17-51 adding Article 1.33C to read as follows:
17-52 Art. 1.33C. RATE AND FORM PROCEEDINGS. (a) The
17-53 commissioner shall adopt rules governing hearings and other
17-54 proceedings necessary for the promulgation or approval of rates and
17-55 approval or promulgation of policy forms or policy form
17-56 endorsements under this code or other insurance laws of this state.
17-57 The commissioner shall conduct these hearings or proceedings in
17-58 accordance with the rules adopted under this article.
17-59 (b) Rules adopted under this article must comply with this
17-60 code and any other insurance law of this state and must be adopted
17-61 in accordance with the Administrative Procedure and Texas Register
17-62 Act (Article 6252-13a, Vernon's Texas Civil Statutes).
17-63 (c) In adopting rules under this article, the commissioner
17-64 shall consider Article 5.121 of this code.
17-65 SECTION 2.03. Article 1.06C, Insurance Code, is amended to
17-66 read as follows:
17-67 Art. 1.06C. PROHIBITED REPRESENTATION. (a) A person
17-68 serving as a member of the former State Board of Insurance <board>,
17-69 commissioner, general counsel, public counsel, staff employee of a
17-70 member of the former State Board of Insurance, or an employee of
18-1 the State Office of Administrative Hearings who is involved in
18-2 hearing cases under this code or another insurance law of this
18-3 state <or head of a department division> may not, for a period of
18-4 one <two> years after the date the person ceases to be a board
18-5 member, commissioner, general counsel, public counsel, or employee
18-6 <division head>, represent any person in a matter before the
18-7 department or receive compensation for services rendered on behalf
18-8 of any person regarding a matter pending before the department.
18-9 (b) <A person, other than a person subject to Subsection (a)
18-10 of this section, who is employed by the department or board may
18-11 not, for a period of two years after the date the person terminates
18-12 service with the department or board, represent any person in a
18-13 matter before the department or receive compensation for services
18-14 rendered on behalf of any person regarding a matter pending before
18-15 the department. This subsection does apply to an employee exempt
18-16 from the state's position classification plan, but does not apply
18-17 to an employee who was compensated at a salary less than the salary
18-18 prescribed by the General Appropriations Act for step 1, salary
18-19 group 17, of the position classification salary schedule.>
18-20 <(c)> A former member of the former State Board of Insurance
18-21 <board>, a former commissioner, a former general counsel, a former
18-22 public counsel, <a former head of a department division,> or a
18-23 former employee of the board or the State Office of Administrative
18-24 Hearings <department described by Subsection (b) of this section>
18-25 may not represent any person or receive compensation for services
18-26 rendered on behalf of any person regarding a matter with which the
18-27 former member, commissioner, general counsel, public counsel,
18-28 division head, or employee was directly concerned during the period
18-29 of service or employment on or with the board or State Office of
18-30 Administrative Hearings <department> or as commissioner, either
18-31 through personal involvement or because the matter was within the
18-32 member's, commissioner's, general counsel's, public counsel's,
18-33 <division head's,> or employee's official responsibility while
18-34 associated with the board or State Office of Administrative
18-35 Hearings.
18-36 (c) <(d)> A former member or employee of the former State
18-37 Board of Insurance <board> or State Office of Administrative
18-38 Hearings <department> or a former commissioner, general counsel, or
18-39 public counsel commits an offense if the former member, employee,
18-40 commissioner, general counsel, or public counsel violates this
18-41 section. An offense under this subsection is a Class A
18-42 misdemeanor.
18-43 (d) <(e)> This section does not apply to an employee of the
18-44 Texas Department of Insurance whose employment is terminated based
18-45 on the elimination of the employee's position of employment that is
18-46 a direct result of a reduction in the agency's workforce.
18-47 SECTION 2.04. Article 1.09-4, Insurance Code, is repealed.
18-48 SECTION 2.05. (a) Not later than December 31, 1993, the
18-49 commissioner of insurance and the chief administrative law judge of
18-50 the State Office of Administrative Hearings shall adopt the
18-51 memorandum of understanding required by Article 1.33B, Insurance
18-52 Code, as added by this Act.
18-53 (b) This article applies only to a hearing that is not held
18-54 before or pending on January 1, 1994. Unless the commissioner of
18-55 insurance and the chief administrative law judge of the State
18-56 Office of Administrative Hearings agree to apply Article 1.33B,
18-57 Insurance Code, as added by this Act, a hearing that is held before
18-58 or pending on January 1, 1994, is governed by the law in effect
18-59 immediately before the effective date of this Act, and that law is
18-60 continued in effect for this purpose.
18-61 ARTICLE 3. TRANSFER OF CERTAIN TAX COLLECTION AND
18-62 AUDIT FUNCTIONS TO OFFICE OF THE COMPTROLLER
18-63 SECTION 3.01. Chapter 1, Insurance Code, is amended by
18-64 adding Article 1.04D to read as follows:
18-65 Art. 1.04D. DUTIES OF COMPTROLLER. (a) Except as otherwise
18-66 expressly provided for in this code or another insurance law of
18-67 this state, the duties of the department and commissioner relative
18-68 to the collection, reporting, and administration of taxes and
18-69 certain fees and assessments imposed under this code or another
18-70 insurance law of this state are transferred to the comptroller
19-1 effective September 1, 1993, as specifically provided in this code.
19-2 (b) The duties transferred to the comptroller relative to
19-3 taxes, fees, and assessments imposed under this code or another
19-4 insurance law of this state relate to the collection, reporting,
19-5 enforcement, and administration of all such amounts currently
19-6 provided for under this code or another insurance law of this
19-7 state, and also of any taxes, fees, or assessments that have been
19-8 repealed or are otherwise inactive but for which amounts may still
19-9 be owing or refunds may be due on or after the effective date of
19-10 this article.
19-11 (c) The comptroller may adopt rules to carry out the
19-12 collection, reporting, enforcement, and administration
19-13 responsibilities assigned to the comptroller under this code or
19-14 another insurance law of this state. The comptroller may also
19-15 prescribe appropriate report forms, establish or alter tax return
19-16 due dates not otherwise specifically set forth in this code or
19-17 another insurance law of this state, and otherwise adapt the
19-18 functions transferred to the comptroller to increase efficiency and
19-19 cost-effectiveness. With respect to rules related to the
19-20 collection, reporting, enforcement, or otherwise to the
19-21 administration of taxes imposed under this code, rules adopted by
19-22 the comptroller shall prevail in the event of conflict with rules,
19-23 policies, or procedures established by the department, the
19-24 commissioner, or otherwise.
19-25 (d) With respect to the comptroller's performance of the
19-26 duties relative to the taxes, fees, and assessments imposed under
19-27 this code or another insurance law of this state, the comptroller
19-28 has the administrative, enforcement, and collection powers provided
19-29 by Subtitles A and B, Title 2, Tax Code, and their subsequent
19-30 amendments. Except as otherwise expressly provided by this code,
19-31 those powers are granted to the comptroller without limiting and
19-32 exclusive of powers granted to the department or the commissioner
19-33 with respect to other fees and assessments under this code.
19-34 SECTION 3.02. Article 1.11(a), Insurance Code, is amended to
19-35 read as follows:
19-36 (a) The commissioner <Board> may, from time to time, make
19-37 such changes in the forms of the annual statements required of
19-38 insurance companies of any kind, as shall seem to it best adapted
19-39 to elicit a true exhibit of their condition and methods of
19-40 transacting business. Such form shall elicit only such information
19-41 as shall pertain to the business of the company.
19-42 If any annual statement, report, financial statement, <tax
19-43 return,> or <tax> payment required to be filed or deposited in the
19-44 offices of the commissioner, or any report, tax return, or payment
19-45 required to be filed or deposited in the offices of the comptroller
19-46 <State Board of Insurance>, is delivered by the United States
19-47 Postal Service to the offices of the commissioner or comptroller,
19-48 as required, <State Board of Insurance> after the prescribed date
19-49 on which the annual statement, report, financial statement, tax
19-50 return, or <tax> payment is to be filed, the date of the United
19-51 States Postal Service postmark stamped on the cover in which the
19-52 document <annual statement> is mailed, or any other evidence of
19-53 mailing authorized by the United States Postal Service reflected on
19-54 the cover in which the document <annual statement> is mailed, shall
19-55 be deemed to be the date of filing, unless otherwise specifically
19-56 made an exception to this general statute.
19-57 SECTION 3.03. Section 2(b), Article 1.14-1, Insurance Code,
19-58 is amended to read as follows:
19-59 (b) The provisions of this section do not apply to:
19-60 1. The lawful transaction of surplus lines insurance
19-61 pursuant to Article 1.14-2.
19-62 2. The lawful transaction of reinsurance by insurers.
19-63 3. Transactions in this state involving a policy
19-64 lawfully solicited, written, and delivered outside of this state
19-65 covering only subjects of insurance not resident, located, or
19-66 expressly to be performed in this state at the time of insurance,
19-67 and which transactions are subsequent to the issuance of such
19-68 policy.
19-69 4. Transactions involving contracts of insurance
19-70 independently procured through negotiations occurring entirely
20-1 outside of this state which are reported and on which premium tax
20-2 is paid in accordance with this Article.
20-3 5. Transactions in this state involving group life,
20-4 health or accident insurance (other than credit insurance) and
20-5 group annuities where the master policy of such groups was lawfully
20-6 issued and delivered in a state in which the company was authorized
20-7 to do an insurance business and such transactions are authorized by
20-8 other statutes of this state.
20-9 6. Lawful transactions by servicing companies of the
20-10 Texas workers' compensation employers' rejected risk fund pursuant
20-11 to Section 4.08, Article 5.76-2.
20-12 7. Transactions in this state of an insurance manager
20-13 or buyer as a full-time salaried employee in placing, managing, and
20-14 administering insurance and insurance programs solely on behalf of
20-15 his or her employer, its parent and affiliated companies.
20-16 8. Management activities in this state on behalf of a
20-17 non-admitted captive insurance company that insures solely risks
20-18 related to or arising out of the business or operations of its
20-19 parent and affiliated companies.
20-20 SECTION 3.04. Section 11(a), Article 1.14-1, Insurance Code,
20-21 is amended to read as follows:
20-22 (a) Except as to premiums on lawfully procured surplus lines
20-23 insurance and premiums on independently procured insurance on which
20-24 a tax has been paid pursuant to this Article or Article 1.14-2,
20-25 every unauthorized insurer shall pay to the comptroller, on a form
20-26 prescribed by the comptroller, <State Board of Insurance> before
20-27 March 1 next succeeding the calendar year in which the insurance
20-28 was so effectuated, continued or renewed or another date as
20-29 prescribed by the comptroller a premium receipts tax of 4.85
20-30 percent of gross premiums charged for such insurance on subjects
20-31 resident, located or to be performed in this state. Such insurance
20-32 on subjects resident, located or to be performed in this state
20-33 procured through negotiations or an application, in whole or in
20-34 part occurring or made within or from within or outside of this
20-35 state, or for which premiums in whole or in part are remitted
20-36 directly or indirectly from within or outside of this state, shall
20-37 be deemed to be insurance procured, or continued or renewed in this
20-38 state. The term "premium" includes all premiums, membership fees,
20-39 assessments, dues and any other consideration for insurance. Such
20-40 tax shall be in lieu of all other insurance taxes. On default of
20-41 any such unauthorized insurer in the payment of such tax the
20-42 insured shall pay the tax. If the tax prescribed by this
20-43 subsection is not paid within the time stated, Subtitles A and B,
20-44 Title 2, Tax Code, and their subsequent amendments, apply <the tax
20-45 shall be increased by a penalty of 25 percent and by the amount of
20-46 an additional penalty computed at the rate of one percent per month
20-47 or any part thereof from the date such payment was due to the date
20-48 paid>.
20-49 SECTION 3.05. Sections 12(a), (c), and (e), Article 1.14-1,
20-50 Insurance Code, are amended to read as follows:
20-51 (a) Every insured who procures or causes to be procured or
20-52 continues or renews insurance with any unauthorized insurer, or any
20-53 insured or self-insurer who so procures or continues excess loss,
20-54 catastrophe or other insurance, upon a subject of insurance
20-55 resident, located or to be performed within this state, other than
20-56 insurance procured through a surplus lines agent pursuant to the
20-57 surplus lines law of this state shall, within 60 days after the
20-58 date such insurance was so procured, continued or renewed or before
20-59 a date prescribed by the comptroller, file a report of the same
20-60 with the comptroller <State Board of Insurance> in writing and upon
20-61 forms designated by the comptroller <State Board of Insurance> and
20-62 furnished to such an insured upon request. The report shall show
20-63 the name and address of the insured or insureds, name and address
20-64 of the insurer, the subject of the insurance, a general description
20-65 of the coverage, the amount of premium currently charged therefor,
20-66 and such additional pertinent information as is reasonably
20-67 requested by the comptroller <State Board of Insurance>.
20-68 (c) There is hereby levied upon the obligation, chose in
20-69 action, or right represented by the premium charged for such
20-70 insurance, a premium receipts tax of 3.85 percent of gross premiums
21-1 charged for such insurance. The term "premium" shall include all
21-2 premiums, membership fees, assessments, dues and any other
21-3 consideration for insurance. Such tax shall be in lieu of all
21-4 other insurance taxes. The insured shall, before March 1 next
21-5 succeeding the calendar year in which the insurance was so
21-6 procured, continued or renewed or another date prescribed by the
21-7 comptroller, pay the amount of the tax to the comptroller, on a
21-8 form prescribed by the comptroller <State Board of Insurance>. In
21-9 event of cancellation and rewriting of any such insurance contract
21-10 the additional premium for premium receipts tax purposes shall be
21-11 the premium in excess of the unearned premium of the canceled
21-12 insurance contract.
21-13 (e) If the insured fails to withhold from the premium the
21-14 amount of tax herein levied, the insured shall be liable for the
21-15 amount thereof and shall pay the same to the comptroller <State
21-16 Board of Insurance> within the time stated in Paragraph (c). If
21-17 the tax prescribed by this subsection is not paid within the time
21-18 stated in Paragraph (c), Subtitles A and B, Title 2, Tax Code, and
21-19 their subsequent amendments, apply <the tax shall be increased by a
21-20 penalty of 25 percent and by the amount of an additional penalty
21-21 computed at the rate of one percent per month or any part thereof
21-22 from the date such payment was due to the date paid>.
21-23 SECTION 3.06. Section 12A, Article 1.14-1, Insurance Code,
21-24 is amended to read as follows:
21-25 Sec. 12A. Exception in Respect of Filing of Reports of Taxes
21-26 Due. As respects corporations, the amount of taxes due and payable
21-27 to the State of Texas under the provisions or under authority of
21-28 Section 12 of this Article shall be reported directly to the
21-29 comptroller <State Board of Insurance> and shall be due when the
21-30 Franchise Tax Report is due or on another date prescribed by the
21-31 comptroller, any other provision of this Article to the contrary
21-32 notwithstanding. All companies or persons other than corporations
21-33 filing franchise tax returns shall report to the comptroller on or
21-34 before the date prescribed by the comptroller <State Board of
21-35 Insurance>.
21-36 SECTION 3.07. Sections 12(a) and (d), Article 1.14-2,
21-37 Insurance Code, are amended to read as follows:
21-38 (a) The premiums charged for surplus lines insurance are
21-39 subject to a premium receipts tax of 4.85 percent of gross premiums
21-40 charged for such insurance. The term premium includes all
21-41 premiums, membership fees, assessments, dues or any other
21-42 consideration for insurance. Such tax shall be in lieu of all
21-43 other insurance taxes. The surplus lines agent shall collect from
21-44 the insured the amount of the tax at the time of delivery of the
21-45 cover note, certificate of insurance, policy or other initial
21-46 confirmation of insurance, in addition to the full amount of the
21-47 gross premium charged by the insurer for the insurance. No agent
21-48 shall absorb such tax nor shall any agent, as an inducement for
21-49 insurance or for any other reason, rebate all or any part of such
21-50 tax or his commission. The surplus lines agent shall report<,
21-51 under oath,> to the comptroller <State Board of Insurance> within
21-52 30 days from the 1st day of January and July of each year the
21-53 amount of gross premiums paid for such insurance placed through him
21-54 in nonlicensed insurers, and shall pay to the comptroller <Board>
21-55 the tax provided for by this Article. If a surplus lines policy
21-56 covers risks or exposures only partially in this state, the tax
21-57 payable shall be computed on the portions of the premium which are
21-58 properly allocable to the risks or exposures located in this state.
21-59 In determining the amount of premiums taxable in this state, all
21-60 premiums written, procured, or received in this state and all
21-61 premiums on policies negotiated in this state shall be deemed
21-62 written on property or risks located or resident in this state,
21-63 except such premiums as are properly allocated or apportioned and
21-64 reported as taxable premiums of any other state or states. In
21-65 event of cancellation and rewriting of any surplus lines insurance
21-66 contract the additional premium for premium receipts tax purposes
21-67 shall be the premium in excess of the unearned premium of the
21-68 canceled insurance contract.
21-69 (d) The Attorney General, upon request of the commissioner
21-70 <State Board of Insurance>, shall proceed in the courts of this or
22-1 any other state or in any federal court or agency to recover <such>
22-2 license fees <or tax> not paid within the time prescribed in this
22-3 Article <section>. Notwithstanding the preceding sentence,
22-4 Subtitles A and B, Title 2, Tax Code, and their subsequent
22-5 amendments, apply to a tax collected under this Article.
22-6 SECTION 3.08. Sections 8 and 9, Article 1.14-3, Insurance
22-7 Code, are amended to read as follows:
22-8 Sec. 8. Maintenance Tax. (a) The commissioner <board>
22-9 annually shall determine the rate of assessment of a maintenance
22-10 tax to be paid on an annual, <or> semiannual, or other periodic
22-11 basis, as determined by the comptroller. The rate of assessment
22-12 may <basis and shall collect a maintenance tax in an amount> not
22-13 <to> exceed one percent of the correctly reported gross premiums on
22-14 all classes of insurance covered by this article and paid through
22-15 the exchange. The comptroller shall collect the maintenance tax.
22-16 (b) After taking into account the unexpended funds produced
22-17 by this tax, if any, the commissioner <board> shall adjust the rate
22-18 of assessment each year to produce the amount of funds that the
22-19 commissioner <board> estimates will be necessary to pay all the
22-20 expenses of regulating all classes of insurance covered by this
22-21 article during the succeeding year. In making an estimate under
22-22 this subsection, the commissioner shall take into account the
22-23 requirement that the general revenue fund be reimbursed under
22-24 Article 4.19 of this code and its subsequent amendments.
22-25 (c) The collected taxes shall be deposited in the State
22-26 Treasury to the credit of the general revenue fund to be
22-27 reallocated to the Texas Department <State Board> of Insurance
22-28 operating fund and shall be spent as authorized by legislative
22-29 appropriation <only> on warrants issued by the comptroller <of
22-30 public accounts> pursuant to duly certified requisitions of the
22-31 commissioner <board>. Amounts reallocated to the Texas Department
22-32 of Insurance operating fund under this subsection may be
22-33 transferred to the general revenue fund in accordance with Article
22-34 4.19 of this code and its subsequent amendments.
22-35 (d) The commissioner shall advise the comptroller of the
22-36 applicable rate of assessment no later than the date 45 days prior
22-37 to the due date of the tax return for the period for which such
22-38 taxes are due. If the commissioner has not advised the comptroller
22-39 of the applicable rate by such date, the applicable rate shall be
22-40 the rate applied in the previous tax period. If the commissioner
22-41 advises the comptroller of the applicable rate of assessment after
22-42 taxes have been assessed pursuant to this subsection, the
22-43 comptroller shall:
22-44 (1) advise each taxpayer in writing of the amount of
22-45 any additional taxes due; or
22-46 (2) refund any excess taxes paid.
22-47 Sec. 9. Application of This Article and Regulations. This
22-48 article and regulations promulgated by the commissioner or the
22-49 comptroller, as applicable, <board> apply to the exchange, its
22-50 members, and the insurance and reinsurance written through the
22-51 exchange, except to the extent exempt by regulations of the
22-52 commissioner or the comptroller, as applicable <board>. An
22-53 exemption may not be unfairly discriminatory or detrimental to the
22-54 solvency of licensed insurers.
22-55 SECTION 3.09. Article 1.35B(a), Insurance Code, is amended
22-56 to read as follows:
22-57 (a) To defray the costs of creating, administering, and
22-58 operating the office of public insurance counsel, the comptroller
22-59 <board> shall collect the following assessments annually in
22-60 connection with the collection of other taxes imposed on insurers:
22-61 (1) each property and casualty insurer authorized to
22-62 do business in this state shall pay an annual assessment of 5.7
22-63 cents for each policy of property and casualty insurance in force
22-64 at year end in this state;
22-65 (2) each insurer shall pay an annual assessment of 3
22-66 cents for each individual policy, and for each certificate of
22-67 insurance evidencing coverage under a group policy, of life,
22-68 health, or accident insurance written for delivery and placed in
22-69 force with the initial premium thereon paid in full in this state
22-70 during each calendar year if the insurer is authorized to do
23-1 business in this state under:
23-2 (A) Chapter 3, 10, 11, 14, 20, 22, 23, or 25 of
23-3 this code;
23-4 (B) Chapter 113, Acts of the 53rd Legislature,
23-5 Regular Session, 1953 (Article 3.49-1, Vernon's Texas Insurance
23-6 Code);
23-7 (C) Section 1, Chapter 417, Acts of the 56th
23-8 Legislature, Regular Session, 1959 (Article 3.49-2, Vernon's Texas
23-9 Insurance Code);
23-10 (D) the Texas Employees Uniform Group Insurance
23-11 Benefits Act (Article 3.50-2, Vernon's Texas Insurance Code);
23-12 (E) the Texas State College and University
23-13 Employees Uniform Insurance Benefits Act (Article 3.50-3, Vernon's
23-14 Texas Insurance Code);
23-15 (F) Section 1, Chapter 123, Acts of the 60th
23-16 Legislature, Regular Session, 1967 (Article 3.51-3, Vernon's Texas
23-17 Insurance Code);
23-18 (G) Section 1, Chapter 387, Acts of the 55th
23-19 Legislature, Regular Session, 1957 (Article 3.62-1, Vernon's Texas
23-20 Insurance Code);
23-21 (H) Sections 1 to 3A and 4 to 13, Chapter 397,
23-22 Acts of the 54th Legislature, Regular Session, 1955 (Articles
23-23 3.70-1 to 3.70-3A and 3.70-4 to 3.70-11, Vernon's Texas Insurance
23-24 Code); or
23-25 (I) the Texas Health Maintenance Organization
23-26 Act (Chapter 20A, Vernon's Texas Insurance Code); and
23-27 (3) each title insurance company authorized to do
23-28 business in this state shall pay an annual assessment of 5.7 cents
23-29 for each owner policy and mortgage policy of title insurance
23-30 written for delivery in this state during each calendar year and
23-31 for which the full basic premium is charged.
23-32 SECTION 3.10. Articles 4.05 and 4.07, Insurance Code, are
23-33 amended to read as follows:
23-34 Art. 4.05. TAXES TO BE PAID BEFORE CERTIFICATE IS ISSUED.
23-35 <Upon the receipt of sworn statements showing the gross premium
23-36 receipts of any insurance organization, the Board of Insurance
23-37 Commissioners shall certify to the State Treasurer the amount of
23-38 taxes due by such insurance organization for the preceding year,
23-39 which taxes shall be paid to the State Treasurer for the use of the
23-40 State, by such company. Upon his receipt of such certificate and
23-41 the payment of such tax, the Treasurer shall execute a receipt
23-42 therefor, which receipt shall be evidence of the payment of such
23-43 taxes.> No <such> life insurance company shall receive a
23-44 certificate of authority to do business in this State until all
23-45 <such> taxes imposed under this code or another insurance law of
23-46 this state are paid. If, upon the examination of any company, or
23-47 in any other manner, the commissioner <Board> shall be informed
23-48 that the gross premium receipts of any year exceed in amount those
23-49 shown by the report thereof, theretofore made as above provided,
23-50 the commissioner shall report this fact to the comptroller. The
23-51 comptroller shall institute a collection action, as the comptroller
23-52 considers appropriate in accordance with Subtitles A and B, Title
23-53 2, Tax Code, and their subsequent amendments, to collect taxes due
23-54 on unreported gross premium receipts. The comptroller shall
23-55 deposit taxes collected under this article to the credit of the
23-56 general revenue fund <it shall be the duty of such Board to file
23-57 with the State Treasurer a supplemental certificate showing the
23-58 additional amount of taxes due by such company, which shall be paid
23-59 by such company upon notice thereof. The State Treasurer if,
23-60 within fifteen (15) days after the receipt by him of any
23-61 certificate or supplemental certificate provided for by this
23-62 article, the taxes due as shown thereby have not been paid, shall
23-63 report the facts to the Attorney General, who shall immediately
23-64 institute suit in the proper court in Travis County to recover such
23-65 taxes>.
23-66 Art. 4.07. FEES OF TEXAS DEPARTMENT <STATE BOARD> OF
23-67 INSURANCE. A. With respect to all authorized insurers writing
23-68 classes of insurance in this State <which are covered by Chapter 3
23-69 of this code>, the Texas Department <State Board> of Insurance
23-70 shall charge and receive for the use of the State fees in an amount
24-1 to be determined by the department <Board> not to exceed the
24-2 following:
24-3 (1) <For filing the annual statement, $500.00.>
24-4 <(2)> For filing an amendment to a certificate of
24-5 authority if the charter is not amended, $100.00.
24-6 (2) <(3)> For affixing the official seal and
24-7 certifying to the seal, $20.00.
24-8 (3) <(4)> For reservation of name, $200.00.
24-9 (4) <(5)> For renewal of reservation of name, $50.00.
24-10 (5) <(6)> For filing an application for admission of a
24-11 foreign or alien company, $4,000.00.
24-12 (6) <(7)> For filing an original charter of a company
24-13 including issuance of a certificate of authority, $3,000.00.
24-14 (7) <(8)> For filing an amendment to a charter if a
24-15 hearing is held, $500.00.
24-16 (8) <(9)> For filing an amendment to a charter if a
24-17 hearing is not held, $250.00.
24-18 (9) <(10)> For filing a designation of an attorney for
24-19 service of process or amendment of the designation, $50.00.
24-20 (10) <(11)> For filing a copy of a total reinsurance
24-21 agreement, $1,500.00.
24-22 (11) <(12)> For filing a copy of a partial reinsurance
24-23 agreement, $300.00.
24-24 (12) <(13)> For accepting a security deposit, $200.00.
24-25 (13) <(14)> For substitution or amendment of a
24-26 security deposit, $100.00.
24-27 (14) <(15)> For certification of statutory deposits,
24-28 $20.00.
24-29 (15) <(16)> For filing a notice of intent to relocate
24-30 books and records pursuant to Article 1.28 of this code, $300.00.
24-31 (16) <(17)> For filing a statement pursuant to Section
24-32 5, Article 21.49-1 of this code, for the first $9,900,000.00 of the
24-33 purchase price or consideration, $1,000.00.
24-34 (17) <(18)> For filing a statement pursuant to Section
24-35 5, Article 21.49-1 of this code, if the purchase price or
24-36 consideration exceeds $9,900,000.00, an additional $500.00 for each
24-37 $10,000,000.00 exceeding $9,900,000.00, but not more than
24-38 $10,000.00 total fee under this subdivision and the preceding
24-39 subdivision.
24-40 (18) <(19)> For filing a registration statement
24-41 pursuant to Section 3, Article 21.49-1 of this code, $300.00.
24-42 (19) <(20)> For filing for review pursuant to Section
24-43 4, Article 21.49-1 or Article 22.15 of this code, $500.00.
24-44 (20) <(21)> For filing of a direct reinsurance
24-45 agreement pursuant to Article 22.19 of this code, $300.00.
24-46 (21) <(22)> For filing for approval of a merger
24-47 pursuant to Article 21.25 of this code, $1,500.00.
24-48 (22) <(23)> For filing for approval of reinsurance
24-49 pursuant to Article 21.26 of this code, $1,500.00.
24-50 (23) <(24)> For filing of restated articles of
24-51 incorporation for <both> domestic, <and> foreign or alien
24-52 companies, $500.00.
24-53 (24) <(25)> For filing a joint control agreement,
24-54 $100.00.
24-55 (25) <(26)> For filing a substitution or amendment to
24-56 a joint control agreement, $40.00.
24-57 (26) <(27)> For filing a change of attorney in fact,
24-58 $500.00.
24-59 <(28) For valuing policies of life insurance, and for
24-60 each one million of insurance or fraction thereof, $10.00.>
24-61 B. For an authorized insurer writing a class of insurance in
24-62 this state that is subject to Chapter 3 of this code, the Texas
24-63 Department of Insurance shall charge and the comptroller shall
24-64 collect for the use of the state fees in an amount to be determined
24-65 by the commissioner not to exceed the following:
24-66 (1) For valuing policies of life insurance, and for
24-67 each one million dollars of insurance or fraction thereof, $10.00.
24-68 (2) For filing the annual statement, $500.00.
24-69 The provisions of Subtitles A and B, Title 2, Tax Code, and
24-70 their subsequent amendments, apply to fees collected by the
25-1 comptroller under this section.
25-2 C. The department <Board> shall, within the limits fixed by
25-3 this Article <section>, prescribe the fees to be charged under this
25-4 Article <section>.
25-5 D. Except as provided by Section B of this Article, the
25-6 <The> insurers subject to the fees imposed by this Article
25-7 <section> shall include any and all stock and mutual insurance
25-8 companies, local mutual aid associations, statewide mutual
25-9 assessment companies, group hospital service plan corporations, and
25-10 stipulated premium insurance companies.
25-11 E. <B.> The Texas Department <State Board> of Insurance
25-12 shall set and collect a sales charge for making copies of any paper
25-13 of record in the State Board of Insurance, such charge to be in an
25-14 amount deemed sufficient to reimburse the State for the actual
25-15 expense; provided, however, that the department <State Board of
25-16 Insurance> may make and distribute copies of papers containing
25-17 rating information without charge or for such charge as the
25-18 commissioner <Board> shall deem appropriate to administer the
25-19 premium rating laws by properly disseminating such rating
25-20 information; and provided further that Article 5.29, Texas
25-21 Insurance Code, shall remain in full force and effect without
25-22 amendment.
25-23 F. <C.> All fees collected by virtue of Section A of this
25-24 Article shall be deposited in the State Treasury to the credit of
25-25 the Texas Department <State Board> of Insurance operating fund and
25-26 appropriated to the use and benefit of the department <State Board
25-27 of Insurance> to be used in the payment of salaries and other
25-28 expenses arising out of and in connection with the examination of
25-29 insurance companies and/or the licensing of insurance companies and
25-30 investigations of violations of the insurance laws of this State in
25-31 such manner as provided in the general appropriation bill.
25-32 G. All fees collected by the comptroller under Section B of
25-33 this Article shall be deposited in the general revenue fund. Those
25-34 amounts are available for appropriation to the Texas Department of
25-35 Insurance for its use in paying salaries and other expenses arising
25-36 out of the examination or licensing of insurance companies and
25-37 investigations of the violations of this code or other insurance
25-38 laws of this State as provided by the General Appropriations Act.
25-39 H. <D.> Notwithstanding any other provision of this article,
25-40 any insurer to which this article applies and whose gross premium
25-41 receipts are less than $450,000.00, according to its annual
25-42 statement for the preceding year ending December 31, shall be
25-43 required to pay only one-half the amount of the fees required to be
25-44 paid under this article and as set by the commissioner <State Board
25-45 of Insurance>.
25-46 SECTION 3.11. Sections 1, 6, and 14, Article 4.10, Insurance
25-47 Code, are amended to read as follows:
25-48 Sec. 1. Payment of tax. Every insurance carrier, including
25-49 Lloyd's and reciprocal exchanges and any other organization or
25-50 concern receiving gross premiums from the business of fire, marine,
25-51 marine inland, accident, credit, livestock, fidelity, guaranty,
25-52 surety, casualty, workers' compensation, employers' liability, or
25-53 any other kind or character of insurance, except title insurance
25-54 and except as provided in Sections 2, 3, and 4 of this article,
25-55 shall pay to the comptroller <commissioner of insurance> for
25-56 transmittal to the state treasurer a <an annual> tax upon such
25-57 gross premium receipts as provided in this article. Any such
25-58 insurance carrier doing other kinds of insurance business shall pay
25-59 the tax levied upon its gross premiums received from such other
25-60 kinds of business as provided in Articles 4.03 and 4.11 of this
25-61 code <Article 4769 and Article 7064a, Revised Civil Statutes of
25-62 Texas, 1925>.
25-63 Sec. 6. Time of Filing and Payment. (a) A premium tax
25-64 return for each taxable year ending the 31st day of December
25-65 preceding shall be filed and the total amount of the tax due under
25-66 this article shall be paid on or before the 1st day of March of
25-67 each year.
25-68 (b) A semiannual <quarterly> prepayment of premium tax must
25-69 be made on March 1st and August 1st<, May 15th, August 15th, and
25-70 November 15th> by all insurers with net tax liability for the
26-1 previous calendar year in excess of $1,000. The tax paid on each
26-2 date must equal one-half <one-fourth> of the total premium tax paid
26-3 for the previous calendar year. Should no premium tax have been
26-4 paid during the previous calendar year, the semiannual <quarterly>
26-5 payment shall equal the tax which would be owed on the aggregate of
26-6 the gross premium receipts for <during> the two previous calendar
26-7 quarters <quarter ending March 31st, June 30th, September 30th, or
26-8 December 31st> at the minimum tax rate specified by law. The
26-9 comptroller <State Board of Insurance> is authorized to certify for
26-10 refund to the State Treasurer any overpayment of premium taxes that
26-11 results from the semiannual <quarterly> prepayment system herein
26-12 established.
26-13 Sec. 14. No Other Taxes to be Levied or Collected;
26-14 Exceptions. No occupational tax shall be levied on insurance
26-15 carriers or companies herein subjected to this premium receipts tax
26-16 by any county, city, or town. The taxes in this article shall
26-17 constitute all taxes collectible under the laws of Texas against
26-18 any such insurance carrier, except maintenance taxes specifically
26-19 levied under the laws of Texas and assessed by the commissioner and
26-20 administered by the comptroller <State Board of Insurance to
26-21 support the various activities of the divisions of the State Board
26-22 of Insurance>. Farm mutuals are not subject to the franchise tax.
26-23 No other tax shall be levied or collected from any insurance
26-24 carrier by the state, county, or city or any town, but this law
26-25 shall not be construed to prohibit the levy and collection of
26-26 state, county, and municipal taxes upon the real and personal
26-27 property of such carrier.
26-28 SECTION 3.12. Sections 1, 3, 6, 10, and 13, Article 4.11,
26-29 Insurance Code, are amended to read as follows:
26-30 Sec. 1. Insurance Carriers Required to Pay Premium Tax.
26-31 Every insurance carrier receiving premiums from the business of
26-32 life insurance, accident insurance, health insurance, life and
26-33 accident insurance, life and health insurance, health and accident
26-34 insurance, or life, health, and accident insurance, including
26-35 variable life insurance, credit life insurance, and credit accident
26-36 and health insurance for profit or otherwise or for mutual benefit
26-37 or protection, in this state, shall pay to the comptroller <State
26-38 Board of Insurance> for transmittal to the state treasurer a <an
26-39 annual> tax upon its gross premiums as provided in this article.
26-40 Sec. 3. Date for Filing Return and Paying Tax. A premium
26-41 tax return for each tax year ending the 31st day of December
26-42 preceding shall be filed and the total amount of the tax due under
26-43 this article shall be paid on or before either March 1 of each
26-44 year, <or> the date the annual statement for such carrier is
26-45 required to be filed with the commissioner, or another date
26-46 prescribed by the comptroller <State Board of Insurance>.
26-47 Sec. 6. Annual Sworn Returns; Forms; Additional Information.
26-48 Each insurance carrier which is liable under this article for tax
26-49 on premiums shall file a tax return annually<, under oath by two
26-50 officers of such carrier,> on forms prescribed by the comptroller
26-51 <State Board of Insurance>. The comptroller <commissioner of
26-52 insurance> may require such carrier to file any relevant additional
26-53 information reasonably necessary to verify the amount of tax due.
26-54 Sec. 10. Failure to Pay Taxes. Any insurance carrier
26-55 failing to pay all taxes imposed by this article shall be subject
26-56 to the provisions of Article 4.05, Insurance Code, and of Subtitles
26-57 A and B, Title 2, Tax Code, and their subsequent amendments.
26-58 Sec. 13. Prepayment of Tax; Rules, Regulations, Standards,
26-59 Limitations. (a) A semiannual <quarterly> prepayment of premium
26-60 tax must be made on March 1 and August 1<, May 15, August 15, and
26-61 November 15> by all insurers with net tax liability for the
26-62 previous calendar year in excess of $1,000. The tax paid on each
26-63 date must equal one-half <one-fourth> of the total premium tax paid
26-64 for the previous calendar year. Should no premium tax have been
26-65 paid during the previous calendar year, the semiannual <quarterly>
26-66 payment shall equal the tax which would be owed on the aggregate of
26-67 the gross premium receipts for <during> the two previous calendar
26-68 quarters <quarter ending March 31, June 30, September 30, or
26-69 December 31> at the minimum tax rate specified by law. The
26-70 comptroller <State Board of Insurance> is authorized to certify for
27-1 refund to the state treasurer any overpayment of premium taxes that
27-2 results from the semiannual <quarterly> prepayment system herein
27-3 established.
27-4 (b) The comptroller by rule may change the dates for
27-5 reporting and payment of taxes to improve operating efficiencies
27-6 within the agency, so long as a system of semiannual prepayment of
27-7 taxes imposed by this article is maintained <The State Board of
27-8 Insurance may establish such rules, regulations, minimum standards,
27-9 or limitations which are fair and reasonable as may be appropriate
27-10 for the augmentation and implementation of this article>.
27-11 SECTION 3.13. Sections 2, 3, and 4, Article 4.11C, Insurance
27-12 Code, are amended to read as follows:
27-13 Sec. 2. A reciprocal exchange may elect to be subject to the
27-14 tax imposed under Article 4.10 of this code, or to be subject to
27-15 the tax imposed under Article 4.11B of this code. A reciprocal
27-16 exchange that elects to be taxed under Article 4.10 of this code
27-17 must file with the comptroller <commissioner of insurance> not
27-18 later than the 31st day before the day on which the tax year for
27-19 which the election is to be effective begins a written statement on
27-20 a form adopted by the comptroller <State Board of Insurance>
27-21 stating that an election has been made. If a reciprocal exchange
27-22 does not file an election as provided by this article or has
27-23 withdrawn the election, the reciprocal exchange is subject to the
27-24 tax imposed under Article 4.11B of this code.
27-25 Sec. 3. A reciprocal exchange that elects to be taxed under
27-26 Article 4.10 of this code will continue to be taxed under that
27-27 article for each tax year until written notice is given to the
27-28 comptroller <commissioner> that the election to be taxed under that
27-29 article is withdrawn. The notice of withdrawal must be filed with
27-30 the comptroller <commissioner of insurance> not later than the 31st
27-31 day before the beginning of the tax year for which the withdrawal
27-32 is to be effective.
27-33 Sec. 4. The comptroller <State Board of Insurance> by rule
27-34 may adopt necessary forms and procedures to carry out this article.
27-35 The comptroller by rule may change the dates for reporting and
27-36 payment of taxes to improve operating efficiencies within the
27-37 agency, so long as a system of semiannual prepayment of taxes
27-38 imposed by this article is maintained.
27-39 SECTION 3.14. Article 4.17, Insurance Code, is amended by
27-40 amending Subsections (a), (c), (d), and (e) and adding Subsection
27-41 (g) to read as follows:
27-42 (a) The commissioner <State Board of Insurance> shall
27-43 annually determine the rate of assessment of a maintenance tax to
27-44 be paid on an annual, <or> semiannual, or other periodic basis, as
27-45 determined by the comptroller. The rate of assessment may <basis
27-46 and collect a maintenance tax in an amount> not <to> exceed .04
27-47 percent of the correctly reported gross premiums of life, health,
27-48 and accident insurance coverages and the gross considerations for
27-49 annuity and endowment contracts collected by all authorized
27-50 insurers writing life, health, and accident insurance, annuity, or
27-51 endowment contracts in this state. The comptroller shall collect
27-52 the maintenance tax.
27-53 (c) The commissioner <State Board of Insurance>, after
27-54 taking into account the unexpended funds produced by this tax, if
27-55 any, shall adjust the rate of assessment each year to produce the
27-56 amount of funds that it estimates will be necessary to pay all the
27-57 expenses of regulating life, health, and accident insurers during
27-58 the succeeding year. In making an estimate under this subsection,
27-59 the commissioner shall take into account the requirement that the
27-60 general revenue fund be reimbursed under Article 4.19 of this code.
27-61 (d) The taxes collected shall be deposited in the state
27-62 treasury to the credit of the general revenue fund to be
27-63 reallocated to the Texas Department <State Board> of Insurance
27-64 operating fund and shall be spent as authorized by legislative
27-65 appropriation <only> on warrants issued by the comptroller <of
27-66 public accounts> pursuant to duly certified requisitions of the
27-67 commissioner <State Board of Insurance>. Amounts reallocated to
27-68 the Texas Department of Insurance operating fund under this
27-69 subsection may be transferred to the general revenue fund in
27-70 accordance with Article 4.19 of this code.
28-1 (e) The comptroller <State Board of Insurance> may collect
28-2 the tax assessed under this article on a semiannual or other
28-3 periodic basis <semiannually> from those insurers whose tax
28-4 liability under this article for the previous year was $2,000 or
28-5 more. <The State Board of Insurance may prescribe and adopt
28-6 reasonable rules to implement these payments that are not
28-7 inconsistent with this article.>
28-8 (g) The commissioner shall advise the comptroller of the
28-9 applicable rate of assessment no later than the date 45 days prior
28-10 to the due date of the tax return for the period for which such
28-11 taxes are due. If the commissioner has not advised the comptroller
28-12 of the applicable rate by such date, the applicable rate shall be
28-13 the rate applied in the previous tax period. If the commissioner
28-14 advises the comptroller of the applicable rate of assessment after
28-15 taxes have been assessed pursuant to this subsection, the
28-16 comptroller shall:
28-17 (1) advise each taxpayer in writing of the amount of
28-18 any additional taxes due; or
28-19 (2) refund any excess taxes paid.
28-20 SECTION 3.15. Chapter 4, Insurance Code, is amended by
28-21 adding Articles 4.18 and 4.19 to read as follows:
28-22 Art. 4.18. TAX ADMINISTRATION FUNCTIONS; COOPERATION BETWEEN
28-23 DEPARTMENT AND COMPTROLLER. (a) The commissioner and the
28-24 comptroller shall cooperate fully in performing their respective
28-25 duties under this code and other insurance laws of this state.
28-26 (b) The department shall comply with all reasonable requests
28-27 of the comptroller relating to the sharing of information gathered
28-28 or compiled in connection with functions carried out under this
28-29 code or other insurance laws of this state.
28-30 (c) The department shall maintain the federal identification
28-31 number of all entities subject to regulation under this code or
28-32 another insurance law of this state and shall include the
28-33 appropriate number in any communication to or information shared
28-34 with the comptroller.
28-35 Art. 4.19. TAX ADMINISTRATION FUNCTIONS; REIMBURSEMENT OF
28-36 GENERAL REVENUE FUND. (a) The department shall reimburse the
28-37 general revenue fund for the amount of expenses incurred by the
28-38 comptroller in administering the taxes imposed under this code or
28-39 another insurance law of this state in accordance with this
28-40 article.
28-41 (b) The comptroller shall certify to the commissioner the
28-42 total amount of expenses estimated to be required to perform the
28-43 comptroller's duties under this code or another insurance law of
28-44 this state for each fiscal biennium. The comptroller shall provide
28-45 copies of the certification to the budget division of the
28-46 governor's office and to the Legislative Budget Board.
28-47 (c) The amount certified by the comptroller under Subsection
28-48 (b) of this article shall be transferred from the Texas Department
28-49 of Insurance operating fund to the general revenue fund. It is the
28-50 intent of the legislature that the money in the department's
28-51 operating fund that is to be transferred into the general revenue
28-52 fund under this subsection should reflect the revenues from the
28-53 various maintenance taxes paid by insurers under this code or other
28-54 insurance laws of this state.
28-55 (d) In setting the maintenance taxes for each fiscal year,
28-56 the commissioner shall ensure that the amount of the taxes imposed
28-57 is sufficient to fully reimburse the general revenue fund for the
28-58 expenses incurred by the comptroller in administering the taxes
28-59 imposed under this code and other insurance laws of this state. If
28-60 the amount of maintenance taxes collected is insufficient to
28-61 reimburse the general revenue fund for the expenses incurred by the
28-62 comptroller in administering the taxes imposed under this code and
28-63 other insurance laws of this state, other money in the department's
28-64 operating fund shall be used to reimburse the general revenue fund
28-65 in accordance with Subsection (b) of this article.
28-66 SECTION 3.16. Articles 5.12, 5.24, 5.49, and 5.68, Insurance
28-67 Code, are amended to read as follows:
28-68 Art. 5.12. Maintenance Tax on Gross Premiums. (a) The
28-69 State of Texas by and through the commissioner <State Board of
28-70 Insurance> shall annually determine the rate of assessment of a
29-1 maintenance tax to be paid <and collect> on an annual or semiannual
29-2 basis, as determined by the comptroller. The rate of assessment
29-3 may <Board, a maintenance tax in an amount> not <to> exceed
29-4 one-fifth of one percent of the correctly reported gross motor
29-5 vehicle insurance premiums of all authorized insurers writing motor
29-6 vehicle insurance in this state. The comptroller shall collect the
29-7 maintenance tax.
29-8 (b) The tax required by this article is in addition to all
29-9 other taxes now imposed or that may be subsequently imposed and
29-10 that are not in conflict with this article.
29-11 (c) The commissioner <State Board of Insurance>, after
29-12 taking into account the unexpended funds produced by this tax, if
29-13 any, shall adjust the rate of assessment each year to produce the
29-14 amount of funds that it estimates will be necessary to pay all the
29-15 expenses of regulating motor vehicle insurance during the
29-16 succeeding year. In making an estimate under this subsection, the
29-17 commissioner shall take into account the requirement that the
29-18 general revenue fund be reimbursed under Article 4.19 of this code.
29-19 (d) The taxes collected shall be deposited in the State
29-20 Treasury to the credit of the general revenue fund to be
29-21 reallocated to the Texas Department <State Board> of Insurance
29-22 operating fund and shall be spent as authorized by legislative
29-23 appropriation only on warrants issued by the comptroller <of public
29-24 accounts> pursuant to duly certified requisitions of the
29-25 commissioner <State Board of Insurance>. Amounts reallocated to
29-26 the Texas Department of Insurance operating fund under this
29-27 subsection may be transferred to the general revenue fund in
29-28 accordance with Article 4.19 of this code.
29-29 (e) The comptroller <State Board of Insurance> may elect to
29-30 collect on a semiannual or other periodic basis the tax assessed
29-31 under this article only from insurers whose tax liability under
29-32 this article for the previous tax year was $2,000 or more<. The
29-33 State Board of Insurance may prescribe and adopt reasonable rules
29-34 to implement such payments as it deems advisable, not inconsistent
29-35 with this article>.
29-36 (f) The commissioner shall advise the comptroller of the
29-37 applicable rate of assessment no later than the date 45 days prior
29-38 to the due date of the tax return for the period for which such
29-39 taxes are due. If the commissioner has not advised the comptroller
29-40 of the applicable rate by such date, the applicable rate shall be
29-41 the rate applied in the previous tax period. If the commissioner
29-42 advises the comptroller of the applicable rate of assessment after
29-43 taxes have been assessed pursuant to this subsection, the
29-44 comptroller shall:
29-45 (1) advise each taxpayer in writing of the amount of
29-46 any additional taxes due; or
29-47 (2) refund any excess taxes paid.
29-48 Art. 5.24. Maintenance Tax on Gross Premiums. (a) The
29-49 State of Texas by and through the commissioner <State Board of
29-50 Insurance> shall annually determine the rate of assessment of a
29-51 maintenance tax to be paid <and collect> on an annual or semiannual
29-52 basis, as determined by the comptroller. The rate of assessment
29-53 may <Board, a maintenance tax in an amount> not <to> exceed
29-54 two-fifths of one percent of the correctly reported gross premiums
29-55 of all classes of insurance covered by this subchapter of all
29-56 authorized insurers writing those classes of insurance in this
29-57 state. The comptroller shall collect the maintenance tax.
29-58 (b) The tax required by this article is in addition to all
29-59 other taxes now imposed or that may be subsequently imposed and
29-60 that are not in conflict with this article.
29-61 (c) The commissioner <State Board of Insurance>, after
29-62 taking into account the unexpended funds produced by this tax, if
29-63 any, shall adjust the rate of assessment each year to produce the
29-64 amount of funds that it estimates will be necessary to pay all the
29-65 expenses of regulating all classes of insurance covered by this
29-66 subchapter during the succeeding year. In making an estimate under
29-67 this subsection, the board shall take into account the requirement
29-68 that the general revenue fund be reimbursed under Article 4.19 of
29-69 this code.
29-70 (d) The taxes collected shall be deposited in the State
30-1 Treasury to the credit of the general revenue fund to be
30-2 reallocated to the Texas Department <State Board> of Insurance
30-3 operating fund and shall be spent as authorized by legislative
30-4 appropriation <only> on warrants issued by the comptroller <of
30-5 public accounts> pursuant to duly certified requisitions of the
30-6 commissioner <State Board of Insurance>. Amounts reallocated to
30-7 the Texas Department of Insurance operating fund under this
30-8 subsection may be transferred to the general revenue fund in
30-9 accordance with Article 4.19 of this code.
30-10 (e) The comptroller <State Board of Insurance> may elect to
30-11 collect on a semiannual basis the tax assessed under this article
30-12 only from insurers whose tax liability under this article for the
30-13 previous tax year was $2,000 or more<. The State Board of
30-14 Insurance may prescribe and adopt reasonable rules to implement
30-15 such payments as it deems advisable, not inconsistent with this
30-16 article>.
30-17 (f) The commissioner shall advise the comptroller of the
30-18 applicable rate of assessment no later than the date 45 days prior
30-19 to the due date of the tax return for the period for which such
30-20 taxes are due. If the commissioner has not advised the comptroller
30-21 of the applicable rate by such date, the applicable rate shall be
30-22 the rate applied in the previous tax period. If the commissioner
30-23 advises the comptroller of the applicable rate of assessment after
30-24 taxes have been assessed pursuant to this subsection, the
30-25 comptroller shall:
30-26 (1) advise each taxpayer in writing of the amount of
30-27 any additional taxes due; or
30-28 (2) refund any excess taxes paid.
30-29 Art. 5.49. Maintenance tax on gross premiums. (a) The
30-30 State of Texas by and through the commissioner <State Board of
30-31 Insurance> shall annually determine the rate of assessment of a
30-32 maintenance tax to be paid on an annual or semiannual basis, as
30-33 determined by the comptroller. The rate of assessment may <Board,
30-34 and collect a maintenance tax in an amount> not <to> exceed one and
30-35 one-fourth percent of the correctly reported gross premiums of
30-36 fire, lightning, tornado, windstorm, hail, smoke or smudge,
30-37 cyclone, earthquake, volcanic eruption, rain, frost and freeze,
30-38 weather or climatic conditions, excess or deficiency of moisture,
30-39 flood, the rising of the waters of the ocean or its tributaries,
30-40 bombardment, invasion, insurrection, riot, civil war or commotion,
30-41 military or usurped power, any order of a civil authority made to
30-42 prevent the spread of a conflagration, epidemic, or catastrophe,
30-43 vandalism or malicious mischief, strike or lockout, explosion as
30-44 defined in Article 5.52 of this code, water or other fluid or
30-45 substance resulting from the breakage or leakage of sprinklers,
30-46 pumps, or other apparatus erected for extinguishing fires, water
30-47 pipes, or other conduits or containers insurance coverage collected
30-48 by all authorized insurers writing those types of insurance in this
30-49 state. The comptroller shall collect the maintenance tax.
30-50 (b) The tax required by this article is in addition to all
30-51 other taxes now imposed or that may be subsequently imposed and
30-52 that are not in conflict with this article.
30-53 (c) The commissioner <State Board of Insurance>, after
30-54 taking into account the unexpended funds produced by this tax, if
30-55 any, shall adjust the rate of assessment each year to produce the
30-56 amount of funds that it estimates will be necessary to pay all the
30-57 expenses of regulating all classes of insurance specified by this
30-58 subchapter during the succeeding year. In making an estimate under
30-59 this subsection, the commissioner shall take into account the
30-60 requirement that the general revenue fund be reimbursed under
30-61 Article 4.19 of this code.
30-62 (d) The taxes collected shall be deposited in the State
30-63 Treasury to the credit of the general revenue fund to be
30-64 reallocated to the Texas Department <State Board> of Insurance
30-65 operating fund and shall be spent as authorized by legislative
30-66 appropriation <only> on warrants issued by the comptroller <of
30-67 public accounts> pursuant to duly certified requisitions of the
30-68 commissioner <State Board of Insurance>. Amounts reallocated to
30-69 the Texas Department of Insurance operating fund under this
30-70 subsection may be transferred to the general revenue fund in
31-1 accordance with Article 4.19 of this code.
31-2 (e) The comptroller <State Board of Insurance> may elect to
31-3 collect on a semiannual or other periodic basis the tax assessed
31-4 under this article only from insurers whose tax liability under
31-5 this article for the previous tax year was $2,000 or more<. The
31-6 State Board of Insurance may prescribe and adopt reasonable rules
31-7 to implement such payments as it deems advisable, not inconsistent
31-8 with this article>.
31-9 (f) The commissioner shall advise the comptroller of the
31-10 applicable rate of assessment no later than the date 45 days prior
31-11 to the due date of the tax return for the period for which such
31-12 taxes are due. If the commissioner has not advised the comptroller
31-13 of the applicable rate by such date, the applicable rate shall be
31-14 the rate applied in the previous tax period. If the commissioner
31-15 advises the comptroller of the applicable rate of assessment after
31-16 taxes have been assessed pursuant to this subsection, the
31-17 comptroller shall:
31-18 (1) advise each taxpayer in writing of the amount of
31-19 any additional taxes due; or
31-20 (2) refund any excess taxes paid.
31-21 Art. 5.68. Maintenance tax on gross premiums. (a) The
31-22 State of Texas by and through the commissioner <State Board of
31-23 Insurance> shall<, as determined by the Board,> annually determine
31-24 the rate of assessment of a maintenance tax <and collect> on an
31-25 annual or semiannual basis. The comptroller shall collect the
31-26 maintenance tax<,> from each stock company, mutual company,
31-27 reciprocal or interinsurance exchange, and Lloyd's association.
31-28 The rate of assessment may <a maintenance tax in an amount> not
31-29 <to> exceed three-fifths of one percent of the correctly reported
31-30 gross workers' compensation insurance premiums of all authorized
31-31 insurers writing workers' compensation insurance in this state.
31-32 (b) For purposes of this article and Section 2.22, Texas
31-33 Workers' Compensation Act (Article 8308-2.22, Vernon's Texas Civil
31-34 Statutes), gross workers' compensation insurance premiums include
31-35 the modified annual premium of a policyholder that purchases a
31-36 deductible pursuant to Article 5.55C of this code, and the rate of
31-37 assessment shall be applied to the modified annual premium prior to
31-38 application of any deductible premium credit.
31-39 (c) The tax required by this article is in addition to all
31-40 other taxes now imposed or that may be subsequently imposed and
31-41 that are not in conflict with this article.
31-42 (d) The commissioner <State Board of Insurance>, after
31-43 taking into account the unexpended funds produced by this tax, if
31-44 any, shall adjust the rate of assessment each year to produce the
31-45 amount of funds that it estimates will be necessary to pay all the
31-46 expenses of regulating workers' compensation insurance during the
31-47 succeeding year. In making an estimate under this subsection, the
31-48 commissioner shall take into account the requirement that the
31-49 general revenue fund be reimbursed under Article 4.19 of this code.
31-50 (e) The taxes collected shall be deposited in the State
31-51 Treasury to the credit of the general revenue fund to be
31-52 reallocated to the Texas Department <State Board> of Insurance
31-53 operating fund and shall be spent as authorized by legislative
31-54 appropriation <only> on warrants issued by the comptroller <of
31-55 public accounts> pursuant to duly certified requisitions of the
31-56 commissioner <State Board of Insurance>. Amounts reallocated to
31-57 the Texas Department of Insurance operating fund under this
31-58 subsection may be transferred to the general revenue fund in
31-59 accordance with Article 4.19 of this code.
31-60 (f) The comptroller <State Board of Insurance> may elect to
31-61 collect on a semiannual basis the tax assessed under this article
31-62 only from insurers whose tax liability under this article for the
31-63 previous tax year was $2,000 or more<. The State Board of
31-64 Insurance may prescribe and adopt reasonable rules to implement
31-65 such payments as it deems advisable, not inconsistent with this
31-66 article>.
31-67 (g) The commissioner shall advise the comptroller of the
31-68 applicable rate of assessment no later than the date 45 days prior
31-69 to the due date of the tax return for the period for which such
31-70 taxes are due. If the commissioner has not advised the comptroller
32-1 of the applicable rate by such date, the applicable rate shall be
32-2 the rate applied in the previous tax period. If the commissioner
32-3 advises the comptroller of the applicable rate of assessment after
32-4 taxes have been assessed pursuant to this subsection, the
32-5 comptroller shall:
32-6 (1) advise each taxpayer in writing of the amount of
32-7 any additional taxes due; or
32-8 (2) refund any excess taxes paid.
32-9 SECTION 3.17. Section 10(b), Article 5.76-5, Insurance Code,
32-10 is amended to read as follows:
32-11 (b) The maintenance tax surcharge shall be set in an amount
32-12 sufficient to pay all debt service on the bonds. The maintenance
32-13 tax surcharge is set by the commissioner <State Board of Insurance>
32-14 in the same time and shall be collected by the comptroller on
32-15 behalf of the fund in the same manner as provided under Article
32-16 5.68 of this code.
32-17 SECTION 3.18. Articles 5.91 and 9.46, Insurance Code, are
32-18 amended to read as follows:
32-19 Art. 5.91. Maintenance Tax on Gross Premiums. (a) The
32-20 State of Texas by and through the commissioner <State Board of
32-21 Insurance> shall annually determine the rate of assessment of a
32-22 maintenance tax to be paid on an annual or semiannual basis, as
32-23 determined by the comptroller. The rate of assessment may <Board,
32-24 and collect a maintenance tax in an amount> not <to> exceed
32-25 two-fifths of one percent of the correctly reported gross premiums
32-26 on all classes of insurance covered by this subchapter of all
32-27 authorized insurers writing those classes of insurance in this
32-28 state. The comptroller shall collect the maintenance tax.
32-29 (b) The tax required by this article is in addition to all
32-30 other taxes now imposed or that may be subsequently imposed and
32-31 that are not in conflict with this article.
32-32 (c) The commissioner <State Board of Insurance>, after
32-33 taking into account the unexpended funds produced by this tax, if
32-34 any, shall adjust the rate of assessment each year to produce the
32-35 amount of funds that it estimates will be necessary to pay all the
32-36 expenses of regulating all classes of insurance specified by this
32-37 subchapter during the succeeding year. In making an estimate under
32-38 this subsection, the commissioner shall take into account the
32-39 requirement that the general revenue fund be reimbursed under
32-40 Article 4.19 of this code.
32-41 (d) The taxes collected shall be deposited in the State
32-42 Treasury to the credit of the general revenue fund to be
32-43 reallocated to the Texas Department <State Board> of Insurance
32-44 operating fund and shall be spent as authorized by legislative
32-45 appropriation <only> on warrants issued by the comptroller <of
32-46 public accounts> pursuant to duly certified requisitions of the
32-47 commissioner <State Board of Insurance>. Amounts reallocated to
32-48 the Texas Department of Insurance operating fund under this
32-49 subsection may be transferred to the general revenue fund in
32-50 accordance with Article 4.19 of this code.
32-51 (e) The comptroller <State Board of Insurance> may elect to
32-52 collect on a semiannual basis the tax assessed under this article
32-53 only from insurers whose tax liability under this article for the
32-54 previous tax year was $2,000 or more<. The State Board of
32-55 Insurance may prescribe and adopt reasonable rules to implement
32-56 such payments as it deems advisable, not inconsistent with this
32-57 article>.
32-58 (f) The commissioner shall advise the comptroller of the
32-59 applicable rate of assessment no later than the date 45 days prior
32-60 to the due date of the tax return for the period for which such
32-61 taxes are due. If the commissioner has not advised the comptroller
32-62 of the applicable rate by such date, the applicable rate shall be
32-63 the rate applied in the previous tax period. If the commissioner
32-64 advises the comptroller of the applicable rate of assessment after
32-65 taxes have been assessed pursuant to this subsection, the
32-66 comptroller shall:
32-67 (1) advise each taxpayer in writing of the amount of
32-68 any additional taxes due; or
32-69 (2) refund any excess taxes paid.
32-70 Art. 9.46. Maintenance FEE <Tax on Gross Premiums>. (a)
33-1 The State of Texas by and through the commissioner <State Board of
33-2 Insurance> shall annually determine the rate of assessment of a
33-3 maintenance fee to be paid on an annual, <or> semiannual, or other
33-4 periodic basis, as determined by the comptroller. The rate of
33-5 assessment may <Board, and collect a maintenance tax in an amount>
33-6 not <to> exceed one percent of the correctly reported gross title
33-7 insurance premiums of all authorized insurers writing title
33-8 insurance in this state. This fee is not a tax and shall be
33-9 reported and paid separately from premium and retaliatory taxes.
33-10 The fee is included in the division of premium and may not be
33-11 separately charged to the title insurance agent. The comptroller
33-12 shall collect the maintenance fee. <The tax required by this
33-13 article is in addition to all other taxes now imposed or that may
33-14 be subsequently imposed and that are not in conflict with this
33-15 article.>
33-16 (b) The commissioner <State Board of Insurance>, after
33-17 taking into account the unexpended funds produced by this fee
33-18 <tax>, if any, shall adjust the rate of assessment each year to
33-19 produce the amount of funds that it estimates will be necessary to
33-20 pay all the expenses of regulating title insurance during the
33-21 succeeding year. In making an estimate under this subsection, the
33-22 commissioner shall take into account the requirement that the
33-23 general revenue fund be reimbursed under Article 4.19 of this code.
33-24 (c) The fees <taxes> collected shall be deposited in the
33-25 State Treasury to the credit of the general revenue fund to be
33-26 reallocated to the Texas Department <State Board> of Insurance
33-27 operating fund and shall be spent as authorized by legislative
33-28 appropriation <only> on warrants issued by the comptroller <of
33-29 public accounts> pursuant to duly certified requisitions of the
33-30 commissioner <State Board of Insurance>. Amounts reallocated to
33-31 the Texas Department of Insurance operating fund under this
33-32 subsection may be transferred to the general revenue fund in
33-33 accordance with Article 4.19 of this code.
33-34 (d) The comptroller <State Board of Insurance> may elect to
33-35 collect on a semiannual or other periodic basis the fee <tax>
33-36 assessed under this article only from insurers whose <tax>
33-37 liability under this article for the previous <tax> year was $2,000
33-38 or more. <The State Board of Insurance may prescribe and adopt
33-39 reasonable rules to implement such payments as it deems advisable,
33-40 not inconsistent with this article.>
33-41 (e) Not later than the 45th day before the date on which a
33-42 maintenance fee return for a period is due, the commissioner shall
33-43 advise the comptroller of the rate of assessment for that period.
33-44 (f) If the commissioner has not advised the comptroller of
33-45 the rate of assessment for a period as required by Subsection (e)
33-46 of this article, the amount of fees due under this article for that
33-47 period for an insurer is an amount equal to 90 percent of the
33-48 amount paid by that insurer for the previous period. If the
33-49 commissioner advises the comptroller of the rate of assessment for
33-50 a period after maintenance fees are assessed under this subsection,
33-51 the comptroller shall:
33-52 (1) advise each insurer in writing of the amount of
33-53 any additional maintenance fees due; or
33-54 (2) refund any excess maintenance fees paid.
33-55 SECTION 3.19. Sections 1, 3, and 5, Article 9.59, Insurance
33-56 Code, are amended to read as follows:
33-57 Sec. 1. Payment of tax. Each title insurance company
33-58 receiving premiums from the business of title insurance shall pay
33-59 to the comptroller <commissioner of insurance> for transmittal to
33-60 the state treasurer a <an annual> tax on those premiums as provided
33-61 in this article.
33-62 Sec. 3. Time of filing and payment. (a) A premium tax
33-63 return for each taxable year ending on December 31 of the preceding
33-64 year shall be filed and the total amount of the tax due under this
33-65 article shall be paid on or before March 1 of each year or another
33-66 date prescribed by the comptroller.
33-67 (b) A semiannual <quarterly> prepayment of premium tax must
33-68 be made on March 1 and August 1<, May 15, August 15, and November
33-69 15> by all insurers with net tax liability for the previous
33-70 calendar year of more than $1,000. The tax paid on each date must
34-1 equal one-half <one-fourth> of the total premium tax paid for the
34-2 previous calendar year. If no premium tax has been paid during the
34-3 previous calendar year, the semiannual <quarterly> payment shall
34-4 equal the tax that would be owed on the aggregate of the gross
34-5 premium receipts for <during> the two previous calendar quarters
34-6 <quarter ending March 31, June 30, September 30, or December 31> at
34-7 the minimum tax rate specified by law. The comptroller
34-8 <commissioner> may certify for refund to the state treasurer any
34-9 overpayment of premium taxes that results from the semiannual
34-10 <quarterly> prepayment system established by this subsection.
34-11 (c) Without limiting the general authority of the
34-12 comptroller to adopt rules to promote the efficient administration,
34-13 collection, enforcement, and reporting of taxes under this code or
34-14 another insurance law of this state, the commissioner or
34-15 comptroller, as appropriate, <The State Board of Insurance> may
34-16 adopt rules, regulations, minimum standards, and limitations that
34-17 are fair and reasonable as may be appropriate for the augmentation
34-18 and implementation of this article.
34-19 Sec. 5. ANNUAL TAX RETURN. Each title insurance company
34-20 that is liable under this article to remit tax on premium shall
34-21 file a tax return annually<, under oath by two officers of the
34-22 title insurance company,> on forms prescribed by the comptroller
34-23 <State Board of Insurance>.
34-24 SECTION 3.20. Section 33, Texas Health Maintenance
34-25 Organization Act (Article 20A.33, Vernon's Texas Insurance Code),
34-26 is amended by amending Subsection (d) and adding Subsections (e),
34-27 (f), (g), (h), and (i) to read as follows:
34-28 (d) The commissioner <State Board of Insurance> shall
34-29 annually determine the rate of assessment of <and collect> a per
34-30 capita maintenance tax to be paid on an annual or semiannual basis,
34-31 on the correctly reported gross revenues for the issuance of health
34-32 maintenance certificates or contracts collected by all authorized
34-33 health maintenance organizations issuing such coverages in this
34-34 state. The rate of assessment may <in an amount> not <to> exceed
34-35 $2 for each enrollee. The rate of assessment may differ between
34-36 basic health care plans and single health care service plans and
34-37 shall equitably reflect any differences in regulatory resources
34-38 attributable to each type of plan. The comptroller shall collect
34-39 the maintenance tax.
34-40 (e) The tax required by this section <article> is in
34-41 addition to all other taxes now imposed or that may be subsequently
34-42 imposed and that are not in conflict with this section.
34-43 (f) The commissioner <State Board of Insurance>, after
34-44 taking into account the unexpended funds produced by this tax, if
34-45 any, shall adjust the rate of assessment each year to produce the
34-46 amount of funds that it estimates will be necessary to pay all the
34-47 expenses of regulating health maintenance organizations during the
34-48 succeeding year. In making an estimate under this subsection, the
34-49 commissioner shall take into account the requirement that the
34-50 general revenue fund be reimbursed under Article 4.19, Insurance
34-51 Code.
34-52 (g) The taxes collected shall be deposited in the State
34-53 Treasury to the credit of the general revenue fund to be
34-54 reallocated to the Texas Department <State Board> of Insurance
34-55 operating fund and shall be spent as authorized by legislative
34-56 appropriation <only> on warrants issued by the comptroller <of
34-57 public accounts> pursuant to duly certified requisitions of the
34-58 commissioner <State Board of Insurance>. Amounts reallocated to
34-59 the Texas Department of Insurance operating fund under this
34-60 subsection may be transferred to the general revenue fund in
34-61 accordance with Article 4.19, Insurance Code.
34-62 (h) The comptroller <State Board of Insurance> may collect
34-63 the tax assessed under this section on a semiannual or other
34-64 periodic basis <semiannually> from those health maintenance
34-65 organizations whose tax liability under this section for the
34-66 previous year was $2,000 or more<. The State Board of Insurance
34-67 may prescribe and adopt reasonable rules to implement such payments
34-68 as it deems advisable, not inconsistent with this section>.
34-69 (i) The commissioner shall advise the comptroller of the
34-70 applicable rate of assessment no later than the date 45 days prior
35-1 to the due date of the tax return for the period for which such
35-2 taxes are due. If the commissioner has not advised the comptroller
35-3 of the applicable rate by such date, the applicable rate shall be
35-4 the rate applied in the previous tax period. If the commissioner
35-5 advises the comptroller of the applicable rate of assessment after
35-6 taxes have been assessed pursuant to this subsection, the
35-7 comptroller shall:
35-8 (1) advise each taxpayer in writing of the amount of
35-9 any additional taxes due; or
35-10 (2) refund any excess taxes paid.
35-11 SECTION 3.21. Section 21, Article 21.07-6, Insurance Code,
35-12 is amended by amending Subsections (a), (c), and (d) and adding
35-13 Subsection (e) to read as follows:
35-14 (a) The commissioner <board> annually shall determine the
35-15 rate of assessment of a maintenance tax to be paid on an annual,
35-16 <or> semiannual, or other periodic basis, as determined by the
35-17 comptroller. The rate of assessment may <and collect a maintenance
35-18 tax in an amount> not <to> exceed one percent of the correctly
35-19 reported administrative or service fees of all administrators that
35-20 are covered by certificates of authority. The comptroller shall
35-21 collect the maintenance tax.
35-22 (c) The commissioner <board>, after taking into account the
35-23 unexpended funds produced by this tax, if any, shall adjust the
35-24 rate of assessment each year to produce the amount of funds that it
35-25 estimates will be necessary to pay all the expenses of regulating
35-26 administrators. In making an estimate under this subsection, the
35-27 commissioner shall take into account the requirement that the
35-28 general revenue fund be reimbursed under Article 4.19 of this code.
35-29 (d) The taxes collected under this section shall be
35-30 deposited in the state treasury to the credit of the general
35-31 revenue fund to be reallocated to the Texas Department <State
35-32 Board> of Insurance operating fund and shall be spent as authorized
35-33 by legislative appropriation <only> on warrants issued by the
35-34 comptroller <of public accounts> pursuant to duly certified
35-35 requisitions of the commissioner <board>. Amounts reallocated to
35-36 the Texas Department of Insurance operating fund under this
35-37 subsection may be transferred to the general revenue fund in
35-38 accordance with Article 4.19 of this code.
35-39 (e) The commissioner shall advise the comptroller of the
35-40 applicable rate of assessment no later than the date 45 days prior
35-41 to the due date of the tax return for the period for which such
35-42 taxes are due. If the commissioner has not advised the comptroller
35-43 of the applicable rate by such date, the applicable rate shall be
35-44 the rate applied in the previous tax period. If the commissioner
35-45 advises the comptroller of the applicable rate of assessment after
35-46 taxes have been assessed pursuant to this subsection, the
35-47 comptroller shall:
35-48 (1) advise each taxpayer in writing of the amount of
35-49 any additional taxes due; or
35-50 (2) refund any excess taxes paid.
35-51 SECTION 3.22. Sections 4(e) and (f), Article 21.54,
35-52 Insurance Code, are amended to read as follows:
35-53 (e) A filing fee not to exceed $500 as established by
35-54 commissioner <board> regulation may be imposed for the filing of
35-55 the financial statement under Subdivision (1) of Subsection (d) of
35-56 this section. Fees collected for filing the statement shall be
35-57 deposited in the State Treasury to the credit of the general
35-58 revenue fund to be reallocated to the Texas Department <State
35-59 Board> of Insurance operating fund.
35-60 (f) Such risk retention group shall be liable for the
35-61 payment of premium and maintenance taxes and taxes on premiums of
35-62 direct business for risks located within this state and shall
35-63 report to the commissioner of this state the net premiums written
35-64 for risks located within this state. Such risk retention group
35-65 shall be subject to taxation, and any applicable fines and
35-66 penalties related thereto, on the same basis as a foreign admitted
35-67 insurer pursuant to Chapters 4 and 5 of this code. Groups shall
35-68 provide to the comptroller all information the comptroller may
35-69 request in connection with the reporting, collection, enforcement,
35-70 and administration of taxes due under this article and of the fee
36-1 imposed under Subsection (e) of this section.
36-2 SECTION 3.23. Chapter 23, Insurance Code, is amended by
36-3 amending Article 23.08 and adding Article 23.08A to read as
36-4 follows:
36-5 Art. 23.08. FEES <AND TAXES>. <(a)> The commissioner
36-6 <State Board of Insurance> shall charge a fee determined by the
36-7 commissioner <Board> in an amount not to exceed $400 for filing the
36-8 annual statement of each corporation operating under this chapter;
36-9 an application fee determined by the commissioner <Board> in an
36-10 amount not to exceed $3,000 for each corporation applying under
36-11 this chapter which includes the fee for the issuance of a
36-12 certificate of authority; and a fee determined by the commissioner
36-13 <Board> in an amount not to exceed $100 for the issuance of each
36-14 additional certificate of authority and amendment of a certificate
36-15 of authority to the corporation. The commissioner <Board> shall,
36-16 within the limits fixed by this article <subsection>, prescribe the
36-17 fees to be charged under this article <subsection>. The fees
36-18 collected by the commissioner <Board> under this article
36-19 <subsection> shall be deposited in the State Treasury to the credit
36-20 of the Texas Department <State Board> of Insurance operating fund,
36-21 and Article 1.31A of this code applies to fees collected under this
36-22 article <subsection>.
36-23 Art. 23.08A. MAINTENANCE TAX. (a) <(b)> The State of Texas
36-24 by and through the commissioner <State Board of Insurance> shall
36-25 annually determine the rate of assessment of a maintenance tax to
36-26 be paid <and collect as determined by the Board,> on an annual or
36-27 semiannual basis. The rate of assessment may<, a maintenance tax
36-28 in an amount> not <to> exceed one percent of the correctly reported
36-29 gross revenues received by all corporations issuing prepaid legal
36-30 services contracts in this state. The comptroller shall collect
36-31 the maintenance tax.
36-32 (b) The tax required by this article is in addition to all
36-33 other taxes now imposed or that may be subsequently imposed and
36-34 that are not in conflict with this article.
36-35 (c) The commissioner <State Board of Insurance>, after
36-36 taking into account the unexpended funds produced by this tax, if
36-37 any, shall adjust the rate of assessment each year to produce the
36-38 amount of funds that it estimates will be necessary to pay all the
36-39 expenses of regulating nonprofit legal services corporations during
36-40 the succeeding year. In making an estimate under this subsection,
36-41 the commissioner shall take into account the requirement that the
36-42 general revenue fund be reimbursed under Article 4.19 of this code.
36-43 (d) The taxes collected shall be deposited in the State
36-44 Treasury to the credit of the general revenue fund to be
36-45 reallocated to the Texas Department <State Board> of Insurance
36-46 operating fund and shall be spent as authorized by legislative
36-47 appropriation <only> on warrants issued by the comptroller <of
36-48 public accounts> pursuant to duly certified requisitions of the
36-49 commissioner <State Board of Insurance>. Amounts reallocated to
36-50 the Texas Department of Insurance operating fund under this
36-51 subsection may be transferred to the general revenue fund in
36-52 accordance with Article 4.19 of this code.
36-53 (e) Article 1.31A of this code applies to taxes collected
36-54 under this article <section>.
36-55 (f) The comptroller <State Board of Insurance> may elect to
36-56 collect on a semiannual basis the tax assessed under this article
36-57 only from insurers whose tax liability under this article for the
36-58 previous tax year was $2,000 or more. The comptroller <State Board
36-59 of Insurance> may prescribe and adopt reasonable rules to implement
36-60 such payments as it deems advisable, not inconsistent with this
36-61 article.
36-62 (g) The commissioner shall advise the comptroller of the
36-63 applicable rate of assessment no later than the date 45 days prior
36-64 to the due date of the tax return for the period for which such
36-65 taxes are due. If the commissioner has not advised the comptroller
36-66 of the applicable rate by such date, the applicable rate shall be
36-67 the rate applied in the previous tax period. If the commissioner
36-68 advises the comptroller of the applicable rate of assessment after
36-69 taxes have been assessed pursuant to this subsection, the
36-70 comptroller shall:
37-1 (1) advise each taxpayer in writing of the amount of
37-2 any additional taxes due; or
37-3 (2) refund any excess taxes paid.
37-4 SECTION 3.24. Section 2.21, Texas Workers' Compensation Act
37-5 (Article 8308-2.21, Vernon's Texas Civil Statutes), is amended to
37-6 read as follows:
37-7 Sec. 2.21. Commission funding. Unless otherwise provided,
37-8 all proceeds, including administrative penalties and advance
37-9 deposits for purchase of services, collected under this Act shall
37-10 be deposited in the General Revenue Fund of the state treasury to
37-11 the credit of the commission. The funds may be spent as authorized
37-12 by legislative appropriation on warrants issued by the comptroller
37-13 <of public accounts> under requisitions made by the commission.
37-14 Proceeds deposited in the General Revenue Fund under this section
37-15 may be used to satisfy the requirements of Article 4.19, Insurance
37-16 Code.
37-17 SECTION 3.25. Section 2.23(a), Texas Workers' Compensation
37-18 Act (Article 8308-2.23, Vernon's Texas Civil Statutes), is amended
37-19 to read as follows:
37-20 (a) The commission shall set and certify to the comptroller
37-21 <State Board of Insurance> the rate of assessment no later than
37-22 October 31 of each year, taking into account the following factors:
37-23 (1) expenditures projected as necessary for the
37-24 commission to administer this Act during the fiscal year for which
37-25 the rate of assessment is set and to reimburse the general revenue
37-26 fund in accordance with Article 4.19, Insurance Code;
37-27 (2) projected employee benefits paid from general
37-28 revenues;
37-29 (3) surpluses or deficits produced by this tax in the
37-30 preceding year; and
37-31 (4) revenue recovered from other sources, including
37-32 reappropriated receipts, grants, payments, fees, gifts, and
37-33 penalties recovered under this Act.
37-34 SECTION 3.26. Section 11.09(c), Texas Workers' Compensation
37-35 Act (Article 8308-11.09, Vernon's Texas Civil Statutes), is amended
37-36 to read as follows:
37-37 (c) Amounts received under this section shall be deposited
37-38 in the state treasury to the credit of a special fund to be used
37-39 for the operation of the research center and to reimburse the
37-40 general revenue fund in accordance with Article 4.19, Insurance
37-41 Code.
37-42 SECTION 3.27. Section 101.003, Tax Code, is amended by
37-43 amending Subdivisions (8) and (11) and adding Subdivision (12) to
37-44 read as follows:
37-45 (8) "Taxpayer" means a person liable for a tax, fee,
37-46 assessment, or other amount imposed by law administered by the
37-47 comptroller <this title>.
37-48 (11) "Report" means a tax return, declaration,
37-49 statement, or other document required to be filed with the
37-50 comptroller <by a provision of this title>.
37-51 (12) "Obligation" means the duty of a person to pay a
37-52 tax, fee, assessment, or other amount or to make, file, or keep a
37-53 report, certificate, affidavit, or other document.
37-54 SECTION 3.28. Subchapter A, Chapter 111, Tax Code, is
37-55 amended by adding Section 111.0022 to read as follows:
37-56 Sec. 111.0022. APPLICATION TO OTHER PROGRAMS. This subtitle
37-57 and Subtitle A apply to the administration of other programs or
37-58 functions assigned to the comptroller by law.
37-59 SECTION 3.29. The following laws are repealed:
37-60 (1) Section 12(f), Article 1.14-1, Insurance Code;
37-61 (2) Sections 12 and 16, Article 4.10, Insurance Code;
37-62 (3) Sections 7 and 11, Article 4.11, Insurance Code;
37-63 (4) Articles 4.13, 4.14, 4.15, and 4.16, Insurance
37-64 Code;
37-65 (5) Sections 6 and 10, Article 9.59, Insurance Code;
37-66 and
37-67 (6) Section 33(b), Texas Health Maintenance
37-68 Organization Act (Article 20A.33, Vernon's Texas Insurance Code).
37-69 SECTION 3.30. (a) The State Board of Insurance, the
37-70 Commissioner of Insurance, and the Texas Department of Insurance
38-1 shall transfer and the comptroller shall assume the duties assigned
38-2 to the comptroller under Article 1.04D, Insurance Code, as added by
38-3 this Act, on September 1, 1993. In assuming these duties, the
38-4 comptroller shall assume responsibility for the collection,
38-5 reporting, enforcement, and administration of any tax, assessment,
38-6 or fee owing on or before September 1, 1993, to the extent such
38-7 responsibility is transferred to the comptroller under this article
38-8 and for the payment of any refund owing on or before September 1,
38-9 1993, without regard to whether the law on which the tax,
38-10 assessment, fee, or refund was based has been repealed on or before
38-11 that date.
38-12 (b) The comptroller may modify procedures that had been used
38-13 by the State Board of Insurance or the Texas Department of
38-14 Insurance in performing the functions that are transferred to the
38-15 comptroller under this article to increase efficiency and cost
38-16 effectiveness.
38-17 (c) Rules of the Texas Department of Insurance that are in
38-18 effect on September 1, 1993, and that relate to the functions
38-19 transferred to the comptroller under this article remain in effect
38-20 until repealed or amended by the comptroller.
38-21 SECTION 3.31. (a) To assist the comptroller of public
38-22 accounts in implementing the reporting, collection, enforcement,
38-23 and administration functions with respect to insurance taxes and
38-24 selected fees as described in this article, there is hereby
38-25 appropriated to the comptroller of public accounts from the general
38-26 revenue fund the sums of $1,570,432 for the fiscal year ending
38-27 August 31, 1994, and $1,042,138 for the fiscal year ending August
38-28 31, 1995. Any unexpended balances remaining as of August 31, 1994
38-29 are hereby reappropriated for the fiscal year ending August 31,
38-30 1995. The comptroller may transfer the sum appropriated into the
38-31 comptroller's operating fund No. 062 and into the appropriate
38-32 program appropriations identified in the General Appropriations
38-33 Act.
38-34 (b) The transfer required by this article includes all
38-35 duties and obligations of any kind, except as otherwise
38-36 specifically provided, relating to the reporting, collection,
38-37 enforcement, and administration of all taxes and of selected fees
38-38 and assessments as set forth in the Insurance Code, and includes
38-39 all assets, liabilities, real or personal property, personnel,
38-40 furniture, computers, and other equipment, files, and related
38-41 materials used by the State Board of Insurance, the commissioner,
38-42 or the department to perform the aspects and functions transferred
38-43 by this article.
38-44 SECTION 3.32. The change in law made by this article to
38-45 Section 6(b), Article 4.10, Insurance Code, Section 13, Article
38-46 4.11, Insurance Code, and Section 3(b), Article 9.59, Insurance
38-47 Code, relating to the dates for prepayment of tax, apply only to
38-48 the prepayment of premium taxes beginning with prepayments that
38-49 become due after March 1, 1994. The dates for prepayment of
38-50 premium taxes under those articles before March 1, 1994, are
38-51 governed by the law as it existed before the effective date of this
38-52 article and that law is continued in effect for that purpose.
38-53 ARTICLE 4. APPEAL OF DECISIONS OF COMMISSIONER
38-54 SECTION 4.01. Section 4, Article 1.15, Insurance Code, is
38-55 amended to read as follows:
38-56 Sec. 4. Any rule, regulation, order, decision or finding of
38-57 the Board under this Act shall be subject to <full> review in
38-58 accordance with Article 1.04 of this code <any suit filed by any
38-59 interested party in any District Court of the State of Texas in
38-60 Travis County, Texas, and not elsewhere>. The filing of such suit
38-61 shall operate as a stay of any such rule, regulation, order,
38-62 decision or finding of the Board until the court directs otherwise.
38-63 <The court may review all the facts, shall hear, try and determine
38-64 said suit de novo as other civil cases in said court; and in
38-65 disposing of the issues before it, may modify, affirm, or reverse
38-66 the action of the Board in whole or in part.>
38-67 SECTION 4.02. Section 8(A)(4), Article 3.53, Insurance Code,
38-68 is amended to read as follows:
38-69 (4) Any person aggrieved by the action of the board in
38-70 the setting of a presumptive rate or any other action taken with
39-1 regard to the setting of such presumptive rate may within 30 days
39-2 from the date the board took the action complained of appeal in
39-3 accordance with Article 1.04 of this code<, file a suit in a
39-4 district court of Travis County to review the action. Such cases
39-5 shall be tried de novo in the district court and shall be governed
39-6 by the same rules of procedure and evidence as in other civil cases
39-7 in such courts. The court may enter an order setting aside or
39-8 affirming the action of the board>.
39-9 SECTION 4.03. Article 5.26(g), Insurance Code, is amended to
39-10 read as follows:
39-11 (g) The Board may call a public hearing on any application
39-12 for permission to file a deviation or a hearing on a permitted
39-13 deviation and shall call a hearing upon the request of any
39-14 aggrieved policyholder of the company filing the deviation made
39-15 within thirty (30) days after the granting or denying of any
39-16 deviation. The Board shall give reasonable notice of such hearings
39-17 and shall hear witnesses respecting such matters. Any applicant
39-18 dissatisfied with any order of the Board made without a hearing
39-19 under this Article may within thirty (30) days after entry of such
39-20 order make written request of the Board for a hearing thereon. The
39-21 Board shall hear such applicant within twenty (20) days after
39-22 receiving such request and shall give not less than ten (10) days
39-23 written notice of the time and place of the hearing. Within
39-24 fifteen (15) days after such hearing the Board shall affirm,
39-25 reverse or modify by order its previous action, specifying in such
39-26 order its reasons therefor. Any applicant who may be dissatisfied
39-27 with any order of the Board respecting its application may appeal
39-28 in accordance with Article 1.04 of this code. <to the District
39-29 Court of Travis County, Texas, and not elsewhere, by filing a
39-30 petition within thirty (30) days after the rendition or entry of
39-31 such order setting forth its grounds of objection thereto, in which
39-32 said action the appealing applicant shall be plaintiff and the
39-33 Board shall be defendant. The action shall not be limited to
39-34 questions of law and the substantial evidence rule shall not apply,
39-35 but such action shall be tried and determined upon a trial de novo
39-36 to the same extent as now provided in the case of an appeal from
39-37 the Justice Court to the County Court.> The judgment of the
39-38 District Court shall be appealable as in any other civil case.
39-39 Such action shall have precedence over other civil cases on the
39-40 dockets of the appellate courts. Should the Board terminate or
39-41 refuse to renew a permitted deviation or refuse permission for
39-42 filing of a deviation under subdivision (f) hereof, then such
39-43 deviation shall remain in effect during the course of any hearing
39-44 thereon and thirty (30) days thereafter, and during the course of
39-45 any appeal taken from such order and until final judgment of the
39-46 courts. <The Board shall not be required to give any appeal or
39-47 supersedeas bond in any cause arising hereunder. All hearings
39-48 before the Board and appeals to the District Courts under this
39-49 Article shall be governed exclusively by this Article.>
39-50 SECTION 4.04. Article 9.33, Insurance Code, is amended to
39-51 read as follows:
39-52 Art. 9.33. To Cancel License; Appeals by Companies. (a)
39-53 The terms and provisions of this Act are conditions upon which
39-54 corporations doing the business provided for in this Act may
39-55 continue to exist, and failure to comply with any of them or a
39-56 violation of any of the terms of this Act shall be proper cause for
39-57 revocation of the permit and forfeiture of charter of a domestic
39-58 corporation or the permit of a foreign corporation.
39-59 (b) Any company qualified or seeking to qualify under this
39-60 Act, feeling aggrieved by any action of the Board, especially, but
39-61 not limited to, any action against such company, shall have the
39-62 right to file a suit in the District Court of Travis County, within
39-63 thirty (30) days after the Board has made its order or ruling;
39-64 provided, however, that if the order or ruling is directed against
39-65 such company, whether or not directed against other companies, such
39-66 company shall have thirty (30) days after receipt of official
39-67 notice of such ruling from the Board to review such action of the
39-68 Board. Such cases shall be subject to the same standard of review
39-69 as other appeals under this code in accordance with Article 1.04 of
39-70 this code <tried de novo in such District Court in accordance with
40-1 the provisions of Article 21.44 of the Insurance Code and shall be
40-2 governed by the same rules of pleading, including rights of
40-3 amendments thereof, evidence, and procedure as are applicable to
40-4 other civil cases in the original jurisdiction of a District
40-5 Court>.
40-6 SECTION 4.05. Article 14.06, Insurance Code, is amended to
40-7 read as follows:
40-8 Art. 14.06. Refusal of Certificate or Permit. (a) No such
40-9 corporation shall continue to operate in this State if the Board
40-10 has notified it in writing of the refusal of the Board to issue it
40-11 a certificate and permit. But any such corporation may within
40-12 sixty (60) days after receiving such notice file a suit <in any
40-13 district court of Travis County, Texas,> to review the said action
40-14 of the Board in accordance with Article 1.04 of this code <and may
40-15 by trial de novo have all necessary relief both in law and equity
40-16 to enforce its rights under this chapter>.
40-17 (b) Nothing in this chapter shall be construed to validate
40-18 or otherwise sanction any unlawful act of any such corporation,
40-19 except when such unlawful act may have been construed to be
40-20 unlawful simply by reason of the fact that the law under which said
40-21 corporation was created has since been repealed or amended so as to
40-22 omit therefrom such corporations as are described in this chapter.
40-23 SECTION 4.06. Section 6(b), Article 21.21-2, Insurance Code,
40-24 is amended to read as follows:
40-25 (b) Any insurer affected by a ruling or order of the board
40-26 pursuant to the provisions of this Act may appeal same by filing
40-27 suit <in any of the district courts of Travis County, Texas,>
40-28 within 20 days from the date of the order of said board. Such
40-29 appeal shall be governed by Article 1.04 of this code <by trial de
40-30 novo>. Reasonable attorneys' fees shall be awarded the board if
40-31 judicial action is necessary for the enforcement of its orders.
40-32 SECTION 4.07. Section 3(h), Article 21.28, Insurance Code,
40-33 is amended to read as follows:
40-34 (h) Action on Claims. The receiver shall have the
40-35 discretion to approve or reject any claim filed against the
40-36 insurer. Objections to any claim not rejected may be made by any
40-37 party interested, by filing the objections with the receiver, who
40-38 shall forthwith present them to the court for determination after
40-39 notice and hearing. Upon the rejection of each claim either in
40-40 whole or in part, the receiver shall notify the claimant of such
40-41 rejection by written notice. Action upon a claim so rejected must
40-42 be brought in the court in which the delinquency proceeding is
40-43 pending within three (3) months after service of notice; otherwise,
40-44 the action of the receiver shall be final and not subject to
40-45 review. Such action shall be <de novo as if originally filed in
40-46 said court and> subject to the same standard of review as other
40-47 appeals under this code in accordance with Article 1.04 of this
40-48 code <rules of procedure and appeal applicable to civil cases>.
40-49 This action shall be a separate action from the delinquency
40-50 proceeding, and a claimant's attempt to appeal the action of the
40-51 receiver by way of intervening in the delinquency proceeding does
40-52 not comply with this subsection.
40-53 SECTION 4.08. Section 7, Article 21.28-A, Insurance Code, is
40-54 amended to read as follows:
40-55 Sec. 7. Review and Stay of Action. During the period of
40-56 supervision and during the period of conservatorship, the insurance
40-57 company may request the Commissioner of Insurance or in his
40-58 absence, the duly appointed deputy for such purpose, to review an
40-59 action taken or proposed to be taken by the supervisor or
40-60 conservator, specifying wherein the action complained of is
40-61 believed not to be in the best interests of the insurance company,
40-62 and such request shall stay the action specified pending review of
40-63 such action by the Commissioner or his duly appointed deputy. Any
40-64 order entered by the Commissioner appointing a supervisor and
40-65 providing that the insurance company shall not do certain acts as
40-66 provided in Section 4 of this Article, any order entered by the
40-67 Commissioner appointing a conservator, and any order by the
40-68 Commissioner following the review of an action of the supervisor or
40-69 conservator as hereinabove provided may be appealed under Article
40-70 1.04 of this code <shall be immediately reviewed by the State Board
41-1 of Insurance upon the filing of an appeal by the insurance company.
41-2 The Board shall review the action complained of in a public hearing
41-3 and render its decision at the earliest possible date thereafter,
41-4 and the requirement of ten (10) days notice set out in Article
41-5 1.04(d) of this Code may be waived by the parties of record. The
41-6 Board may stay the effectiveness of any order of the Commissioner,
41-7 pending its review of such order. Such appeal shall have
41-8 precedence over all other business of a different nature pending
41-9 before the Board, and in the public hearing any and all evidence
41-10 and matters pertaining to the appeal may be submitted to the Board,
41-11 whether included in the appeal or not, and the Board shall make
41-12 such other rules and regulations with regard to such applications
41-13 and their consideration as it deems advisable. If such insurance
41-14 company be dissatisfied with any decision, regulation, order, rule,
41-15 act or administrative ruling adopted by the State Board of
41-16 Insurance, such dissatisfied insurance company after failing to get
41-17 relief from the State Board of Insurance, may initiate an action by
41-18 filing a petition setting forth the particular objection to such
41-19 decision, regulation, order, rule, act or administrative ruling, or
41-20 to either or all of them, in the District Court of Travis County,
41-21 Texas, and not elsewhere, against the State Board of Insurance as
41-22 defendant. Notwithstanding any other statute or rule of procedure,
41-23 the filing of a petition for the purpose of initiating such an
41-24 action with respect to this article does not stay or vacate the
41-25 decision, regulation, order, rule, act, or administrative ruling or
41-26 either or all of them unless the court that acquires jurisdiction,
41-27 after hearing and by order, specifically stays or vacates the
41-28 decision, regulation, order, rule, act, or administrative ruling
41-29 that is the subject of the action. The action shall not be limited
41-30 to questions of law and the substantial evidence rule shall not
41-31 apply, except as interpretation of the Constitution may require,
41-32 but such action shall be tried and determined upon a trial de novo
41-33 to the same extent as now provided for in the case of an appeal
41-34 from the Justice Court to the County Court>. Either party to said
41-35 action may appeal to the Appellate Court having jurisdiction of
41-36 said cause and said appeal shall be at once returnable to said
41-37 Appellate Court having jurisdiction of said cause and said action
41-38 so appealed shall have precedence in said Appellate Court over all
41-39 causes of a different character therein pending. <The Board shall
41-40 not be required to give any appeal bond in any cause arising
41-41 hereunder.>
41-42 SECTION 4.09. The change in law made by this article and
41-43 made by this Act to Article 9.07, Insurance Code, Article 9.37,
41-44 Insurance Code, Section 5, Article 9.44, Insurance Code, and
41-45 Section 8(e), Article 9.56, Insurance Code, that relate to the
41-46 standard for judicial review of a ruling, action, order, decision,
41-47 or other act of the commissioner of insurance or the state board of
41-48 insurance applies only to judicial review of a ruling, action,
41-49 order, decision, or other act made or committed on or after the
41-50 effective date of this Act. Judicial review of a ruling, action,
41-51 order, decision, or other act made or committed before the
41-52 effective date of this Act is governed by the law in effect
41-53 immediately before the effective date of this Act, and that law is
41-54 continued in effect for that purpose.
41-55 ARTICLE 5. ADMINISTRATIVE PENALTIES
41-56 SECTION 5.01. Chapter 1, Insurance Code, is amended by
41-57 adding Article 1.10E to read as follows:
41-58 Art. 1.10E. ADMINISTRATIVE PENALTIES
41-59 Sec. 1. DEFINITIONS. In this article:
41-60 (1) "Person" means an individual, corporation, trust,
41-61 partnership, association, or any other legal entity.
41-62 (2) "Administrative penalty" means any monetary
41-63 penalty which may be imposed under this article by the
41-64 commissioner.
41-65 Sec. 2. PENALTY AUTHORIZED. On written notification of a
41-66 specific violation, the commissioner may impose an administrative
41-67 penalty against a person licensed or regulated under this code or
41-68 another insurance law of this state who violates this code, another
41-69 insurance law of this state, or a rule or order adopted under this
41-70 code or another insurance law of this state.
42-1 Sec. 3. AMOUNT OF PENALTY. (a) The penalty for a violation
42-2 may be in an amount not to exceed $25,000, unless a greater or
42-3 lesser penalty is specified by a provision of this code or another
42-4 insurance law of this state.
42-5 (b) The amount of the penalty shall be based on:
42-6 (1) the seriousness of the violation, including the
42-7 nature, circumstances, extent, and gravity of any prohibited acts,
42-8 and the hazard or potential hazard created to the health, safety,
42-9 or economic welfare of the public;
42-10 (2) the economic harm to the public's interests or
42-11 confidences caused by the violation;
42-12 (3) the history of previous violations;
42-13 (4) the amount necessary to deter future violations;
42-14 (5) efforts to correct the violation;
42-15 (6) whether the violation was intentional or
42-16 unintentional; and
42-17 (7) any other matter that justice may require.
42-18 Sec. 4. PROCEDURES FOR ASSESSING PENALTY; HEARING. (a) If
42-19 the department determines that a violation has occurred, the
42-20 department may issue to the commissioner a report that states the
42-21 facts on which the determination is based and the department's
42-22 recommendation on the imposition of a penalty, including a
42-23 recommendation on the amount of the penalty.
42-24 (b) Within 14 days after the date the report is issued, the
42-25 department shall give written notice of the report to the person.
42-26 The notice may be given by certified mail. The notice must include
42-27 a brief summary of the alleged violation and a statement of the
42-28 amount of the recommended penalty and must inform the person that
42-29 the person has a right to a hearing on the occurrence of the
42-30 violation, the amount of the penalty, or both the occurrence of the
42-31 violation and the amount of the penalty.
42-32 (c) Within 20 days after the date the person receives the
42-33 notice, the person in writing may accept the determination and
42-34 recommended penalty of the department or may make a written request
42-35 for a hearing on the occurrence of the violation, the amount of the
42-36 penalty, or both the occurrence of the violation and the amount of
42-37 the penalty.
42-38 (d) If the person accepts the determination and recommended
42-39 penalty of the department, the commissioner by order shall approve
42-40 the determination and impose the recommended penalty.
42-41 (e) If the person requests a hearing or fails to respond
42-42 timely to the notice, the department shall set a hearing and give
42-43 notice of the hearing to the person. The hearing shall be held by
42-44 an administrative law judge of the State Office of Administrative
42-45 Hearings. The administrative law judge shall make findings of fact
42-46 and conclusions of law and promptly issue to the commissioner a
42-47 proposal for a decision about the occurrence of the violation and
42-48 the amount of a proposed penalty. Based on the findings of fact,
42-49 conclusions of law, and proposal for decision, the commissioner by
42-50 order may find that a violation has occurred and impose a penalty
42-51 or may find that no violation occurred.
42-52 (f) The notice of the commissioner's order given to the
42-53 person under the Administrative Procedure and Texas Register Act
42-54 (Article 6252-13a, Vernon's Texas Civil Statutes) and its
42-55 subsequent amendments must include a statement of the right of the
42-56 person to judicial review of the order.
42-57 (g) Within 30 days after the date the commissioner's order
42-58 is final as provided by Section 16(c), Administrative Procedure and
42-59 Texas Register Act (Article 6252-13a, Vernon's Texas Civil
42-60 Statutes), and its subsequent amendments, the person shall:
42-61 (1) pay the amount of the penalty;
42-62 (2) pay the amount of the penalty and file a petition
42-63 for judicial review contesting the occurrence of the violation, the
42-64 amount of the penalty, or both; or
42-65 (3) without paying the amount of the penalty, file a
42-66 petition for judicial review contesting the occurrence of the
42-67 violation, the amount of the penalty, or both the occurrence of the
42-68 violation and the amount of the penalty.
42-69 (h) Within the 30-day period, a person who acts under
42-70 Subsection (g)(3) of this section may:
43-1 (1) stay enforcement of the penalty by:
43-2 (A) paying the amount of the penalty to the
43-3 court for placement in an escrow account; or
43-4 (B) giving the court a supersedeas bond that is
43-5 approved by the court for the amount of the penalty and that is
43-6 effective until all judicial review of the board's order is final;
43-7 or
43-8 (2) request the court to stay enforcement of the
43-9 penalty by:
43-10 (A) filing with the court a sworn affidavit of
43-11 the person stating that the person is financially unable to pay the
43-12 amount of the penalty and is financially unable to give the
43-13 supersedeas bond; and
43-14 (B) giving a copy of the affidavit to the
43-15 commissioner by certified mail.
43-16 (i) If the commissioner receives a copy of an affidavit
43-17 under Subsection (h)(2) of this section, the commissioner may file
43-18 with the court, within five days after the date the copy is
43-19 received, a contest to the affidavit. The court shall hold a
43-20 hearing on the facts alleged in the affidavit as soon as
43-21 practicable and shall stay the enforcement of the penalty on
43-22 finding that the alleged facts are true. The person who files an
43-23 affidavit has the burden of proving that the person is financially
43-24 unable to pay the amount of the penalty and to give a supersedeas
43-25 bond.
43-26 (j) If the person does not pay the amount of the penalty and
43-27 the enforcement of the penalty is not stayed, the commissioner may
43-28 refer the matter to the attorney general for collection of the
43-29 amount of the penalty.
43-30 Sec. 5. JUDICIAL REVIEW. (a) Judicial review of the order
43-31 of the commissioner:
43-32 (1) is instituted by filing a petition as provided by
43-33 Section 19, Administrative Procedure and Texas Register Act
43-34 (Article 6252-13a, Vernon's Texas Civil Statutes); and
43-35 (2) is under the substantial evidence rule.
43-36 (b) If the court sustains the occurrence of the violation,
43-37 the court may uphold or reduce the amount of the penalty and order
43-38 the person to pay the full or reduced amount of the penalty. If
43-39 the court does not sustain the occurrence of the violation, the
43-40 court shall order that no penalty is owed.
43-41 (c) When the judgment of the court becomes final, the court
43-42 shall proceed under this subsection. If the person paid the amount
43-43 of the penalty and if that amount is reduced or is not upheld by
43-44 the court, the court shall order that the appropriate amount plus
43-45 accrued interest be remitted to the person. The rate of the
43-46 interest is the rate charged on loans to depository institutions by
43-47 the New York Federal Reserve Bank, and the interest shall be paid
43-48 for the period beginning on the date the penalty was paid and
43-49 ending on the date the penalty is remitted. If the person gave a
43-50 supersedeas bond and if the amount of the penalty is not upheld by
43-51 the court, the court shall order the release of the bond. If the
43-52 person gave a supersedeas bond and if the amount of the penalty is
43-53 reduced, the court shall order the release of the bond after the
43-54 person pays the amount.
43-55 Sec. 6. DEPOSIT TO GENERAL REVENUE FUND. A penalty
43-56 collected under this section shall be remitted to the comptroller
43-57 for deposit in the general revenue fund.
43-58 Sec. 7. APPLICATION OF ADMINISTRATIVE PROCEDURE AND TEXAS
43-59 REGISTER ACT. All proceedings under this section are subject to
43-60 the Administrative Procedure and Texas Register Act (Article
43-61 6252-13a, Vernon's Texas Civil Statutes) and its subsequent
43-62 amendments.
43-63 Sec. 8. APPLICATION TO OTHER LAWS. This article applies to
43-64 any monetary penalty imposed by the department or commissioner
43-65 under this code or another insurance law of this state.
43-66 SECTION 5.02. Section 17A, Article 1.14-2, Insurance Code,
43-67 is amended to read as follows:
43-68 Sec. 17A. Administrative penalty. <(a)> If a surplus lines
43-69 agent violates Section 8 of this article or a rule, regulation, or
43-70 order adopted under that provision, the State Board of Insurance
44-1 may assess an administrative <a> penalty against that agent as
44-2 provided by Article 1.10E of this code <Section 7, Article 1.10, of
44-3 this code.>
44-4 <(b) In determining the amount of the penalty, the State
44-5 Board of Insurance shall consider:>
44-6 <(1) the nature, circumstances, extent, and gravity of
44-7 the violation;>
44-8 <(2) any economic benefit gained through the
44-9 violation;>
44-10 <(3) the amount necessary to deter future violations;
44-11 and>
44-12 <(4) any other matters that justice may require>.
44-13 SECTION 5.03. Section 19, Managing General Agents' Licensing
44-14 Act (Article 21.07-3, Vernon's Texas Insurance Code), is amended to
44-15 read as follows:
44-16 Sec. 19. Violations of act. Any person, firm, or
44-17 corporation who violates any of the provisions of this Act or any
44-18 rule, regulation, or order adopted under this Act shall be subject
44-19 to sanctions under Section 7, Article 1.10, Insurance Code. <In
44-20 determining the amount of any penalty, the State Board of Insurance
44-21 shall consider:>
44-22 <(1) the nature, circumstances, extent, and gravity of
44-23 the violation;>
44-24 <(2) any economic benefit gained through the
44-25 violation;>
44-26 <(3) the amount necessary to deter future violations;
44-27 and>
44-28 <(4) any other matters that justice may require.>
44-29 SECTION 5.04. Article 21.11-1, Insurance Code, is amended by
44-30 amending Section 6 and adding Section 7 to read as follows:
44-31 Sec. 6. If it is found, after notice and an opportunity to
44-32 be heard as determined by the board, that an insurance company has
44-33 violated this article, the insurance company shall be subject to an
44-34 administrative <a civil> penalty under Article 1.10E of this code
44-35 of not less than $1,000 nor more than $10,000<, and it shall be
44-36 subject to a civil suit by the agent for damages suffered because
44-37 of the premature termination of the contract by the company>.
44-38 Sec. 7. Any agent who has sustained actual damages as a
44-39 result of a company's violation of this article may maintain an
44-40 action against the company, without regard to whether or not there
44-41 has been a finding by the board that there has been a violation of
44-42 this article.
44-43 SECTION 5.05. Sections 7(c) and (d), Article 21.21,
44-44 Insurance Code, are amended to read as follows:
44-45 (c) Any person who violates the terms of a cease and desist
44-46 order under this section is subject to an administrative penalty
44-47 under Article 1.10E of this code. An administrative penalty
44-48 assessed under this subsection may not exceed $1,000 for each
44-49 violation and a total of $5,000 for all violations <shall be given
44-50 notice to appear and show cause, at a hearing to be held in
44-51 conformity with Section 6 of this Article, why he should not
44-52 forfeit and pay to the state a civil penalty of not more than
44-53 $1,000 per violation and not to exceed a total of $5,000>. In
44-54 determining whether or not a cease and desist order has been
44-55 violated, the Board shall take into consideration the maintenance
44-56 of procedures reasonably adapted to insure compliance with the
44-57 order.
44-58 (d) An order of the Board awarding an administrative penalty
44-59 <civil penalties> under Subsection (c) of this section applies only
44-60 to violations of this order incurred prior to the awarding of the
44-61 penalty order.
44-62 SECTION 5.06. Section 5(k), Article 21.49-1, Insurance Code,
44-63 is amended to read as follows:
44-64 (k) Additional Violations. Each director or officer of an
44-65 insurance company subject to this article, or of an insurance
44-66 holding company system subject to this article, who knowingly and
44-67 wilfully violates, participates in, or assents to or who knowingly
44-68 and wilfully permits any of the officers, agents, or employees of
44-69 the insurer or holding company system to engage in transactions or
44-70 make investments that have not been properly reported or submitted
45-1 under this article or that knowingly and wilfully violate this
45-2 article is subject to an administrative penalty under Article 1.10E
45-3 of this code<, shall pay, in the person's individual capacity, a
45-4 civil penalty> of not more than $10,000 for each violation<, after
45-5 notice and an opportunity for hearing before the commissioner. In
45-6 determining the amount of the civil penalty, the commissioner shall
45-7 consider the appropriateness of the penalty with respect to the
45-8 gravity of the violation, the history of previous violations, and
45-9 any other matters that justice requires>.
45-10 SECTION 5.07. Section 17(a), Article 21.49-3b, Insurance
45-11 Code, is amended to read as follows:
45-12 (a) An association that violates this article or any rule or
45-13 order adopted under this article is subject to sanctions under
45-14 Section 7, Article 1.10 of this code. <In determining the amount
45-15 of any penalty, the board shall consider:>
45-16 <(1) the nature, circumstances, extent, and gravity of
45-17 the violation;>
45-18 <(2) any economic benefit gained through the
45-19 violation;>
45-20 <(3) the amount necessary to deter future violations;
45-21 and>
45-22 <(4) any other matters that justice may require.>
45-23 SECTION 5.08. This article applies only to the assessment of
45-24 an administrative penalty on or after September 1, 1993.
45-25 Assessment of an administrative penalty before September 1, 1993,
45-26 is governed by the law in effect immediately before the effective
45-27 date of this Act, and that law is continued in effect for this
45-28 purpose.
45-29 ARTICLE 6. RATE AND POLICY FORM REGULATION
45-30 SECTION 6.01. Chapter 5, Insurance Code, is amended by
45-31 adding Subchapter N to read as follows:
45-32 SUBCHAPTER N. STREAMLINED PROCEDURES FOR RATEMAKING
45-33 Art. 5.121. STUDY AND IMPLEMENTATION. The department shall
45-34 study and the commissioner may adopt and implement procedures for
45-35 streamlining insurance rate proceedings under this chapter, this
45-36 code, and other insurance laws of this state. The procedures must
45-37 ensure due process to all affected parties.
45-38 SECTION 6.02. Chapter 1, Insurance Code, is amended by
45-39 adding Article 1.50 to read as follows:
45-40 Art. 1.50. SELECT COMMITTEE ON RATE AND POLICY FORM
45-41 REGULATION
45-42 Sec. 1. DEFINITION. In this article, "committee" means the
45-43 select committee on rate and policy form regulation established
45-44 under this article.
45-45 Sec. 2. COMPOSITION OF COMMITTEE. (a) The select committee
45-46 on rate and policy form regulation is composed of:
45-47 (1) three members, appointed by the governor;
45-48 (2) three members of the senate, appointed by the
45-49 lieutenant governor; and
45-50 (3) three members of the house of representatives,
45-51 appointed by the speaker of the house of representatives.
45-52 (b) The governor shall designate a member of the committee
45-53 to serve as presiding officer of the committee.
45-54 Sec. 3. PURPOSE; DUTIES; MEETINGS. (a) The committee shall
45-55 study insurance rate and policy form regulation in this state. The
45-56 committee shall assess:
45-57 (1) the effects of changes made by the 72nd
45-58 Legislature in insurance regulation to identify whether the purpose
45-59 of the department should be further changed from insurance rate and
45-60 policy form regulation and directed to:
45-61 (A) regulation of the financial conditions of
45-62 companies and market conduct; and
45-63 (B) provision of consumer services;
45-64 (2) the degree of competition in the insurance
45-65 industry in this state; and
45-66 (3) the availability of motor vehicle insurance, the
45-67 number of uninsured drivers, and the number of drivers insured
45-68 through the Texas Automobile Insurance Association, on a geographic
45-69 area basis, to assess if certain geographic areas of the state are
45-70 underserved.
46-1 (b) The committee shall meet monthly or as needed to carry
46-2 out its duties under this section.
46-3 (c) The committee may appoint subcommittees, task groups, or
46-4 advisory groups to assist it in its work. Members of these groups
46-5 are not required to be members of the committee.
46-6 Sec. 4. REPORT. (a) Not later than December 1, 1994, the
46-7 committee shall issue a report of its findings. The committee
46-8 shall file copies of the report with the Legislative Reference
46-9 Library, the governor's office, the secretary of the senate, the
46-10 chief clerk of the house of representatives, the department, and
46-11 the office of public insurance counsel. The department shall make
46-12 copies of the report available to the public at cost.
46-13 (b) The report shall include recommended rule or statutory
46-14 changes to implement the committee's recommendations.
46-15 Sec. 5. STAFF. On request of the committee, the Texas
46-16 Legislative Council, governor's office, senate, and house of
46-17 representatives shall provide staff as necessary to carry out the
46-18 duties of the committee.
46-19 Sec. 6. WITNESSES; PROCESS. The committee may issue a
46-20 subpoena or other process to a witness at any place in this state,
46-21 compel the attendance of the witness, and compel the production of
46-22 a book, record, document, or instrument that the committee
46-23 requires. If necessary to obtain compliance with a subpoena or
46-24 other process, the committee may issue a writ of attachment. A
46-25 subpoena or other process issued by the committee may be addressed
46-26 to and served by any peace officer of this state or a political
46-27 subdivision of this state. The presiding officer shall issue, in
46-28 the name of the committee, a subpoena or other process as the
46-29 committee directs. If the presiding officer is absent, the
46-30 assistant presiding officer or a designee of the presiding officer
46-31 may issue a subpoena or other process in the same manner as the
46-32 presiding officer. A witness attending proceedings of the
46-33 committee under process is entitled to the same mileage and per
46-34 diem payments as a witness before a grand jury in this state. The
46-35 testimony given at any hearing conducted under this article shall
46-36 be given under oath subject to the penalties of perjury.
46-37 Sec. 7. COOPERATION OF OTHER AGENCIES. If necessary to the
46-38 discharge of its duties, the committee may request the assistance
46-39 of a state agency, department, or office. The agency, department,
46-40 or office shall provide the requested assistance.
46-41 Sec. 8. EXPENSES. The operating expenses of the committee
46-42 shall be paid from available funds of the Texas Department of
46-43 Insurance operating fund. A member of the committee appointed
46-44 under Section 2(a)(1) of this article is entitled to reimbursement
46-45 from those funds for expenses incurred in carrying out official
46-46 duties as a member of the committee at the rate specified in the
46-47 General Appropriations Act. Other members of the committee are not
46-48 entitled to reimbursement for their expenses.
46-49 Sec. 9. PROGRESS REPORT. Not later than December 1, 1996,
46-50 the department shall issue a report on the department's progress in
46-51 implementing recommendations for rule changes made by the committee
46-52 and in implementing any changes in law made by the 74th Legislature
46-53 in response to the recommendations of the committee.
46-54 Sec. 10. COMMITTEE ABOLISHED; EXPIRATION OF ARTICLE. (a)
46-55 The committee is abolished on December 31, 1994.
46-56 (b) This article expires January 1, 1997.
46-57 SECTION 6.03. Chapter 3, Insurance Code, is amended by
46-58 adding Subchapter H to read as follows:
46-59 SUBCHAPTER H. RATE REPORTING
46-60 Art. 3.90. HEALTH INSURER REPORTING. (a) This article
46-61 applies to any insurance company, group hospital service
46-62 corporation, or health maintenance organization that issues:
46-63 (1) an individual, group, blanket, or franchise
46-64 insurance policy, or an insurance agreement, a group hospital
46-65 service contract, or an evidence of coverage, that provides
46-66 benefits for medical or surgical expenses incurred as a result of
46-67 an accident or sickness; or
46-68 (2) a long-term care insurance policy, as that term is
46-69 defined by Section 2, Article 3.70-12, of this code and its
46-70 subsequent amendments.
47-1 (b) Each insurer subject to this article shall submit to the
47-2 department information required by the department relating to the
47-3 insurer's loss experience, overhead, and operating expenses. The
47-4 department may also request information about characteristics of
47-5 persons insured by the insurer, including information on age,
47-6 gender, health status, job classifications, and geographic
47-7 distribution.
47-8 (c) The commissioner shall adopt rules governing the
47-9 submission of information under this article. The rules may not
47-10 require an insurer to submit the information more than annually.
47-11 SECTION 6.04. Section 3(c), Article 5.101, Insurance Code,
47-12 is amended to read as follows:
47-13 (c) Each initial flexibility band is based on a benchmark
47-14 rate promulgated by the board. On or before January 1, 1992, and
47-15 annually thereafter, the board shall conduct hearings to determine
47-16 the benchmark rates and flexibility bands by line. The
47-17 determination of the rate shall not include disallowed expenses
47-18 under Subsection (h) of this section. An insurer, the public
47-19 insurance counsel, and any other interested person may present
47-20 testimony at the hearing and may file information for consideration
47-21 by the board. An advisory organization which collects ratemaking
47-22 data shall not be a party to the hearing. The definition of "small
47-23 and medium-sized insurers" shall be a limitation upon the scope of
47-24 the presentation to be made by a trade association, but may not
47-25 limit the participation of a trade association because its
47-26 membership includes other sized insurers. An insurer shall use
47-27 that benchmark rate and the flexibility band to develop rates used
47-28 for the line for the year following the setting of the benchmark
47-29 rate and the flexibility band.
47-30 SECTION 6.05. Article 1.09-5(c), Insurance Code, is amended
47-31 to read as follows:
47-32 (c) An employee of the department may appear before the
47-33 board or its designated hearings officer only as follows:
47-34 (1) a member of the department's legal staff may
47-35 assist the board or its designated hearings officer in the
47-36 prehearing process and in aligning parties to board proceedings;
47-37 (2) one or more employees of the department may appear
47-38 as a party, present evidence, and question witnesses in a
47-39 proceeding in which the public counsel under Section 5(b)(1),
47-40 Article 1.35A<(h)(1)> of this code is not authorized by law to
47-41 appear;
47-42 (3) an employee responsible for collecting and
47-43 compiling rate data may appear and present evidence relating to the
47-44 validity of the compiled data and a licensed attorney employed as
47-45 part of the legal staff of the department may assist such employee
47-46 in making the presentation;
47-47 (4) one or more employees of the department may
47-48 present evidence in any rate filing case under Article 5.13-2,
47-49 5.15, 5.55, or 5.81 of this code;
47-50 (5) <(4)> the general counsel or an assistant general
47-51 counsel may assist the board in any proceeding in which insurance
47-52 rates are set; and
47-53 (6) <(5)> the general counsel or an assistant general
47-54 counsel may be designated by the board and may serve as a hearings
47-55 officer in any proceeding in which insurance rates are set or any
47-56 prehearing proceeding provided that any final decision relating to
47-57 rates to be set must be set by the board.
47-58 SECTION 6.06. Article 3.42, Insurance Code, is amended by
47-59 adding Section (k) to read as follows:
47-60 (k) The department shall develop and implement rules to
47-61 improve procedures for approval of policy forms under this article.
47-62 SECTION 6.07. Sections 1 and 2, Article 5.13-2, Insurance
47-63 Code, are amended to read as follows:
47-64 Sec. 1. Purpose<; expiration date>. (a) This article
47-65 governs the regulation of general liability, <lines and> commercial
47-66 property, and medical professional liability insurance rates and
47-67 forms. It does not govern <lines insurance rates and forms, other
47-68 than> fidelity, surety, or guaranty bonds. The purposes of this
47-69 article are to:
47-70 (1) promote the public welfare by regulating insurance
48-1 rates to prohibit excessive, inadequate, or unfairly discriminatory
48-2 rates;
48-3 (2) promote availability of insurance;
48-4 (3) promote price competition among insurers to
48-5 provide rates and premiums that are responsive to competitive
48-6 market conditions;
48-7 (4) prohibit price-fixing agreements and other
48-8 anticompetitive behavior by insurers;
48-9 (5) regulate the insurance forms used for lines of
48-10 insurance subject to this article to ensure that they are not
48-11 unjust, unfair, inequitable, misleading, or deceptive; and
48-12 (6) provide regulatory procedures for the maintenance
48-13 of appropriate information reporting systems.
48-14 (b) This article expires December 31, 1995.
48-15 Sec. 2. SCOPE. This article applies to all lines of general
48-16 liability, <or> commercial property, and medical professional
48-17 liability insurance written under policies or contracts of
48-18 insurance issued by a licensed insurer, other than a fidelity,
48-19 surety, or guaranty bond.
48-20 SECTION 6.08. Sections 3(5) and (6), Article 5.13-2,
48-21 Insurance Code, are amended to read as follows:
48-22 (5) "Supplementary rating information" means any
48-23 manual, rating schedule, plan of rules, rating rules,
48-24 classification systems, territory codes and descriptions, rating
48-25 plans, and other similar information used by the insurer <required
48-26 by the board> to determine the applicable premium for an insured.
48-27 The term includes factors and relativities, such as increased
48-28 limits factors, classification relativities, deductible
48-29 relativities, premium discount, and <or> other similar factors and
48-30 rating plans such as experience, schedule, and retrospective
48-31 rating.
48-32 (6) "Supporting information" means:
48-33 (A) the experience and judgment of the filer and
48-34 the experience or information of other insurers or advisory
48-35 organizations relied on by the filer;
48-36 (B) the interpretation of any other information
48-37 relied on by the filer;
48-38 (C) descriptions of methods used in making the
48-39 rates; and
48-40 (D) any other information required by the
48-41 department <board> to be filed.
48-42 SECTION 6.09. Sections 5, 7, 8, and 9, Article 5.13-2,
48-43 Insurance Code, are amended to read as follows:
48-44 Sec. 5. Rate filings; legislative report. (a) Each insurer
48-45 shall file with the commissioner <board> all rates, supplementary
48-46 rating information, and reasonable and pertinent supporting
48-47 information for risks written in this state.
48-48 (b) If the commissioner <board> determines after a hearing
48-49 that an insurer's rates require supervision because of the
48-50 insurer's financial condition or the insurer's rating practices,
48-51 the commissioner <board> may require the insurer to file with the
48-52 commissioner <board> all rates, supplementary rate information, and
48-53 any supporting information prescribed by the commissioner <board>.
48-54 (c) An insured that is aggrieved with respect to any filing
48-55 in effect, or the public insurance counsel, may make a written
48-56 application to the commissioner <board> for a hearing on the
48-57 filing. The application must specify the grounds on which the
48-58 applicant bases the grievance. If the commissioner <board> finds
48-59 that the application is made in good faith, that the applicant
48-60 would be so aggrieved if the grounds in the application are
48-61 established, and that those grounds otherwise justify holding the
48-62 hearing, the commissioner <board> shall hold a hearing not later
48-63 than the 30th day after the date of receipt of the application.
48-64 The commissioner <board> must give at least 10 days' written notice
48-65 to the applicant and to each insurer that made the filing in
48-66 question.
48-67 (d) If, after the hearing, the commissioner <board> finds
48-68 that the filing does not meet the requirements of this article, the
48-69 commissioner <board> shall issue an order specifying how the filing
48-70 fails to meet the requirements of this article and stating the date
49-1 on which, within a reasonable period after the order date, the
49-2 filing is no longer in effect. The commissioner <board> shall send
49-3 copies of the order to the applicant and to each affected insurer.
49-4 (e) The commissioner <board> shall require each insurer
49-5 subject to this article to file information with the commissioner
49-6 <board> on a quarterly basis. Each insurer shall provide the
49-7 commissioner <board> with information relating to changes in
49-8 losses, premiums, and market share since January 1, 1993. The
49-9 commissioner <board> shall report to the governor, lieutenant
49-10 governor, and speaker of the house of representatives on a
49-11 quarterly basis, relating to the information provided by the
49-12 insurers' reports and to market conduct, especially consumer
49-13 complaints.
49-14 Sec. 7. Disapproval. (a) The commissioner <board> shall
49-15 disapprove a rate if the commissioner <board> determines that the
49-16 rate filing made under this article does not meet the standards
49-17 established under that section.
49-18 (b) If the commissioner <board> disapproves a filing, the
49-19 commissioner <board> shall issue an order specifying in what
49-20 respects the filing fails to meet the requirements of this article.
49-21 The filer is entitled to a hearing on written request made to the
49-22 board not later than the 30th day after the effective date of the
49-23 disapproval order.
49-24 (c) If the commissioner <board> disapproves a rate that is
49-25 in effect, the commissioner <board> may issue a disapproval order
49-26 only after a hearing held after at least 20 days' written notice to
49-27 the insurer that made the filing. The disapproval order must be
49-28 issued not later than the 15th day after the close of the hearing
49-29 and must specify how the rate fails to meet the requirements of
49-30 this article. The disapproval order must state the date on which
49-31 the further use of that rate is prohibited. The commissioner
49-32 <board> shall set the date not earlier than the 45th day after the
49-33 date on which the hearing closes.
49-34 Sec. 8. Forms. (a) An insurance policy or printed
49-35 endorsement form for use in writing the types of insurance subject
49-36 to this article may not be delivered or issued for delivery in this
49-37 state unless the form has been filed with and approved by the
49-38 commissioner <board>.
49-39 (b) Each filing shall be made not later than the 60th day
49-40 before the date of any use or delivery for use. At the expiration
49-41 of the 60-day period a filed form is approved unless, before the
49-42 expiration of the 60 days, the commissioner <board> approves or
49-43 disapproves the form by order. Approval of a form by the
49-44 commissioner <board> constitutes a waiver of any unexpired portion
49-45 of the 60-day period. The commissioner <board> may extend by not
49-46 more than an additional 10 <60> days the period during which it may
49-47 approve or disapprove a form by giving notice to the filer of the
49-48 extension before the expiration of the initial period. At the
49-49 expiration of any extension and in the absence of any earlier
49-50 approval or disapproval, the form shall be considered approved.
49-51 For good cause shown, the commissioner <board> may withdraw the
49-52 commissioner's <its> approval at any time after notice and a
49-53 hearing.
49-54 (c) A commissioner's <An> order <of the board> disapproving
49-55 any form or any notice of the commissioner's <board's> intention to
49-56 withdraw a previous approval must state the grounds for the
49-57 disapproval in enough detail to reasonably inform the filer of the
49-58 grounds. An order of withdrawal of a previously approved form
49-59 takes effect on the expiration of the prescribed period, but not
49-60 sooner than the 30th day after the effective date of the withdrawal
49-61 order, as prescribed by the commissioner <board>.
49-62 (d) An insurer may not use in this state any form after
49-63 disapproval of the form or withdrawal of approval by the
49-64 commissioner <board>.
49-65 (e) The commissioner <board> may promulgate standard
49-66 insurance policy forms, endorsements, and other related forms that
49-67 may be used, at the discretion of the insurer, by an insurer
49-68 instead of the insurer's own forms in writing insurance subject to
49-69 this article. Forms submitted by insurers for approval under this
49-70 section must provide coverage equivalent to that provided in the
50-1 policy forms used for these lines of coverage on the effective date
50-2 of this article. An endorsement may not reduce coverage provided
50-3 under the approved policy form.
50-4 Sec. 9. COMMISSIONER <BOARD> AUTHORITY. If the commissioner
50-5 <board> determines at any time that the implementation of this
50-6 article or any part thereof is contrary to the public interest and
50-7 has resulted in or may result in imminent peril to the insurance
50-8 consumers of this state, the commissioner <board> may issue an
50-9 order stating the harm to the public and shall thereafter rely upon
50-10 Subchapters A-L of this chapter, or parts thereof, in the
50-11 regulation of property and casualty insurance.
50-12 SECTION 6.10. Section 4(a), Article 5.15-1, Insurance Code,
50-13 is amended to read as follows:
50-14 (a) The provisions of Article 5.13-2 of this code <5.15,
50-15 Insurance Code,> shall apply to the filing of rates and rating
50-16 information required under this article.
50-17 SECTION 6.11. Section 4A, Article 5.15-1, Insurance Code, is
50-18 repealed.
50-19 SECTION 6.12. Section 1, Article 3.50, Insurance Code, is
50-20 amended to read as follows:
50-21 Sec. 1. Definitions. No policy of group life insurance
50-22 shall be delivered in this state unless it conforms to one of the
50-23 following descriptions:
50-24 (1) A policy issued to an employer, or to the trustees
50-25 of a fund established by an employer, which employer or trustees
50-26 shall be deemed the policyholder, to insure employees of the
50-27 employer for the benefit of persons other than the employer,
50-28 subject to the following requirements:
50-29 (a) The employees eligible for insurance under
50-30 the policy shall be all of the employees of the employer, or all of
50-31 any class or classes thereof determined by conditions pertaining to
50-32 their employment. The policy may provide that the term "employees"
50-33 shall include the employees of one or more subsidiary corporations,
50-34 and the employees, individual proprietors, and partners of one or
50-35 more affiliated corporations, proprietors or partnerships if the
50-36 business of the employer and of such affiliated corporations,
50-37 proprietors or partnerships is under common control through stock
50-38 ownership, contract, or otherwise. The policy may provide that the
50-39 term "employees" shall include the individual proprietor or
50-40 partners if the employer is an individual proprietor or a
50-41 partnership. The policy may provide that the term "employees"
50-42 shall include retired employees.
50-43 (b) The premium for the policy shall be paid by
50-44 the policyholder, either wholly from the employer's fund or funds
50-45 contributed by him, or partly from such funds and partly from funds
50-46 contributed by the insured employees. No policy may be issued on
50-47 which the entire premium is to be derived from funds contributed by
50-48 the insured employees. A policy on which part of the premium is to
50-49 be derived from funds contributed by the insured employees may be
50-50 placed in force only if at least seventy-five percent (75%) of the
50-51 then eligible employees, excluding any as to whom evidence of
50-52 individual insurability is not satisfactory to the insurer, elect
50-53 to make the required contributions. A policy on which no part of
50-54 the premium is to be derived from funds contributed by the insured
50-55 employees must insure all eligible employees, or all except any as
50-56 to whom evidence of individual insurability is not satisfactory to
50-57 the insurer.
50-58 (c) The policy must cover at least ten (10)
50-59 employees at date of issue.
50-60 (d) The amounts of insurance under the policy
50-61 must be based upon some plan precluding individual selection either
50-62 by the employees or by the employer or trustees. No policy may be
50-63 issued which provides insurance on any employee which together with
50-64 any other insurance under any group life insurance policies issued
50-65 to the employer or to the trustees of a fund established by the
50-66 employer exceeds One Hundred Thousand Dollars ($100,000.00), unless
50-67 four hundred percent (400%) of the annual compensation of such
50-68 employee from his employer or employers exceeds One Hundred
50-69 Thousand Dollars ($100,000.00), in which event all such term
50-70 insurance shall not exceed four hundred percent (400%) of such
51-1 annual compensation, except that this limitation shall not apply to
51-2 group insurance on other than the term plan where such insurance is
51-3 to be used to fund the benefits under a pension or profit sharing
51-4 plan and the amount of such insurance does not exceed that required
51-5 to provide at normal retirement date the pension specified by the
51-6 plan, and except that a group policy which is issued by the same or
51-7 another carrier to replace another group policy may provide term
51-8 insurance not to exceed the amounts provided by the policy which it
51-9 replaces, or the amounts provided above, whichever are greater.
51-10 (2) A policy issued to a labor union, which shall be
51-11 deemed the employer and policyholder, to insure the members of such
51-12 union who are actively engaged in the same occupation and who shall
51-13 be deemed to be the employees of such union within the meaning of
51-14 this Article.
51-15 (3) A policy issued to any association of employees of
51-16 the United States Government or any subdivision thereof, provided
51-17 the majority of the members of such association are residents of
51-18 this state, an association of public employees, an incorporated
51-19 city, town or village, an independent school district, common
51-20 school district, state colleges or universities, any association of
51-21 state employees, any association of state, county and city, town or
51-22 village employees, and any association of any combination of state,
51-23 county or city, town or village employees and any department of the
51-24 state government which employer or association shall be deemed the
51-25 policyholder to insure the employees of any such incorporated city,
51-26 town or village, of any such independent school district, of any
51-27 common school district, of any such state college or university, of
51-28 any such department of the state government, members of any
51-29 association of state, county or city, town or village or of the
51-30 United States Government or any subdivision thereof, provided the
51-31 majority of such employees reside in this state, employees for the
51-32 benefit of persons other than the policyholder subject to the
51-33 following requirements:
51-34 (a) The persons eligible for insurance under the
51-35 policy shall be all of the employees of the employer or if the
51-36 policyholder is an association, all of the members of the
51-37 association.
51-38 (b) The premium for a policy issued to any
51-39 policyholder authorized to be such policyholder under Subsection
51-40 (3) of Section 1, Article 3.50, Texas Insurance Code, may be paid
51-41 in whole or in part from funds contributed by the employer, or in
51-42 whole or in part from funds contributed by the persons insured
51-43 under said policy; or in whole or in part from funds contributed by
51-44 the insured employees who are members of such association of
51-45 employees; provided, however, that any monies or credits received
51-46 by or allowed to the policyholder pursuant to any participation
51-47 agreement contained in or issued in connection with the policy
51-48 shall be applied to the payment of future premiums and to the pro
51-49 rata abatement of the insured employees' contribution therefor; and
51-50 provided further, that the employer may deduct from the employees'
51-51 salaries the employees' contributions for the premiums when
51-52 authorized in writing by the respective employees so to do. Such
51-53 policy may be placed in force only if at least 75% of the eligible
51-54 employees or if an association of employees is the policyholder,
51-55 75% of the eligible members of said association, excluding any as
51-56 to whom evidence of individual insurability is not satisfactory to
51-57 the insurer, elect to make the required premium contributions and
51-58 become insured thereunder. Any group policies heretofore issued
51-59 to any of the groups named in Section 1(3) above and in existence
51-60 on the effective date of this Act shall continue in force even
51-61 though the number of employees or members insured thereunder is
51-62 less than 75% of the eligible employees or members on the effective
51-63 date of this Act.
51-64 (c) The policy must cover at least ten (10)
51-65 employees at date of issue, or if an association of employees is
51-66 the policyholder, ten (10) members of said association at date of
51-67 issue.
51-68 (d) The term employees as used herein in
51-69 addition to its usual meaning shall include elective and appointive
51-70 officials of the state.
52-1 (4) A policy issued to a creditor, who shall be deemed
52-2 the policyholder, to insure debtors of the creditor, subject to the
52-3 following requirements:
52-4 (a) The debtors eligible for insurance under the
52-5 policy shall all be members of a group of persons numbering not
52-6 less than fifty (50) at all times, who become borrowers, or
52-7 purchasers of securities, merchandise or other property, under
52-8 agreement to repay the sum borrowed or to pay the balance of the
52-9 price of the securities, merchandise or other property purchased,
52-10 to the extent of their respective indebtedness, but not to exceed
52-11 Fifty Thousand Dollars ($50,000.00) on any one life or not to
52-12 exceed One Hundred Twenty-Five Thousand Dollars ($125,000.00) on
52-13 any one life if the indebtedness is secured by a first lien on real
52-14 estate; provided, however, the face amount of any loan or loan
52-15 commitment, totally or partially executed, made to a debtor for
52-16 educational purposes or to a debtor with seasonal income by a
52-17 creditor in good faith for general agricultural or horticultural
52-18 purposes, secured or unsecured, where the debtor becomes personally
52-19 liable for the payment of such loan, may be so insured in an
52-20 initial amount of such insurance not to exceed the total amount
52-21 repayable under the contract of indebtedness and, when such
52-22 indebtedness is repayable in substantially equal installments, the
52-23 amount of insurance shall at no time exceed the scheduled or actual
52-24 amount of unpaid indebtedness, whichever is greater, and such
52-25 insurance on such credit commitments not exceeding one year in
52-26 duration may be written up to the amount of the loan commitment on
52-27 a nondecreasing or level term plan, but such insurance shall not
52-28 exceed One Hundred Thousand Dollars ($100,000.00) on any one life.
52-29 (b) The premium for the policy shall be paid by
52-30 the policyholder, either from the creditor's funds or from charges
52-31 collected from the insured debtors, or both.
52-32 (c) The insurance issued shall not include
52-33 annuities or endowment insurance.
52-34 (d) The insurance shall be payable to the
52-35 policyholder. Such payment shall reduce or extinguish the unpaid
52-36 indebtedness of the debtor to the extent of such payment; provided
52-37 that in the case of a debtor for educational purposes or of a
52-38 debtor with seasonal income, under a loan or loan commitment for
52-39 general agricultural or horticultural purposes of the type
52-40 described in paragraph (a), the insurance in excess of the
52-41 indebtedness to the creditor, if any, shall be payable to the
52-42 estate of the debtor or under the provision of a facility of
52-43 payment clause.
52-44 (5) A policy issued to the trustees of a fund
52-45 established by two or more employers in the same industry or by one
52-46 or more labor unions, or to the trustees of a fund established by
52-47 one or more employers in the same industry and one or more labor
52-48 unions, or by one or more employers and one or more labor unions
52-49 whose members are in the same or related occupations or trades,
52-50 which trustees shall be deemed the policyholder, to insure
52-51 employees of the employers or members of the unions for the benefit
52-52 of persons other than the employers or the union, subject to the
52-53 following requirements:
52-54 (a) The persons eligible for insurance shall be
52-55 all of the employees of the employers and the employees of the
52-56 trade association of such employers or all of the members of the
52-57 union, or all of any class or classes thereof determined by
52-58 conditions pertaining to their employment, or to membership in the
52-59 unions, or both. The policy may provide that the term "employees"
52-60 shall include retired employees, and the individual proprietor or
52-61 partners if an employer is an individual proprietor or a
52-62 partnership. No director of a corporate employer shall be eligible
52-63 for insurance under the policy unless such person is otherwise
52-64 eligible as a bona fide employee of the corporation by performing
52-65 services other than the usual duties of a director. No individual
52-66 proprietor or partner shall be eligible for insurance under the
52-67 policy unless he is actively engaged in and devotes a substantial
52-68 part of his time to the conduct of the business of the proprietor
52-69 or partnership. The policy may provide that the term "employees"
52-70 shall include the trustees or their employees, or both, if their
53-1 duties are principally connected with such trusteeship.
53-2 (b) The premium for the policy shall be paid by
53-3 the trustees wholly from funds contributed by the employer or
53-4 employers of the insured persons, or by the union or unions, or by
53-5 both, or, partly from such funds and partly from funds contributed
53-6 by the insured persons, except that in no event shall the
53-7 contribution by an insured person toward the cost of his insurance
53-8 exceed forty cents per thousand per month. A policy on which part
53-9 of the premium is to be derived from funds contributed by the
53-10 insured persons specifically for their insurance may be placed in
53-11 force only if at least seventy-five percent (75%) of the then
53-12 eligible persons of each participating employer unit, excluding any
53-13 as to whom evidence of insurability is not satisfactory to the
53-14 insurer, elect to make the required contributions. A policy on
53-15 which no part of the premium is to be derived from funds
53-16 contributed by the insured persons specifically for their insurance
53-17 must insure all eligible persons, or all except any as to whom
53-18 evidence of individual insurability is not satisfactory to the
53-19 insurer. The policy may provide that a participating employer or
53-20 labor union may pay the premium directly to the insurer for the
53-21 policy issued to the trustee, and in that event, the employer or
53-22 labor union becomes the premium payor for the insured employees or
53-23 union members for that employer unit.
53-24 (c) The policy must cover at date of issue at
53-25 least one hundred (100) persons; unless the policy is issued to the
53-26 trustees of a fund established by employers which have assumed
53-27 obligations through a collective bargaining agreement and are
53-28 participating in the fund either pursuant to those obligations with
53-29 regard to one or more classes of their employees which are
53-30 encompassed in the collective bargaining agreement or as a method
53-31 of providing insurance benefits for other classes of their
53-32 employees, or unless the policy is issued to the trustees of a fund
53-33 established by one or more labor unions.
53-34 (d) The amounts of insurance under the policy
53-35 must be based upon some plan precluding individual selection either
53-36 by the insured persons or by the policyholder or employer. No
53-37 policy may be issued which provides term insurance on any person
53-38 which together with any other term insurance under any group life
53-39 insurance policy or policies issued to trustees or employers
53-40 exceeds One Hundred Thousand Dollars ($100,000.00), unless four
53-41 hundred percent (400%) of the annual compensation of such employee
53-42 from his employer or employers exceeds One Hundred Thousand Dollars
53-43 ($100,000.00), in which event all such term insurance shall not
53-44 exceed four hundred percent (400%) of such annual compensation.
53-45 (e) The limitation as to amount of group
53-46 insurance on any person shall not apply to group insurance on other
53-47 than the term plan where such insurance is to be used to fund the
53-48 benefits under a pension plan and the amount of such insurance does
53-49 not exceed that required to provide at normal retirement date the
53-50 pension specified by the plan, and except that a group policy which
53-51 is issued by the same or another carrier to replace another group
53-52 policy may provide term insurance not to exceed the amount provided
53-53 by the policy which it replaces, or the amounts provided above
53-54 whichever is greater.
53-55 (f) No policy may be issued (i) to insure
53-56 employees of any employer whose eligibility to participate in the
53-57 fund as an employer arises out of considerations directly related
53-58 to the employer being a commercial correspondent or business client
53-59 or patron of another employer (regardless of whether such other
53-60 employer is or is not participating in the fund); or (ii) to insure
53-61 employees of any employer which is not located in this state,
53-62 unless the majority of the employers whose employees are to be
53-63 insured are located in this state, or unless the policy is issued
53-64 to the trustees of a fund established by one or more labor unions.
53-65 (5A) A policy issued to an association or trust for a
53-66 group of individuals for the payment of future funeral expenses.
53-67 (6) A policy issued to cover any other group subject
53-68 to the following requirements:
53-69 (a) No such group life insurance policy shall be
53-70 delivered in this state unless the Commissioner of Insurance finds
54-1 that:
54-2 (i) the issuance of such group policy is
54-3 not contrary to the best interest of the public;
54-4 (ii) the issuance of the group policy
54-5 would result in economies of acquisition or administration; and
54-6 (iii) the benefits are reasonable in
54-7 relation to the premiums charged.
54-8 (b) No such group life insurance coverage may be
54-9 offered in this state by an insurer under a policy issued in
54-10 another state unless this state or another state having
54-11 requirements substantially similar to those contained in Paragraph
54-12 (a) of Subdivision (6) has made a determination that such
54-13 requirements have been met.
54-14 (c) The premium for the policy shall be paid
54-15 either from the policyholder's funds or from funds contributed by
54-16 the covered person or from both.
54-17 (d) Notwithstanding other provisions of law, an
54-18 employer may insure the lives of its officers, directors,
54-19 employees, and retirees under this subdivision for the purpose of
54-20 and in an amount necessary to provide funds to offset fringe
54-21 benefit-related liabilities. Evidence of the purpose of the policy
54-22 shall be submitted to the Commissioner of Insurance. A policy
54-23 issued for such purpose shall not diminish other life insurance
54-24 benefits if any are offered or provided by such employer. The
54-25 provisions of Subdivisions 5 through 10 of Section 2 of this
54-26 article shall not apply to such policies.
54-27 (7) No policy of wholesale, franchise or employee life
54-28 insurance, as hereinafter defined, shall be issued or delivered in
54-29 this state unless it conforms to the following requirements:
54-30 (a) Wholesale, franchise or employee life
54-31 insurance is hereby defined as: a term life insurance plan under
54-32 which a number of individual term life insurance policies are
54-33 issued at special rates to a selected group. A special rate is any
54-34 rate lower than the rate shown in the issuing insurance company's
54-35 manual for individually issued policies of the same type and to
54-36 insureds of the same class.
54-37 (b) Wholesale, franchise or employee life
54-38 insurance may be issued to (1) the employees of a common employer
54-39 or employers, covering at date of issue not less than five
54-40 employees; or (2) the members of a labor union or unions covering
54-41 at date of issue not less than five members; or (3) the members of
54-42 a credit union or credit unions covering at date of issue not less
54-43 than five (5) members.
54-44 (c) The premium for the policy shall be paid
54-45 either wholly from funds contributed by the employer or employers
54-46 of the insured persons, or by the union or unions or by both, or
54-47 partly from such funds and partly from funds contributed by the
54-48 insured person, except that in no event shall the contribution by
54-49 an insured person toward the cost of his insurance exceed forty
54-50 cents per thousand per month.
54-51 (d) No policy may be issued on a wholesale,
54-52 franchise or employee life insurance basis which, together with any
54-53 other term life insurance policy or policies issued on a wholesale,
54-54 franchise, employee life insurance or group basis, provides term
54-55 life insurance coverage for an amount in excess of One Hundred
54-56 Thousand Dollars ($100,000.00), unless four hundred percent (400%)
54-57 of the annual compensation of such employee from his employer or
54-58 employers exceeds One Hundred Thousand Dollars ($100,000.00), in
54-59 which event all such term insurance shall not exceed four hundred
54-60 percent (400%) of such annual compensation. An individual
54-61 application shall be taken for each such policy and the insurer
54-62 shall be entitled to rely upon the applicant's statements as to
54-63 applicant's other similar coverage upon his life.
54-64 (e) Each such policy of insurance shall contain
54-65 a provision substantially as follows:
54-66 A provision that if the insurance on an insured person ceases
54-67 because of termination of employment or of membership in the union,
54-68 such person shall be entitled to have issued to him by the insurer,
54-69 without evidence of insurability an individual policy of life
54-70 insurance without disability or other supplementary benefits,
55-1 provided application for the individual policy shall be made, and
55-2 the first premium paid to the insurer, within thirty-one (31) days
55-3 after such termination.
55-4 (f) Each such policy may contain any provision
55-5 substantially as follows:
55-6 (1) A provision that the policy is
55-7 renewable at the option of the insurer only;
55-8 (2) A provision for termination of
55-9 coverage by the insurer upon termination of employment by the
55-10 insured employee;
55-11 (3) A provision requiring a person
55-12 eligible for insurance to furnish evidence of individual
55-13 insurability satisfactory to the insurer as condition to coverage.
55-14 (g) The limitation as to amount of group and
55-15 wholesale, franchise or employee life insurance on any person shall
55-16 not apply to group insurance on other than the term plan where such
55-17 insurance is to be used to fund benefits under a pension plan and
55-18 the amount of such insurance does not exceed that required to
55-19 provide at normal retirement date the pension specified by the
55-20 plan, and except that a group policy which is issued by the same or
55-21 another carrier to replace another group policy may provide term
55-22 insurance not to exceed the amounts provided by the policy which it
55-23 replaces, or the amounts provided above, whichever are greater.
55-24 (h) Nothing contained in this Subsection (7)
55-25 shall in any manner alter, impair or invalidate (1) any policy
55-26 heretofore issued prior to the effective date of this Act; nor (2)
55-27 any such plan heretofore placed in force and effect provided such
55-28 prior plan was at date of issue legal and valid; nor (3) any policy
55-29 issued on a salary savings franchise plan, bank deduction plan,
55-30 pre-authorized check plan or similar plan of premium collection.
55-31 (7A) A policy may be issued to a principal, or if such
55-32 principal is a life or life and accident or life, accident and
55-33 health insurer, by or to such principal, covering when issued not
55-34 less than ten (10) agents of the principal, subject to the
55-35 following requirements:
55-36 (a) As used in this section, the term "agents"
55-37 shall be deemed to include general agents, subagents and salesmen.
55-38 (b) The agents eligible for insurance under the
55-39 policy shall be those who are under contract to render personal
55-40 services for the principal for a commission or other fixed or
55-41 ascertainable compensation.
55-42 (c) The premium for the policy shall be paid
55-43 either wholly by the principal or partly from funds contributed by
55-44 the principal and partly from funds contributed by the insured
55-45 agents. A policy on which no part of the premium is to be derived
55-46 from funds contributed by the insured agents must insure all of the
55-47 eligible agents or all of any class or classes thereof determined
55-48 by conditions pertaining to the services to be rendered by the
55-49 agents to the principal. A policy on which part of the premium is
55-50 to be derived from funds contributed by the insured agents must
55-51 cover at issue at least seventy-five percent (75%) of the eligible
55-52 agents or at least seventy-five percent (75%) of any class or
55-53 classes thereof determined by conditions pertaining to the services
55-54 to be rendered by the agents; provided, however, that the benefits
55-55 may be extended to other classes of agents as seventy-five percent
55-56 (75%) thereof express the desire to be covered.
55-57 (d) The amounts of insurance under the policy
55-58 must be based upon some plan precluding individual selection either
55-59 by the principal or by the agents. No policy may be issued which
55-60 provides term insurance on any agent which together with any other
55-61 term insurance under any group life insurance policy or policies
55-62 issued to the principal exceeds One Hundred Thousand Dollars
55-63 ($100,000.00), unless four hundred percent (400%) of the annual
55-64 commissions or other fixed or ascertainable compensation of such
55-65 agent from the principal exceeds One Hundred Thousand Dollars
55-66 ($100,000.00), in which event all such term insurance shall not
55-67 exceed four hundred percent (400%) of such annual commissions or
55-68 other fixed or ascertainable compensation.
55-69 (e) The insurance shall be for the benefit of
55-70 persons other than the principal.
56-1 (8) A policy issued to the Veterans Land Board of the
56-2 State of Texas, who shall be deemed the policyholder to insure
56-3 persons purchasing land under the Texas Veterans Land Program as
56-4 provided in Section 16(B) of Article 5421m, Vernon's Texas Civil
56-5 Statutes (Chapter 318, Acts of the 51st Legislature, Regular
56-6 Session, 1949, as amended).
56-7 (9) Any policy of group term life insurance may be
56-8 extended, in the form of group term life insurance only, to insure
56-9 the spouse and minor children, natural or adopted, of an insured
56-10 employee, provided the policy constitutes a part of the employee
56-11 benefit program established for the benefit of employees of the
56-12 United States government or any subdivision thereof, and provided
56-13 further, that the spouse or children of other employees covered by
56-14 the same employee benefit program in other states of the United
56-15 States are or may be covered by group term life insurance, subject
56-16 to the following requirements:
56-17 (a) The premiums for the group term life
56-18 insurance shall be paid by the policyholder from funds solely
56-19 contributed by the insured employee.
56-20 (b) The amounts of insurance under the policy
56-21 must be based upon some plan precluding individual selection either
56-22 by the insured employee or by the policyholder, provided that group
56-23 term life insurance upon the life of a spouse shall not exceed the
56-24 lesser of (1) Ten Thousand Dollars ($10,000.00) or (2) one-half of
56-25 the amount of insurance on the life of the insured employee under
56-26 the group policy; and provided that group term life insurance on
56-27 the life of any minor child shall not exceed Two Thousand Dollars
56-28 ($2,000.00).
56-29 (c) Upon termination of the group term life
56-30 insurance with respect to the spouse of any insured employee by
56-31 reason of such person's termination of employment or death, or
56-32 termination of the group contract, the spouse insured pursuant to
56-33 this section shall have the same conversion rights as to the group
56-34 term life insurance on his or her life as is provided for the
56-35 insured employee.
56-36 (d) Only one certificate need be issued for
56-37 delivery to an insured employee if a statement concerning any
56-38 dependent's coverage is included in such certificate.
56-39 (10) A policy of group life insurance may be issued to
56-40 a nonprofit service, civic, fraternal, or community organization or
56-41 association which has had an active existence for at least two
56-42 years, has a constitution or bylaws, was formed for purposes other
56-43 than obtaining insurance, and which association shall be deemed the
56-44 policyholder to insure members and employees of such association
56-45 for the benefit of persons other than the association or any of its
56-46 officers, subject to the following requirements:
56-47 (a) The persons eligible for insurance shall be
56-48 all the members of the association, or all of any class thereof
56-49 determined by conditions pertaining to membership in the
56-50 association.
56-51 (b) The amounts of insurance under the policy
56-52 shall be based upon some plan precluding individual selection
56-53 either by the insured members or by the association.
56-54 (c) The premium for the policy shall be paid by
56-55 the policyholder from the policyholder's own funds or from funds
56-56 contributed by the employees or members specifically for their
56-57 insurance, or from both. The policy may provide that the premium
56-58 may be paid directly to the insurer by individual employees or
56-59 members from their own funds, and in that event, the respective
56-60 employees or members become the premium payor for that particular
56-61 certificate.
56-62 (d) The policy shall cover at least twenty-five
56-63 (25) persons at date of issue.
56-64 ARTICLE 7. FINANCIAL SUPERVISION OF ENTITIES REGULATED
56-65 BY TEXAS DEPARTMENT OF INSURANCE
56-66 SECTION 7.01. Section 2A(a)(1), Article 3.28, Insurance
56-67 Code, is amended to read as follows:
56-68 (1) In conjunction with the annual statement and in
56-69 addition to other information required by this article, every life
56-70 insurance company doing business in this state shall annually
57-1 submit to the State Board of Insurance the opinion of a qualified
57-2 <an> actuary <or other financial specialist as defined by Board
57-3 rule> as to whether the reserves and related actuarial items held
57-4 in support of the policies and contracts specified by rule of the
57-5 Board are computed appropriately, are based on assumptions which
57-6 satisfy contractual provisions, are consistent with prior reported
57-7 amounts, and comply with applicable laws of this state. The Board
57-8 by rule shall define the specific requirements of this opinion<,
57-9 the qualifications of the persons who may certify to such an
57-10 opinion,> and shall include any matters deemed to be necessary to
57-11 the opinion's scope. For purposes of this subdivision, "qualified
57-12 actuary" has the meaning assigned by Article 1.11(d) of this code.
57-13 A person who, before September 1, 1993, satisfied the requirements
57-14 of the Board to submit an opinion under this subdivision may also
57-15 submit the opinion required by this subdivision.
57-16 SECTION 7.02. Section 2A(b), Article 3.28, Insurance Code,
57-17 is amended to read as follows:
57-18 (b) Actuarial Analysis of Reserves and Assets Supporting
57-19 Such Reserves. Every life insurance company, except as exempted by
57-20 or pursuant to rule adopted by the Board, shall also annually
57-21 include in the opinion required by Subsection (a)(1) of this
57-22 section, an opinion of the same person who certifies to the opinion
57-23 under Subsection (a)(1) of this section as to whether the reserves
57-24 and related actuarial items held in support of the policies and
57-25 contracts specified by Board rule, when considered in light of the
57-26 assets held by the company with respect to the reserves and related
57-27 actuarial items, including but not limited to the investment
57-28 earnings on the assets and the considerations anticipated to be
57-29 received and retained under the policies and contracts, make
57-30 adequate provision for the company's obligations under the policies
57-31 and contracts, including but not limited to the benefits under and
57-32 expenses associated with the policies and contracts. The rules
57-33 adopted by the Board under this section may <shall> exempt those
57-34 companies that would be exempted from the requirements stated in
57-35 this subsection (b) according to the most recently adopted
57-36 regulation by the National Association of Insurance Commissioners
57-37 entitled "Model Actuarial Opinion and Memorandum Regulation" or
57-38 its successor regulation if the Board considers the exemption
57-39 appropriate.
57-40 SECTION 7.03. Article 1.11, Insurance Code, is amended by
57-41 amending Subsection (c) and adding Subsection (d) to read as
57-42 follows:
57-43 (c) Included on or attached to page 1 of the annual
57-44 statement shall be the statement of a qualified actuary<, who is a
57-45 member in good standing of the American Academy of Actuaries>,
57-46 entitled "Statement of Actuarial Opinion," setting forth his or her
57-47 opinion relating to policy reserves and other actuarial items for
57-48 life, accident and health, and annuities, or loss and loss
57-49 adjustment expense reserves for property and casualty risks, as
57-50 described in the NAIC annual statement instructions as appropriate
57-51 for the type of risks insured.
57-52 (d) In this article, "qualified actuary" means a member in
57-53 good standing of the American Academy of Actuaries or a person who
57-54 has otherwise demonstrated actuarial competence to the satisfaction
57-55 of the commissioner of insurance or other insurance regulatory
57-56 official of the insurer's domiciliary state.
57-57 SECTION 7.04. Chapter 1, Insurance Code, is amended by
57-58 adding Article 1.11A to read as follows:
57-59 Art. 1.11A. ACCEPTANCE OF ACTUARIAL OPINION. (a) In any
57-60 case in which the commissioner requests or requires the opinion of
57-61 an actuary under this code, another insurance law of this state, or
57-62 a rule adopted by the commissioner, including an opinion of a
57-63 qualified actuary submitted in accordance with Section 2A, Article
57-64 3.28, of this code, the opinion is presumed to be accurate and
57-65 valid and the department shall accept the opinion.
57-66 (b) The department may employ, at the department's expense,
57-67 an actuary other than the actuary who provides an opinion under
57-68 Subsection (a) of this section to provide an alternative opinion.
57-69 SECTION 7.05. Article 1.15, Insurance Code, is amended by
57-70 adding Sections 8, 9, and 10 to read as follows:
58-1 Sec. 8. (a) In conducting an examination under this
58-2 article, the department shall use audits and work papers prepared
58-3 by an accountant or accounting firm that meets the requirements of
58-4 Section 12, Article 1.15A, of this code that are made available to
58-5 the department by the carrier. If necessary, the department may
58-6 conduct a separate audit of the carrier.
58-7 (b) The carrier shall provide the department with the work
58-8 papers of an accountant or accounting firm or the carrier and a
58-9 record of any communications between the accountant or accounting
58-10 firm and the carrier that relate to the audit. The accountant or
58-11 accounting firm shall deliver that information to the department's
58-12 examiners, who shall retain the information during the course of
58-13 the department's examination of the carrier. Information obtained
58-14 under this section is confidential and may not be disclosed to the
58-15 public except when introduced as evidence in a hearing.
58-16 (c) For purposes of this section, "work papers" has the
58-17 meaning assigned by Section 17(a), Article 1.15A, of this code.
58-18 Work papers developed in an audit conducted under this section
58-19 shall be maintained in the manner provided by Sections 17(b) and
58-20 (c), Article 1.15A, of this code.
58-21 Sec. 9. A final or preliminary examination report, and any
58-22 information obtained during the course of an examination, is
58-23 confidential and is not subject to disclosure under the open
58-24 records law, Chapter 424, Acts of the 63rd Legislature, Regular
58-25 Session, 1973 (Article 6252-17a, Vernon's Texas Civil Statutes),
58-26 and its subsequent amendments. This section applies if the carrier
58-27 examined is under supervision or conservation but does not apply to
58-28 an examination conducted in connection with a liquidation or a
58-29 receivership under this code or another insurance law of this
58-30 state.
58-31 Sec. 10. If the Commissioner determines that the financial
58-32 strength of a carrier justifies less-frequent examinations than are
58-33 required by Section 1 of this article, the Commissioner may conduct
58-34 the examination of a carrier at intervals not to exceed five years.
58-35 The Commissioner shall adopt rules governing the determination of
58-36 whether the financial strength of a carrier justifies examination
58-37 under this section. This section applies only to examination of a
58-38 carrier that has been incorporated or organized for more than three
58-39 years.
58-40 SECTION 7.06. Section 10, Article 1.15A, Insurance Code, is
58-41 amended by adding Subsection (f) to read as follows:
58-42 (f) The audited financial report must also include
58-43 information required by the department to conduct the examination
58-44 of the insurer under Article 1.15 of this code. The commissioner
58-45 shall adopt rules governing the information to be included in the
58-46 report under this subsection.
58-47 SECTION 7.07. Chapter 1, Insurance Code, is amended by
58-48 adding Article 1.15B to read as follows:
58-49 Art. 1.15B. CONFIDENTIALITY OF EARLY WARNING SYSTEM
58-50 INFORMATION. Any information relating to the financial solvency of
58-51 any organization regulated by the department under this code or
58-52 another insurance law of this state obtained by the department's
58-53 early warning system is confidential and is not subject to
58-54 disclosure under the open records law, Chapter 424, Acts of the
58-55 63rd Legislature, Regular Session, 1973 (Article 6252-17a, Vernon's
58-56 Texas Civil Statutes), and its subsequent amendments.
58-57 SECTION 7.08. Section 8, Article 1.14-2, Insurance Code, is
58-58 amended by amending Subsections (b) and (c) and adding Subsection
58-59 (d) to read as follows:
58-60 (b) No surplus lines agent shall place any coverage with an
58-61 <unauthorized> insurer unless the insurer has met the eligibility
58-62 requirements of this section and the stamping office provides
58-63 evidence that the insurer has met the requirements to the State
58-64 Board of Insurance. An <unauthorized> insurer shall not be
58-65 eligible unless the insurer has a minimum capital and surplus of
58-66 $15 million <that are not less than the following amounts for the
58-67 following dates:>
58-68 <(1) $4.5 million capital and surplus as of December
58-69 31, 1991; or>
58-70 <(2) $6 million capital and surplus as of December 31,
59-1 1992>.
59-2 (c) An <unauthorized> insurer may be exempt from the minimum
59-3 capital and surplus requirements provided by Subsection (b) of this
59-4 section if the Commissioner of Insurance finds, after public
59-5 hearing, that the exemption is warranted based on factors such as
59-6 quality of management, capital and surplus of any parent company,
59-7 company underwriting profit and investment income trends,
59-8 reinsurance contracts, company record and reputation within the
59-9 industry, and other information the commissioner requires to make a
59-10 determination. The commissioner, by rule, shall exempt an insurer
59-11 from the minimum capital and surplus requirements of Subsection (b)
59-12 of this section if the insurer writes less than a minimum level of
59-13 insurance premium in this state. The rules must specify the
59-14 minimum level of insurance premium.
59-15 (d) A surplus lines insurer may be exempt from the minimum
59-16 capital and surplus requirements of this article if the
59-17 commissioner finds, after a public hearing, that the applicant for
59-18 exemption complies with each of the following conditions:
59-19 1. the insurer has at least $6 million in capital and
59-20 surplus;
59-21 2. the amount of net risk retained after ceding to a
59-22 reinsurer is reasonable and does not exceed 10 percent of the
59-23 capital and surplus of the insurer;
59-24 3. the annual ratio of net written premiums to surplus
59-25 of the insurer does not exceed 2.5 to 1;
59-26 4. the reinsurance company of the insurer is rated at
59-27 least "B+" by the A.M. Best Company;
59-28 5. the ownership interest in the insurer of an agent
59-29 who places insurance with it does not exceed 10 percent;
59-30 6. the officers, directors, or managing head have
59-31 sufficient insurance ability, standing, and good record to render
59-32 continued success of the company probable;
59-33 7. the composition, quality, duration, and liquidity
59-34 of the insurer's investment portfolio are prudent;
59-35 8. the insurer is audited annually by an independent
59-36 certified public accountant who is in good standing with the
59-37 American Institute of Certified Public Accountants and is licensed
59-38 to practice by the Texas State Board of Public Accountancy, and a
59-39 copy of such audit is filed with the commissioner;
59-40 9. the number and type of complaints are not excessive
59-41 relative to the number of insurance policies written; and
59-42 10. the insurer is acting in good faith in applying
59-43 for an exemption.
59-44 The commissioner may continue the exemption in force on an
59-45 annual basis upon the filing of a certificate by the insurer that
59-46 the above conditions remain true and correct. The commissioner may
59-47 hold a public hearing, however, at any time to determine that the
59-48 continued exemption is warranted. The commissioner may waive any
59-49 of the above 10 conditions if in her or his judgment the
59-50 policyholders of the insurer would not be adversely affected
59-51 thereby.
59-52 SECTION 7.09. Article 1.16(b), Insurance Code, is amended to
59-53 read as follows:
59-54 (b) Assessments for the expenses of such domestic
59-55 examination which shall be sufficient to meet all the expenses and
59-56 disbursements necessary to comply with the provisions of the laws
59-57 of Texas relating to the examination of insurance companies and to
59-58 comply with the provisions of this Article and Articles 1.17 and
59-59 1.18 of this Code, shall be made by the State Board of Insurance
59-60 upon the corporations or associations to be examined taking into
59-61 consideration annual premium receipts, and/or admitted assets that
59-62 are not attributable to 90 percent of pension plan contracts as
59-63 defined in Section 818(a) of the Internal Revenue Code of 1986 (26
59-64 U.S.C. Section 818(a)), and/or insurance in force; provided such
59-65 assessments shall be made and collected as follows: (1) expenses
59-66 attributable directly to a specific examination including
59-67 employees' salaries and expenses and expenses provided by Article
59-68 1.28 of this Code shall be collected at the time of examination;
59-69 (2) assessments calculated annually for each corporation or
59-70 association which take into consideration annual premium receipts,
60-1 and/or admitted assets that are not attributable to 90 percent of
60-2 pension plan contracts as defined in Section 818(a) of the Internal
60-3 Revenue Code of 1986 (26 U.S.C. Section 818(a)), and/or insurance
60-4 in force shall be assessed annually for each such corporation or
60-5 association. In computing the assessments, the board may not
60-6 consider insurance premiums for insurance contracted for by a state
60-7 or federal governmental entity to provide welfare benefits to
60-8 designated welfare recipients or contracted for in accordance with
60-9 or in furtherance of Title 2, Human Resources Code, or the federal
60-10 Social Security Act (42 U.S.C. Section 301 et seq.). The <Provided
60-11 further that the> amount of the <all such> assessments paid in each
60-12 taxable year to or for the use of the State of Texas by any
60-13 insurance corporation or association hereby affected shall be
60-14 allowed as a credit on the amount of premium taxes to be paid by
60-15 any such insurance corporation or association for such taxable year
60-16 except as provided by Article 1.28 of this Code.
60-17 SECTION 7.10. Article 1.39, Insurance Code, is amended to
60-18 read as follows:
60-19 Art. 1.39. Subordinated Indebtedness. (a) This article
60-20 applies to an insurer as that term is defined by Article 1.15A of
60-21 this code.
60-22 (b) An insurer may obtain a loan or an advance of cash or
60-23 property, repayable with interest and may assume a subordinated
60-24 liability for repayment of the advance and payment of interest on
60-25 the advance if the insurer and creditor execute a written agreement
60-26 stating that the creditor may be paid only out of that <the>
60-27 portion of the insurer's surplus that exceeds the greater of a
60-28 minimum surplus stated and fixed in the agreement or a minimum
60-29 surplus of $500,000 for that insurer. The department or the
60-30 commissioner may not require the agreement to provide another
60-31 minimum surplus amount.
60-32 (c) <Before an insurer may assume a subordinated liability
60-33 under Subsection (a) of this article, the agreement must be
60-34 approved by the commissioner.>
60-35 <(d) An insurer may not repay principal or pay interest on a
60-36 subordinate liability assumed under this article unless the
60-37 repayment or payment is approved by the commissioner. The
60-38 commissioner may approve the repayment or payment only if satisfied
60-39 that the repayment or payment is appropriate, considering the
60-40 financial condition of the insurer. The commissioner may not deny
60-41 approval of the repayment or payment if the insurer submits
60-42 evidence, satisfactory to the commissioner, that the insurer has at
60-43 least the minimum surplus stated in the agreement.>
60-44 <(e)> A loan or advance made under this article, and any
60-45 interest accruing on the loan or advance, is <not> a legal
60-46 liability and <or> financial statement liability of the insurer
60-47 only to the extent provided by the terms and conditions of the loan
60-48 or advance agreement, and the loan or advance may not otherwise be
60-49 a legal liability or financial statement liability of the insurer.
60-50 <until the commissioner authorizes repayment or payment under
60-51 Subsection (d) of this article. Until the commissioner authorizes
60-52 the repayment or payment, all financial statements published by the
60-53 insurer or filed with the commissioner must show as a liability
60-54 that portion of the insurer's surplus that exceeds the minimum
60-55 surplus as defined in the subordinated agreement to the extent of
60-56 the unpaid balance thereon, and must show the amount of that
60-57 minimum surplus as a special surplus account.>
60-58 (d) If the loan or advance agreement provides for a sinking
60-59 fund out of which the loan or advance is to be repaid, then the
60-60 loan or advance shall be a legal liability and financial statement
60-61 liability of the insurer only to the extent of those funds
60-62 accumulated and held in the sinking fund, and the loan or advance
60-63 may not otherwise be a legal liability or financial statement
60-64 liability of the insurer. By mutual agreement of the parties to
60-65 the agreement, any portion of the accumulated funds in the sinking
60-66 fund may be returned to the surplus of the insurer at any time and
60-67 from time to time and thereafter may not be considered as a legal
60-68 liability or financial statement liability of the insurer.
60-69 SECTION 7.11. Section 4, Article 3.33, Insurance Code, is
60-70 amended to read as follows:
61-1 Sec. 4. AUTHORIZED INVESTMENTS AND LOANS. Subject to the
61-2 limitations and restrictions herein contained, the investments and
61-3 loans described in the following subsections, and none other, are
61-4 authorized for the insurers subject hereto:
61-5 (a) United States Government Bonds. Bonds, evidences
61-6 of indebtedness or obligations of the United States of America, or
61-7 bonds, evidences of indebtedness or obligations guaranteed as to
61-8 principal and interest by the full faith and credit of the United
61-9 States of America, and bonds, evidences of indebtedness, or
61-10 obligations of agencies and instrumentalities of the government of
61-11 the United States of America;
61-12 (b) Other Governmental Bonds. Bonds, evidences of
61-13 indebtedness or obligations of governmental units in the United
61-14 States, Canada, or any province or city of Canada, and of the
61-15 instrumentalities of such governmental units; provided:
61-16 (1) such governmental unit or instrumentality is
61-17 not in default in the payment of principal or interest in any of
61-18 its obligations; and
61-19 (2) investments in the obligations of any one
61-20 governmental unit or instrumentality may not exceed 20 percent of
61-21 the insurer's capital and surplus;
61-22 (c) Obligations of Business Entities. Obligations,
61-23 including bonds or evidences of indebtedness, or participations in
61-24 those bonds or evidences of indebtedness, that are issued, assumed,
61-25 guaranteed, or insured by any business entity, including a sole
61-26 proprietorship, a corporation, an association, a general or limited
61-27 partnership, a joint-stock company, a joint venture, a trust, or
61-28 any other form of business organization, whether for-profit or
61-29 not-for-profit, that is organized under the laws of the United
61-30 States, another state, Canada, or any state, district, province, or
61-31 territory of Canada, subject to all conditions set forth below:
61-32 (1) an insurer may acquire obligations in any
61-33 one business entity rated one or two by the Securities Valuation
61-34 Office of the National Association of Insurance Commissioners, but
61-35 not to exceed 20 percent of the insurer's statutory capital and
61-36 surplus as reported in the most recent annual statement filed with
61-37 the department;
61-38 (2) an insurer may acquire obligations rated
61-39 three or lower by the Securities Valuation Office if, after giving
61-40 effect to such an acquisition, the aggregate amount of all
61-41 obligations rated three or lower then held by the domestic insurer
61-42 does not exceed 20 percent of its admitted assets. Not more than
61-43 10 percent of the admitted assets of that insurer may consist of
61-44 obligations rated four, five, or six by the Securities Valuation
61-45 Office. Not more than three percent of the admitted assets of that
61-46 insurer may consist of obligations rated five or six by the
61-47 Securities Valuation Office. Not more than one percent of the
61-48 admitted assets of that insurer may consist of obligations rated
61-49 six by the Securities Valuation Office. Attaining or exceeding the
61-50 limit in any one category does not preclude an insurer from
61-51 acquiring obligations in other categories, subject to the specific
61-52 and multi-category limits;
61-53 (3) an insurer may not invest more than an
61-54 aggregate of one percent of its admitted assets in obligations
61-55 rated three by the Securities Valuation Office that are issued,
61-56 assumed, guaranteed, or insured by any one business entity, or more
61-57 than one-half percent of its admitted assets in obligations rated
61-58 four, five, or six by the Securities Valuation Office that are
61-59 issued, assumed, guaranteed, or insured by any one business entity.
61-60 An insurer may not invest more than one percent of its admitted
61-61 assets in any obligations rated three, four, five, or six by the
61-62 Securities Valuation Office that are issued, assumed, guaranteed,
61-63 or insured by any one business entity;
61-64 (4) notwithstanding the foregoing, an insurer
61-65 may acquire an obligation of a business entity in which the insurer
61-66 already has one or more obligations if the obligation is acquired
61-67 in order to protect an investment previously made in that business
61-68 entity. Such acquired obligations may not exceed one-half percent
61-69 of the insurer's admitted assets; and
61-70 (5) this subsection does not prohibit an insurer
62-1 from acquiring an obligation as a result of a restructuring of an
62-2 already held obligation that is rated three or lower by the
62-3 Securities Valuation Office;
62-4 <Corporate Bonds. Bonds, evidences of indebtedness or
62-5 obligations of corporations organized under the laws of the United
62-6 States of America or its states or Canada or any state, district,
62-7 province, or territory of Canada; provided:>
62-8 <(1) any such corporation must be solvent with
62-9 at least $1,000,000 of net worth as of the date of its latest
62-10 annual or more recent certified audited financial statement or will
62-11 have at least $1,000,000 of net worth after completion of a
62-12 securities offering which is being subscribed to by the insurer, or
62-13 the obligation is guaranteed as to principal and interest by a
62-14 solvent corporation meeting such net worth requirements which is
62-15 organized under the laws of the United States of America or one of
62-16 its states or Canada or any state, district, province, or territory
62-17 of Canada;>
62-18 <(2) investments in the obligations of any one
62-19 corporation may not exceed 20 percent of the insurer's capital and
62-20 surplus; and>
62-21 <(3) the aggregate of all investments under this
62-22 subsection may not exceed:>
62-23 <(A) one hundred percent of the insurer's
62-24 assets (excluding, however, those assets representing the minimum
62-25 capital required for the insurer), but only if more than 75 percent
62-26 of the total amount invested by the insurer in such bonds,
62-27 evidences of indebtedness, or obligations of any such corporations
62-28 qualifying under Subdivision (1) of this subsection are rated
62-29 either: (i) AA or better by Standard and Poor's Bond Ratings
62-30 service; or (ii) Aa or better by Moody's Bond Ratings service; or>
62-31 <(B) eighty percent of the insurer's
62-32 assets (excluding, however, those assets representing the minimum
62-33 capital required for the insurer), but only if more than 50 percent
62-34 of the total amount invested by the insurer in such bonds,
62-35 evidences of indebtedness or obligations of any such corporations
62-36 qualifying under Subdivision (1) of this subsection are rated
62-37 either: (i) BBB or better by Standard and Poor's Bond Ratings
62-38 service; or (ii) Baa or better by Moody's Bond Ratings service; or>
62-39 <(C) fifty percent of the insurer's
62-40 assets;>
62-41 (d) International Market. Bonds issued, assumed, or
62-42 guaranteed by the Interamerican Development Bank, the International
62-43 Bank for Reconstruction and Development (the World Bank), the Asian
62-44 Development Bank, the State of Israel, the African Development
62-45 Bank, and the International Finance Corporation; provided:
62-46 (1) investments in the bonds of any one of the
62-47 entities specified above may not exceed 20 percent of the insurer's
62-48 capital and surplus; and
62-49 (2) the aggregate of all investments made under
62-50 this subsection may not exceed 20 percent of the insurer's assets;
62-51 (e) Policy Loans. Loans upon the security of the
62-52 insurer's own policies not in excess of the amount of the reserve
62-53 values thereof;
62-54 (f) Time and Savings Deposits. Any type or form of
62-55 savings deposits, time deposits, certificates of deposit, NOW
62-56 accounts, and money market accounts in solvent banks, savings and
62-57 loan associations, and credit unions and branches thereof,
62-58 organized under the laws of the United States of America or its
62-59 states, when made in accordance with the laws or regulations
62-60 applicable to such entities; provided the amount of the deposits in
62-61 any one bank, savings and loan association, or credit union will
62-62 not exceed the greater of:
62-63 (1) twenty percent of the insurer's capital and
62-64 surplus;
62-65 (2) the amount of federal or state deposit
62-66 insurance coverage pertaining to such deposit; or
62-67 (3) ten percent of the amount of capital,
62-68 surplus, and undivided profits of the entity receiving such
62-69 deposits;
62-70 (g) Equipment Trusts. Equipment trust obligations or
63-1 certificates; provided:
63-2 (1) any such obligation or certificate is
63-3 secured by an interest in transportation equipment that is in whole
63-4 or in part within the United States of America <and the amount of
63-5 the obligation or certificate may not exceed 90 percent of the
63-6 value of the equipment>;
63-7 (2) the obligation or certificate provides a
63-8 right to receive determined portions of rental, purchase, or other
63-9 fixed obligatory payments for the use or purchase of the
63-10 transportation equipment;
63-11 (3) the obligation is classified as an
63-12 obligation of a business entity and is subject to the limitations
63-13 on obligations of business entities set forth in Subsection (c) of
63-14 this section <investment in any one equipment trust obligation or
63-15 certificate may not exceed 10 percent of the insurer's capital and
63-16 surplus>; and
63-17 (4) the aggregate of all investments made under
63-18 this subsection may not exceed 10 percent of the insurer's assets;
63-19 (h) Common Stock. Common stock of any corporation
63-20 organized under the laws of the United States of America or any of
63-21 its states, shares of mutual funds doing business under the
63-22 Investment Company Act of 1940 (15 U.S.C. Section 80a-1 et seq.),
63-23 other than money market funds as defined in Subsection (s) of this
63-24 section, and shares in real estate investment trusts as defined in
63-25 the Internal Revenue Code of 1954 (26 U.S.C. Section 856);
63-26 provided:
63-27 (1) any such corporation, other than a mutual
63-28 fund, must be solvent with at least $1,000,000 net worth as of the
63-29 date of its latest annual or more recent certified audited
63-30 financial statement or will have at least $1,000,000 of net worth
63-31 after completion of a securities offering which is being subscribed
63-32 to by the insurer;
63-33 (2) mutual funds, other than money market funds
63-34 as defined in Subsection (s) of this section, and real estate
63-35 investment trusts must be solvent with at least $1,000,000 of net
63-36 assets as of the date of its latest annual or more recent certified
63-37 audited financial statement;
63-38 (3) investments in any one corporation, mutual
63-39 fund, other than a money market fund as defined in Subsection (s)
63-40 of this section, or real estate investment trust may not exceed 15
63-41 <10> percent of the insurer's capital and surplus; and
63-42 (4) the aggregate of all investments made under
63-43 this subsection may not exceed 25 <20> percent of the insurer's
63-44 assets;
63-45 (i) Preferred Stock. Preferred stock of corporations
63-46 organized under the laws of the United States of America or any of
63-47 its states; provided:
63-48 (1) such corporation must be solvent with at
63-49 least $1,000,000 of net worth as of the date of its latest annual
63-50 or more recent certified audited financial statement or will have
63-51 at least $1,000,000 of net worth after completion of a security
63-52 offering which is being subscribed to by the insurer;
63-53 (2) investments in the preferred stock of any
63-54 one corporation will not exceed 20 percent of the insurer's capital
63-55 and surplus;
63-56 (3) in the aggregate not more than 10 percent of
63-57 the insurer's assets may be invested in preferred stock, the
63-58 redemption and retirement of which is not provided for by a sinking
63-59 fund meeting the standards established by the National Association
63-60 of Insurance Commissioners to value the preferred stock at cost;
63-61 and
63-62 (4) the aggregate of all investments made under
63-63 this subsection may not exceed 40 percent of the insurer's assets;
63-64 (j) Collateral Loans. Collateral loans secured by a
63-65 first lien upon or a valid and perfected first security interest in
63-66 an asset; provided:
63-67 (1) the amount of any such collateral loan will
63-68 not exceed 80 percent of the value of the collateral asset at any
63-69 time during the duration of the loan; and
63-70 (2) the asset used as collateral would be
64-1 authorized for direct investment by the insurer under other
64-2 provisions of this Section 4, except real property in Subsection
64-3 (l);
64-4 (k) Real Estate Loans. Notes, evidences of
64-5 indebtedness, or participations therein secured by a valid first
64-6 lien upon real property or leasehold estate therein located in the
64-7 United States of America; provided:
64-8 (1) the amount of any such obligation secured by
64-9 a first lien upon real property or leasehold estate therein shall
64-10 not exceed 90 percent of the value of such real property or
64-11 leasehold estate therein, but the amount of such obligation:
64-12 (A) may exceed 90 percent but shall not
64-13 exceed 100 percent of the value of such real property or leasehold
64-14 estate therein if the insurer or one or more wholly owned
64-15 subsidiaries of the insurer owns in the aggregate a 10 percent or
64-16 greater equity interest in such real property or leasehold estate
64-17 therein;
64-18 (B) may be 95 percent of the value of such
64-19 real property or leasehold estate therein if it contains only a
64-20 dwelling designed exclusively for occupancy by not more than four
64-21 families for residential purposes, and the portion of the unpaid
64-22 balance of such obligation which is in excess of an amount equal to
64-23 90 percent of such value is guaranteed or insured by a mortgage
64-24 insurance company qualified to do business in the State of Texas;
64-25 or
64-26 (C) may be greater than 90 percent of the
64-27 value of such real property or leasehold estate therein to the
64-28 extent the obligation is insured or guaranteed by the United States
64-29 of America, the Federal Housing Administration pursuant to the
64-30 National Housing Act of 1934, as amended (12 U.S.C. Section 1701 et
64-31 seq.), or the State of Texas; and
64-32 (2) the term of an obligation secured by a first
64-33 lien upon a leasehold estate in real property shall not exceed a
64-34 period equal to four-fifths of the then unexpired term of such
64-35 leasehold estate; provided the unexpired term of the leasehold
64-36 estate must extend at least 10 years beyond the term of the
64-37 obligation, and each obligation shall be payable in an installment
64-38 or installments of sufficient amount or amounts so that at any time
64-39 after the expiration of two-thirds of the original loan term, the
64-40 principal balance will be no greater than the principal balance
64-41 would have been if the loan had been amortized over the original
64-42 loan term in equal monthly, quarterly, semiannual, or annual
64-43 payments of principal and interest, it being required that under
64-44 any method of repayment such obligation will fully amortize during
64-45 a period of time not exceeding four-fifths of the then unexpired
64-46 term of the security leasehold estate; and
64-47 (3) if any part of the value of buildings is to
64-48 be included in the value of such real property or leasehold estate
64-49 therein to secure the obligations provided for in this subsection,
64-50 such buildings shall be covered by adequate property insurance,
64-51 including but not limited to fire and extended coverage insurance
64-52 issued by a company authorized to transact business in the State of
64-53 Texas or by a company recognized as acceptable for such purpose by
64-54 the insurance regulatory official of the state in which such real
64-55 estate is located, and the amount of insurance granted in the
64-56 policy or policies shall be not less than the unpaid balance of the
64-57 obligation or the insurable value of such buildings, whichever is
64-58 the lesser; the loss clause shall be payable to the insurer as its
64-59 interest may appear; and
64-60 (4) to the extent any note, evidence of
64-61 indebtedness, or participation therein under this subsection
64-62 represents an equity interest in the underlying real property, the
64-63 value of such equity interest shall be determined at the time of
64-64 execution of such note, evidence of indebtedness, or participation
64-65 therein and that portion shall be designated as an investment
64-66 subject to the provisions of Subsection (l)(2) of this section; and
64-67 (5) the amount of any one such obligation may
64-68 not exceed 25 percent of the insurer's capital and surplus; and
64-69 (6) a first lien on real property may be
64-70 purchased after its origination if the first lien is insured by a
65-1 mortgagee's title policy issued to the original mortgagee that
65-2 contains a provision that inures the policy to the use and benefit
65-3 of the owners of the evidence of debt indicated in the policy and
65-4 to any subsequent owners of that evidence of debt, and if the
65-5 insurer maintains evidence of assignments or other transfers of the
65-6 first lien on real property to the insurer. An assignment or other
65-7 transfer to the insurer, duly recorded in the county in which the
65-8 real property is located, shall be presumed to create legal
65-9 ownership of the first lien by the insurer;
65-10 (l) Real Estate. Real property fee simple or
65-11 leasehold estates located within the United States of America, as
65-12 follows:
65-13 (1) home and branch office real property or
65-14 participations therein, which must be materially enhanced in value
65-15 by the construction of durable, permanent-type buildings and other
65-16 improvements costing an amount at least equal to the cost of such
65-17 real property, exclusive of buildings and improvements at the time
65-18 of acquisition, or by the construction of such buildings and
65-19 improvements which must be commenced within two years of the date
65-20 of the acquisition of such real property; provided:
65-21 (A) at least 30 percent of the available
65-22 space in such building shall be occupied for the business purposes
65-23 of the insurer and its affiliates; and
65-24 (B) the aggregate investment in such home
65-25 and branch offices shall not exceed 20 percent of the insurer's
65-26 assets; and
65-27 (2) other investment property or participations
65-28 therein, which must be materially enhanced in value by the
65-29 construction of durable, permanent-type buildings and other
65-30 improvements costing an amount at least equal to the cost of such
65-31 real property, exclusive of buildings and improvements at the time
65-32 of acquisition, or by the construction of such buildings and
65-33 improvements which must be commenced within two years of the date
65-34 of acquisition of such real property; provided that such investment
65-35 in any one piece of property or interest therein, including the
65-36 improvements, fixtures, and equipment pertaining thereto may not
65-37 exceed five percent of the insurer's assets; provided, however,
65-38 nothing in this article shall allow ownership of, development of,
65-39 or equity interest in any residential property or subdivision,
65-40 single or multiunit family dwelling property, or undeveloped real
65-41 estate for the purpose of subdivision for or development of
65-42 residential, single, or multiunit family dwellings, except
65-43 acquisitions as provided in Subdivision (4) below, and such
65-44 ownership, development, or equity interests shall be specifically
65-45 prohibited;
65-46 (3) the admissible asset value of each such
65-47 investment in the properties acquired under Subdivisions (1) and
65-48 (2) of this subsection shall be subject to review and approval by
65-49 the Commissioner of Insurance. The commissioner shall have
65-50 discretion at the time such investment is made or any time when an
65-51 examination of the company is being made to cause any such
65-52 investment to be appraised by an appraiser, appointed by the
65-53 commissioner, and the reasonable expense of such appraisal shall be
65-54 paid by such insurance company and shall be deemed to be a part of
65-55 the expense of examination of such company; if the appraisal is
65-56 made upon application of the company, the expense of such appraisal
65-57 shall not be considered a part of the expense of examination of
65-58 such company; no insurance company may hereafter make any write-up
65-59 in the valuation of any of the properties described in Subdivision
65-60 (1) or (2) of this subsection unless and until it makes application
65-61 therefor and such increase in valuation shall be approved by the
65-62 commissioner; and
65-63 (4) other real property acquired:
65-64 (A) in good faith by way of security for
65-65 loans previously contracted or money due; or
65-66 (B) in satisfaction of debts previously
65-67 contracted for in the course of its dealings; or
65-68 (C) by purchase at sales under judgment or
65-69 decrees of court, or mortgage or other lien held by such insurer;
65-70 and
66-1 (5) regardless of the mode of acquisition
66-2 specified herein, upon sale of any such real property, the fee
66-3 title to the mineral estate or any portion thereof may be retained
66-4 by the insurance company indefinitely;
66-5 (m) Oil, Gas, and Minerals. In addition to and
66-6 without limitation on the purposes for which real property may be
66-7 acquired, secured, held, or retained pursuant to other provisions
66-8 of this section, every such insurance company may secure, hold,
66-9 retain, and convey production payments, producing royalties and
66-10 producing overriding royalties, or participations therein as an
66-11 investment for the production of income; provided:
66-12 (1) in no event may such company carry such
66-13 assets in an amount in excess of 90 percent of the appraised value
66-14 thereof; and
66-15 (2) no one investment under this subsection may
66-16 exceed 10 percent of the insurer's capital and surplus in excess of
66-17 statutory minimum capital and surplus applicable to that insurer,
66-18 and the aggregate of all such investments may not exceed 10 percent
66-19 of the insurer's assets as of December 31st next preceding the date
66-20 of such investment; and
66-21 (3) for the purposes of this subsection, the
66-22 following definitions apply:
66-23 (A) a production payment is defined to
66-24 mean a right to oil, gas, or other minerals in place or as produced
66-25 that entitles its owner to a specified fraction of production until
66-26 a specified sum of money, or a specified number of units of oil,
66-27 gas, or other minerals, has been received;
66-28 (B) a royalty and an overriding royalty
66-29 are each defined to mean a right to oil, gas, and other minerals in
66-30 place or as produced that entitles the owner to a specified
66-31 fraction of production without limitation to a specified sum of
66-32 money or a specified number of units of oil, gas, or other
66-33 minerals;
66-34 (C) "producing" is defined to mean
66-35 producing oil, gas, or other minerals in paying quantities,
66-36 provided that it shall be deemed that oil, gas, or other minerals
66-37 are being produced in paying quantities if a well has been "shut
66-38 in" and "shut-in royalties" are being paid;
66-39 (n) Foreign Countries and United States Territories.
66-40 In addition to the investments in Canada authorized in other
66-41 subsections of this section, investments <Investments> in other
66-42 foreign countries or in commonwealths, territories, or possessions
66-43 of the United States <where the insurer conducts an insurance
66-44 business>; provided:
66-45 (1) such investments are similar to those
66-46 authorized for investment within the United States of America or
66-47 Canada by other provisions of this section and are rated one or two
66-48 by the Securities Valuation Office of the National Association of
66-49 Insurance Commissioners; and
66-50 (2) such investments when added to the amount of
66-51 similar investments made within the United States and Canada do not
66-52 result in the combined total of such investments exceeding the
66-53 limitations specified in Subsections (a) through (p) of this
66-54 section; and
66-55 (3) such investments may not exceed the sum of:
66-56 (A) the amount of reserves attributable to
66-57 the business in force in said countries, if any, and any additional
66-58 investments<; provided, however, such investments may exceed such
66-59 reserves to the extent> required by any country as a condition to
66-60 doing business therein, <but to the extent such investments exceed
66-61 such reserves said investments shall not be considered as admitted
66-62 assets of the insurer>; and
66-63 (B) five percent of the insurer's assets;
66-64 (o) Investments Not Otherwise Specified. Investments
66-65 which are not otherwise authorized by this article and which are
66-66 not specifically prohibited by statute, including that portion of
66-67 any investments which may exceed the limits specified in
66-68 Subsections (a) through (n) of this section; provided:
66-69 (1) if any aggregate or individual specified
66-70 investment limitation in Subsections (a) through (n) of this
67-1 section is exceeded, then the excess portion of such investment
67-2 shall be an investment under this subsection; and
67-3 (2) the burden of establishing the value of such
67-4 investments shall be upon the insurer; and
67-5 (3) the amount of any one such investment may
67-6 not exceed 10 percent of the insurer's capital and surplus in
67-7 excess of the statutory minimum capital and surplus applicable to
67-8 that insurer; and
67-9 (4) the aggregate of all investments made under
67-10 this subsection may not exceed the lesser of either five percent of
67-11 the insurer's assets or the insurer's capital and surplus in excess
67-12 of the statutory minimum capital and surplus applicable to that
67-13 insurer;
67-14 (p) Other Authorized Investments. Those other
67-15 investments as follows:
67-16 (1) any investment held by an insurer on the
67-17 effective date of this Act, which was legally authorized at the
67-18 time it was made or acquired or which the insurer was authorized to
67-19 hold or possess immediately prior to such effective date, but which
67-20 does not conform to the requirements of the investments authorized
67-21 in Subsections (a) through (o) of this section, may continue to be
67-22 held by and considered as an admitted asset of the insurer;
67-23 provided the investment is disposed of at its maturity date, if
67-24 any, or within the time prescribed by the law under which it was
67-25 acquired, if any; and provided further, in no event shall the
67-26 provisions of this subdivision alter the legal or accounting status
67-27 of such asset; and
67-28 (2) any other investment which may be authorized
67-29 by other provisions of this code or by other laws of this state for
67-30 the insurers which are subject to this article.
67-31 (q) Special Limitations for Certain Fixed Annuity
67-32 Insurers. The quantitative limitations imposed above in
67-33 Subsections (b)(2), (c)(2), (f)(1), (g)(3), (h)(3), (i)(2), and
67-34 (k)(5) of this section shall not apply to any insurer with assets
67-35 in excess of $2,500,000,000 and that receives more than 90 percent
67-36 of its premium income from fixed rate annuity contracts and that
67-37 has more than 90 percent of its assets allocated to its reserves
67-38 held for fixed rate annuity contracts, excluding, however, any
67-39 premium income, assets, and reserves received from, held for, or
67-40 allocated to separate accounts from the computation of the above
67-41 percentages, and in lieu thereof, the following quantitative
67-42 limitations shall apply to such insurers:
67-43 (1) the limitation in Subsection (b)(2) of this
67-44 section shall be two percent of the insurer's assets;
67-45 (2) the limitation in Subsection (c)(2) of this
67-46 section shall be two percent of the insurer's assets;
67-47 (3) the limitation in Subsection (f)(1) of this
67-48 section shall be two percent of the insurer's assets;
67-49 (4) the limitation in Subsection (g)(3) of this
67-50 section shall be one percent of the insurer's assets;
67-51 (5) the limitation in Subsection (h)(3) of this
67-52 section shall be one percent of the insurer's assets;
67-53 (6) the limitation in Subsection (i)(2) of this
67-54 section shall be two percent of the insurer's assets; and
67-55 (7) the limitation in Subsection (k)(5) of this
67-56 section shall be two percent of the insurer's assets.
67-57 (r) Premium Loans. Loans to finance the payment of
67-58 premiums for the insurer's own insurance policies or annuity
67-59 contracts; provided that the amount of any such loan does not
67-60 exceed the sum of: (i) the available cash value of such insurance
67-61 policy or annuity contract; and (ii) the amount of any escrowed
67-62 commissions payable relating to such insurance policy or annuity
67-63 contract for which the premium loan is made; and
67-64 (s) Money Market Funds. (1) Money market funds as
67-65 defined by 17 CFR 270.2a-7 under the Investment Company Act of 1940
67-66 (15 U.S.C. 80a-1 et seq.) that meet the following additional
67-67 conditions:
67-68 (A) the funds invest 100 percent of total
67-69 assets in United States treasury bills, notes, and bonds, and
67-70 collateralized repurchase agreements composed of those obligations
68-1 at all times;
68-2 (B) the funds invest 100 percent of total
68-3 assets in other full faith and credit instruments of the United
68-4 States; or
68-5 (C) the funds invest at least 95 percent
68-6 of total assets in exempt securities, short-term debt instruments
68-7 with a maturity of 397 days or less, class one bonds, and
68-8 collateralized repurchase agreements composed of those securities
68-9 at all times;
68-10 (2) For purposes of complying with Subsection
68-11 (h) of this section, money market funds qualifying for listing
68-12 within these categories must conform to the purpose and procedures
68-13 manual of the valuation of securities manual of the National
68-14 Association of Insurance Commissioners.
68-15 (t) The percentage authorizations and limitations set
68-16 forth in any and all of the provisions of this section shall apply
68-17 at the time of originally making such investments and shall not be
68-18 applicable to the company or such investment thereafter.
68-19 SECTION 7.12. Section 3(d), Article 21.49-1, Insurance Code,
68-20 is amended to read as follows:
68-21 (d) Amendments to Registration Statements. Each registered
68-22 insurer shall keep current the information required to be disclosed
68-23 in its registration statement by reporting all material changes or
68-24 additions within 15 days after the end of the month in which it
68-25 learns of each such change or addition, except that the insurer is
68-26 not required to report a transaction under this subsection that is
68-27 authorized under Subsection 4(d) of this section. In addition,<;
68-28 provided, however, that> subject to Subsection (c) of Section 4,
68-29 each registered insurer shall <so> report all dividends and other
68-30 distributions to shareholders within two business days following
68-31 the declaration thereof<;> and at least 10 days before the date of
68-32 payment. For purposes of determining compliance with those
68-33 deadlines, reports are considered to be made when received by the
68-34 Texas Department of Insurance. Reports under this subsection are
68-35 for informational purposes only. The commissioner shall adopt
68-36 rules that establish procedures to:
68-37 (1) consider the prepayment notices promptly, that
68-38 shall include the standards set forth under Section 4(b), Article
68-39 21.49-1 of this code;
68-40 (2) review annually all reported ordinary dividends
68-41 paid within the preceding twelve months; and
68-42 (3) take such appropriate actions as may be authorized
68-43 by other provisions of this code <provided further that any
68-44 transaction authorized by Section 4(d) hereof need not be reported
68-45 under this subsection>.
68-46 SECTION 7.13. Section 4(b), Article 21.49-1, Insurance Code,
68-47 is amended to read as follows:
68-48 (b) Adequacy of Surplus. For the purposes of this
68-49 article, in determining whether an insurer's surplus as regards
68-50 policyholders is reasonable in relation to the insurer's
68-51 outstanding liabilities and adequate to its financial needs, the
68-52 following factors, among others, shall be considered:
68-53 (1) the size of the insurer as measured by its assets,
68-54 capital and surplus, reserves, premium writings, insurance in
68-55 force, and other appropriate criteria;
68-56 (2) the extent to which the insurer's business is
68-57 diversified among the several lines of insurance;
68-58 (3) the number and size of risks insured in each line
68-59 of business;
68-60 (4) the extent of the geographical dispersion of the
68-61 insurer's insured risks;
68-62 (5) the nature and extent of the insurer's reinsurance
68-63 program;
68-64 (6) the quality, diversification, and liquidity of the
68-65 insurer's investment portfolio;
68-66 (7) the recent past and projected future trend in the
68-67 size of the insurer's surplus as regards policyholders and the
68-68 insurer's investment portfolio;
68-69 (8) the surplus as regards policyholders maintained by
68-70 other comparable insurers;
69-1 (9) the adequacy of the insurer's reserves; <and>
69-2 (10) the quality and liquidity of investments in
69-3 subsidiaries made pursuant to Section 6. The commissioner may
69-4 treat any such investment as a nonadmitted or disallowed asset for
69-5 purposes of determining the adequacy of surplus as regards
69-6 policyholders whenever in his judgment such investment so warrants;
69-7 and
69-8 (11) the quality of the insurer's earnings and the
69-9 extent to which the insurer's reported earnings include
69-10 extraordinary items.
69-11 SECTION 7.14. Section 3A, Article 21.39-A, Insurance Code,
69-12 is amended by adding Subsection (c) to read as follows:
69-13 (c) This Act does not apply to a reinsurance agreement or
69-14 any trust account related to the reinsurance agreement if the
69-15 agreement and trust account meet the requirements of Article 3.10
69-16 or 5.75-1 of this code.
69-17 SECTION 7.15. Section 1, Article 21.39-B, Insurance Code, is
69-18 amended to read as follows:
69-19 Sec. 1. Any director, member of a committee, or officer, or
69-20 any clerk of a domestic company, who is charged with the duty of
69-21 handling or investing its funds, shall not:
69-22 (1) deposit or invest such funds, except in the
69-23 corporate name of such company, provided, however, that securities
69-24 kept under a custodial agreement or trust agreement with a bank,
69-25 federal home loan bank, or trust company may be issued in the name
69-26 of a nominee of such bank, federal home loan bank, or trust company
69-27 if such bank, federal home loan bank, or trust company has
69-28 corporate trust powers and is duly authorized to act as a custodian
69-29 or trustee and is organized under the laws of the United States of
69-30 America or any state thereof and either (i) is a member of the
69-31 Federal Reserve System, (ii) is a member of or is eligible to
69-32 receive deposits which are insured by the Federal Deposit Insurance
69-33 Corporation, <or> (iii) maintains an account with a Federal Reserve
69-34 Bank and is subject to supervision and examination by the Board of
69-35 Governors of the Federal Reserve System, or (iv) is subject to
69-36 supervision and examination by the Federal Housing Finance Board;
69-37 (2) borrow the funds of such company;
69-38 (3) be interested in any way in any loan, pledge,
69-39 security, or property of such company, except as stockholder; or
69-40 (4) take or receive to his own use any fee, brokerage,
69-41 commission, gift, or other consideration for, or on account of, a
69-42 loan made by or on behalf of such company.
69-43 SECTION 7.16. Section 4(a), Article 21.39-B, Insurance Code,
69-44 is amended to read as follows:
69-45 (a) A domestic insurance company may evidence its ownership
69-46 of securities either through definitive certificates or through
69-47 uncertificated securities as defined by the Business & Commerce
69-48 Code and as provided by Section 6 of this article. The insurance
69-49 company<, or it> may deposit or arrange through its agents,
69-50 brokers, or dealers for the deposit of securities held in or
69-51 purchased for its general account or its separate accounts in
69-52 either a clearing corporation or the Federal Reserve Book Entry
69-53 System. When securities are deposited with a clearing corporation
69-54 directly or deposited indirectly through a participating custodian
69-55 bank, certificates representing securities of the same class of the
69-56 same issuer may be merged and held in bulk in the name of nominee
69-57 of such clearing corporation with any other securities deposited
69-58 with such clearing corporation by any person, regardless of the
69-59 ownership of such securities, and certificates representing
69-60 securities of small denominations may be merged into one or more
69-61 certificates of larger denominations. The records of any agent,
69-62 broker, dealer, or member banks through which an insurance company
69-63 holds securities in the Federal Reserve Book Entry System and the
69-64 record of any custodian banks through which an insurance company
69-65 holds securities in a clearing corporation shall at all times show
69-66 that such securities are held for such insurance company and for
69-67 which accounts thereof. To be eligible to act as a participating
69-68 custodian bank under this subsection, a bank must enter a custodial
69-69 agreement with the insurance company for which it is to act as a
69-70 participating custodian bank.
70-1 SECTION 7.17. Article 21.39-B, Insurance Code, is amended by
70-2 adding Section 6 to read as follows:
70-3 Sec. 6. The State Board of Insurance shall adopt rules
70-4 authorizing a domestic insurance company to demonstrate ownership
70-5 of an uncertificated security consistent with common practices of
70-6 securities exchanges and markets. The rules shall establish:
70-7 (1) standards for the types of uncertificated
70-8 securities that may be held;
70-9 (2) the manner in which ownership of the security may
70-10 be demonstrated; and
70-11 (3) adequate financial safeguards relating to the
70-12 ownership of uncertificated securities.
70-13 SECTION 7.18. Notwithstanding Section 8(b), Article 1.14-2,
70-14 Insurance Code, as amended by this Act, each insurer subject to the
70-15 minimum capital and surplus requirements of that section shall have
70-16 a minimum capital and surplus of not less than:
70-17 (1) $9 million not later than December 31, 1993;
70-18 (2) $12 million not later than December 31, 1994; and
70-19 (3) $15 million not later than December 31, 1995.
70-20 SECTION 7.19. Article 1.16(b), Insurance Code, as amended by
70-21 this Act, applies only to an assessment made by the State Board of
70-22 Insurance on or after September 1, 1993. An assessment made
70-23 before that date is governed by the law in effect on the date that
70-24 the assessment is made, and the former law is continued in effect
70-25 for that purpose.
70-26 SECTION 7.20. Article 1.39, Insurance Code, as amended by
70-27 this Act, applies only to a subordinated indebtedness created on or
70-28 after the effective date of this Act.
70-29 SECTION 7.21. (a) Section 4(c), Article 3.33, Insurance
70-30 Code, as amended by this Act, does not prohibit an insurer from
70-31 acquiring an obligation that it has committed to acquire within the
70-32 nine months preceding the effective date of this Act if the insurer
70-33 would have been permitted to acquire that obligation under Section
70-34 4, Article 3.33, Insurance Code, as it existed before amendment by
70-35 this Act on the date on which the insurer committed to purchase
70-36 that obligation.
70-37 (b) Section 4(c), Article 3.33, Insurance Code, as amended
70-38 by this Act, does not require an insurer to sell or otherwise
70-39 dispose of any obligation:
70-40 (1) legally acquired before the effective date of this
70-41 Act; or
70-42 (2) if acquired on or after the effective date of this
70-43 Act, that satisfied the conditions of that subsection on the date
70-44 of the acquisition, but that subsequently fails to satisfy those
70-45 conditions.
70-46 SECTION 7.22. Section 8(e), Article 1.14-2, Insurance Code,
70-47 is amended to read as follows:
70-48 (e) Instead of the minimum capital and surplus requirements
70-49 provided by this section, a <an unincorporated> group of <alien
70-50 individual> insurers, which group includes unincorporated
70-51 individual insurers, may maintain a trust fund in an amount not
70-52 less than $50 million as security to the full amount of the trust
70-53 fund for all policyholders and creditors in the United States of
70-54 each member of the group. Except as specifically otherwise
70-55 provided by this subsection, the trust fund must comply with the
70-56 terms and conditions provided by Subsection (d) of this section for
70-57 the trust fund required by that subsection.
70-58 ARTICLE 8. CONSOLIDATION, LIQUIDATION, REHABILITATION,
70-59 REORGANIZATION, OR CONSERVATION OF INSURERS
70-60 SECTION 8.01. Subsection (a), Section 2, Article 21.28,
70-61 Insurance Code, is amended to read as follows:
70-62 (a) Receiver Taking Charge; Commissioner and Powers and
70-63 Duties. Whenever under the law of this State a court of competent
70-64 jurisdiction finds that a receiver should take charge of the assets
70-65 of an insurer domiciled in this State, the commissioner of
70-66 insurance or a person designated by the commissioner under contract
70-67 shall act as receiver. The receiver shall forthwith take
70-68 possession of the assets of such insurer and deal with the same in
70-69 the person's own name as receiver or in the name of the insurer as
70-70 the court may direct. The receiver has the powers specified in
71-1 this code. A person designated by the commissioner to act as
71-2 special deputy receiver under contract is subject to the
71-3 performance standards imposed by this subsection. It is the intent
71-4 of the legislature that <continuous> oversight of the special
71-5 deputy receivers and guaranty associations shall be conducted by
71-6 the commissioner. The commissioner shall use a competitive bidding
71-7 process in the selection of special deputy receivers and shall
71-8 establish specifications for the position of special deputy
71-9 receiver. The special deputy receiver shall submit monthly written
71-10 reports to the court and commissioner that state the special deputy
71-11 receiver's business plan for the receivership, including expenses
71-12 incurred in administering the receivership during the preceding
71-13 month and an estimate of those expenses for the succeeding month.
71-14 The report must include a cost-benefit analysis on the expenditure
71-15 of funds other than funds spent for the payment of claims. The
71-16 business plan report must include a budget of monthly expenses that
71-17 explains any variation from the original projection. The business
71-18 plan report must include a list of any lawyers or law firms that
71-19 offered to or did represent the special deputy receiver in relation
71-20 to its duties under this article, and any hours billed or fees paid
71-21 to a lawyer or law firm that represented the special deputy
71-22 receiver. The special deputy receiver shall submit the business
71-23 plan report to the attorney general on a quarterly basis, and the
71-24 attorney general may make recommendations to the commissioner based
71-25 on the report. In addition to the business plan report, the
71-26 special deputy receiver shall submit a monthly report to the
71-27 commissioner relating to the special deputy receiver's activities
71-28 in administering the receivership. Upon written application by the
71-29 special deputy receiver and with approval of the commissioner, the
71-30 court may suspend the requirement for monthly reports or require
71-31 reports less frequently based upon a showing that the costs of such
71-32 reports exceed the benefit derived from their filing.
71-33 SECTION 8.02. Sections 3(f) and (g), Article 21.28,
71-34 Insurance Code, are amended to read as follows:
71-35 (f) Offsets. In all cases of mutual debts or mutual
71-36 credits, whether arising out of one or more contracts between the
71-37 insurer and another person in connection with any claim or
71-38 proceeding under this Article, such credits and debts shall be set
71-39 off and the balance only shall be allowed or paid, except as
71-40 provided in subsection (g).
71-41 (g) No Offsets. No offsets shall be allowed in favor of any
71-42 person where (1) the obligation of the insurer to such person would
71-43 not at the date of the commencement of the delinquency proceedings
71-44 or as otherwise provided in Section 2(c), entitle him to share as a
71-45 claimant in the assets of such insurer, or (2) the obligation of
71-46 the insurer to such person was purchased by or transferred to such
71-47 person subsequent to the commencement of the delinquency
71-48 proceedings or for the purpose of increasing offset rights <with a
71-49 view of its being used as an offset>, or (3) the obligation of such
71-50 person is to pay an assessment levied against the members of a
71-51 mutual insurer, or reciprocal exchange, or underwriters at Lloyds,
71-52 or to pay a balance upon a subscription to the capital stock of a
71-53 stock insurance corporation, or (4) the obligation of such person
71-54 is as a trustee or fiduciary, or (5) the obligations between the
71-55 person and the insurer arise from reinsurance transactions in which
71-56 either the person or the insurer has assumed risks and obligations
71-57 from the other party and then has ceded back to that party
71-58 substantially the same risks and obligations. The receiver shall
71-59 provide persons with accounting statements identifying all debts
71-60 that are due and payable. If a person owes the insurer amounts
71-61 that are due and payable, against which the person asserts offset
71-62 of mutual credits that may become due and payable from the insurer
71-63 in the future, the person shall promptly pay to the receiver the
71-64 amounts due and payable. Notwithstanding Section 8, or any other
71-65 provision of this Article, the receiver shall promptly and fully
71-66 refund, to the extent of the person's prior payments, any mutual
71-67 credits that become due and payable to the person by the insurer.
71-68 SECTION 8.03. Article 21.28, Insurance Code, is amended by
71-69 adding Section 7A to read as follows:
71-70 Sec. 7A. EARLY ACCESS DISTRIBUTION. (a) Within 120 days of
72-1 the commencement of the insolvency proceeding against an impaired
72-2 insurer, the liquidator or a special deputy receiver appointed
72-3 under this Article may make application to the court for approval
72-4 of a proposal to disburse assets out of marshaled assets, from time
72-5 to time as such assets become available, to a guaranty association
72-6 or foreign guaranty association having Class 1 or Class 2 claims
72-7 against the estate of the impaired insurer because of such
72-8 insolvency. If the receiver or special deputy receiver fails to
72-9 make such application within 120 days, the guaranty association may
72-10 submit an application to the court requesting that the receiver or
72-11 special deputy receiver submit a proposal to disburse assets. If
72-12 the liquidator or special deputy receiver determines that there are
72-13 insufficient assets to disburse, the application required by this
72-14 section shall be considered satisfied by a filing by the liquidator
72-15 or special deputy receiver stating the reasons for this
72-16 determination.
72-17 (b) Such proposal shall, at a minimum, include provisions
72-18 for:
72-19 (1) reserving amounts sufficient to allow the payment
72-20 of Class 1 claims, and to the extent the assets of the insolvent
72-21 insurer will allow any payment to be made on Class 2 claims,
72-22 reserving amounts sufficient to provide equal pro-rata
72-23 distributions to the Class 2 claimants other than the guaranty
72-24 associations;
72-25 (2) disbursement of the assets marshaled to date and
72-26 the subsequent distribution of assets as they become available;
72-27 (3) equitable allocation of disbursements to each of
72-28 the guaranty associations and foreign guaranty associations
72-29 entitled thereto;
72-30 (4) the securing of the liquidator or special deputy
72-31 receiver from each of the associations entitled to disbursements
72-32 pursuant to this section of an agreement to return to the
72-33 liquidator upon request and approval by the court such assets,
72-34 together with income on assets previously disbursed, as may be
72-35 required to pay Class 1 claimants and any federal claimants
72-36 asserting priority claims. No bond shall be required of any such
72-37 association; and
72-38 (5) a full report to be made by each association to
72-39 the liquidator or special deputy receiver, as requested by the
72-40 liquidator or special deputy receiver, but no more frequently than
72-41 quarterly, accounting for the assets so disbursed to the
72-42 association, all disbursements made therefrom, any interest earned
72-43 by the association on such assets and any other matter as the court
72-44 may direct.
72-45 (c) The proposal submitted by the liquidator or special
72-46 deputy receiver shall provide for disbursements to the associations
72-47 in amounts estimated at least equal to the claim payments made or
72-48 to be made thereby for which such associations could assert a claim
72-49 against the liquidator, and shall further provide that if the
72-50 assets available for disbursement from time to time do not equal or
72-51 exceed the amount of such claim payments made or to be made by the
72-52 association, then disbursements shall be made for the pro-rata
72-53 amount of the association's Class 2 claim.
72-54 (d) The proposal submitted by the liquidator or special
72-55 deputy receiver shall, with respect to an insolvent insurer writing
72-56 life or health insurance or annuities, provide for disbursement of
72-57 assets to any guaranty association or foreign guaranty association
72-58 covering life or health insurance or annuities or to any other
72-59 entity or organization reinsuring, assuming, or guaranteeing
72-60 policies or contracts of insurance under the acts creating such
72-61 associations.
72-62 (e) Notice of the application shall be given to the
72-63 association in and to the commissioners of insurance of each of the
72-64 states. Notice shall be considered to have been given when
72-65 deposited in the United States certified mail, first class postage
72-66 prepaid, at least 30 days prior to the submission of the
72-67 application to the court. Action of the application may be taken
72-68 by the court if notice has been given and if the liquidator's or
72-69 special deputy receiver's proposal complies with the requirements
72-70 of this section. Notice of the application shall be given to those
73-1 Class 1 and Class 2 claimants that are reasonably ascertainable in
73-2 a manner deemed appropriate by the court, including notice by
73-3 publication.
73-4 SECTION 8.04. Subsection (a), Section 8, Article 21.28,
73-5 Insurance Code, is amended to read as follows:
73-6 (a) Priority of Distribution of Assets. The
73-7 <Notwithstanding any other provision of law, the> priority of
73-8 distribution of assets from the insurer's estate shall be in
73-9 accordance with the disbursement plan approved by the court
73-10 pursuant to Section 7A of this Article, and in accordance with the
73-11 order of each class as provided by this subsection. Every claim in
73-12 each class shall be paid in full or adequate funds retained for
73-13 such payment before the members of the next class receive any
73-14 payment. No subclasses shall be established within any class.
73-15 <Additional subclasses may not be established within any class.>
73-16 Class 1.
73-17 (1) All of the receiver's, conservator's, and
73-18 supervisor's costs and expenses of administration, including
73-19 repayment of funds advanced to the receiver from the abandoned
73-20 property fund of the State Board of Insurance.
73-21 (2) All of the expenses of an insurance guaranty
73-22 association or foreign insurance guaranty association in handling
73-23 claims.
73-24 (3) Wages owed to employees of the insurer as provided
73-25 for in Section 6 of this Article.
73-26 (4) Secured creditors to the extent of the value of
73-27 the security as provided by Section 8(c) of this Article.
73-28 Class 2.
73-29 (1) All claims by policyholders, beneficiaries,
73-30 insureds, and liability claims against insureds covered under
73-31 insurance policies and insurance contracts issued by the insurer.
73-32 (2) All claims by an insurance guaranty association or
73-33 a foreign insurance guaranty association that are payments of
73-34 proper policyholder claims.
73-35 Class 3.
73-36 All other claims of general creditors not falling within any
73-37 other priority under this section including claims for taxes and
73-38 debts due the federal government or any state or local government
73-39 which are not secured claims.
73-40 Class 4.
73-41 Claims of surplus or contribution note holders, holders of
73-42 debentures or holders of similar obligations and proprietary claims
73-43 of shareholders, members, or other owners according to the terms of
73-44 the instruments.
73-45 SECTION 8.05. Section 8, Article 21.28, Insurance Code, is
73-46 amended by adding Subsection (k) to read as follows:
73-47 (k) Every claim under a separate account established under
73-48 Article 3.75 of this code, providing that the income, gains, and
73-49 losses, realized and unrealized, from assets allocated to the
73-50 separate account shall be credited to or charged against the
73-51 account, without regard to other income, gains, or losses of the
73-52 life insurance company, shall be satisfied out of the assets in the
73-53 separate account equal to the reserves maintained in such account
73-54 for the contracts. To the extent provided under contracts
73-55 established under Article 3.75 of this code, that portion of the
73-56 assets of any separate account equal to the reserves and other
73-57 contract liabilities for the separate account is not chargeable
73-58 with liabilities arising out of any other business of the company.
73-59 To the extent, if any, reserves maintained in the separate account
73-60 are in excess of the amounts needed to satisfy claims under the
73-61 separate account contracts, the excess shall be treated as general
73-62 assets of the life insurance company.
73-63 SECTION 8.06. Section 9, Article 21.28, Insurance Code, is
73-64 amended to read as follows:
73-65 Sec. 9. CLOSING. (a) Excess Assets--Stock Companies. When
73-66 the receiver shall have made provision for unclaimed dividends and
73-67 all of the liabilities of a stock insurance company, he shall call
73-68 a meeting of the stockholders of the insurer by giving notice
73-69 thereof in one (1) or more newspapers in the county where the
73-70 principal office of the insurer was located, and by written notice
74-1 to the stockholders of record at their last known address. At such
74-2 meeting, the stockholders shall appoint an agent or agents to take
74-3 over the affairs to continue the liquidation for benefit of the
74-4 stockholders. Voting privileges shall be governed by the insurer's
74-5 bylaws. A majority of the stock shall be represented at the
74-6 agent's appointment. Such agent or agents shall execute and file
74-7 with the court such bond or bonds as shall be approved by it,
74-8 conditioned on the faithful performance of all the duties of the
74-9 trust. Under order of the court the receiver shall then transfer
74-10 and deliver to such agent or agents for continued liquidation under
74-11 the court's supervision all assets of insurer remaining in his
74-12 hands, whereupon the receiver and the Board, and each member and
74-13 employee thereof, shall be discharged from any further liability to
74-14 such insurer and its creditors and stockholders; provided, however,
74-15 that nothing herein contained shall be so construed as to permit
74-16 the insurer to continue in business as such, but the charter of
74-17 such insurer and all permits and licenses issued thereunder or in
74-18 connection therewith shall be ipso facto revoked and annulled by
74-19 such order of the court directing the receiver to transfer and
74-20 deliver the remaining assets of such insurer to such agent or
74-21 agents.
74-22 (b) Excess Assets--Other Companies. After the receiver
74-23 shall have made provision for unclaimed dividends and all of the
74-24 liabilities of any insurer other than a stock insurance company, he
74-25 shall dispose of any remaining assets as directed by the
74-26 receivership court.
74-27 (c) Excess Assets--Guaranty Associations. Notwithstanding
74-28 any other provisions of this article in closing an estate, a
74-29 special deputy receiver, on approval of the court, may transfer any
74-30 remaining assets, causes of action asserted on behalf of the
74-31 impaired insurer, judgment, claims, or liens to the appropriate
74-32 guaranty association and this transfer shall not be a preference or
74-33 voidable transfer but shall be considered a distribution under
74-34 Section 8(a)(1) of this article. In the event the sum realized by
74-35 the guaranty association is materially larger than the amount
74-36 loaned to the estate by the guaranty association, the court may
74-37 order reopening of the estate to disburse the excess funds.
74-38 Nothing in this section shall be construed as a transfer of any
74-39 liability of an impaired insurer to the guaranty association that
74-40 would not constitute a claim payable under Articles 9.48, 21.28-C,
74-41 or 21.28-D of this code.
74-42 (d) Limitation. Except as otherwise provided by this
74-43 subsection, each receivership or other delinquency proceeding
74-44 prescribed by this Article shall be administered in accordance with
74-45 Section 64.072, Civil Practice and Remedies Code. To the extent a
74-46 receivership or delinquency proceeding initiated against an insurer
74-47 applies to claims against a workers' compensation insurance policy
74-48 or a title insurance policy, the receivership or delinquency
74-49 proceeding shall be administered continuously for whatever length
74-50 of time is necessary to effectuate its purposes, and no arbitrary
74-51 period prescribed elsewhere by the laws of Texas limiting the time
74-52 for the administration of receiverships or of corporate affairs
74-53 generally shall be applicable thereto. Instead of the winding up
74-54 and distribution of a receivership estate of an insurer without
74-55 capital stock, the court shall order revival and reinstatement of
74-56 the charter, permits, licenses, franchises, and management
74-57 contracts or other control instruments of the insurer if the
74-58 insurer's remaining cash on hand and on deposit, less any
74-59 outstanding valid and enforceable liabilities, exceeds the minimum
74-60 amount of capital and surplus prescribed for that insurer under
74-61 Article 2.02 or Section 1 of Article 3.02 of this code.
74-62 (e) <(d)> Reopening. If after the receivership shall have
74-63 been closed by final order of the court, the liquidator shall
74-64 discover assets not known to him during receivership, he shall
74-65 report his findings to the court. It shall be within the
74-66 discretion of the court as to whether the value of the
74-67 after-discovered assets shall justify the reopening of the
74-68 receivership for continued liquidation.
74-69 SECTION 8.07. Subsection (d), Section 11, Article 21.28,
74-70 Insurance Code, is amended to read as follows:
75-1 (d) Maintenance of Records. The receiver may devise a
75-2 method for the effective, efficient, and economical maintenance of
75-3 the records of the delinquent insurer and of the liquidator's
75-4 office including maintaining those records on any medium approved
75-5 by the Records Management Division of the Texas State Library. A
75-6 copy of an original record or any other record that is maintained
75-7 on any medium approved by the Records Management Division of the
75-8 Texas State Library within the scope of this section that is
75-9 produced by the receiver or his authorized representative under
75-10 this Article shall have the same force and effect as the original
75-11 record and may be used the same as the original record in any
75-12 judicial or administrative proceeding in this state. In order to
75-13 maintain the records of delinquent insurers after the closing of
75-14 the receivership proceedings, the receiver may reserve assets of an
75-15 estate to be deposited in an account to be used for the specific
75-16 purpose of maintenance, storage, and disposal of records in closed
75-17 receivership estates. <If the need exists for the continued
75-18 maintenance of any records of a delinquent insurer after the
75-19 closing of the receivership proceedings, the receiver may reserve
75-20 sufficient assets, including cash, to be transferred to the
75-21 liquidator on closing of the receivership for the specific purpose
75-22 of meeting the reasonable cost of maintaining those records.>
75-23 SECTION 8.08. Section 3, Article 21.28-A, Insurance Code, is
75-24 amended to read as follows:
75-25 Sec. 3. Notice to comply with written requirements of
75-26 commissioner; noncompliance; taking charge as conservator. If upon
75-27 examination or at any other time it appears to or is the opinion of
75-28 the Commissioner of Insurance that any insurance company is
75-29 insolvent, or its condition is such as to render the continuance of
75-30 its business hazardous to the public or to holders of its policies
75-31 or certificates of insurance, or if such company appears to have
75-32 exceeded its powers (as defined herein) or has failed to comply
75-33 with the law, or if such insurance company gives its consent (as
75-34 defined herein), then the Commissioner of Insurance shall upon his
75-35 determination (a) notify the insurance company of his
75-36 determination, and (b) furnish to the insurance company a written
75-37 list of the Commissioner's requirements to abate his determination,
75-38 and (c) if the Commissioner makes a further determination to
75-39 supervise he shall notify the insurance company that it is under
75-40 the supervision of the Commissioner of Insurance and that the
75-41 Commissioner is applying and effecting the provisions of this
75-42 Article. Such insurance company shall comply with the lawful
75-43 requirements of the Commissioner of Insurance. If placed under
75-44 supervision, the insurance company shall have not more than one
75-45 hundred-eighty (180) <sixty (60)> days from the date of the
75-46 Commissioner's notice of supervision to comply with the
75-47 requirements of the Commissioner. <The Commissioner may extend the
75-48 supervision for an additional period not to exceed thirty (30) days
75-49 on written determination by the Commissioner that there is a
75-50 substantial likelihood of rehabilitation. No hearing is required
75-51 before the Commissioner makes the determination.> During the
75-52 period of supervision, the insurance company shall continue to pay
75-53 claims according to terms of the insurance policy, and the
75-54 Commissioner may schedule a hearing relating to the insurance
75-55 company in supervision with not less than ten (10) days' written
75-56 notice to all parties of record on his own motion or that of any
75-57 party of record. However, notice may be waived by the parties of
75-58 record. If after hearing it is determined that the insurance
75-59 company has failed to comply with the lawful requirements of the
75-60 Commissioner, it has not been rehabilitated, it is insolvent, or it
75-61 is otherwise in such a condition as to render the continuance of
75-62 its business hazardous to the public or to holders of its policies
75-63 or certificates of insurance, or if the company appears to have
75-64 exceeded its powers as defined in this Article, the Commissioner of
75-65 Insurance, acting for himself, or through a conservator appointed
75-66 by the Commissioner of Insurance for that purpose, shall take
75-67 charge as conservator of the insurance company and all of the
75-68 property and effects thereof. If after hearing it is determined
75-69 that the insurance company has been rehabilitated or its condition
75-70 has otherwise been remedied such that the continuance of its
76-1 business is no longer hazardous to the public or to holders of its
76-2 policies or certificates of insurance, the Commissioner may release
76-3 that insurance company from supervision. Section 15,
76-4 Administrative Procedure and Texas Register Act (Article 6252-13a,
76-5 Vernon's Texas Civil Statutes), does not apply to hearings held by
76-6 the Commissioner or his representative under this Article.
76-7 SECTION 8.09. Sections 3A(a) and (e), Article 21.28-A,
76-8 Insurance Code, are amended to read as follows:
76-9 (a) All <Notwithstanding any other provision of law,>
76-10 hearings, orders, notices, correspondence, reports, records, and
76-11 other information in the possession of the Texas Department <State
76-12 Board> of Insurance relating to the supervision or conservatorship
76-13 of any insurance company are <not> confidential <unless the
76-14 Commissioner of Insurance determines that confidentiality> during
76-15 the <initial> period of supervision and conservatorship. On
76-16 termination of the supervision and conservatorship, the information
76-17 in the custody of the department that relates to the supervision
76-18 and conservatorship becomes public information <is necessary to
76-19 accomplish the purposes of this article. The Commissioner of
76-20 Insurance shall make this determination of confidentiality on the
76-21 date the first notice of supervision is given. The period of
76-22 confidentiality determined by the Commissioner of Insurance may not
76-23 be for a period that exceeds 60 days after the date of the
76-24 Commissioner's determination>.
76-25 (e) An officer or employee of the Texas Department <State
76-26 Board> of Insurance is not liable for release of information
76-27 without a showing that the release of information was accomplished
76-28 with actual malice.
76-29 This section does not apply to information (1) if the
76-30 insureds of the insurance company are not protected by Article
76-31 9.48, 21.28-C, or 21.28-D of this code or by statutes substantially
76-32 similar to those Articles, or (2) on the appointment of a receiver
76-33 for the insurance company by a court of competent jurisdiction.
76-34 SECTION 8.10. Article 21.28-A, Insurance Code, is amended by
76-35 adding Section 13 to read as follows:
76-36 Sec. 13. INSURER'S ATTORNEY, ACTUARY, AND ACCOUNTANT. (a)
76-37 Notwithstanding any other provision of this article, during a
76-38 supervision or conservatorship proceeding, the insurer may employ
76-39 an attorney, actuary, and accountant of the insurer's choice to
76-40 assist the insurer during the supervision or conservatorship.
76-41 (b) The supervisor or conservator shall authorize the
76-42 payment of reasonable fees and expenses from the insurer for the
76-43 attorney, actuary, or accountant.
76-44 SECTION 8.11. Section 17(a), Article 21.28-A, Insurance
76-45 Code, is amended to read as follows:
76-46 (a) The State Board of Insurance may collect fees from any
76-47 entity that is regulated by the board as provided by Subsection (h)
76-48 of Section 7 of Article 1.10 of this code and that is successfully
76-49 rehabilitated by the board. The fees shall be in amounts
76-50 sufficient to cover but not exceed the costs of rehabilitation of
76-51 that entity. The board shall use the fees for the sole purpose of
76-52 the rehabilitation of the entity from which they are collected.
76-53 Fees collected under this subsection shall be deposited in and
76-54 expended through the State Board of Insurance Operating Fund. The
76-55 supervisor, conservator, or commissioner shall use the employees of
76-56 the entity being rehabilitated, to the maximum extent possible,
76-57 instead of outside consultants, actuaries, attorneys, accountants,
76-58 other personnel or departmental employees, in order to minimize the
76-59 expense of rehabilitation or the necessity of fees for
76-60 rehabilitation.
76-61 ARTICLE 9. TEXAS PROPERTY AND CASUALTY INSURANCE GUARANTY
76-62 ASSOCIATION
76-63 SECTION 9.01. Section 3, Article 21.28-C, Insurance Code, is
76-64 amended to read as follows:
76-65 Sec. 3. Scope. This Act applies to all kinds of direct
76-66 insurance, and except as provided in Section 12 of this Act, <but>
76-67 is not applicable to the following:
76-68 (1) life, annuity, health, or disability insurance;
76-69 (2) mortgage guaranty, financial guaranty, or other
76-70 forms of insurance offering protection against investment risks;
77-1 (3) fidelity or surety bonds, or any other bonding
77-2 obligations;
77-3 (4) credit insurance, vendors' single-interest
77-4 insurance, collateral protection insurance, or any similar
77-5 insurance protecting the interests of a creditor arising out of a
77-6 creditor-debtor transaction;
77-7 (5) insurance of warranties or service contracts;
77-8 (6) title insurance;
77-9 (7) ocean marine insurance;
77-10 (8) any transaction or combination of transactions
77-11 between a person, including an affiliate of such a person, and an
77-12 insurer, including an affiliate of such an insurer, that involves
77-13 the transfer of investment or credit risk unaccompanied by the
77-14 transfer of insurance risk; or
77-15 (9) any insurance provided by or guaranteed by
77-16 government.
77-17 SECTION 9.02. Subdivision (8), Section 5, Article 21.28-C,
77-18 Insurance Code, is amended to read as follows:
77-19 (8) "Covered claim" means an unpaid claim of an
77-20 insured or third-party liability claimant that arises out of and is
77-21 within the coverage and not in excess of the applicable limits of
77-22 an insurance policy to which this Act applies, issued or assumed
77-23 (whereby an assumption certificate is issued to the insured) by an
77-24 insurer licensed to do business in this state, if that insurer
77-25 becomes an impaired insurer and the third-party claimant or
77-26 liability claimant or insured is a resident of this state at the
77-27 time of the insured event, or the property from which the claim
77-28 arises is permanently located in this state. "Covered claim" shall
77-29 also include 75 percent of unearned premiums, but in no event
77-30 shall a covered claim for unearned premiums exceed $1,000.
77-31 Individual covered claims (including any and all derivative claims
77-32 by more than one person which arise from the same occurrence, which
77-33 shall be considered collectively as a single claim under this Act)
77-34 shall be limited to $100,000, except that the association shall pay
77-35 the full amount of any covered claim arising out of a workers'
77-36 compensation claim made under a workers' compensation policy.
77-37 "Covered claim" shall not include any amount sought as a return of
77-38 premium under a retrospective rating plan or any amount due any
77-39 reinsurer, insurer, insurance pool, or underwriting association, as
77-40 subrogation recoveries or otherwise. "Covered claim" shall not
77-41 include supplementary payment obligations, including adjustment
77-42 fees and expenses, attorney's fees and expenses, court costs,
77-43 interest and penalties, and interest and bond premiums incurred
77-44 prior to the determination that an insurer is an impaired insurer
77-45 under this Act. "Covered claim" shall not include any prejudgment
77-46 or postjudgment interest that accrues subsequent to the
77-47 determination that an insurer is an impaired insurer under this
77-48 Act. "Covered claim" shall not include any claim for recovery of
77-49 punitive, exemplary, extracontractual, or bad-faith damages,
77-50 whether sought as a recovery against the insured, insurer, guaranty
77-51 association, receiver, special deputy receiver, or commissioner,
77-52 awarded in a court judgment against an insured or insurer.
77-53 "Covered claim" shall not include, and the association shall not
77-54 have any liability to an insured or third-party liability claimant,
77-55 for its failure to settle a liability claim within the limits of a
77-56 covered claim under this Act. With respect to a covered claim for
77-57 unearned premiums, both persons who were residents of this state at
77-58 the time the policy was issued and persons who are residents of
77-59 this state at the time the company is found to be an impaired
77-60 insurer shall be considered to have covered claims under this Act.
77-61 If the impaired insurer has insufficient assets to pay the expenses
77-62 of administering the receivership or conservatorship estate, that
77-63 portion of the expenses of administration incurred in the
77-64 processing and payment of claims against the estate shall also be a
77-65 covered claim under this Act.
77-66 SECTION 9.03. Subdivision (9), Section 5, Article 21.28-C,
77-67 Insurance Code, is amended to read as follows:
77-68 (9) "Impaired insurer" means:
77-69 (A) a member insurer that is placed in temporary
77-70 or permanent receivership under an order of a court of competent
78-1 jurisdiction, including the courts of any other state, based on a
78-2 finding of insolvency and that has been designated an impaired
78-3 insurer by the commissioner; or
78-4 (B) a member insurer placed in conservatorship
78-5 after it has been determined by the commissioner to be insolvent
78-6 and that has been designated an impaired insurer by the
78-7 commissioner.
78-8 SECTION 9.04. Subdivision (11), Section 5, Article 21.28-C,
78-9 Insurance Code, is amended to read as follows:
78-10 (11) "Net direct written premiums", when assessing
78-11 other than the workers' compensation line of business, means direct
78-12 premiums written in this state on insurance policies to which this
78-13 Act applies, less return premiums on those policies and dividends
78-14 paid or credited to policyholders on that direct business. The
78-15 term does not include premiums on contracts between insurers or
78-16 reinsurers. When assessing the workers' compensation line of
78-17 business, the term "net direct written premiums" means the modified
78-18 annual premium prior to the application of any deductible premium
78-19 credit, less return premiums on those policies and dividends paid
78-20 or credited to policyholders on that direct business. The term
78-21 does not include premiums on contracts between insurers or
78-22 reinsurers.
78-23 SECTION 9.05. Subsection (d), Section 7, Article 21.28-C,
78-24 Insurance Code, is amended to read as follows:
78-25 (d) A public representative may not be:
78-26 (1) an officer, director, or employee of an insurance
78-27 company, insurance agency, agent, broker, solicitor, adjuster, or
78-28 any other business entity regulated by the Texas Department of
78-29 Insurance;
78-30 (2) a person required to register with the Texas
78-31 Ethics Commission <secretary of state> under Chapter 305,
78-32 Government Code, in connection with the person's representation of
78-33 clients in the field of insurance; or
78-34 (3) related to a person described by Subdivision (1)
78-35 or (2) of this subsection within the second degree of affinity or
78-36 consanguinity.
78-37 SECTION 9.06. Section 7, Article 21.28-C, Insurance Code, is
78-38 amended by adding Subsection (f) to read as follows:
78-39 (f) A director of the association or any member company or
78-40 other entity represented by the director may not receive any money
78-41 or valuable thing directly, indirectly, or through any substantial
78-42 interest in any other corporation, firm, or business unit for
78-43 negotiating, procuring, participating, recommending, or aiding in a
78-44 transaction, reinsurance agreement, merger, purchase, sale, or
78-45 exchange of assets, policies of insurance, or property made by the
78-46 association or the supervisor, conservator, or receiver on behalf
78-47 of an impaired insurer. The director, company, or entity may not
78-48 be pecuniarily or contractually interested, as principal,
78-49 co-principal, agent, or beneficiary, directly, indirectly, or
78-50 through any substantial interest in any other corporation, firm, or
78-51 business unit, in the transaction, reinsurance agreement, merger,
78-52 purchase, sale, or exchange.
78-53 SECTION 9.07. Subsection (b), Section 8, Article 21.28-C,
78-54 Insurance Code, is amended to read as follows:
78-55 (b) The association shall undertake to discharge the policy
78-56 obligations of the impaired insurer, including the duty to defend
78-57 insureds under a liability policy, to the extent that the policy
78-58 obligations are covered claims under this Act. In performing its
78-59 statutory obligations, the association may also enforce any duty
78-60 imposed on the insured party or beneficiary under the terms of any
78-61 policy of insurance within the scope of this Act. In performing
78-62 its statutory obligations under this Act, the association shall not
78-63 be considered to be in the business of insurance, shall not be
78-64 considered to have assumed or succeeded to any liabilities of the
78-65 impaired insurer, and shall not be considered to otherwise stand in
78-66 the shoes of the impaired insurer for any purpose, including the
78-67 issue of whether the association is amenable to the personal
78-68 jurisdiction of the courts of any other state. The association is
78-69 considered the insurer to the extent of its obligation on the
78-70 covered claims and to that extent has all rights, duties, and
79-1 obligations of the impaired insurer as if the insurer had not
79-2 become impaired.
79-3 SECTION 9.08. Subsection (d), Section 8, Article 21.28-C,
79-4 Insurance Code, is amended to read as follows:
79-5 (d) The association shall investigate <claims brought
79-6 against the association> and <shall> adjust, compromise, settle,
79-7 and pay covered claims to the extent of the association's
79-8 obligation and deny all other claims. The association may review
79-9 settlements, releases, and judgments to which the impaired insurer
79-10 or its insureds were parties to determine the extent to which those
79-11 settlements, releases, and judgments may be properly contested.
79-12 Any judgment taken by default or consent against an insured or the
79-13 impaired insurer, and any settlement, release, or judgment entered
79-14 into by the insured or the impaired insurer, is not binding on the
79-15 association, and may not be considered as evidence of liability or
79-16 of damages in connection with any claim brought against the
79-17 association or any other party under this Act. Notwithstanding any
79-18 other provision of this Act, a covered claim shall not include any
79-19 claim filed with the guaranty association after the later of the
79-20 final date for filing claims against the liquidator or receiver of
79-21 an insolvent insurer or eighteen months after the order of
79-22 liquidation.
79-23 SECTION 9.09. Subsection (h), Section 8, Article 21.28-C,
79-24 Insurance Code, is amended to read as follows:
79-25 (h) The association may:
79-26 (1) employ or retain persons as necessary to handle
79-27 claims and perform other duties of the association;
79-28 (2) borrow funds necessary to implement this Act in
79-29 accordance with the plan of operation;
79-30 (3) sue or be sued;
79-31 (4) negotiate and become a party to contracts as
79-32 necessary to implement this Act, including lump-sum or structured
79-33 compromise and settlement agreements with claimants who have claims
79-34 for medical or indemnity benefits for a period of three years or
79-35 more other than a settlement or lump-sum payment in violation of
79-36 the Texas Workers' Compensation Act (Article 8308-1.01 et seq.,
79-37 Vernon's Texas Civil Statutes);
79-38 (5) perform other acts as necessary or proper to
79-39 implement this Act; or
79-40 (6) refund to the member insurers in proportion to the
79-41 contribution of each member insurer to the association that amount
79-42 by which the assets of the association exceed the liabilities, if
79-43 at the end of any calendar year the board of directors finds that
79-44 the assets of the association exceed the liabilities of the
79-45 association as estimated by the board of directors for the coming
79-46 year.
79-47 SECTION 9.10. Subsection (i), Section 8, Article 21.28-C,
79-48 Insurance Code, is repealed.
79-49 SECTION 9.11. Section 8, Article 21.28-C, Insurance Code, is
79-50 amended by adding Subsection (k) to read as follows:
79-51 (k)(1) Notwithstanding Chapter 271, Acts of the 60th
79-52 Legislature, Regular Session, 1967 (Article 6252-17, Vernon's Texas
79-53 Civil Statutes), the board may hold an open meeting by telephone
79-54 conference call if immediate action is required and the convening
79-55 at one location of a quorum of the board is not reasonable or
79-56 practical.
79-57 (2) The meeting is subject to the notice requirements
79-58 applicable to other meetings.
79-59 (3) The notice of the meeting must specify as the
79-60 location of the meeting the location where meetings of the board
79-61 are usually held.
79-62 (4) Each part of the meeting that is required to be
79-63 open to the public shall be audible to the public at the location
79-64 specified in the notice of the meeting as the location of the
79-65 meeting and shall be tape recorded. The tape recording shall be
79-66 made available to the public.
79-67 SECTION 9.12. Subsection (d), Section 9, Article 21.28-C,
79-68 Insurance Code, is amended to read as follows:
79-69 (d) The plan of operation must:
79-70 (1) establish the procedures under which the powers
80-1 and duties of the association are performed;
80-2 (2) establish procedures for handling assets of the
80-3 association;
80-4 (3) establish the amount and method of reimbursing
80-5 members of the board of directors;
80-6 (4) provide for the establishment of a claims filing
80-7 procedure that includes, but is not limited to, notice by the
80-8 association to claimants, procedures for filing claims seeking
80-9 recovery from the association, and a procedure for appealing the
80-10 denial of claims by the association <establish procedures by which
80-11 claims may be filed with the association>; and
80-12 (5) establish acceptable forms of proof of covered
80-13 claims.
80-14 SECTION 9.13. Subsection (e), Section 9, Article 21.28-C,
80-15 Insurance Code, is amended to read as follows:
80-16 (e) <Notice of claims to the receiver of the impaired
80-17 insurer constitutes notice to the association or its agent.> A
80-18 list of claims shall be submitted periodically to the association
80-19 or similar organization in another state by the receiver.
80-20 SECTION 9.14. Subsection (a), Section 11, Article 21.28-C,
80-21 Insurance Code, is amended to read as follows:
80-22 (a) A person recovering under this Act is considered to have
80-23 assigned to the association the person's right under the policy,
80-24 and the person's rights to recover for the occurrence made the
80-25 basis of the claim under this Act under any policy of insurance
80-26 issued by an unimpaired insurer <the person's rights under the
80-27 policy to the association> to the extent of the person's recovery
80-28 from the association. The association may pursue any such claims
80-29 to which it is subrogated under this provision in its own name or
80-30 in the name of the person recovering under this Act. Each insured
80-31 or claimant seeking the protection of this Act shall cooperate with
80-32 the association to the same extent as that person would have been
80-33 required to cooperate with the impaired insurer. The association
80-34 does not have a cause of action against the insured of the impaired
80-35 insurer for any sums it has paid out except those causes of action
80-36 the impaired insurer would have had if the sums had been paid by
80-37 the impaired insurer and except as provided in Subsection (b) of
80-38 this section. In the case of an impaired insurer operating on a
80-39 plan with assessment liability, payments of claims of the
80-40 association do not reduce the liability of the insureds to the
80-41 receiver or statutory successor for unpaid assessments.
80-42 SECTION 9.15. Subsection (a), Section 12, Article 21.28-C,
80-43 Insurance Code, is amended to read as follows:
80-44 (a) A person who has a claim against an insurer under any
80-45 provision in an insurance policy other than a policy of an impaired
80-46 insurer that is also a covered claim shall exhaust first the
80-47 person's rights under the policy, including any claim for indemnity
80-48 or medical benefits under any workers' compensation, health,
80-49 disability, uninsured motorist, personal injury protection, medical
80-50 payment, liability, or other policy. The association shall have a
80-51 credit or setoff against any amount of benefits which would
80-52 otherwise be payable by the association to the claimant under this
80-53 Act, in the amount of the claimant's recovery under any policy
80-54 issued by an unimpaired insurer. Subject to the provisions of
80-55 Subsections (1) and (2) below, the association's credit or setoff
80-56 under this section shall be deducted from damages incurred by the
80-57 claimant, and the remaining sum shall be the maximum amount payable
80-58 by the association, except that the association's liability shall
80-59 not exceed $100,000 or the limits of the policy under which the
80-60 claim is made, whichever is less.
80-61 (a-1) Notwithstanding Subsection (a) of this section, if a
80-62 claimant is seeking recovery of policy benefits that, but for the
80-63 insolvency of the impaired insurer, would be subject to lien or
80-64 subrogation by a workers' compensation insurer, health insurer or
80-65 any other insurer, whether impaired or not, then the association's
80-66 credit or offset shall be deducted from the damages incurred by the
80-67 claimant or the limits of the policy under which the claim is made,
80-68 whichever is less. In no event shall a claimant's recovery under
80-69 this Act result in a total recovery to the claimant that is greater
80-70 than that which would have resulted but for the insolvency of the
81-1 impaired insurer. Subject to Section 5(8) of this Act, a
81-2 claimant's recovery under this Act may not result in a recovery to
81-3 the claimant that is less than that which would have resulted but
81-4 for the insolvency of the impaired insurer<. Any amount payable on
81-5 a covered claim under this Act shall be reduced by the amount of
81-6 any recovery under the insurance policy>.
81-7 SECTION 9.16. Subsection (b), Section 12, Article 21.28-C,
81-8 Insurance Code, is amended to read as follows:
81-9 (b) A person who has a claim that may be recovered under
81-10 more than one insurance guaranty association or its equivalent
81-11 shall seek recovery first from the association of the place of
81-12 residence of the insured, except that if it is a first-party claim
81-13 for damage to property with a permanent location, the person shall
81-14 seek recovery first from the association of the location of the
81-15 property, and if it is a workers' compensation claim the person
81-16 shall seek recovery first from the association of the residence of
81-17 the claimant. The association shall have a credit or setoff
81-18 against any amount of benefits under this Act, in the amount of the
81-19 claimant's recovery from the guaranty association or equivalent.
81-20 Subject to the provisions of Subsections (1) and (2) below, the
81-21 association's credit or setoff under this Section shall be deducted
81-22 from the damages incurred by the claimant, and the remaining sum
81-23 shall be the maximum amount payable by the association, except that
81-24 the association's liability shall not exceed $100,000.
81-25 (b-1) Notwithstanding Subsection (b) of this section, if a
81-26 claimant is seeking recovery of policy benefits that, but for the
81-27 insolvency of the impaired insurer, would be subject to lien or
81-28 subrogation by a workers' compensation insurer, health insurer or
81-29 any other insurer, whether impaired or not, then the association's
81-30 credit or offset shall be deducted from the damages incurred by the
81-31 claimant or the limits of the policy under which the claim is made,
81-32 whichever is less. In no event shall a claimant's recovery under
81-33 this Act result in a total recovery to the claimant that is greater
81-34 than that which would have resulted but for the insolvency of the
81-35 impaired insurer. Subject to Section 5(8) of this Act, a
81-36 claimant's recovery under this Act shall not result in a recovery
81-37 to the claimant that is less than that which would have resulted
81-38 but for the insolvency of the impaired insurer <Any recovery under
81-39 this Act shall be reduced by the amount of recovery from any other
81-40 insurance guaranty association or its equivalent>.
81-41 SECTION 9.17. Section 13, Article 21.28-C, Insurance Code,
81-42 is amended to read as follows:
81-43 Sec. 13. FINANCIAL CONDITION OF MEMBER INSURERS; PREVENTION
81-44 OF INSOLVENCIES. (a) The association shall have access to the
81-45 books and records of a member insurer in receivership, in order to
81-46 make a determination of the extent of the impact on the association
81-47 in the event such member becomes impaired. The association shall
81-48 have the authority to perform or cause to be performed an actuarial
81-49 and operational analysis of the member insurer and prepare a report
81-50 on matters relating to the impact or potential impact on the
81-51 association in the event of impairment. Such reports shall not be
81-52 public documents. <To aid in the detection and prevention of
81-53 insurer insolvencies, the board of directors, on majority vote, may
81-54 make recommendations to the commissioner for the detection and
81-55 prevention of insurer insolvencies and respond to requests by the
81-56 commissioner to discuss and make recommendations regarding the
81-57 status of any member insurer whose financial condition may be
81-58 hazardous to policyholders or the public. Those recommendations
81-59 are not public documents and are not subject to the open records
81-60 law, Chapter 424, Acts of the 63rd Legislature, Regular Session,
81-61 1973 (Article 6252-17a, Vernon's Texas Civil Statutes), until such
81-62 time as an insurer is declared to be impaired.>
81-63 (b) At the conclusion of any domestic insurer insolvency in
81-64 which the association was obligated to pay covered claims, the
81-65 board of directors may prepare a report on the history and causes
81-66 of the insolvency, based on the information available to the
81-67 association, and may submit the report to the commissioner.
81-68 (c) There shall be no liability on the part of, and no cause
81-69 of action of any nature shall arise against the association or its
81-70 agents or employees, the board of directors, member insurers, or
82-1 the commissioner or the commissioner's authorized representative
82-2 for any statement made in good faith by them in any report or
82-3 recommendation made under this section.
82-4 SECTION 9.18. Section 14, Article 21.28-C, Insurance Code,
82-5 is amended to read as follows:
82-6 Sec. 14. Examination of the association. <The association
82-7 shall be subject to examination and regulation by the commissioner
82-8 in the same manner as other insurers under this code.> Not later
82-9 than March 30 of each year, the association <board of directors>
82-10 shall submit an audited financial statement to the state auditor <a
82-11 financial report> for the preceding calendar year in a form
82-12 approved by the state auditor's office <commissioner>.
82-13 SECTION 9.19. Subsection (a), Section 16, Article 21.28-C,
82-14 Insurance Code, is amended to read as follows:
82-15 (a) There is no liability on the part of, and no cause of
82-16 action of any nature arises against, any member insurer, the
82-17 association or its agents or employees, the board of directors,
82-18 receiver, special deputy receiver or its agents or employees, or
82-19 the commissioner or the commissioner's representatives for any good
82-20 faith action or failure to act in the performance of powers and
82-21 duties under this Act.
82-22 SECTION 9.20. Section 17, Article 21.28-C, Insurance Code,
82-23 is amended to read as follows:
82-24 Sec. 17. Stay of proceedings. All proceedings in which an
82-25 impaired insurer is a party or is obligated to defend a party in
82-26 any court in this state, except proceedings directly related to the
82-27 receivership or instituted by the receiver, shall be stayed for six
82-28 months and any additional time thereafter as may be determined by
82-29 the court from the date of the designation of impairment or an
82-30 ancillary proceeding is instituted in the state, whichever is
82-31 later, to permit proper defense by the receiver or the association
82-32 of all pending causes of action. As to any covered claims arising
82-33 from a judgment under any decision, verdict, or finding based on
82-34 the default of the impaired insurer or its failure to defend an
82-35 insured, the association either on its own behalf or on behalf of
82-36 the insured shall be entitled, upon application, <may apply> to
82-37 have the judgment, order, decision, verdict, or finding set aside
82-38 by the same court or administrator that made the judgment, order,
82-39 decision, verdict, or finding and shall be permitted to defend the
82-40 claim on the merits. The receiver or statutory successor of an
82-41 impaired insurer covered by this Act shall permit access by the
82-42 board or its authorized representative to records of the impaired
82-43 insurer as are necessary for the board in carrying out its
82-44 functions under this Act with regard to covered claims. In
82-45 addition, the receiver or statutory successor shall provide the
82-46 board or its representative with copies of the records on request
82-47 of the board and at the expense of the board.
82-48 SECTION 9.21. Section 18, Article 21.28-C, Insurance Code,
82-49 is amended by adding Subsection (h) to read as follows:
82-50 (h) Notwithstanding Subsection (b) of this section, the
82-51 association may assess the workers' compensation line of business
82-52 during a calendar year not more than three percent of each
82-53 insurer's net direct written premium for the preceding calendar
82-54 year for assessments made on or before December 31, 1995. An
82-55 assessment under this subsection may be made only if the
82-56 association finds that the assessment is necessary to meet the
82-57 obligations of the association. This subsection expires January 1,
82-58 1996.
82-59 SECTION 9.22. Article 21.28-C, Insurance Code, is amended by
82-60 adding Section 24 to read as follows:
82-61 Sec. 24. REPORTING REQUIREMENTS. The guaranty association,
82-62 its employees, and board of directors are not required to register
82-63 with the secretary of state or Texas Ethics Commission pursuant to
82-64 Article 1.06-D of this code.
82-65 SECTION 9.23. Article 21.28-C, Insurance Code, is amended by
82-66 adding Section 25 to read as follows:
82-67 Sec. 25. CONTROLLING LAW. (a) Except as provided in
82-68 Subsection (b) of this section, if a conflict exists between this
82-69 Act and any other statutory provision relating to the association,
82-70 this Act shall control.
83-1 (b) This section does not apply to a conflict between this
83-2 Act and:
83-3 (1) the Texas Workers' Compensation Act (Article
83-4 8308-1.01, et seq., Vernon's Texas Civil Statutes);
83-5 (2) Subchapter D, Chapter 5, of this code; or
83-6 (3) Article 5.76-2, 5.76-3, 5.76-4, or 5.76-5 of this
83-7 code.
83-8 SECTION 9.24. Notwithstanding Subsection (b), Section 1.27,
83-9 Chapter 12, Acts of 72nd Legislature, 2nd Called Session, 1991, the
83-10 Texas Property and Casualty Insurance Guaranty Association may
83-11 assume its responsibilities under this Act in proceedings initiated
83-12 before January 1, 1992, prior to September 1, 1994, on an
83-13 estate-by-estate basis. Assumption of its responsibilities in
83-14 proceedings initiated before January 1, 1992, shall not impose upon
83-15 the Texas Property and Casualty Insurance Guaranty Association a
83-16 duty to defend insureds who have been sued under a liability policy
83-17 issued by an impaired insurer.
83-18 SECTION 9.25. If the 73rd Legislature adopts legislation
83-19 repealing Article 1.06-D, Insurance Code, Section 9.22 of this
83-20 article shall not be effective.
83-21 ARTICLE 10. LIFE, ACCIDENT, HEALTH, AND HOSPITAL SERVICE
83-22 INSURANCE GUARANTY ASSOCIATION
83-23 SECTION 10.01. Section 7, Article 21.28-D, Insurance Code,
83-24 is amended by adding Subsection (d) to read as follows:
83-25 (d) A director of the association or any member company or
83-26 other entity represented by the director may not receive any money
83-27 or valuable thing directly, indirectly, or through any substantial
83-28 interest in any other corporation, firm, or business unit for
83-29 negotiating, procuring, participating, recommending, or aiding in a
83-30 transaction, reinsurance agreement, merger, purchase, sale, or
83-31 exchange of assets, policies of insurance, or property made by the
83-32 association or the supervisor, conservator, or receiver on behalf
83-33 of an impaired insurer. The director, company, or entity may not
83-34 be pecuniarily or contractually interested, as principal,
83-35 co-principal, agent, or beneficiary, directly, indirectly, or
83-36 through any substantial interest in any other corporation, firm, or
83-37 business unit, in the transaction, reinsurance agreement, merger,
83-38 purchase, sale, or exchange.
83-39 SECTION 10.02. Section 17(a), Article 21.28-D, Insurance
83-40 Code, is amended to read as follows:
83-41 (a) There is no liability on the part of and no cause of
83-42 action of any nature arises against any member insurer or its
83-43 agents or employees, the association or its agents or employees,
83-44 members of the board of directors, the receiver, the special deputy
83-45 or its agents or employees, or the commissioner or the
83-46 commissioner's representatives, for any good faith action or
83-47 omission in the performance of powers and duties under this Act.
83-48 This immunity extends to the participation in any organization of
83-49 one or more other state associations of similar purposes and to any
83-50 similar organization and its agents or employees.
83-51 ARTICLE 11. TITLE INSURANCE GUARANTY ASSOCIATION
83-52 SECTION 11.01. Section 5(2), Article 9.48, Insurance Code,
83-53 is amended by amending Paragraph B and by adding Paragraph C to
83-54 read as follows:
83-55 B. "Covered claim" shall not include any amount
83-56 due any reinsurer, insurer, insurance pool, or underwriting
83-57 association, as subrogation recoveries or otherwise. "Covered
83-58 claim" shall not include supplementary payment obligations,
83-59 including but not limited to adjustment fees and expenses,
83-60 attorneys' fees and expenses, court costs, interest, enhanced
83-61 damages, whether sought as a recovery against the insured, the
83-62 impaired insurer, the impaired agent, or the association, that
83-63 arise <arising> under Article 21.21 of this code or under the
83-64 Deceptive Trade Practices-Consumer Protection Act (Section 17.41 et
83-65 seq., Business & Commerce Code), and bond premiums, incurred prior
83-66 to the determination that an insurer or agent is "impaired" under
83-67 this article. "Covered claim" shall also not include any shortage
83-68 of trust funds, shortage in an escrow account resulting from the
83-69 insolvency of a financial institution, or punitive, exemplary,
83-70 extracontractual, or bad faith damages awarded by a court judgment
84-1 against an insured or insurer. A "covered claim" does not include
84-2 a claim under Subparagraph (ii) or (iv) of Paragraph A of
84-3 Subdivision (2) of Section 5 if the claimant has a lien against the
84-4 real estate that was the subject of the transaction from which the
84-5 claim arises unless that lien is held to be invalid as a matter of
84-6 law. No claimant who has caused or substantially contributed to
84-7 his loss by his action or failure to act shall have a covered claim
84-8 under Paragraph A of Subdivision (2) of Section 5.
84-9 C. If an impaired insurer or an impaired agent
84-10 has insufficient assets to pay the expenses of administering the
84-11 receivership or conservatorship estate, the association may advance
84-12 funds necessary to pay those expenses on the terms it may
84-13 negotiate. Any funds advanced with regard to the expenses of
84-14 administering the estate of an impaired agent may be paid only from
84-15 the guaranty fee account.
84-16 SECTION 11.02. Section 5, Article 9.48, Insurance Code, is
84-17 amended by adding Subdivisions (14) and (15) to read as follows:
84-18 (14) "Affiliate" means a person who directly or
84-19 indirectly, through one or more intermediaries, controls, is
84-20 controlled by, or is under common control with an impaired insurer
84-21 on December 31 of the year next proceeding the date the insurer
84-22 becomes an impaired insurer.
84-23 (15) "Control" means the possession, direct or
84-24 indirect, of the power to direct or cause the direction of the
84-25 management and policies of a person, whether through the ownership
84-26 of voting securities, by contract other than a commercial contract
84-27 for goods or nonmanagement services, or otherwise, unless the power
84-28 is the result of an official position with or corporate office held
84-29 by the person. Control is presumed to exist if any person,
84-30 directly or indirectly, owns, controls, holds with the power to
84-31 vote, or holds proxies representing 10 percent or more of the
84-32 voting securities of any other person. This presumption may be
84-33 rebutted by a showing that control does not exist in fact.
84-34 SECTION 11.03. Section 7, Article 9.48, Insurance Code, is
84-35 amended by adding Subsection (g) to read as follows:
84-36 (g) An insurer designated as an impaired insurer by the
84-37 commissioner is exempt from assessment from and after the date of
84-38 designation and until the commissioner determines that the insurer
84-39 is no longer an impaired insurer.
84-40 SECTION 11.04. Sections 7A and 8, Article 9.48, Insurance
84-41 Code, are amended to read as follows:
84-42 Sec. 7A. Purpose of Assessments. (a) The amounts provided
84-43 pursuant to assessments made under this article are considered to
84-44 be supplemental to the marshaling of assets for the purpose of
84-45 making payments on behalf of an impaired insurer.
84-46 (b) The association may assess its insurers or use funds
84-47 derived from assessments to pay covered claims before the receiver
84-48 exhausts the assets of the impaired insurer.
84-49 Sec. 8. Penalty for failure to pay assessments. (a) The
84-50 commissioner may suspend or revoke, after notice and hearing, the
84-51 certificate of authority to transact business in this state of any
84-52 insurer who fails to pay an assessment when due, and the
84-53 association shall promptly report the failure to pay to the
84-54 commissioner. As an alternative, the commissioner may assess an
84-55 administrative penalty in accordance with Article 1.10E of this
84-56 code on any insurer that fails to pay an assessment when due. The
84-57 fine may not exceed the greater of five percent of the unpaid
84-58 assessment per month or $100 per month.
84-59 (b) Any insurer whose certificate or authority to do
84-60 business in this state is cancelled or surrendered shall be liable
84-61 for any unpaid assessments made prior to the date of such
84-62 cancellation or surrender.
84-63 SECTION 11.05. Section 10, Article 9.48, Insurance Code, is
84-64 amended by amending Subsections (d) and (e) and by adding
84-65 Subsection (j) to read as follows:
84-66 (d) The association stands in the place of the impaired
84-67 insurer or agent to the extent of its obligation on the covered
84-68 claims and, to that extent, has all rights, duties, and obligations
84-69 of the impaired insurer or agent as if the insurer or agent had not
84-70 become impaired. In performing its obligations under this article,
85-1 the association shall not be considered to be in the business of
85-2 insurance, shall not be considered to have assumed or succeeded to
85-3 any liabilities of the impaired insurer or the impaired agent, and
85-4 shall not be considered to otherwise stand in the shoes of the
85-5 impaired insurer or the impaired agent for any purpose, including,
85-6 but not limited to, the issue of whether the association is
85-7 amenable to the personal jurisdiction of the courts of any other
85-8 state.
85-9 (e) The association shall investigate claims brought against
85-10 the association, the commissioner, or a special deputy receiver
85-11 appointed under Article 21.28 of this code if the claims involve or
85-12 may involve the association's rights and obligations under this
85-13 article, and shall adjust, compromise, settle, and pay covered
85-14 claims to the extent of the association's obligation, and deny all
85-15 other claims. The association may review settlements, releases,
85-16 and judgments to which the impaired insurer or agent or its
85-17 insureds were parties to determine the extent to which the
85-18 settlements, releases, and judgments are contested.
85-19 (j) Funds advanced by the association under this article do
85-20 not become assets of the impaired insurer or the impaired agent but
85-21 are considered special fund loans to the impaired insurer or the
85-22 impaired agent for payment of covered claims. That loan is
85-23 repayable to the extent available from the funds of the impaired
85-24 insurer or the impaired agent.
85-25 SECTION 11.06. Section 11, Article 9.48, Insurance Code, is
85-26 amended to read as follows:
85-27 Sec. 11. Approval of covered claims. (a) Funds received
85-28 from assessments or from guaranty fees shall be liable only for the
85-29 difference between the amount of the covered claims and the amount
85-30 of the assets marshalled by the receiver for payment to holders of
85-31 covered claims. In ancillary receiverships in this state, funds
85-32 received from assessments shall be liable only for the difference
85-33 between the amount of the covered claims and the amount of assets
85-34 marshalled by the receivers in other states for application to
85-35 payment of covered claims within this state.
85-36 (b) If a conservator is appointed to handle the affairs of
85-37 an impaired insurer or agent, the conservator shall determine
85-38 whether or not covered claims should or can be provided for in
85-39 whole or in part by reinsurance, assumption, or substitution. Upon
85-40 determination by the conservator that actual payment of covered
85-41 claims should be made, the conservator shall give notice of such
85-42 determination to claimants falling within the class of "covered
85-43 claims." The conservator shall mail such notice to the latest
85-44 address reflected in the records of the impaired insurer or agent.
85-45 If the records of the impaired insurer or agent do not reflect the
85-46 address of a claimant, the conservator may give notice by
85-47 publication in a newspaper of general circulation. Such notice
85-48 shall state the time within which the claimant must file his claim
85-49 with the conservator, which time shall in no event be less than 90
85-50 days from the date of the mailing or publication of such notice.
85-51 The conservator may require, in whole or in part, that sworn claim
85-52 forms be filed and may require that additional information or
85-53 evidence be filed as may be reasonably necessary for the
85-54 conservator to determine the legality or the amount due under a
85-55 covered claim. When an impaired insurer or agent has been placed
85-56 in conservatorship, the funds received from assessments or from
85-57 guaranty fees shall be liable only for the difference between the
85-58 amount of the covered claim approved by the conservator and the
85-59 amount of assets marshalled by the conservator for payment to
85-60 holders of covered claims.
85-61 (c) Upon determination by the conservator that actual
85-62 payment of covered claims should be made or upon order of the court
85-63 to the receiver to give notice for the filing of claims, any person
85-64 who has a cause of action against an insured of the impaired
85-65 insurer under a title insurance policy issued or assumed by such
85-66 insurer shall, if such cause of action meets the definition of
85-67 "covered claim," have the right to file a claim with the receiver
85-68 or the conservator, regardless of the fact that such claim may be
85-69 unliquidated or undetermined, and such claim may be approved as a
85-70 "covered claim" (1) if it may be reasonably inferred from the proof
86-1 presented upon such claim that such person would be able to obtain
86-2 a judgment upon such cause of action against such insured; and (2)
86-3 if such person shall furnish suitable proof that no further valid
86-4 claims against such insurer arising out of his cause of action
86-5 other than those already presented can be made; and (3) if the
86-6 total liability of such insurer to all claimants arising from the
86-7 same title insurance policy shall be no greater than its total
86-8 liability would be were it not in liquidation, rehabilitation, or
86-9 conservation. In the proceedings of considering "covered claims,"
86-10 no judgment against an insured taken after the date of the
86-11 commencement of the delinquency proceedings or the appointment of a
86-12 conservator shall be considered as evidence of liability, or of the
86-13 amount of damages, and no judgment <against an insured> taken by
86-14 default or consent against an insured or the impaired insurer and
86-15 any settlement, release, or judgment entered into by the insured or
86-16 the impaired insurer may not be considered to be binding on the
86-17 association and may not <by collusion prior to the commencement of
86-18 the delinquency proceedings or the appointment of a conservator
86-19 shall> be considered as <conclusive> evidence <either (1)> of the
86-20 liability <of such insured to such person upon such cause of
86-21 action,> or <(2) of the amount> of damages in connection with any
86-22 claim brought against the association or any other party under this
86-23 article <to which such person is therein entitled>.
86-24 (d) The acceptance of payment from the association by the
86-25 holder of a covered claim or the acceptance of the benefits of
86-26 contracts by the association providing for reinsurance or
86-27 assumption of liabilities or for substitution shall constitute an
86-28 assignment to the association of any cause of action or right of
86-29 the holder of such covered claim arising from the occurrence upon
86-30 which the covered claim is based. Such assignment shall be to the
86-31 extent of the amount accepted or the value of the benefits provided
86-32 by such contracts of reinsurance or assumption of liabilities or
86-33 substitution. Such assignment to the association may be assigned
86-34 to the insurer executing such reinsurance, assumption or
86-35 substitution agreement.
86-36 (e) The receiver or statutory successor of an impaired
86-37 insurer is bound by settlements of covered claims by the
86-38 association. The court having jurisdiction shall grant those
86-39 claims priority equal to that to which the claimant would have been
86-40 entitled in the absence of this article against the assets of the
86-41 impaired insurer. The expenses of the association in handling
86-42 claims shall be accorded the same priority as the receiver's
86-43 expenses.
86-44 (f) The association shall file periodically with the
86-45 receiver of the impaired insurer statements of the covered claims
86-46 paid by the association and estimates of anticipated claims on the
86-47 association that shall preserve the rights of the association
86-48 against the assets of the impaired insurer.
86-49 SECTION 11.07. Section 14, Article 9.48, Insurance Code, is
86-50 amended by amending Subsection (c) and by adding Subsection (g) to
86-51 read as follows:
86-52 (c) Powers and duties of association. In addition to the
86-53 powers and duties provided by other sections of this article, the
86-54 association:
86-55 (1) may render assistance and advice to the
86-56 commissioner, upon his request, concerning rehabilitation, payment
86-57 of claims, continuations of coverage, or the performance of other
86-58 contractual obligations of any impaired insurer or agent;
86-59 (2) has standing to appear before any court in this
86-60 state with jurisdiction over an impaired insurer or agent
86-61 concerning which the association is or may become obligated under
86-62 this article;
86-63 (3) Each director of the association shall file a
86-64 financial statement with the Texas Ethics Commission <secretary of
86-65 state> in accordance with Sections 3 and 4, Chapter 421, Acts of
86-66 the 63rd Legislature, Regular Session, 1973 (Article 6252-9b,
86-67 Vernon's Texas Civil Statutes).
86-68 (4) may borrow funds as necessary to implement this
86-69 article in accordance with the plan of operation;
86-70 (5) may lend money to an impaired insurer;
87-1 (6) sue or be sued, including taking any legal actions
87-2 necessary or proper for recovery of any unpaid assessments;
87-3 (7) may enter into contracts as necessary or proper to
87-4 implement this article;
87-5 (8) <(5)> may employ or retain such persons who are
87-6 necessary to handle the financial transactions of the association,
87-7 and to perform any other functions that become necessary or proper
87-8 under this article;
87-9 (9) may ensure payment of the policy obligations of an
87-10 impaired insurer;
87-11 (10) <(6)> may negotiate and contract with any
87-12 liquidator, rehabilitator, conservator, receiver, or ancillary
87-13 receiver to carry out the powers and duties of the association;
87-14 (11) may guarantee, assume, or reinsure, or cause to
87-15 be guaranteed, assumed, or reinsured, a policy or contract of an
87-16 impaired insurer;
87-17 (12) <(7)> may take legal action as necessary to avoid
87-18 the payment of improper claims, or to settle claims or potential
87-19 claims against the impaired insurer or association;
87-20 (13) <(8)> shall, on the request of the commissioner,
87-21 authorize the expenditure of funds from the guaranty fee account to
87-22 retain, compensate, and reimburse for reasonable and necessary
87-23 expenses, a person or persons who will audit and review agent and
87-24 insurer escrow and trust accounts and make reports relating to
87-25 those accounts to the commissioner, solely under the direction of
87-26 and as assigned by the commissioner; <and>
87-27 (14) <(9)> shall collect, receive, retain, and
87-28 disburse the income provided by Section 6 of this article solely
87-29 for the purposes, to the persons, and under the circumstances that
87-30 are specifically stated in this article; and
87-31 (15) may perform other acts as necessary or proper to
87-32 implement this article.
87-33 (g) Notwithstanding Chapter 271, Acts of the 60th
87-34 Legislature, Regular Session, 1967 (Article 6252-17, Vernon's Texas
87-35 Civil Statutes), the board may hold an open meeting by telephone
87-36 conference call if immediate action is required and the convening
87-37 at one location of a quorum of the board is not reasonable or
87-38 practical. The meeting is subject to the notice requirements
87-39 applicable to other meetings. The notice of the meeting must
87-40 specify as the location of the meeting the location at which
87-41 meetings of the board are usually held. Each part of the meeting
87-42 that is required to be open to the public shall be audible to the
87-43 public at the location specified in the notice of the meeting as
87-44 the location of the meeting and shall be tape recorded. The tape
87-45 recording shall be made available to the public for 30 days after
87-46 the meeting date.
87-47 SECTION 11.08. Article 9.48, Insurance Code, is amended by
87-48 adding Section 15A to read as follows:
87-49 Sec. 15A. DUTIES AND POWERS OF COMMISSIONER. (a) The
87-50 commissioner shall notify the association of the existence of an
87-51 impaired insurer not later than the third day after the date on
87-52 which the commissioner gives notice of the designation of
87-53 impairment. The association is entitled to a copy of any complaint
87-54 seeking an order of receivership with a finding of insolvency
87-55 against an insurer at the same time that the complaint is filed
87-56 with a court of competent jurisdiction.
87-57 (b) The commissioner shall notify the board when the
87-58 commissioner receives a report from the commissioner of insurance
87-59 or other analogous officer of another state that indicates that an
87-60 insurer has been designated impaired in another state. The report
87-61 to the board must contain all significant details of the action
87-62 taken or the report received from the other commissioner or
87-63 analogous officer.
87-64 (c) The commissioner shall report to the board when the
87-65 commissioner has reasonable cause to believe from any examination,
87-66 whether completed or in process, of any insurer that the insurer
87-67 may be an impaired insurer. The board may use this information in
87-68 carrying out its duties and responsibilities under this article.
87-69 The board shall keep the report and the information contained in
87-70 the report confidential until it is made public by the commissioner
88-1 or other lawful authority.
88-2 (d) On the request of the board, the commissioner shall
88-3 provide the association with a statement of the net direct written
88-4 premiums of each insurer.
88-5 (e) The commissioner may require that the association notify
88-6 the insureds of the impaired insurer and any other interested
88-7 parties of the designation of impairment and of their rights under
88-8 this article. Notification by publication in a newspaper of
88-9 general circulation is sufficient notice under this section.
88-10 SECTION 11.09. Section 17(a), Article 9.48, Insurance Code,
88-11 is amended to read as follows:
88-12 (a) There shall be no liability on the part of and no cause
88-13 of action of any nature shall arise against any member insurer of
88-14 the association or its agents or employees, the association or its
88-15 agents or employees, members of the association's board of
88-16 directors, the receiver, a special deputy receiver or its agents or
88-17 employees, or the commissioner or his representatives for any good
88-18 faith action or omission in the performance of their powers and
88-19 duties under this article.
88-20 SECTION 11.10. Sections 20(c) and (d), Article 9.48,
88-21 Insurance Code, are amended to read as follows:
88-22 (c) If an insurer is appealing an assessment, the amount
88-23 assessed shall be paid to the association and shall be available to
88-24 meet association obligations during the pendency of an appeal. If
88-25 the appeal on the assessment is upheld, the amount paid in error or
88-26 excess shall be returned to the insurer. <The liability of the
88-27 appealing insurer for an assessment shall be suspended pending
88-28 appeal by such insurer contesting the amount or legality of such
88-29 assessment.>
88-30 (d) Venue in a suit <against the association> relating to
88-31 any action or ruling <of the association> made under this article
88-32 is in Travis County. Either party to the action may appeal to the
88-33 appellate court having jurisdiction over the cause. The appeal
88-34 shall be at once returnable to the appellate court having
88-35 jurisdiction over the cause, and the action so appealed shall have
88-36 precedence in the appellate court over all cases of a different
88-37 character pending before the court. The commissioner and
88-38 association are <is> not required to give an appeal bond in an
88-39 appeal of a cause of action arising under this article.
88-40 SECTION 11.11. Article 9.48, Insurance Code, is amended by
88-41 adding Section 23 to read as follows:
88-42 Sec. 23. MISCELLANEOUS PROVISIONS. (a) The association
88-43 shall maintain records of all negotiations and meetings in which
88-44 the association or its representatives discuss the activities of
88-45 the association in carrying out its powers and duties under this
88-46 article. Records of the negotiations or meetings may be made
88-47 public only on the termination of a liquidation, rehabilitation, or
88-48 conservation proceeding involving the impaired or insolvent
88-49 insurer, on the termination of the impairment or insolvency of the
88-50 insurer, or on the order of a court of competent jurisdiction.
88-51 This subsection does not limit the duty of the association to
88-52 report on its activities under Section 14 of this article.
88-53 (b) To carry out its obligations under this article, the
88-54 association is considered a creditor of the impaired or insolvent
88-55 insurer to the extent of assets attributable to covered policies,
88-56 reduced by any amounts that the association recovers as a subrogee
88-57 under this article. Assets of the impaired or insolvent insurer
88-58 attributable to covered policies shall be used to continue all
88-59 covered policies and pay all contractual obligations of the
88-60 impaired or insolvent insurer as required by this article. For
88-61 purposes of this subsection, assets attributable to covered
88-62 policies are that proportion of the assets that the reserves that
88-63 should have been established for the covered policies bear to the
88-64 reserves that should have been established for all policies of
88-65 insurance written by the impaired or insolvent insurer.
88-66 (c) A distribution to stockholders of an impaired or
88-67 insolvent insurer may not be made until the total amount of valid
88-68 claims of the association for funds expended in carrying out its
88-69 powers and duties under this article with respect to the insurer
88-70 have been recovered with interest by the association.
89-1 (d) If an order of receivership of an insurer domiciled in
89-2 this state has been entered, the receiver appointed under the order
89-3 may recover on behalf of the insurer, from any affiliate that
89-4 controlled it, the amount of distributions, other than stock
89-5 dividends paid by the insurer on its capital stock, made at any
89-6 time during the five years preceding the petition for liquidation
89-7 or rehabilitation, subject to the limitations imposed under
89-8 Subsections (e), (f), and (g) of this section.
89-9 (e) A distribution to stockholders is not recoverable under
89-10 Subsection (d) of this section if the insurer shows that the
89-11 distribution was lawful and reasonable as of the date of payment,
89-12 and that the insurer did not know and could not reasonably have
89-13 known that the distribution might adversely affect the ability of
89-14 the insurer to fulfill its contractual obligations.
89-15 (f) A person that was an affiliate that controlled the
89-16 insurer at the time distributions subject to Subsection (d) of this
89-17 section were paid is liable for the amount of distributions
89-18 received. A person that was an affiliate that controlled the
89-19 insurer at the time the distributions were declared is liable for
89-20 the amount of distributions the person would have received if they
89-21 had been paid immediately. If two or more persons are liable with
89-22 respect to the same distributions, those persons are jointly and
89-23 severally liable.
89-24 (g) The maximum amount recoverable under Subsections (d) and
89-25 (f) of this section is the amount needed in excess of all other
89-26 available assets of the insolvent insurer to pay the contractual
89-27 obligations of the insolvent insurer.
89-28 (h) If a person liable under Subsection (f) of this section
89-29 is insolvent, all of its affiliates that controlled it at the time
89-30 the distribution was paid are jointly and severally liable for any
89-31 resulting deficiency in the amount recovered from the insolvent
89-32 affiliate.
89-33 (i) An impaired insurer placed in conservatorship or
89-34 receivership for which assessments have been made under this
89-35 article, or for which association funds have been provided, may
89-36 not, on release from conservatorship or receivership, issue new or
89-37 renewal insurance policies until the insurer has repaid in full the
89-38 amount of guaranty fees furnished by the association. The
89-39 commissioner may permit, on application of the association and
89-40 after hearing, the issuance of new policies in accordance with a
89-41 plan of operation by the released insurer for repayment. The
89-42 commissioner, in approving the plan, may place restrictions on the
89-43 issuance of new or renewal policies as necessary for the
89-44 implementation of the plan. The commissioner shall give notice of
89-45 a hearing under this subsection to the association not later than
89-46 the 11th day before the date on which the hearing is scheduled.
89-47 The association and member insurers that paid assessments in
89-48 relation to the impaired insurer are entitled to appear at and
89-49 participate in the hearing. Money recovered by the association
89-50 under this subsection shall be repaid to the member insurers that
89-51 paid assessments in relation to the impaired insurer on return of
89-52 the appropriate certificate of contribution.
89-53 ARTICLE 12. REGULATION OF CERTAIN LICENSE HOLDERS
89-54 SECTION 12.01. Subchapter A, Chapter 21, Insurance Code, is
89-55 amended by adding Article 21.01-2 to read as follows:
89-56 Art. 21.01-2. GENERAL PROVISIONS APPLICABLE TO CERTAIN
89-57 LICENSE HOLDERS
89-58 Sec. 1. APPLICATION. Except as otherwise provided by this
89-59 article, this article applies to licensing of persons under:
89-60 (1) Section 4, Article 1.14-2, Insurance Code;
89-61 (2) Section 7, Article 3.75, Insurance Code;
89-62 (3) Article 9.36, 9.42, or 9.43, Insurance Code;
89-63 (4) Section 6, Article 9.56, Insurance Code;
89-64 (5) Section 15 or 15A, Texas Health Maintenance
89-65 Organization Act (Section 20A.15 or 20A.15A, Vernon's Texas
89-66 Insurance Code);
89-67 (6) Article 21.07, Insurance Code;
89-68 (7) Chapter 213, Acts of the 54th Legislature, Regular
89-69 Session, 1955 (Article 21.07-1, Vernon's Texas Insurance Code);
89-70 (8) Chapter 29, Acts of the 54th Legislature, Regular
90-1 Session, 1955 (Article 21.07-2, Vernon's Texas Insurance Code);
90-2 (9) the Managing General Agents' Licensing Act
90-3 (Article 21.07-3, Vernon's Texas Insurance Code);
90-4 (10) Chapter 407, Acts of the 63rd Legislature,
90-5 Regular Session, 1973 (Article 21.07-4, Vernon's Texas Insurance
90-6 Code);
90-7 (11) Article 21.07-6, Insurance Code;
90-8 (12) Article 21.07-7, Insurance Code;
90-9 (13) Article 21.09, Insurance Code;
90-10 (14) Article 21.11, Insurance Code;
90-11 (15) Article 21.14, Insurance Code;
90-12 (16) Article 21.14-1, Insurance Code;
90-13 (17) Article 21.14-2, Insurance Code; or
90-14 (18) Article 23.23, Insurance Code.
90-15 Sec. 2. RENEWAL OF LICENSES. (a) A person may renew an
90-16 unexpired license by filing a renewal application with the
90-17 department in the form prescribed by the department and paying to
90-18 the department before the expiration date of the license the
90-19 required renewal fee. A renewal fee paid under this section is
90-20 nonrefundable.
90-21 (b) If a person's license has been expired for 90 days or
90-22 less, the person may renew the license by filing a renewal
90-23 application with the department in the form prescribed by the
90-24 department and paying to the department the required renewal fee
90-25 and a fee that is equal to one-half of the license fee, if any, for
90-26 the license.
90-27 (c) If a person's license has been expired for longer than
90-28 90 days, the person may not renew the license. The person may
90-29 obtain a new license by submitting to reexamination, if examination
90-30 is required for original issuance of the license, and complying
90-31 with the requirements and procedures for obtaining an original
90-32 license. However, the department may renew without reexamination
90-33 an expired license of a person who was licensed in this state,
90-34 moved to another state, and is currently licensed and has been in
90-35 practice in the other state for the two years preceding
90-36 application. The person must pay to the department a fee that is
90-37 equal to the license fee.
90-38 (d) At least 30 days before the expiration of a person's
90-39 license, the department shall send written notice of the impending
90-40 license expiration to the person at the person's last known address
90-41 according to the records of the department.
90-42 (e) The commissioner by rule may adopt a system under which
90-43 licenses expire on various dates during a licensing period. For
90-44 the licensing period in which the license expiration is changed,
90-45 license fees shall be prorated on a monthly basis so that each
90-46 license holder shall pay only that portion of the license fee that
90-47 is allocable to the number of months during which the license is
90-48 valid. On renewal of the license on the new expiration date, the
90-49 total license renewal fee is payable. The commissioner shall adopt
90-50 a system under which a person who holds more than one license may
90-51 renew all the licenses held in a single process.
90-52 (f) This section is not applicable to a license issued under
90-53 Article 21.07-6 of this code.
90-54 Sec. 3. LICENSING BY ENDORSEMENT. The department may waive
90-55 any license requirement for an applicant with a valid license from
90-56 another state having license requirements substantially equivalent
90-57 to those of this state.
90-58 Sec. 4. CONTINUING EDUCATION. (a) The department may
90-59 recognize, prepare, or administer continuing education programs for
90-60 persons whose licenses are subject to this article.
90-61 (b) Except as otherwise provided by this code or another
90-62 insurance law of this state, participation in continuing education
90-63 programs is voluntary.
90-64 Sec. 5. DISCIPLINE OF LICENSE HOLDERS. (a) The department
90-65 shall refuse to issue an original license, revoke, suspend, or
90-66 refuse to renew a license, place on probation a person whose
90-67 license has been suspended, assess an administrative penalty, or
90-68 reprimand a license holder for a violation of this code, another
90-69 insurance law of this state, or a rule of the commissioner or the
90-70 board. If a license suspension is probated, the commissioner may
91-1 require the person to:
91-2 (1) report regularly to the department on matters that
91-3 are the basis of the probation;
91-4 (2) limit the person's practice to the areas
91-5 prescribed by the department; or
91-6 (3) continue or review professional education until
91-7 the person attains a degree of skill satisfactory to the
91-8 commissioner in those areas that are the basis of the probation.
91-9 (b) If the department proposes to refuse to issue an
91-10 original license, or to suspend, revoke, or refuse to renew a
91-11 license, the person affected is entitled to a hearing conducted by
91-12 the State Office of Administrative Hearings in accordance with
91-13 Article 1.33B of this code. Notice of the hearing shall be
91-14 provided to the person and to any insurance carrier appearing on
91-15 the application as desiring that the license be issued. The
91-16 commissioner shall prescribe procedures by which all decisions to
91-17 deny, suspend, or revoke a license, or to refuse to renew a
91-18 license, are made by or are appealable to the commissioner.
91-19 Sec. 6. STATUTORY REFERENCES. A reference in this article
91-20 to a statutory provision applies to all reenactments, revisions, or
91-21 amendments of that provision.
91-22 SECTION 12.02. Section 7(f), Article 3.75, Insurance Code,
91-23 is amended to read as follows:
91-24 (f) Licenses which have not expired or which have not been
91-25 suspended or revoked may be renewed by filing with the State Board
91-26 of Insurance a completed renewal application and paying the
91-27 nonrefundable renewal fee set by the board in an amount not to
91-28 exceed $50 on or before the expiration date of the license in
91-29 accordance with Article 21.01-2 of this code. <If a license has
91-30 been expired for not longer than 90 days, the licensee may renew
91-31 the license by paying to the board the required nonrefundable
91-32 renewal fee and a nonrefundable fee that is one-half of the
91-33 original license fee. If a license has been expired for more than
91-34 90 days, the license may not be renewed. A new license may be
91-35 obtained by complying with the requirements and procedures for
91-36 obtaining an original license. At least 30 days before the
91-37 expiration of a license, the commissioner shall send written notice
91-38 of the impending license expiration to the licensee at the
91-39 licensee's last known address. This subsection may not be
91-40 construed to prevent the board from denying or refusing to renew a
91-41 license under applicable law or rules of the State Board of
91-42 Insurance.>
91-43 SECTION 12.03. Article 21.01-1, Insurance Code, is amended
91-44 to read as follows:
91-45 Art. 21.01-1. Agents' Qualifying Examination <to be
91-46 Prescribed by the Board>. (a) The State Board of Insurance may,
91-47 at its discretion, accept examinations administered by a testing
91-48 service as satisfying the examination requirements of persons
91-49 seeking license as agents, solicitors, counselors, or adjusters
91-50 under this code. The State Board of Insurance may negotiate
91-51 agreements with such testing services to include performance of
91-52 examination development, test scheduling, examination site
91-53 arrangements, and test administration, grading, reporting and
91-54 analysis. The State Board of Insurance may require such testing
91-55 services to correspond directly with the applicants with regard to
91-56 the administration of such examinations and that such testing
91-57 services collect fees for administering such examinations directly
91-58 from the applicants. The State Board of Insurance may stipulate
91-59 that any agreements with such testing services provide for the
91-60 administration of examinations in specific locales and at specified
91-61 frequencies. The State Board of Insurance shall retain the
91-62 authority to establish the scope and type of all examinations.
91-63 Prior to negotiating and making any agreement with any testing
91-64 service as authorized hereby, the State Board of Insurance shall
91-65 hold a public hearing thereon in accordance with the provisions of
91-66 Section 5 of the Administrative Procedure and Texas Register Act
91-67 (Article 6252-13a, Vernon's Texas Civil Statutes), and shall adopt
91-68 such rules, regulations, and standards as may be deemed appropriate
91-69 by the Board to implement the authority granted in this Article.
91-70 (b) The commissioner may appoint advisory boards consisting
92-1 of any of the following persons: persons holding a license for
92-2 which the respective examinations are intended, persons who are
92-3 employed by insurance companies appointing such licensees, persons
92-4 acting as general agents or managers, persons teaching insurance at
92-5 an accredited college or university in Texas, persons who are
92-6 citizens of the State of Texas but who are not of any of the
92-7 preceding descriptions, or any combination of such persons. The
92-8 function of such advisory boards will be to make recommendations to
92-9 the State Board of Insurance or the testing service with respect to
92-10 the scope, type, and conduct of such examinations and the times and
92-11 places within the state where they shall be held. The members of
92-12 such advisory boards shall serve without pay but shall be
92-13 reimbursed for their reasonable expenses in attending meetings of
92-14 their respective advisory boards.
92-15 (c) In the absence of an agreement with a testing service,
92-16 the State Board of Insurance shall administer any required
92-17 qualifying examination in accordance with the provisions of the
92-18 respective statutes governing the issuance of the license sought by
92-19 the applicant.
92-20 (d) Not later than the 30th day after the date on which a
92-21 licensing examination is administered under this code, the
92-22 department shall notify each examinee of the results of the
92-23 examination. However, if an examination is graded or reviewed by a
92-24 testing service, the department shall notify examinees of the
92-25 results of the examination not later than the 14th day after the
92-26 date on which the department receives the results from the testing
92-27 service. If the notice of examination results graded or reviewed
92-28 by a testing service will be delayed for longer than 90 days after
92-29 the examination date, the department shall notify the examinee of
92-30 the reason for the delay before the 90th day. The department may
92-31 require a testing service to notify examinees of the results of an
92-32 examination.
92-33 (e) If requested in writing by a person who fails a
92-34 licensing examination administered under this code, the department
92-35 shall furnish the person with an analysis of the person's
92-36 performance on the examination.
92-37 SECTION 12.04. Sections 4(c) and (d), Article 1.14-2,
92-38 Insurance Code, are amended to read as follows:
92-39 (c) Unless the State Board of Insurance adopts a system for
92-40 staggered renewal of licenses, as provided by Article 21.01-2 of
92-41 this code <this section>, each license issued under this section is
92-42 for a two-year term that expires on December 31; however, the term
92-43 of the initial licensing period shall expire on December 31 of the
92-44 year following the year in which the license is issued. A license
92-45 may be renewed for periods of two years.
92-46 (d) By filing a completed written application in the form
92-47 prescribed by the State Board of Insurance and paying the
92-48 nonrefundable renewal fee set by the board in an amount not to
92-49 exceed $50, an unexpired license may be renewed on or before the
92-50 expiration date of the license. <If a license has been expired for
92-51 not longer than 90 days, the licensee may renew the license by
92-52 filing a completed written application for renewal and by paying to
92-53 the board the required nonrefundable renewal fee and a
92-54 nonrefundable fee that is one-half of the original fee for the
92-55 license. If a license has been expired for more than 90 days, the
92-56 license may not be renewed. A new license may be obtained by
92-57 complying with the requirements and procedures for obtaining an
92-58 original license. This subsection may not be construed to prevent
92-59 the board from denying or refusing to renew a license under
92-60 applicable law or rules of the State Board of Insurance.>
92-61 SECTION 12.05. Section 2(b), Article 9.36, Insurance Code,
92-62 is amended to read as follows:
92-63 (b) Unless a staggered renewal system is adopted under
92-64 Article 21.01-2 of this code and its subsequent amendments <Section
92-65 5 of this article>, a license shall continue in force until June 1
92-66 after the second anniversary of the date on which the license was
92-67 issued unless previously cancelled.
92-68 SECTION 12.06. Sections B and E, Article 9.37, Insurance
92-69 Code, are amended to read as follows:
92-70 B. The department may discipline <license of> any agent or
93-1 direct operation or deny an application under Section 5, Article
93-2 21.01-2, of this code and its subsequent amendments <may be denied,
93-3 or a license duly issued may be suspended or revoked or a renewal
93-4 thereof refused by the Board,> if<, after notice and hearing as
93-5 hereafter provided,> it finds that the applicant for or holder of
93-6 such license:
93-7 (1) Has wilfully violated any provision of this Act;
93-8 <or>
93-9 (2) Has intentionally made a material misstatement in
93-10 the application for such license; <or>
93-11 (3) Has obtained, or attempted to obtain, such license
93-12 by fraud or misrepresentation; <or>
93-13 (4) Has misappropriated or converted to his own use or
93-14 illegally withheld money belonging to a title insurance company, an
93-15 insured or any other person; <or>
93-16 (5) <Has otherwise demonstrated lack of
93-17 trustworthiness or competence to act as an agent or direct
93-18 operation; or>
93-19 <(6)> Has been guilty of fraudulent or dishonest
93-20 practices; <or>
93-21 (6) <(7)> Has materially misrepresented the terms and
93-22 conditions of title insurance policies or contracts; or
93-23 (7) <(8) Is not of good character or reputation; or>
93-24 <(9)> Has failed to maintain a separate and distinct
93-25 accounting of escrow funds, and has failed to maintain an escrow
93-26 bank account or accounts separate and apart from all other
93-27 accounts.
93-28 E. A disciplinary action or denial of an application under
93-29 this article may be appealed under Article 1.04 of this code and
93-30 its subsequent amendments <If the Board shall refuse an application
93-31 for any license provided for in this Act, or shall suspend, revoke
93-32 or refuse to renew any such license at said hearing, then any such
93-33 applicant or licensee, and any title insurance company or companies
93-34 concerned, may appeal from said order by filing suit against the
93-35 Board as defendant in any of the District Courts of Travis County,
93-36 Texas, and not elsewhere, within twenty (20) days from the date of
93-37 the order of said Board. The action shall not be limited to
93-38 questions of law and shall be tried and determined upon a trial de
93-39 novo to the same extent as now provided for in the case of an
93-40 appeal from the justice court to the county court. Any party to
93-41 said action may appeal to the appellate court having jurisdiction
93-42 of said cause, and said appeal shall be at once returnable to said
93-43 appellate court having jurisdiction of said cause and said action
93-44 so appealed shall have precedence in said appellate court over all
93-45 causes of a different character therein pending. The Board shall
93-46 not be required to give any appeal bond in any cause arising
93-47 hereunder>.
93-48 SECTION 12.07. Section 1(b), Article 9.42, Insurance Code,
93-49 is amended to read as follows:
93-50 (b) Unless a system of staggered renewal is adopted under
93-51 Article 21.01-2 of this code and its subsequent amendments <Section
93-52 2 of this article>, a license shall continue in force until the
93-53 second June 1 after its issuance, unless previously cancelled.
93-54 Provided, however, that if any title insurance agent or direct
93-55 operation surrenders its license or has its license revoked by the
93-56 Board, all existing licenses of its escrow officers shall
93-57 automatically terminate without notice.
93-58 SECTION 12.08. Section B, Article 9.43, Insurance Code, is
93-59 amended to read as follows:
93-60 B. Such application shall contain the following:
93-61 (1) that the proposed escrow officer is a natural
93-62 person, a bona fide resident of the State of Texas, and either an
93-63 attorney or a bona fide employee of an attorney licensed as an
93-64 escrow officer, a bona fide employee of a title insurance agent, or
93-65 a bona fide employee of a direct operation;
93-66 (2) that the proposed escrow officer has reasonable
93-67 experience or instruction in the field of title insurance; and
93-68 (3) that <the proposed escrow officer is known to the
93-69 direct operation or title insurance agent to have a good business
93-70 reputation and is worthy of the public trust and> the direct
94-1 operation or title insurance agent knows of no fact or condition
94-2 which would disqualify the proposed escrow officer from receiving a
94-3 license.
94-4 SECTION 12.09. Sections 2 and 5, Article 9.44, Insurance
94-5 Code, are amended to read as follows:
94-6 Sec. 2. The department may discipline an <license of any>
94-7 escrow officer or deny an application under Section 5, Article
94-8 21.01-2, of this code and its subsequent amendments <may be denied,
94-9 or a license duly issued may be suspended or revoked or a renewal
94-10 thereof refused by the Board,> if<, after notice and hearing as
94-11 hereafter provided,> it finds that the applicant for or holder of
94-12 such license:
94-13 (1) has wilfully violated any provision of this Act;
94-14 (2) has intentionally made a material misstatement in
94-15 the application for such license;
94-16 (3) has obtained, or attempted to obtain, such license
94-17 by fraud or misrepresentation;
94-18 (4) has misappropriated or converted to the escrow
94-19 officer's own use or illegally withheld money belonging to a direct
94-20 operation, title insurance agent, or any other person;
94-21 (5) <has otherwise demonstrated lack of
94-22 trustworthiness or competence to act as escrow officer;>
94-23 <(6)> has been guilty of fraudulent or dishonest
94-24 practices;
94-25 (6) <(7)> has materially misrepresented the terms and
94-26 conditions of title insurance policies or contracts;
94-27 <(8) is not of good character or reputation;> or
94-28 (7) <(9)> has failed to complete all educational
94-29 requirements.
94-30 Sec. 5. A disciplinary action or denial of an application
94-31 under this article may be appealed under Article 1.04 of this code
94-32 and its subsequent amendments <If the Board shall refuse an
94-33 application for any license provided for in this Article, or shall
94-34 suspend, revoke or refuse to renew any such license at said
94-35 hearing, then any such applicant may appeal from said order by
94-36 filing suit against the Board as defendant in any of the District
94-37 Courts of Travis County, Texas, and not elsewhere, within twenty
94-38 (20) days from the date of the order of said Board. The action
94-39 shall not be limited to questions of law and shall be tried and
94-40 determined upon a trial de novo to the same extent as now provided
94-41 for in the case of an appeal from the justice court to the county
94-42 court. Either party to said action may appeal to the appellate
94-43 court having jurisdiction of said cause, and said appeal shall be
94-44 at once returnable to said appellate court having jurisdiction of
94-45 said cause and said action so appealed shall have precedence in
94-46 said appellate court over all causes of a different character
94-47 therein pending. The Board shall not be required to give any
94-48 appeal bond in any cause arising hereunder>.
94-49 SECTION 12.10. Section 6(b), Article 9.56, Insurance Code,
94-50 is amended to read as follows:
94-51 (b) Unless a system of staggered renewal is adopted under
94-52 Article 21.01-2 of this code and its subsequent amendments
94-53 <Subsection (d) of this section>, on or before the first day of
94-54 June of each year, every attorney's title insurance company
94-55 operating under the provisions of this Chapter 9 shall certify to
94-56 the board, on forms provided by the board, the names and addresses
94-57 of every title attorney of said attorney's title insurance company,
94-58 and shall apply for and pay a fee in an amount not to exceed $50 as
94-59 determined by the board for an annual license in the name of each
94-60 title attorney included in said list; if any such attorney's title
94-61 insurance company shall terminate any licensed title attorney, it
94-62 shall immediately notify the board in writing of such act and
94-63 request cancellation of such license, notifying the title attorney
94-64 of such action. No such attorney's title insurance company shall
94-65 permit any title attorney appointed by it to write, sign, or
94-66 deliver title insurance policies within the state until the
94-67 foregoing conditions have been complied with, and the board has
94-68 granted said license. The board shall deliver such license to the
94-69 attorney's title insurance company for transmittal to the title
94-70 attorney.
95-1 Unless a system of staggered renewal is adopted under Article
95-2 21.01-2 of this code and its subsequent amendments <Subsection (d)
95-3 of this section>, licenses shall continue until the first day of
95-4 the next June unless previously cancelled; provided, however, that
95-5 if any attorney's title insurance company surrenders or has its
95-6 certificate of authority revoked by the board, all existing
95-7 licenses of its title attorneys shall automatically terminate
95-8 without notice.
95-9 The board shall keep a record of the names and addresses of
95-10 all licensed title attorneys in such manner that the title
95-11 attorneys appointed by any attorney's title insurance company
95-12 authorized to transact the business of an attorney's title
95-13 insurance company within the State of Texas may be conveniently
95-14 ascertained and inspected by any person upon request.
95-15 SECTION 12.11. Sections 8(b) and (e), Article 9.56,
95-16 Insurance Code, are amended to read as follows:
95-17 (b) The department may discipline a <license of any> title
95-18 attorney or deny an application under Section 5, Article 21.01-2,
95-19 of this code and its subsequent amendments <may be denied, or a
95-20 license duly issued may be suspended or revoked or a renewal
95-21 thereof refused by the board,> if<, after notice and hearing as
95-22 hereafter provided,> it finds that the applicant for or holder of
95-23 such license:
95-24 (1) has wilfully violated any provision of this
95-25 Chapter 9; <or>
95-26 (2) has intentionally made a material misstatement in
95-27 the application for such license; <or>
95-28 (3) has obtained, or attempted to obtain, such license
95-29 by fraud or misrepresentation; <or>
95-30 (4) has misappropriated or converted to his own use or
95-31 illegally withheld money belonging to an attorney's title insurance
95-32 company, an insured, or any other person; <or>
95-33 (5) <has otherwise demonstrated lack of
95-34 trustworthiness or competence to act as a title attorney; or>
95-35 <(6)> has been guilty of fraudulent or dishonest
95-36 practices; <or>
95-37 (6) <(7)> has materially misrepresented the terms and
95-38 conditions of title insurance policies or contracts; <or>
95-39 <(8) is not of good character or reputation; or>
95-40 (7) <(9)> has failed to maintain a separate and
95-41 distinct accounting of escrow funds, and has failed to maintain an
95-42 escrow bank account or accounts separate and apart from all other
95-43 accounts; <or>
95-44 (8) <(10)> has failed to remain a member of the State
95-45 Bar of Texas, or has been disbarred; or
95-46 (9) <(11)> is no longer actively engaged in the
95-47 practice of law.
95-48 (e) A disciplinary action or denial of an application under
95-49 this article may be appealed under Article 1.04 of this code and
95-50 its subsequent amendments <If the board shall refuse an application
95-51 for any license provided for in this Act, or shall suspend, revoke,
95-52 or refuse to renew any such license at said hearing, then any such
95-53 applicant or licensee, and any attorney's title insurance company
95-54 concerned, may appeal from said order by filing suit against the
95-55 board as defendant in any of the district courts of Travis County,
95-56 Texas, and not elsewhere, within 20 days from the date of the order
95-57 of said board. The action shall not be limited to questions of law
95-58 and shall be tried and determined upon a trial de novo to the same
95-59 extent as now provided for in the case of an appeal from the
95-60 justice court to the county court. Any party to said action may
95-61 appeal to the appellate court having jurisdiction of said cause,
95-62 and said appeal shall be at once returnable to said appellate court
95-63 having jurisdiction of said cause and said action so appealed shall
95-64 have precedence in said appellate court over all causes of a
95-65 different character therein pending. The board shall not be
95-66 required to give any appeal bond in any cause arising hereunder>.
95-67 SECTION 12.12. Chapter 10, Insurance Code, is amended by
95-68 adding Article 10.37-2 to read as follows:
95-69 Art. 10.37-2. CERTAIN PERSONS MAY NOT SOLICIT. A fraternal
95-70 benefit society may not employ or otherwise retain a person to
96-1 solicit business if that person has had a license revoked under
96-2 Articles 21.07 or 21.14, Insurance Code, or under Chapter 213, Acts
96-3 of the 54th Legislature, Regular Session, 1955 (Article 21.07-1,
96-4 Vernon's Texas Insurance Code).
96-5 SECTION 12.13. Section 15(c), Texas Health Maintenance
96-6 Organization Act (Section 20A.15, Vernon's Texas Insurance Code),
96-7 is amended to read as follows:
96-8 (c) Except as may be provided by a staggered renewal system
96-9 adopted under Article 21.01-2, Insurance Code, and its subsequent
96-10 amendments <Subsection (i) of this section>, each license issued to
96-11 a health maintenance organization agent shall expire two years
96-12 following the date of issue, unless prior thereto it is suspended
96-13 or revoked by the commissioner or the authority of the agent to act
96-14 for the health maintenance organization is terminated.
96-15 SECTION 12.14. Sections 15A(c) and (i), Texas Health
96-16 Maintenance Organization Act (Section 20A.15A, Vernon's Texas
96-17 Insurance Code), are amended to read as follows:
96-18 (c) Except as may be provided by a staggered renewal system
96-19 adopted under Article 21.01-2, Insurance Code, and its subsequent
96-20 amendments <Section 15(i) of this Act>, each license issued to a
96-21 health maintenance organization agent under this section shall
96-22 expire two years following the date of issuance, unless before that
96-23 time the license is suspended or revoked by the commissioner or the
96-24 authority of the agent to act for the health maintenance
96-25 organization is terminated.
96-26 (i) A licensee may renew an unexpired license issued under
96-27 this section by filing the required renewal application and paying
96-28 a nonrefundable fee with the State Board of Insurance on or before
96-29 the expiration date of the license. <If a license has been expired
96-30 for not longer than 90 days, the licensee may renew the license by
96-31 filing a completed application and paying to the State Board of
96-32 Insurance the required nonrefundable renewal fee and a
96-33 nonrefundable fee that is one-half of the original license fee. If
96-34 a license has been expired for more than 90 days, the license may
96-35 not be renewed. A new license may be obtained by complying with
96-36 the requirements and procedures for obtaining an original license.
96-37 At least 30 days before the expiration of a license, the
96-38 commissioner shall send written notice of the impending license
96-39 expiration to the licensee at the licensee's last known address.
96-40 This section does not prevent the State Board of Insurance from
96-41 denying or refusing to renew a license under applicable law or
96-42 rules.>
96-43 SECTION 12.15. Article 21.06, Insurance Code, is amended to
96-44 read as follows:
96-45 Art. 21.06. Certificates for Agents. Each such foreign
96-46 insurance company shall, by resolution of its board of directors,
96-47 designate some officer or agent who is empowered to appoint or
96-48 employ its agents or solicitors in this State, and such officer or
96-49 agent shall promptly notify the Board in writing of the name, title
96-50 and address of each person so appointed or employed. Upon receipt
96-51 of this notice, <if such person is of good reputation and
96-52 character,> the Board shall issue to him a certificate which shall
96-53 include a copy of the certificate of authority authorizing the
96-54 company requesting it to do business in this State, and the name
96-55 and title of the person to whom the certificate is issued. Such
96-56 certificate, unless sooner revoked by the Board for cause or
96-57 cancelled at the request of the company employing the holder
96-58 thereof, shall continue in force until the first day of March next
96-59 after its issuance, and must be renewed annually.
96-60 SECTION 12.16. Section 1, Article 21.07, Insurance Code, is
96-61 amended by adding Subsection (c) to read as follows:
96-62 (c) A person who has had a license revoked under Section 10
96-63 of this article may not solicit or otherwise transact business
96-64 under Chapter 10 of this code.
96-65 SECTION 12.17. Section 2(b), Article 21.07, Insurance Code,
96-66 is amended to read as follows:
96-67 (b) The application must bear a signed endorsement by an
96-68 officer or properly authorized representative of the insurance
96-69 carrier that the individual applicant or each member of the
96-70 partnership or each officer, director, and shareholder of the
97-1 corporation is <trustworthy, of good character and good reputation,
97-2 and> qualified to hold himself or the partnership or the
97-3 corporation out in good faith to the general public as an insurance
97-4 agent, and that the insurance carrier desires that the applicant
97-5 act as an insurance agent to represent it in this State.
97-6 SECTION 12.18. Section 3, Article 21.07, Insurance Code, is
97-7 amended to read as follows:
97-8 Sec. 3. Issuance of License Under Certain Circumstances.
97-9 The <After the State Board of Insurance has determined that such
97-10 applicant is of good character and trustworthy, the> State Board of
97-11 Insurance shall issue a license to a <such> person or corporation
97-12 in such form as it may prepare authorizing such applicant to write
97-13 the types of insurance authorized by law to be issued by
97-14 applicant's appointing insurance carrier, except that:
97-15 (a) Such applicant shall not be authorized to write
97-16 health and accident insurance unless: (i) applicant, if not a
97-17 partnership or corporation, shall have first passed a written
97-18 examination as provided for in this Article 21.07, as amended, or
97-19 (ii) applicant will act only as a ticket-selling agent of a public
97-20 carrier with respect to accident life insurance covering risks of
97-21 travel or as an agent selling credit life, health and accident
97-22 insurance issued exclusively in connection with credit
97-23 transactions, or (iii) applicant will write policies or riders to
97-24 policies providing only lump sum cash benefits in the event of the
97-25 accidental death, or death by accidental means, or dismemberment,
97-26 or providing only ambulance expense benefits in the event of
97-27 accident or sickness; and
97-28 (b) Such applicant, if not a partnership or
97-29 corporation, shall not be authorized to write life insurance in
97-30 excess of $7,500 <$5,000> upon any one life unless: (i) applicant,
97-31 if not a partnership or corporation, shall have first passed a
97-32 written examination as provided for in this Article 21.07, as
97-33 amended, or (ii) applicant will act only as a ticket-selling agent
97-34 of a public carrier with respect to accident life insurance
97-35 covering risks of travel or as an agent selling credit life, health
97-36 and accident insurance issued exclusively in connection with credit
97-37 transactions, or (iii) applicant will write policies or riders to
97-38 policies providing only lump sum cash benefits in the event of the
97-39 accidental death, or death by accidental means, or dismemberment,
97-40 or providing only ambulance expense benefits in the event of
97-41 accident or sickness.
97-42 SECTION 12.19. Section 4(c), Article 21.07, Insurance Code,
97-43 is amended to read as follows:
97-44 (c) After the State Board of Insurance shall determine that
97-45 such applicant has successfully passed the written examination or
97-46 it has been waived, <and is a person of good character and
97-47 reputation,> the State Board of Insurance shall forthwith issue a
97-48 license to such applicant which shall also authorize such applicant
97-49 to write health and accident insurance for the designated insurance
97-50 carrier.
97-51 SECTION 12.20. Sections 4A(a), (c), and (e), Article 21.07,
97-52 Insurance Code, are amended to read as follows:
97-53 (a) Each applicant for a license under the provisions of
97-54 this Article 21.07, Insurance Code, as amended, who desires to
97-55 write life insurance in excess of $7,500 <$5,000> upon any one
97-56 life, other than as excepted in Section 3 of this Article 21.07,
97-57 within this state shall submit to a personal written examination
97-58 prescribed by the State Board of Insurance and administered in the
97-59 English or Spanish language to determine his competency with
97-60 respect to life insurance and his familiarity with the pertinent
97-61 provisions of the laws of the State of Texas relating to life
97-62 insurance and shall pass the same to the satisfaction of the State
97-63 Board of Insurance; except that no written examination shall be
97-64 required of an applicant that is a partnership or corporation.
97-65 (c) After the State Board of Insurance shall determine that
97-66 such applicant has successfully passed the written examination or
97-67 it has been waived <and is a person of good character and
97-68 reputation>, the State Board of Insurance shall forthwith issue a
97-69 license to such applicant which shall also authorize such applicant
97-70 to write life insurance upon any one life in excess of $7,500 <Five
98-1 Thousand Dollars ($5,000.00)> for the designated insurance carrier.
98-2 (e) When any license shall be issued by the State Board of
98-3 Insurance to an applicant entitled to write life insurance upon any
98-4 one life in excess of $7,500 <Five Thousand Dollars ($5,000.00)>,
98-5 the license shall have stamped thereon the words, "Life Insurance
98-6 in Excess of $7,500 <$5,000.00>."
98-7 SECTION 12.21. Sections 5, 8, and 11, Article 21.07,
98-8 Insurance Code, are amended to read as follows:
98-9 Sec. 5. Failure of Applicant to Qualify for License. If
98-10 <the State Board of Insurance is not satisfied that> the applicant
98-11 for a license <is trustworthy and of good character, or, if
98-12 applicable, that the applicant>, if required to do so, has not
98-13 passed the written examination to the satisfaction of the State
98-14 Board of Insurance, the State Board of Insurance shall forthwith
98-15 notify the applicant and the insurance carrier in writing that the
98-16 license will not be issued to the applicant.
98-17 Sec. 8. Temporary license. The department<, if it is
98-18 satisfied with the honesty and trustworthiness of any applicant who
98-19 desires to write health and accident insurance,> may issue a
98-20 temporary agent's license, authorizing the applicant to write
98-21 health and accident insurance, as well as all other insurance
98-22 authorized to be written by the appointing insurance carrier,
98-23 effective for ninety (90) days, without requiring the applicant to
98-24 pass a written examination, as follows:
98-25 To any applicant who has been appointed or who is being
98-26 considered for appointment as an agent by an insurance carrier
98-27 authorized to write health and accident insurance immediately upon
98-28 receipt by the department of an application executed by such person
98-29 in the form required by this Article, together with a nonrefundable
98-30 filing fee of $100 and a certificate signed by an officer or
98-31 properly authorized representative of such insurance carrier
98-32 certifying:
98-33 (a) <that such insurance carrier has
98-34 investigated the character and background of such person and is
98-35 satisfied that he is trustworthy and of good character;>
98-36 <(b)> that such person has been appointed or is
98-37 being considered for appointment by such insurance carrier as its
98-38 agent; and
98-39 (b) <(c)> that such insurance carrier desires
98-40 that such person be issued a temporary license; provided that if
98-41 such temporary license shall not have been received from the
98-42 department within seven days from the date on which the application
98-43 and certificate were delivered to or mailed to the department, the
98-44 insurance carrier may assume that such temporary license will be
98-45 issued in due course and the applicant may proceed to act as an
98-46 agent; provided, however, that no temporary license shall be
98-47 renewable or issued more than once in a consecutive six months
98-48 period to the same applicant; and provided further, that no
98-49 temporary license shall be granted to any person who does not
98-50 intend to actively sell health and accident insurance to the public
98-51 generally and it is intended to prohibit the use of a temporary
98-52 license to obtain commissions from sales to persons of family
98-53 employment or business relationships to the temporary licensee, to
98-54 accomplish which purposes an insurance carrier is hereby prohibited
98-55 from knowingly paying directly or indirectly to the holder of a
98-56 temporary license under this Section any commissions on the sale of
98-57 a contract of health and accident insurance to any person related
98-58 to temporary licensee by blood or marriage, and the holder of a
98-59 temporary license is hereby prohibited from receiving or accepting
98-60 commissions on the sale of a contract of health and accident
98-61 insurance to any person included in the foregoing classes of
98-62 relationship.
98-63 Sec. 11. Judicial review of acts of State Board of
98-64 Insurance. If the commissioner refuses an application for license
98-65 as provided by this Article, or suspends, revokes, or refuses to
98-66 renew a license at a hearing as provided by this Article, <and this
98-67 action is upheld on review to the Board as provided by this code,>
98-68 and if the applicant or accused is dissatisfied with the action of
98-69 the commissioner <and the Board>, the applicant or accused may
98-70 appeal from the action as provided by <Section (f),> Article
99-1 1.04<,> of this code.
99-2 SECTION 12.22. Section 10(a), Article 21.07, Insurance Code,
99-3 is amended to read as follows:
99-4 (a) The department may discipline a <A> license holder or
99-5 deny an application under Section 5, Article 21.01-2, of this code
99-6 <may be denied, or a license duly issued may be suspended or
99-7 revoked or the renewal thereof refused by the State Board of
99-8 Insurance> if<, after notice and hearing as hereafter provided,> it
99-9 finds that the applicant, individually or through any officer,
99-10 director, or shareholder, for, or holder of, such license:
99-11 (1) Has wilfully violated any provision of the
99-12 insurance laws of this State; <or>
99-13 (2) Has intentionally made a material misstatement in
99-14 the application for such license; <or>
99-15 (3) Has obtained, or attempted to obtain, such license
99-16 by fraud or misrepresentation; <or>
99-17 (4) Has misappropriated or converted to his or its own
99-18 use or illegally withheld money belonging to an insurance carrier
99-19 or an insured or beneficiary; <or>
99-20 (5) <Has otherwise demonstrated lack of
99-21 trustworthiness or competence to act as an agent; or>
99-22 <(6)> Has been guilty of fraudulent or dishonest
99-23 practices; <or>
99-24 (6) <(7)> Has materially misrepresented the terms and
99-25 conditions of any insurance policy or contract; <or>
99-26 (7) <(8)> Has made or issued, or caused to be made or
99-27 issued, any statement misrepresenting or making incomplete
99-28 comparisons regarding the terms or conditions of any insurance
99-29 contract legally issued by any insurance carrier, for the purpose
99-30 of inducing or attempting to induce the owner of such contract to
99-31 forfeit or surrender such contract or allow it to lapse for the
99-32 purpose of replacing such contract with another; <or>
99-33 <(9) Is not of good character or reputation;> or
99-34 (8) <(10)> Is convicted of a felony.
99-35 SECTION 12.23. Section 19(b), Article 21.07, Insurance Code,
99-36 is amended to read as follows:
99-37 (b) The State Board of Insurance may, upon request of such
99-38 insurer on application forms furnished by the State Board of
99-39 Insurance and upon payment of a nonrefundable license fee in an
99-40 amount not to exceed $50 as determined by the State Board of
99-41 Insurance, issue such license to such person which will be valid
99-42 only for such limited representation of such insurer as provided
99-43 herein. The application shall be accompanied by a certificate, on
99-44 forms to be prescribed and furnished by the State Board of
99-45 Insurance and signed by an officer or properly authorized
99-46 representative of the insurance company the applicant proposes to
99-47 represent, stating that the insurance company <has investigated the
99-48 character and background of the applicant and is satisfied that the
99-49 applicant is trustworthy and qualified to hold himself out in good
99-50 faith as an insurance agent, and that the insurance company>
99-51 desires that the applicant act as an insurance agent to represent
99-52 the insurance company. The insurer shall also certify to the State
99-53 Board of Insurance that it has provided the applicant with at least
99-54 forty (40) hours of training, has tested the applicant and found
99-55 the applicant qualified to represent the insurer, and that the
99-56 insurer is willing to be bound by the acts of such applicant within
99-57 the scope of such limited representation.
99-58 SECTION 12.24. Section 3, Chapter 213, Acts of the 54th
99-59 Legislature, Regular Session, 1955 (Article 21.07-1, Vernon's Texas
99-60 Insurance Code), is amended by adding Subsection (c) to read as
99-61 follows:
99-62 (c) A person who has had a license revoked under Section 12
99-63 of this Act may not solicit or otherwise transact business under
99-64 Chapter 10 of this code.
99-65 SECTION 12.25. Section 4(b), Chapter 213, Acts of the 54th
99-66 Legislature, Regular Session, 1955 (Article 21.07-1, Vernon's Texas
99-67 Insurance Code), is amended to read as follows:
99-68 (b) The application shall be accompanied by a certificate on
99-69 forms furnished by the Commissioner and signed by an officer or
99-70 properly authorized representative of the life insurance company
100-1 the applicant proposes to represent, stating that <the insurer has
100-2 investigated the character and background of the applicant and is
100-3 satisfied that the applicant or the partners of the partnership or
100-4 the officers, directors, and shareholders of the corporation are
100-5 trustworthy and qualified to act as a life insurance agent, that>
100-6 the applicant has completed the educational requirements as
100-7 provided in this Act, and that the insurer desires that the
100-8 applicant be licensed as a life insurance agent to represent it in
100-9 this State.
100-10 SECTION 12.26. Section 6, Chapter 213, Acts of the 54th
100-11 Legislature, Regular Session, 1955 (Article 21.07-1, Vernon's Texas
100-12 Insurance Code), is amended to read as follows:
100-13 Sec. 6. Issuance or Denial of License. After <If the
100-14 Commissioner is satisfied that the applicant is trustworthy and
100-15 competent and after> the applicant, if required to do so, has
100-16 passed the written examination to the satisfaction of the
100-17 Commissioner, a license shall be issued forthwith. If the license
100-18 is denied for any of the reasons set forth in Section 12 of this
100-19 Act, the Commissioner shall notify the applicant and the insurer in
100-20 writing that the license will not be issued to the applicant.
100-21 SECTION 12.27. Section 9(a), Chapter 213, Acts of the 54th
100-22 Legislature, Regular Session, 1955 (Article 21.07-1, Vernon's Texas
100-23 Insurance Code), is amended to read as follows:
100-24 (a) Except as may be provided by a staggered renewal system
100-25 adopted under Article 21.01-2, Insurance Code <Subsection (e) of
100-26 this section>, each license issued to a life insurance agent shall
100-27 expire two years following the date of issue, unless prior thereto
100-28 it is suspended or revoked by the Commissioner.
100-29 SECTION 12.28. Section 10, Chapter 213, Acts of the 54th
100-30 Legislature, Regular Session, 1955 (Article 21.07-1, Vernon's Texas
100-31 Insurance Code), is amended to read as follows:
100-32 Sec. 10. Temporary License. (a) The department<, if it is
100-33 satisfied with the honesty and trustworthiness of the applicant,>
100-34 may issue a temporary life insurance agent's license, effective for
100-35 ninety days, without requiring the applicant to pass a written
100-36 examination, as follows:
100-37 (1) <(a)> To an applicant who has fulfilled the
100-38 provisions of Section 4 of this Act where such applicant will
100-39 actually collect the premiums on industrial life insurance
100-40 contracts during the period of such temporary license; provided,
100-41 however, that if such temporary license is not received from the
100-42 department within seven days from the date the application was sent
100-43 to the department, the company may assume that the temporary
100-44 license will be issued in due course and the applicant may proceed
100-45 to act as an agent. For the purpose of this subsection an
100-46 industrial life insurance contract shall mean a contract for which
100-47 the premiums are payable at monthly or more frequent intervals
100-48 directly by the owner thereof, or by a person representing the
100-49 owner, to a representative of the company;
100-50 (2) <(b)> To any person who is being considered for
100-51 appointment as an agent by an insurer immediately upon receipt by
100-52 the department of an application executed by such person in the
100-53 form required by Section 4 of this Act, together with a
100-54 nonrefundable filing fee of $100 and a certificate signed by an
100-55 officer or properly authorized representative of such insurer
100-56 stating:
100-57 (A) <(1) that such insurer has investigated the
100-58 character and background of such person and is satisfied that he is
100-59 trustworthy;>
100-60 <(2)> that such person is being considered for
100-61 appointment by such insurer as its full-time agent; <and>
100-62 (B) <(3)> that such insurer desires that such
100-63 person be issued a temporary license; provided that if such
100-64 temporary license shall not have been received from the department
100-65 within seven days from the date on which the application and
100-66 certificate were delivered to or mailed to the department the
100-67 insurer may assume that such temporary license will be issued in
100-68 due course and the applicant may proceed to act as an agent;
100-69 provided, however, that no temporary license shall be renewable nor
100-70 issued more than once in a consecutive six months period to the
101-1 same applicant; and provided further, that no temporary license
101-2 shall be granted to any person who does not intend to apply for a
101-3 license to sell life insurance to the public generally and it is
101-4 intended to prohibit the use of a temporary license to obtain
101-5 commissions from sales to persons of family employment or business
101-6 relationships to the temporary licensee, to accomplish which
101-7 purposes an insurer is hereby prohibited from knowingly paying
101-8 directly or indirectly to the holder of a temporary license under
101-9 this subsection any commissions on the sale of a contract of
101-10 insurance on the life of the temporary licensee, or on the life of
101-11 any person related to him by blood or marriage, or on the life of
101-12 any person who is or has been during the past six months his
101-13 employer either as an individual or as a member of a partnership,
101-14 association, firm or corporation, or on the life of any person who
101-15 is or who has been during the past six months his employee, and the
101-16 holder of a temporary license is hereby prohibited from receiving
101-17 or accepting commissions on the sale of a contract of insurance to
101-18 any person included in the foregoing classes of relationship;
101-19 (C) <(4)> that a person who has been issued a
101-20 temporary license under this subsection and is acting under the
101-21 authority of the temporary license may not engage in any insurance
101-22 solicitation, sale, or other agency transaction that results in or
101-23 is intended to result in the replacement of any existing individual
101-24 life insurance policy form or annuity contract that is in force or
101-25 receive, directly or indirectly, any commission or other
101-26 compensation that may or does result from such solicitation, sale,
101-27 or other agency transaction; and that any person holding a
101-28 permanent license may not circumvent or attempt to circumvent the
101-29 intent of this subdivision by acting for or with a person holding
101-30 such a temporary license. As used in this subdivision,
101-31 "replacement" means any transaction in which a new life insurance
101-32 or annuity contract is to be purchased, and it is known or should
101-33 be known to the temporary agent that by reason of the solicitation,
101-34 sale, or other transaction the existing life insurance or annuity
101-35 contract has been or is to be:
101-36 (i) <(A)> lapsed, forfeited, surrendered,
101-37 or otherwise terminated;
101-38 (ii) <(B)> converted to reduced paid-up
101-39 insurance, continued as extended term insurance, or otherwise
101-40 reduced in value by the use of nonforfeiture benefits or other
101-41 policy values;
101-42 (iii) <(C)> amended so as to effect either
101-43 a reduction in benefits or in the term for which coverage would
101-44 otherwise remain in force or for which benefits would be paid;
101-45 (iv) <(D)> reissued with any reduction in
101-46 cash value; or
101-47 (v) <(E)> pledged as collateral or
101-48 subjected to borrowing, whether in a single loan or under a
101-49 schedule of borrowing over a period of time for amounts in the
101-50 aggregate exceeding 25 percent of the loan value set forth in the
101-51 policy; and
101-52 (D) <(5)> that such person will complete, under
101-53 such insurer's supervision, at least forty hours of training as
101-54 prescribed by Subsection (c) of this Section within fourteen days
101-55 from the date on which the application and certificate were
101-56 delivered or mailed to the department.
101-57 (b) <(6)> The department shall have the authority to cancel,
101-58 suspend, or revoke the temporary appointment powers of any life
101-59 insurance company, if, after notice and hearing, he finds that such
101-60 company has abused such temporary appointment powers. In
101-61 considering such abuse, the department may consider, but is not
101-62 limited to, the number of temporary appointments made by a company
101-63 as provided by Subsection (f) <(e)> of this Section, the percentage
101-64 of appointees sitting for the examination as life insurance agents
101-65 under this Article as it may be in violation of Subsection (e)
101-66 <(d)> of this Section, and the number of appointees successfully
101-67 passing said examination in accordance with Subsection (e) <(d)>.
101-68 Appeals from the department's decision shall be made in accordance
101-69 with Section 13 hereof.
101-70 (c) At least forty hours of training must be administered to
102-1 any applicant for a temporary license as herein defined within
102-2 fourteen days from the date on which the application and
102-3 certificate were delivered or mailed to the department. Of this
102-4 forty-hour requirement, ten hours must be taught in a classroom
102-5 setting, including but not limited to an accredited college,
102-6 university, junior or community college, business school, or
102-7 private institute or classes sponsored by the insurer and
102-8 especially established for this purpose. Such training program
102-9 shall be constructed so as to provide an applicant with the basic
102-10 knowledge of:
102-11 (1) the broad principles of insurance, licensing, and
102-12 regulatory laws of this State; and
102-13 (2) the obligations and duties of a life insurance
102-14 agent.
102-15 (d) The Commissioner of Insurance may, in his discretion,
102-16 require that the <such> training program required by Subsection (c)
102-17 of this Section <shall> be filed with the department for approval
102-18 in the event the commissioner <he> finds an abuse of temporary
102-19 appointment powers under Subsection (b)<(6)> of this Section.
102-20 (e) <(d)> Each insurer is responsible for requiring that not
102-21 less than 70 percent of such insurer's applicants for temporary
102-22 licenses sit for an examination during any two consecutive calendar
102-23 quarters. At least 50 percent of those applicants sitting for the
102-24 examination must pass during such a period.
102-25 (f) <(e)> Each insurer may make no more than two hundred and
102-26 fifty temporary licensee appointments during a calendar year under
102-27 Subsection (a)(2) <(b)> of this Section.
102-28 SECTION 12.29. Section 12(a), Chapter 213, Acts of the 54th
102-29 Legislature, Regular Session, 1955 (Article 21.07-1, Vernon's Texas
102-30 Insurance Code), is amended to read as follows:
102-31 (a) The commissioner may discipline a <A> license holder or
102-32 deny an application under Section 5, Article 21.01-2, Insurance
102-33 Code, <may be denied, or a license duly issued may be suspended or
102-34 revoked or the renewal thereof refused by the Commissioner> if<,
102-35 after notice and hearing as hereafter provided,> the Commissioner
102-36 finds that the applicant, individually or through any officer,
102-37 director, or shareholder, for, or holder of such license:
102-38 (1) Has wilfully violated any provision of the
102-39 insurance laws of this State;
102-40 (2) Has intentionally made a material misstatement in
102-41 the application for such license;
102-42 (3) Has obtained, or attempted to obtain, such license
102-43 by fraud or misrepresentation;
102-44 (4) Has misappropriated or converted to the
102-45 applicant's or licensee's own use or illegally withheld money
102-46 belonging to an insurer or an insured or beneficiary;
102-47 (5) <Has otherwise demonstrated lack of
102-48 trustworthiness or competence to act as a life insurance agent;>
102-49 <(6)> Has been guilty of fraudulent or dishonest
102-50 practices;
102-51 (6) <(7)> Has materially misrepresented the terms and
102-52 conditions of life insurance policies or contracts;
102-53 (7) <(8)> Has made or issued, or caused to be made or
102-54 issued, any statement misrepresenting or making incomplete
102-55 comparisons regarding the terms or conditions of any insurance or
102-56 annuity contract legally issued by any insurer, for the purpose of
102-57 inducing or attempting to induce the owner of such contract to
102-58 forfeit or surrender such contract or allow it to lapse for the
102-59 purpose of replacing such contract with another;
102-60 (8) <(9)> Has obtained, or attempted to obtain such
102-61 license, not for the purpose of holding himself or itself out to
102-62 the general public as a life insurance agent, but primarily for the
102-63 purpose of soliciting, negotiating or procuring life insurance or
102-64 annuity contracts covering the applicant or licensee, members of
102-65 the applicant's or licensee's family, or the applicant's or
102-66 licensee's business associates;
102-67 (9) <(10) Is not of good character or reputation; or>
102-68 <(11)> Is convicted of a felony; or
102-69 (10) Is guilty of rebating an insurance premium or
102-70 commission to an insured.
103-1 SECTION 12.30. Section 13, Chapter 213, Acts of the 54th
103-2 Legislature, Regular Session, 1955 (Article 21.07-1, Vernon's Texas
103-3 Insurance Code), is amended to read as follows:
103-4 Sec. 13. Judicial review of acts of commissioner. If the
103-5 Commissioner refuses an application for license as provided by this
103-6 Act or suspends, revokes, or refuses to renew a license at a
103-7 hearing provided by this Act, <and the action is upheld on review
103-8 to the Board as provided by this Code,> and if the applicant or
103-9 accused is dissatisfied with the action of the Commissioner and the
103-10 Board, the applicant or accused may appeal from that action in
103-11 accordance with <Section (f),> Article 1.04, Insurance Code.
103-12 SECTION 12.31. Section 16(h), Chapter 213, Acts of the 54th
103-13 Legislature, Regular Session, 1955 (Article 21.07-1, Vernon's Texas
103-14 Insurance Code), is amended to read as follows:
103-15 (h) After the State Board of Insurance determines that an
103-16 applicant has successfully passed the written examination or is
103-17 exempt therefrom as provided in Subsection (d) above, <and the
103-18 board has determined the applicant to be of good character and
103-19 reputation,> has been appointed to act as an agent by one or more
103-20 legal reserve life insurance companies, and has paid a
103-21 nonrefundable license fee not to exceed $50 as determined by the
103-22 board, the board shall issue a license to such applicant
103-23 authorizing the applicant to act as an accident and health
103-24 insurance agent for the appointing insurance carrier.
103-25 SECTION 12.32. Section 5, Chapter 29, Acts of the 54th
103-26 Legislature, Regular Session, 1955 (Article 21.07-2, Vernon's Texas
103-27 Insurance Code), is amended to read as follows:
103-28 Sec. 5. Mode of Licensing and Regulation. (a) The
103-29 licensing and regulation of a Life Insurance Counselor, as that
103-30 term is defined herein, shall be in the same manner and subject to
103-31 the same requirements as applicable to the licensing of agents of
103-32 legal reserve life insurance companies as provided in Article
103-33 21.07-1 of the Texas Insurance Code, 1951, or as provided by any
103-34 existing or subsequent applicable law governing the licensing of
103-35 such agents, and all the provisions thereof are hereby made
103-36 applicable to applicants and licensees under this Act, except that
103-37 a Life Insurance Counselor shall not advertise in any manner and
103-38 shall not circulate materials indicating professional superiority
103-39 or the performance of professional service in a superior manner;
103-40 provided, however, that an appointment to act for an insurer shall
103-41 not be a condition to the licensing of a Life Insurance Counselor.
103-42 (b) In addition to the above requirements, the applicant for
103-43 licensure as a Life Insurance Counselor shall submit to the
103-44 Commissioner <evidence of high moral and ethical character,>
103-45 documentation that he has been licensed as a life insurance agent
103-46 in excess of three years. After the Insurance Commissioner has
103-47 satisfied himself as to these requirements, he shall then cause the
103-48 applicant for a Life Insurance Counselor's license to sit for an
103-49 examination which shall include the following<:>
103-50 <Such examination shall consist of> five subjects and subject
103-51 areas:
103-52 (1) <(a)> Fundamentals of life and health insurance;
103-53 (2) <(b)> Group life insurance, pensions and health
103-54 insurance;
103-55 (3) <(c)> Law, trust and taxation;
103-56 (4) <(d)> Finance and economics; and
103-57 (5) <(e)> Business insurance and estate planning.
103-58 (c) No license shall be granted until such individual shall
103-59 have successfully passed each of the five parts under Subsection
103-60 (b) of this section <above enumerated>. Such examinations may be
103-61 given and scheduled by the Commissioner at his discretion.
103-62 Individuals currently holding Life Insurance Counselor licenses
103-63 issued by the Texas State Board of Insurance, who do not have the
103-64 equivalent of the requirements above listed, shall have one year
103-65 from the date of enactment hereof to so qualify.
103-66 <Unless the State Board of Insurance accepts a qualifying
103-67 examination administered by a testing service, as provided under
103-68 Article 21.01-1, Insurance Code, as amended, not later than the
103-69 30th day after the day on which a licensing examination is
103-70 administered under this Section, the Commissioner shall send notice
104-1 to each examinee of the results of the examination. If an
104-2 examination is graded or reviewed by a testing service, the
104-3 Commissioner shall send, or require the testing service to send,
104-4 notice to the examinees of the results of the examination within
104-5 two weeks after the date on which the Commissioner receives the
104-6 results from the testing service. If the notice of the examination
104-7 results will be delayed for longer than 90 days after the
104-8 examination date, the Commissioner shall send, or require the
104-9 testing service to send, notice to the examinee of the reason for
104-10 the delay before the 90th day. If requested in writing by a person
104-11 who fails the licensing examination administered under this
104-12 Section, the Commissioner shall send, or require the testing
104-13 service to send, to the person an analysis of the person's
104-14 performance on the examination.>
104-15 SECTION 12.33. Sections 9, 12, and 14, Managing General
104-16 Agents' Licensing Act (Article 21.07-3, Vernon's Texas Insurance
104-17 Code), are amended to read as follows:
104-18 Sec. 9. Expiration of License; Renewal. <(a)> Except as
104-19 may be provided by a staggered renewal system adopted under Article
104-20 21.01-2, Insurance Code <Subsection (c) of this section>, every
104-21 license issued under this Act expires two years from the date of
104-22 issuance, unless a completed application to qualify for renewal of
104-23 such license shall be filed with the commissioner and a
104-24 nonrefundable fee paid on or before such date, in which event the
104-25 license sought to be renewed shall continue in full force and
104-26 effect until renewed or renewal is denied.
104-27 <(b) An unexpired license may be renewed by paying the
104-28 required nonrefundable renewal fee to the board not later than the
104-29 expiration date of the license. If a license has been expired for
104-30 not longer than 90 days, the licensee may renew the license by
104-31 paying to the board the required nonrefundable renewal fee and a
104-32 nonrefundable fee that is one-half of the original license fee. If
104-33 a license has been expired for more than 90 days, the license may
104-34 not be renewed. A new license may be obtained by complying with
104-35 the requirements and procedures for obtaining an original license.
104-36 At least 30 days before the expiration of a license, the
104-37 commissioner shall send written notice of the impending license
104-38 expiration to the licensee at the licensee's last known address.
104-39 This subsection may not be construed to prevent the board from
104-40 denying or refusing to renew a license under applicable law or
104-41 rules of the State Board of Insurance.>
104-42 <(c) The State Board of Insurance by rule may adopt a system
104-43 under which licenses expire on various dates during the year. For
104-44 the period in which the license is valid for less than two years,
104-45 the license fee shall be prorated on a monthly basis so that each
104-46 licensee shall pay only that portion of the license fee that is
104-47 allocable to the number of months during which the license is
104-48 valid. On each subsequent renewal of the license, the total
104-49 license renewal fee is payable.>
104-50 Sec. 12. Denial, Refusal, Suspension, or Revocation of
104-51 Licenses. The commissioner may discipline a <A> license holder or
104-52 deny an application under Section 5, Article 21.01-2, Insurance
104-53 Code, if it <may be denied, suspended for a period of time, revoked
104-54 or the renewal thereof refused by the commissioner if, after notice
104-55 and hearing as hereinafter provided, he> finds that the applicant
104-56 for, or holder of such license:
104-57 (a) has wilfully violated or participated in the
104-58 violation of any provisions of this Act or any of the insurance
104-59 laws of this state; <or>
104-60 (b) has intentionally made a material misstatement in
104-61 the application for such license; <or>
104-62 (c) has obtained, or attempted to obtain such license
104-63 by fraud or misrepresentation; <or>
104-64 (d) has misappropriated or converted to his own use or
104-65 has illegally withheld moneys required to be held in a fiduciary
104-66 capacity; <or>
104-67 (e) has with intent to deceive materially
104-68 misrepresented the terms or effect of any contract of insurance, or
104-69 has engaged in any fraudulent transaction; or
104-70 (f) has been convicted of a felony, or of any
105-1 misdemeanor of which criminal fraud is an essential element<; or>
105-2 <(g) has shown himself to be, and is so deemed by the
105-3 commissioner, incompetent, or untrustworthy, or not of good
105-4 character and reputation>.
105-5 Sec. 14. JUDICIAL REVIEW OF ACTS OF COMMISSIONER <AND THE
105-6 BOARD>. If the commissioner shall refuse an application for
105-7 license as provided in this Act, or shall suspend, revoke or refuse
105-8 to renew any license at a hearing as provided by this Act, <and
105-9 such action is upheld upon review to the board as in this Code
105-10 provided,> and if the applicant or accused thereafter is
105-11 dissatisfied with the action of the commissioner <and the board>,
105-12 the applicant or accused may appeal from that action in accordance
105-13 with <Section (f),> Article 1.04, Insurance Code.
105-14 SECTION 12.34. Sections 10 and 18, Chapter 407, Acts of the
105-15 63rd Legislature, Regular Session, 1973 (Article 21.07-4, Vernon's
105-16 Texas Insurance Code), are amended to read as follows:
105-17 Sec. 10. Examination for License. <(a)> Each applicant for
105-18 a license as an adjuster shall, prior to the issuance of such
105-19 license, personally take and pass, to the satisfaction of the
105-20 commissioner, an examination as a test of his qualifications and
105-21 competency; but the requirement of an examination shall not apply
105-22 to any of the following:
105-23 (1) an applicant who for the 90-day period next
105-24 preceding the effective date of this Act has been principally
105-25 engaged in the investigation, adjustment, or supervision of losses
105-26 and who is so engaged on the effective date of this Act;
105-27 (2) an applicant for the renewal of a license issued
105-28 hereunder; <or>
105-29 (3) an applicant who is licensed as an insurance
105-30 adjuster, as defined by this statute, in another state with which
105-31 state a reciprocal agreement has been entered into by the
105-32 commissioner; or
105-33 (4) any person who has completed a course or training
105-34 program in adjusting of losses as prescribed and approved by the
105-35 commissioner and is certified to the commissioner upon completion
105-36 of the course that such person has completed said course or
105-37 training program, and has passed an examination testing his
105-38 knowledge and qualification, as prescribed by the commissioner.
105-39 <(b) Unless the State Board of Insurance accepts a
105-40 qualifying examination administered by a testing service, as
105-41 provided under Article 21.01-1, Insurance Code, as amended, not
105-42 later than the 30th day after the day on which a licensing
105-43 examination is administered under this section, the commissioner
105-44 shall send notice to each examinee of the results of the
105-45 examination. If an examination is graded or reviewed by a testing
105-46 service, the commissioner shall send, or require the testing
105-47 service to send, notice to the examinees of the results of the
105-48 examination within two weeks after the date on which the
105-49 commissioner receives the results from the testing service. If the
105-50 notice of the examination results will be delayed for longer than
105-51 90 days after the examination date, the commissioner shall send, or
105-52 require the testing service to send, notice to the examinee of the
105-53 reason for the delay before the 90th day.>
105-54 <(c) If requested in writing by a person who fails the
105-55 licensing examination administered under this section, the
105-56 commissioner shall send, or require the testing service to send, to
105-57 the person an analysis of the person's performance on the
105-58 examination.>
105-59 Sec. 18. Automatic <Procedure for Refusal, Suspension, or>
105-60 Revocation. <(a)> The commissioner may revoke or refuse to renew
105-61 any license of an adjuster immediately and without hearing, upon
105-62 the licensee's conviction of a felony, by final judgment, in any
105-63 court of competent jurisdiction.
105-64 <(b) The commissioner may deny, suspend, revoke, or refuse
105-65 to renew a license:>
105-66 <(1) by order or notice given to the licensee not less
105-67 than 15 days in advance of the effective date of the order or
105-68 notice, subject to the right of the licensee to demand in writing,
105-69 a hearing, before the board after receipt of notice and before the
105-70 effective date of the revocation. Pending such hearing, the
106-1 license may be suspended.>
106-2 <(2) by an order after a hearing which is effective 10
106-3 days after the order is issued subject to appeal to a district
106-4 court in Travis County.>
106-5 SECTION 12.35. Section 16(a), Chapter 407, Acts of the 63rd
106-6 Legislature, Regular Session, 1973 (Article 21.07-4, Vernon's Texas
106-7 Insurance Code), is amended to read as follows:
106-8 (a) Except as may be provided by a staggered renewal system
106-9 adopted under Article 21.01-2, Insurance Code <Subsection (e) of
106-10 this section>, an adjuster's license expires two years after the
106-11 date of issuance.
106-12 SECTION 12.36. Section 17(a), Chapter 407, Acts of the 63rd
106-13 Legislature, Regular Session, 1973 (Article 21.07-4, Vernon's Texas
106-14 Insurance Code), is amended to read as follows:
106-15 (a) The department <commissioner> may discipline an adjuster
106-16 or deny an application under Section 5, Article 21.01-2, Insurance
106-17 Code, <deny, suspend, revoke, or refuse to renew any adjuster's
106-18 license> for any of the following causes:
106-19 (1) for any cause for which issuance of the license
106-20 could have been refused had it been existent and been known to the
106-21 board;
106-22 (2) if the applicant or licensee willfully violates or
106-23 knowingly participates in the violation of any provision of this
106-24 Act;
106-25 (3) if the applicant or licensee has obtained or
106-26 attempted to obtain any such license through willful
106-27 misrepresentation or fraud, or has failed to pass any examination
106-28 required under this Act;
106-29 (4) if the applicant or licensee has misappropriated,
106-30 or converted to the applicant's or licensee's own use, or has
106-31 illegally withheld moneys required to be held in a fiduciary
106-32 capacity;
106-33 (5) if the applicant or licensee has, with intent to
106-34 deceive, materially misrepresented the terms or effect of an
106-35 insurance contract, or has engaged in any fraudulent transactions;
106-36 or
106-37 (6) if the applicant or licensee is convicted, by
106-38 final judgment, of a felony<; or>
106-39 <(7) if in the conduct of the licensee's affairs under
106-40 the license, the licensee has proven to be, and is so deemed by the
106-41 commissioner, incompetent, untrustworthy, or a source of injury to
106-42 the public>.
106-43 SECTION 12.37. Section 5(a), Article 21.07-6, Insurance
106-44 Code, is amended to read as follows:
106-45 (a) The commissioner shall approve an application for a
106-46 certificate of authority to conduct a business in this state as an
106-47 administrator if the commissioner is satisfied that the application
106-48 meets the following criteria:
106-49 (1) the granting of the application would not violate
106-50 a federal or state law;
106-51 (2) the <competence, trustworthiness, experience,>
106-52 financial condition<, or integrity> of an administrator applicant
106-53 or those persons who would operate or control an administrator
106-54 applicant are such that the granting of a certificate of authority
106-55 would not be adverse to the public interest;
106-56 (3) the applicant has not attempted through fraud or
106-57 bad faith to obtain the certificate of authority;
106-58 (4) the applicant has complied with this article and
106-59 rules adopted by the board under this article; and
106-60 (5) the name under which the applicant will conduct
106-61 business in this state is not so similar to that of another
106-62 administrator or insurer that it is likely to mislead the public.
106-63 SECTION 12.38. Section 3(e), Article 21.07-7, Insurance
106-64 Code, is amended to read as follows:
106-65 (e) The department <commissioner> may discipline a license
106-66 holder or deny an application under Section 5, Article 21.01-2, of
106-67 this code if it <deny a license application or suspend, revoke, or
106-68 refuse to renew a license if, after notice and hearing as provided
106-69 by this code, the commissioner> determines that the applicant for
106-70 or holder of a license, or any person who would be authorized to
107-1 act on behalf of the applicant or the license holder under
107-2 Subsection (c) of this section has:
107-3 (1) wilfully violated or participated in the violation
107-4 of this article or any of the insurance laws of this state;
107-5 (2) intentionally made a material misstatement in the
107-6 license application;
107-7 (3) obtained or attempted to obtain the license by
107-8 fraud or misrepresentation;
107-9 (4) misappropriated, converted to his own use, or
107-10 illegally withheld money required to be held in a fiduciary
107-11 capacity;
107-12 (5) materially misrepresented the terms or effect of
107-13 any contract of insurance or reinsurance, or engaged in any
107-14 fraudulent transaction; or
107-15 (6) been convicted of a felony or of any misdemeanor
107-16 of which criminal fraud is an essential element<; or>
107-17 <(7) shown himself to be, and is so determined to be
107-18 by the commissioner, incompetent, untrustworthy, or not of good
107-19 character and reputation>.
107-20 SECTION 12.39. Sections 3(a) and (c), Article 21.14,
107-21 Insurance Code, are amended to read as follows:
107-22 (a) When any person, partnership or corporation shall desire
107-23 to engage in business as a local recording agent for an insurance
107-24 company, or insurance carrier, he or it shall make application for
107-25 a license to the State Board of Insurance, in such form as the
107-26 Board may require. Such application shall bear a signed
107-27 endorsement by a general, state or special agent of a qualified
107-28 insurance company, or insurance carrier that applicant or each
107-29 member of the partnership or each stockholder of the corporation is
107-30 a resident of this state <Texas, trustworthy, of good character and
107-31 good reputation, and is worthy of a license>.
107-32 (c) The Board shall issue a license to a corporation if the
107-33 Board finds:
107-34 (1) That the corporation is a Texas corporation
107-35 organized or existing under the Texas Business Corporation Act or
107-36 the Texas Professional Corporation Act having its principal place
107-37 of business in the State of Texas and having as one of its purposes
107-38 the authority to act as a local recording agent; and
107-39 (2) That every officer, director and shareholder of
107-40 the corporation is individually licensed as a local recording agent
107-41 under the provisions of this Insurance Code, except as may be
107-42 otherwise permitted by this Section or Section 3a of this article,
107-43 or that every officer and director of the corporation is
107-44 individually licensed as a local recording agent under this
107-45 Insurance Code, that the corporation is a wholly owned subsidiary
107-46 of a parent corporation that is licensed as a local recording agent
107-47 under this Insurance Code, and that every shareholder of the parent
107-48 corporation is individually licensed as a local recording agent
107-49 under this Insurance Code, and except as specifically provided by
107-50 this article, that no shareholder of the corporation is a corporate
107-51 entity; and
107-52 (3) That such corporation will have the ability to pay
107-53 any sums up to $25,000 which it might become legally obligated to
107-54 pay on account of any claim made against it by any customer and
107-55 caused by any negligent act, error or omission of the corporation
107-56 or any person for whose acts the corporation is legally liable in
107-57 the conduct of its business as a local recording agent. The term
107-58 "customer" as used herein shall mean any person, firm or
107-59 corporation to whom such corporation sells or attempts to sell a
107-60 policy of insurance, or from whom such corporation accepts an
107-61 application for insurance. Such ability shall be proven in one of
107-62 the following ways:
107-63 (A) <(a)> An errors and omissions policy
107-64 insuring such corporation against errors and omissions, in at least
107-65 the sum of $100,000<,> with no more than a $10,000 deductible
107-66 feature or the sum of at least $300,000 with no more than a $25,000
107-67 deductible feature, issued by an insurance company licensed to do
107-68 business in the State of Texas or, if a policy cannot be obtained
107-69 from a company licensed to do business in Texas, a policy issued by
107-70 a company not licensed to do business in Texas, on filing an
108-1 affidavit with the State Board of Insurance stating the inability
108-2 to obtain coverage and receiving the Board's approval; or
108-3 (B) <(b)> A bond executed by such corporation as
108-4 principal and a surety company authorized to do business in this
108-5 state, as surety, in the principal sum of $25,000, payable to the
108-6 State Board of Insurance for the use and benefit of customers of
108-7 such corporation, conditioned that such corporation shall pay any
108-8 final judgment recovered against it by any customer; or
108-9 (C) <(c)> A deposit of cash or securities of the
108-10 class authorized by Articles 2.08 and 2.10 of this Code, having a
108-11 fair market value of $25,000 with the State Treasurer. The State
108-12 Treasurer is hereby authorized and directed to accept and receive
108-13 such deposit and hold it exclusively for the protection of any
108-14 customer of such corporation recovering a final judgment against
108-15 such corporation. Such deposit may be withdrawn only upon filing
108-16 with the Board evidence satisfactory to it that the corporation has
108-17 withdrawn from business, and has no unsecured liabilities
108-18 outstanding, or that such corporation has provided for the
108-19 protection of its customers by furnishing an errors and omissions
108-20 policy or a bond as hereinbefore provided. Securities so deposited
108-21 may be exchanged from time to time for other qualified securities.
108-22 A binding commitment to issue such a policy or bond, or the
108-23 tender of such securities, shall be sufficient in connection with
108-24 any application for license.
108-25 Nothing contained herein shall be construed to permit any
108-26 unlicensed employee or agent of any corporation to perform any act
108-27 of a local recording agent without obtaining a local recording
108-28 agent's license. The Board shall not require a corporation to take
108-29 the examination provided in Section 6 of this Article 21.14.
108-30 If at any time, any corporation holding a local recording
108-31 agent's license does not maintain the qualifications necessary to
108-32 obtain a license, the license of such corporation to act as a local
108-33 recording agent shall be cancelled or denied in accordance with the
108-34 provisions of Sections 16, 17 and 18 of this Article 21.14;
108-35 provided, however, that should any person who is not a licensed
108-36 local recording agent acquire shares in such a corporation by
108-37 devise or descent, they shall have a period of 90 days from date of
108-38 acquisition within which to obtain a license as a local recording
108-39 agent or to dispose of the shares to a licensed local recording
108-40 agent except as may be permitted by Section 3a of this article.
108-41 Should such an unlicensed person, except as may be permitted
108-42 by Section 3a of this article, acquire shares in such a corporation
108-43 and not dispose of them within said period of 90 days to a licensed
108-44 local recording agent, then they must be purchased by the
108-45 corporation for their book value, that is, the value of said shares
108-46 of stock as reflected by the regular books and records of said
108-47 corporation, as of the date of the acquisition of said shares by
108-48 said unlicensed person. Should the corporation fail or refuse to
108-49 so purchase such shares, its license shall be cancelled.
108-50 Any such corporation shall have the power to redeem the
108-51 shares of any shareholder, or the shares of a deceased shareholder,
108-52 upon such terms as may be agreed upon by the Board of Directors and
108-53 such shareholder or his personal representative, or at such price
108-54 and upon such terms as may be provided in the Articles of
108-55 Incorporation, the Bylaws, or an existing contract entered into
108-56 between the shareholders of the corporation.
108-57 Each corporation licensed as a local recording agent shall
108-58 file, under oath, a list of the names and addresses of all of its
108-59 officers, directors and shareholders with its application for
108-60 renewal license.
108-61 Each corporation licensed as a local recording agent shall
108-62 notify the State Board of Insurance upon any change in its
108-63 officers, directors or shareholders not later than the 30th day
108-64 after the date on which the change became effective.
108-65 The term "firm" as it applies to local recording agents in
108-66 Sections 2, 12 and 16 of this Article 21.14 shall be construed to
108-67 include corporations.
108-68 SECTION 12.40. Sections 5, 8, and 18, Article 21.14,
108-69 Insurance Code, are amended to read as follows:
108-70 Sec. 5. ACTIVE AGENTS OR SOLICITORS ONLY TO BE LICENSED. No
109-1 license shall be granted to any person, firm, partnership or
109-2 corporation as a local recording agent or to a person as a
109-3 solicitor, for the purpose of writing any form of insurance, unless
109-4 it is found by the State Board of Insurance that such person, firm,
109-5 partnership or corporation, is or intends to be, actively engaged
109-6 in the soliciting or writing of insurance for the public generally;
109-7 that each person or individual of a firm is a resident of Texas<,
109-8 of good character and good reputation, worthy of a license,> and is
109-9 to be actively engaged in good faith in the business of insurance,
109-10 and that the application is not being made in order to evade the
109-11 laws against rebating and discrimination either for the applicant
109-12 or for some other person, firm, partnership or corporation.
109-13 Nothing herein contained shall prohibit an applicant insuring
109-14 property which the applicant owns or in which the applicant has an
109-15 interest; but it is the intent of this Section to prohibit coercion
109-16 of insurance and to preserve to each citizen the right to choose
109-17 his own agent or insurance carrier, and to prohibit the licensing
109-18 of an individual, firm, partnership or corporation to engage in the
109-19 insurance business principally to handle business which the
109-20 applicant controls only through ownership, mortgage or sale, family
109-21 relationship or employment, which shall be taken to mean that an
109-22 applicant who is making an original application for license shall
109-23 show the State Board of Insurance that the applicant has a bona
109-24 fide intention to engage in business in which, in any calendar
109-25 year, at least twenty-five per cent (25%) of the total volume of
109-26 premiums shall be derived from persons or organizations other than
109-27 applicant and from property other than that on which the applicant
109-28 shall control the placing of insurance through ownership, mortgage,
109-29 sale, family relationship or employment. Nothing herein contained
109-30 shall be construed to authorize a partnership or corporation to
109-31 receive a license as a solicitor.
109-32 Sec. 8. EXPIRATION OF LICENSE; RENEWAL. <(a)> Except as
109-33 may be provided by a staggered renewal system adopted under Article
109-34 21.01-2 of this code <Subsection (c) of this section>, every
109-35 license issued to a local recording agent or a solicitor shall
109-36 expire two years from the date of its issue, unless a completed
109-37 application to qualify for the renewal of any such license shall be
109-38 filed with the State Board of Insurance and a nonrefundable fee
109-39 paid on or before such date, in which event the license sought to
109-40 be renewed shall continue in full force and effect until renewed or
109-41 renewal is denied.
109-42 <(b) An unexpired license may be renewed by filing a
109-43 completed application and paying the required nonrefundable renewal
109-44 fee to the State Board of Insurance not later than the expiration
109-45 date of the license. If a license has been expired for not longer
109-46 than 90 days, the licensee may renew the license by paying to the
109-47 State Board of Insurance the required nonrefundable renewal fee and
109-48 a nonrefundable fee that is one-half of the original license fee.
109-49 If a license has been expired for more than 90 days, the license
109-50 may not be renewed. A new license may be obtained by complying
109-51 with the requirements and procedures for obtaining an original
109-52 license. At least 30 days before the expiration of a license, the
109-53 commissioner shall send written notice of the impending license
109-54 expiration to the licensee at the licensee's last known address.
109-55 This subsection may not be construed to prevent the board from
109-56 denying or refusing to renew a license under applicable law or
109-57 rules of the State Board of Insurance.>
109-58 <(c) The State Board of Insurance by rule may adopt a system
109-59 under which licenses expire on various dates during the year. For
109-60 the period in which the license is valid for less than two years,
109-61 the license fee shall be prorated on a monthly basis so that each
109-62 licensee shall pay only that portion of the license fee that is
109-63 allocable to the number of months during which the license is
109-64 valid. On each subsequent renewal of the license, the total
109-65 license renewal fee is payable.>
109-66 Sec. 18. APPEAL. If the Commissioner refuses an application
109-67 for license as provided by this article, or suspends, revokes, or
109-68 refuses to renew any license at a hearing as provided by this
109-69 article, <and the action is upheld on review to the Board as
109-70 provided by this Code,> and if the applicant or accused is
110-1 dissatisfied with the action of the Commissioner <and the Board>,
110-2 the applicant or accused may appeal from the action in accordance
110-3 with <Section (f),> Article 1.04<,> of this Code.
110-4 SECTION 12.41. Section 16, Article 21.14, Insurance Code, as
110-5 amended by Chapters 242 and 790, Acts of the 72nd Legislature,
110-6 Regular Session, 1991, is reenacted and amended to read as follows:
110-7 Sec. 16. SUSPENSION OR REVOCATION OF LICENSE. (a) The
110-8 license of any local recording agent shall be suspended during a
110-9 period in which the agent does not have outstanding a valid
110-10 appointment to act as an agent for an insurance company. The Board
110-11 shall end the suspension on receipt of evidence satisfactory to the
110-12 board that the agent has a valid appointment. The Board shall
110-13 cancel the license of a solicitor if the solicitor does not have
110-14 outstanding a valid appointment to act as a solicitor for a local
110-15 recording agent, and shall suspend the license during a period that
110-16 the solicitor's local recording agent does not have outstanding a
110-17 valid appointment to act as an agent under this Article.
110-18 (b) The department may discipline <license of> any local
110-19 recording agent or solicitor or deny an application under Section
110-20 5, Article 21.01-2, of this code <may be denied or a license duly
110-21 issued may be suspended or revoked or the renewal thereof refused
110-22 by the State Board of Insurance> if<, after notice and hearing as
110-23 hereafter provided,> it finds that the applicant, individually or
110-24 through any officer, director, or shareholder, for or holder of
110-25 such license:
110-26 (1) Has wilfully violated any provision of the
110-27 insurance laws of this state;
110-28 (2) Has intentionally made a material misstatement in
110-29 the application for such license;
110-30 (3) Has obtained, or attempted to obtain, such license
110-31 by fraud or misrepresentation;
110-32 (4) Has misappropriated or converted to the
110-33 applicant's or licensee's own use or illegally withheld money
110-34 belonging to an insurer or an insured or beneficiary;
110-35 (5) <Has otherwise demonstrated lack of
110-36 trustworthiness or competence to act as an insurance agent;>
110-37 <(6)> Has been guilty of fraudulent or dishonest acts;
110-38 (6) <(7)> Has materially misrepresented the terms and
110-39 conditions of any insurance policies or contracts;
110-40 (7) <(8)> Has made or issued, or caused to be made or
110-41 issued, any statement misrepresenting or making incomplete
110-42 comparisons regarding the terms or conditions of any insurance
110-43 contract legally issued by an insurance carrier for the purpose of
110-44 inducing or attempting to induce the owner of such contract to
110-45 forfeit or surrender such contract or allow it to expire for the
110-46 purpose of replacing such contract with another;
110-47 (8) <(9) Is not of good character or reputation;>
110-48 <(10)> Is convicted of a felony;
110-49 (9) <(11)> Is guilty of rebating any insurance premium
110-50 or discriminating as between insureds; <or>
110-51 (10) <(12)> Is not engaged in the soliciting or
110-52 writing of insurance for the public generally as required by
110-53 Section 5 of this Article; or
110-54 (11) <(12)> Is afflicted with a disability as that
110-55 term is defined by Subsection (a) of Article 21.15-6 of this code.
110-56 (c) <(b)> The State Board of Insurance may order that a
110-57 local recording agent or solicitor who is afflicted with a
110-58 disability be placed on disability probation under the terms and
110-59 conditions specified under Article 21.15-6 of this code instead of
110-60 taking disciplinary action under Subsection (b) <(a)> of this
110-61 section.
110-62 (d) <(c)> A license applicant or licensee whose license
110-63 application or license has been denied, refused, or revoked under
110-64 this section may not apply for any license as an insurance agent
110-65 before the first anniversary of the effective date of the denial,
110-66 refusal, or revocation, or, if the applicant or licensee seeks
110-67 judicial review of the denial, refusal, or revocation before the
110-68 first anniversary of the date of the final court order or decree
110-69 affirming that action. The Commissioner may deny an application
110-70 timely filed if the applicant does not show good cause why the
111-1 denial, refusal, or revocation of the previous license application
111-2 or license should not be considered a bar to the issuance of a new
111-3 license. This subsection does not apply to an applicant whose
111-4 license application was denied for failure to pass a required
111-5 written examination.
111-6 SECTION 12.42. Section 18, Article 21.14, Insurance Code, is
111-7 amended to read as follows:
111-8 Sec. 18. APPEAL. If the Commissioner refuses an application
111-9 for license as provided by this article, or suspends, revokes, or
111-10 refuses to renew any license at a hearing as provided by this
111-11 article, <and the action is upheld on review to the Board as
111-12 provided by this Code,> and if the applicant or accused is
111-13 dissatisfied with the action of the Commissioner and the Board, the
111-14 applicant or accused may appeal from the action in accordance with
111-15 <Section (f),> Article 1.04<,> of this Code.
111-16 SECTION 12.43. Sections 5, 8, and 10, Article 21.14-1,
111-17 Insurance Code, are amended to read as follows:
111-18 Sec. 5. Qualifications for risk manager's license. To
111-19 qualify for a license under this article, a person must:
111-20 (1) be at least 18 years of age;
111-21 (2) maintain a place of business in this state;
111-22 (3) <be a trustworthy and competent person;>
111-23 <(4)> meet the application requirements required by
111-24 this article and rules of the board;
111-25 (4) <(5)> take and pass the licensing examination; and
111-26 (5) <(6)> pay the examination and licensing fees.
111-27 Sec. 8. License renewal; renewal fee. Except as provided by
111-28 a staggered renewal system adopted under Article 21.01-2 of this
111-29 code, a <(a) A> license issued under this article expires two
111-30 years after the date of issuance. A licensee may renew an
111-31 unexpired license by filing a completed application for renewal
111-32 with the board and paying the nonrefundable renewal fee, in an
111-33 amount not to exceed $50 as determined by the board, on or before
111-34 the expiration date of the license. The commissioner shall issue a
111-35 renewal certificate to the licensee at the time of the renewal if
111-36 the commissioner determines the licensee continues to be eligible
111-37 for the license.
111-38 <(b) If a person's license has been expired for not longer
111-39 than 90 days, the licensee may renew the license by paying the
111-40 nonrefundable renewal fee plus a nonrefundable late fee in an
111-41 amount not to exceed one-half of the original license fee as
111-42 determined by the board.>
111-43 <(c) If the license has been expired for more than 90 days,
111-44 the person may not renew the license. The person may obtain a new
111-45 license by submitting to reexamination, if the person was
111-46 originally required to take the examination, and complying with the
111-47 requirements and procedures for obtaining an original license.>
111-48 <(d) The commissioner shall notify each licensee in writing
111-49 at the licensee's last known address of the pending license
111-50 expiration not later than the 30th day before the date on which the
111-51 license expires.>
111-52 Sec. 10. Denial, suspension, or revocation of a license.
111-53 <(a)> The department may discipline a risk manager or deny an
111-54 application under Section 5, Article 21.01-2, of this code <State
111-55 Board of Insurance may deny an application or suspend, revoke, or
111-56 refuse to renew a risk manager's license for any of the following
111-57 reasons>:
111-58 (1) for any cause for which issuance of the license
111-59 could have been refused had it been known to the board;
111-60 (2) if the licensee wilfully violates or knowingly
111-61 participates in the violation of this article, any insurance law of
111-62 this state, or rules of the board;
111-63 (3) if the licensee has obtained or attempted to
111-64 obtain a license through wilful misrepresentation or fraud, or has
111-65 failed to pass the examination required under this article; or
111-66 (4) if a licensee is convicted, by final judgment, of
111-67 a felony<; or>
111-68 <(5) if in the conduct of his affairs under the
111-69 license, the licensee has shown himself to be, and is so deemed by
111-70 the commissioner, incompetent, untrustworthy, or a source of injury
112-1 to the public.>
112-2 <(b) A risk manager's license may not be suspended or
112-3 revoked without notice and hearing by the board>.
112-4 SECTION 12.44. Sections 2(a) and (c), Article 21.14-2,
112-5 Insurance Code, are amended to read as follows:
112-6 (a) To obtain a license to act as an agent under this
112-7 article, an applicant must submit a completed written application
112-8 to the commissioner of insurance on a form prescribed by the State
112-9 Board of Insurance and pay a $50 nonrefundable fee. The
112-10 application must bear an endorsement signed by an agent of an
112-11 insurance company that meets the requirements of Section 1 of this
112-12 article and must state that the applicant is a resident of this
112-13 state<, is of good character and good reputation, and is worthy of
112-14 a license>.
112-15 (c) Except as provided by a staggered renewal system adopted
112-16 under Article 21.01-2 of this code, a <A> license issued under this
112-17 article expires two years after the date of its issuance unless a
112-18 completed application to renew the license is filed with the
112-19 commissioner and the $50 nonrefundable renewal fee is paid on or
112-20 before that date, in which case the license continues in full force
112-21 and effect until renewed or the renewal is denied. <If a license
112-22 has been expired for not longer than 90 days, the licensee may
112-23 renew the license by filing with the State Board of Insurance the
112-24 required nonrefundable renewal fee and a nonrefundable fee that is
112-25 one-half of the original license fee. If a license has been
112-26 expired for more than 90 days, the license may not be renewed. A
112-27 new license may be obtained by complying with the procedures for
112-28 obtaining an original license. At least 30 days before the
112-29 expiration of a license the commissioner of insurance shall send
112-30 written notice of the impending license expiration to the licensee
112-31 at the licensee's last known address. This section may not be
112-32 construed to prevent the board from denying or refusing to renew a
112-33 license under applicable law or the rules of the State Board of
112-34 Insurance.>
112-35 SECTION 12.45. Section 3, Article 21.14-2, Insurance Code,
112-36 is amended to read as follows:
112-37 Sec. 3. The license of an agent is automatically suspended
112-38 or canceled if the agent does not have outstanding a valid
112-39 appointment to act as an agent for an insurance company described
112-40 in Section 1 of this article. The department may discipline a
112-41 licensee or deny an application under Section 5, Article 21.01-2,
112-42 of this code if it <commissioner of insurance may deny a license
112-43 application and may suspend or revoke a license or deny the renewal
112-44 of a license if, after notice and hearing, the commissioner>
112-45 determines that the license applicant or licensee:
112-46 (1) has intentionally or knowingly violated the
112-47 insurance laws of this state;
112-48 (2) has obtained or attempted to obtain a license by
112-49 fraud or misrepresentation;
112-50 (3) has misappropriated, converted, or illegally
112-51 withheld money belonging to an insurer or an insured or
112-52 beneficiary;
112-53 (4) <has otherwise demonstrated lack of
112-54 trustworthiness or competence to act as an insurance agent;>
112-55 <(5)> has been guilty of fraudulent or dishonest acts;
112-56 (5) <(6)> has materially misrepresented the terms and
112-57 conditions of an insurance policy or contract;
112-58 (6) <(7)> has made or issued or caused to be made or
112-59 issued any statement misrepresenting or making incomplete
112-60 comparisons regarding the terms or conditions of an insurance
112-61 contract legally issued by an insurance carrier for the purpose of
112-62 inducing or attempting to induce the owner of the contract to
112-63 forfeit or surrender the contract or allow the contract to expire
112-64 or for the purpose of replacing the contract with another contract;
112-65 (7) <(8)> has been convicted of a felony; or
112-66 (8) <(9)> is guilty of rebating an insurance premium
112-67 or discriminating between insureds.
112-68 SECTION 12.46. Article 21.15, Insurance Code, is amended to
112-69 read as follows:
112-70 Art. 21.15. Revocation of Agent's Certificate. Cause for
113-1 the discipline under Section 5, Article 21.01-2, of this code
113-2 <revocation of the certificate of authority> of an agent or
113-3 solicitor for an insurance company may exist <for violation of any
113-4 of the insurance laws, or> if <it shall appear to the Board upon
113-5 due proof, after notice that> such agent or solicitor has knowingly
113-6 deceived or defrauded a policyholder or a person having been
113-7 solicited for insurance<,> or <that such agent or solicitor> has
113-8 unreasonably failed and neglected to pay over to the company, or
113-9 its agent entitled thereto, any premium or part thereof collected
113-10 by him on any policy of insurance or application therefor. The
113-11 Board shall publish such revocation in such manner as it deems
113-12 proper for the protection of the public; and no person whose
113-13 certificate of authority as agent or solicitor has been revoked
113-14 shall be entitled to again receive a certificate of authority as
113-15 such agent or solicitor for any insurance company in this State for
113-16 a period of one year.
113-17 SECTION 12.47. Amend Subchapter E, Chapter 21, Insurance
113-18 Code, by adding Article 21.35A to read as follows:
113-19 Art. 21.35A. PERMISSIBLE REIMBURSEMENT. (a) In this
113-20 article, "client" means an applicant for insurance coverage or an
113-21 insured.
113-22 (b) A local recording agent may charge a client a fee to
113-23 reimburse the agent for costs incurred by the agent in obtaining a
113-24 motor vehicle record of a person, or a photograph of property,
113-25 insured under, or to be insured under, an insurance policy. The
113-26 fee may not exceed the actual costs incurred by the agent. The
113-27 agent may obtain the record or photograph in connection with an
113-28 application for insurance coverage by the client or the issuance of
113-29 an insurance policy to the client or on the client's request. The
113-30 agent must provide a copy of the motor vehicle record to the
113-31 client.
113-32 (c) An agent may not charge a client a fee under this
113-33 article unless the agent notifies the client of the agent's
113-34 reimbursement requirement and obtains the client's written consent
113-35 for each fee charged before the agent incurs the expense for the
113-36 client.
113-37 SECTION 12.48. Section (a), Article 21.35B, Insurance Code,
113-38 is amended to read as follows:
113-39 (a) No payment may be solicited or collected by an insurer,
113-40 its agent, or sponsoring organization in connection with an
113-41 application for insurance or the issuance of a policy other than
113-42 premiums, taxes, finance charges, policy fees, agent fees, service
113-43 fees, inspection fees, or membership dues in a sponsoring
113-44 organization. The commissioner by rule shall permit sponsoring
113-45 organizations to solicit voluntary contributions with a membership
113-46 renewal solicitation when the membership renewal solicitation is
113-47 separate from an insurance billing.
113-48 SECTION 12.49. Section (c), Article 23.23, Insurance Code,
113-49 is amended to read as follows:
113-50 (c) Except as may be provided by a staggered renewal system
113-51 adopted under Section 2(f), Article 21.01-2 <section (h)> of this
113-52 code <article>, each license issued to agents of corporations
113-53 complying with this chapter shall expire two years following the
113-54 date of issue, unless prior thereto it is suspended or revoked by
113-55 the Commissioner of Insurance or the authority of the agent to act
113-56 for the corporation complying with this chapter is terminated.
113-57 SECTION 12.50. The following laws are repealed:
113-58 (1) Section 4(e), Article 1.14-2, Insurance Code;
113-59 (2) Sections 5, 6, and 7, Article 9.36, Insurance
113-60 Code;
113-61 (3) Section C, Article 9.37, Insurance Code;
113-62 (4) Sections 2, 3, and 4, Article 9.42, Insurance
113-63 Code;
113-64 (5) Section 3, Article 9.44, Insurance Code;
113-65 (6) Sections 6(d), (e), (f), and (g) and Section 8(c),
113-66 Article 9.56, Insurance Code;
113-67 (7) Sections 15(h), (i), (j), (k), and (l), Texas
113-68 Health Maintenance Organization Act (Section 20A.15, Vernon's Texas
113-69 Insurance Code);
113-70 (8) Section 15A(j), Texas Health Maintenance
114-1 Organization Act (Section 20A.15A, Vernon's Texas Insurance Code);
114-2 (9) Sections 4(e) and (f), Article 21.07, Insurance
114-3 Code;
114-4 (10) Section 10(b), Article 21.07, Insurance Code;
114-5 (11) Sections 3A and 15A, Article 21.07, Insurance
114-6 Code;
114-7 (12) Sections 5(e), 9(d) and (e), and 12(b), Chapter
114-8 213, Acts of the 54th Legislature, Regular Session, 1955 (Article
114-9 21.07-1, Vernon's Texas Insurance Code);
114-10 (13) Section 5A, Managing General Agents' Licensing
114-11 Act (Article 21.07-3, Vernon's Texas Insurance Code);
114-12 (14) Sections 16(c), (d), and (e), Chapter 407, Acts
114-13 of the 63rd Legislature, Regular Session, 1973 (Article 21.07-4,
114-14 Vernon's Texas Insurance Code);
114-15 (15) Sections 3(j) and (k), Article 21.07-7, Insurance
114-16 Code;
114-17 (16) Article 21.13, Insurance Code;
114-18 (17) Sections 4(e), 7a, and 17, Article 21.14,
114-19 Insurance Code;
114-20 (18) Sections 6(f) and (h), Article 21.14-1, Insurance
114-21 Code; and
114-22 (19) Sections (g), (h), (i), (j), (k), and (l),
114-23 Article 23.23, Insurance Code.
114-24 SECTION 12.51. (a) The change in law made by this article
114-25 to Section 4A, Article 21.07, Insurance Code, does not affect the
114-26 validity of a license issued under that section on or before the
114-27 effective date of this Act.
114-28 (b) A person who holds a license issued under Section 4A,
114-29 Article 21.07, Insurance Code, on or before the effective date of
114-30 this Act may renew that license in accordance with Article 21.07,
114-31 Insurance Code, as amended by this Act. On renewal, the license
114-32 shall be conformed to Section 4A, Article 21.07, Insurance Code, as
114-33 amended by this Act, and a new license shall be issued in
114-34 conformity with Section 4A(e), Article 21.07, Insurance Code, as
114-35 amended by this Act.
114-36 SECTION 12.52. This article applies only to issuance or
114-37 renewal of a license or discipline of a license holder on or after
114-38 September 1, 1993. Issuance or renewal of a license or discipline
114-39 of a license holder before September 1, 1993, is governed by the
114-40 law in effect immediately before the effective date of this Act,
114-41 and that law is continued in effect for this purpose.
114-42 ARTICLE 13. REINSURANCE ISSUES
114-43 SECTION 13.01. Article 3.10(a), Insurance Code, is amended
114-44 to read as follows:
114-45 (a) Any insurer authorized to do the business of insurance
114-46 in this state may reinsure in any solvent assuming insurer, any
114-47 risk or part of a risk which both are authorized to assume;
114-48 provided, however, no credit for reinsurance, either as an asset or
114-49 a deduction of liability, may be taken by the ceding insurer except
114-50 as provided in this article, and, provided further, no insurer
114-51 operating under Section 2(a) of Article 3.02 shall reinsure any
114-52 risk or part of a risk with any insurer which is not licensed to
114-53 engage in the business of insurance in this state. This article
114-54 applies to all insurers regulated by the State Board of Insurance,
114-55 including any stock and mutual life, accident, and health insurers,
114-56 fraternal benefit societies, health maintenance organizations
114-57 operating under the Texas Health Maintenance Organization Act
114-58 (Chapter 20A, Vernon's Texas Insurance Code), and nonprofit
114-59 hospital, medical, or dental service corporations, including
114-60 companies subject to Chapter 20 of this code. No such insurer
114-61 shall have the power to reinsure its entire outstanding business to
114-62 an assuming insurer unless the assuming insurer is licensed in this
114-63 state and until the contract therefor shall be submitted to the
114-64 Commissioner and approved by him as protecting fully the interests
114-65 of all policy holders. This article does not apply to ceding
114-66 insurers domiciled in another state that regulates credit for
114-67 reinsurance under statutes, rules, or regulations substantially
114-68 similar in substance or effect to this article. To qualify for
114-69 this exception, the ceding insurer must provide the Commissioner on
114-70 request with evidence of the similarity in the form of statutes,
115-1 rules, or regulations, and an interpretation of the statutes,
115-2 rules, or regulations and the standards used by the state of
115-3 domicile. This article is supplementary to and cumulative of other
115-4 provisions of this code and other insurance laws of this state
115-5 relating to reinsurance to the extent those provisions are not in
115-6 conflict with this article.
115-7 SECTION 13.02. Section 2(c), Article 4.11, Insurance Code,
115-8 is amended to read as follows:
115-9 (c) "Gross premiums" are the total gross amount of all
115-10 premiums, membership fees, assessments, dues, and any other
115-11 considerations for such insurance received during the taxable year
115-12 on each and every kind of such insurance policy or contract
115-13 covering persons located in the State of Texas and arising from the
115-14 types of insurance specified in Section 1 of this article, but
115-15 deducting returned premiums, any dividends applied to purchase
115-16 paid-up additions to insurance or to shorten the endowment or
115-17 premium payment period, and excluding those premiums received from
115-18 insurance carriers for reinsurance and there shall be no deduction
115-19 for premiums paid for reinsurance. For purposes of this article, a
115-20 stop-loss or excess loss insurance policy issued to a health
115-21 maintenance organization, as defined under the Texas Health
115-22 Maintenance Organization Act (Chapter 20A, Vernon's Texas Insurance
115-23 Code), shall be considered reinsurance. Such gross premiums shall
115-24 not include premiums received from the Treasury of the State of
115-25 Texas or from the Treasury of the United States for insurance
115-26 contracted for by the state or federal government for the purpose
115-27 of providing welfare benefits to designated welfare recipients or
115-28 for insurance contracted for by the state or federal government in
115-29 accordance with or in furtherance of the provisions of Title 2,
115-30 Human Resources Code, or the Federal Social Security Act. The
115-31 gross premiums receipts so reported shall not include the amount of
115-32 premiums paid on group health, accident, and life policies in which
115-33 the group covered by the policy consists of a single nonprofit
115-34 trust established to provide coverage primarily for municipal or
115-35 county employees of this state.
115-36 SECTION 13.03. Article 5.75-1(n), Insurance Code, is amended
115-37 to read as follows:
115-38 (n) An insurer shall account for reinsurance agreements and
115-39 shall record those agreements in the insurer's financial statements
115-40 in a manner that accurately reflects the effect of the reinsurance
115-41 agreements on the financial condition of the insurer. The State
115-42 Board of Insurance may adopt reasonable rules relating to the
115-43 accounting and financial statement requirements of this subsection
115-44 and the treatment of reinsurance agreements between insurers,
115-45 including asset debits or credits, reinsurance debits or credits,
115-46 and reserve debits or credits relating to the transfer of risks or
115-47 liabilities by reinsurance agreements and to any contingencies
115-48 arising from reinsurance agreements. Reinsurance agreements may
115-49 contain a provision allowing the offset of mutual debts and credits
115-50 between the ceding insurer and the assuming insurer whether arising
115-51 out of one or more reinsurance agreements.
115-52 SECTION 13.04. Section 6(a), Texas Health Maintenance
115-53 Organization Act (Article 20A.06, Vernon's Texas Insurance Code),
115-54 is amended to read as follows:
115-55 (a) The powers of a health maintenance organization include,
115-56 but are not limited to, the following:
115-57 (1) the purchase, lease, construction, renovation,
115-58 operation, or maintenance of hospitals, medical facilities, or
115-59 both, and ancillary equipment and such property as may reasonably
115-60 be required for its principal office or for such other purposes as
115-61 may be necessary in the transaction of the business of the health
115-62 maintenance organization;
115-63 (2) the making of loans to a medical group, under an
115-64 independent contract with it in furtherance of its program, or
115-65 corporations under its control, for the purpose of acquiring or
115-66 constructing medical facilities and hospitals, or in the
115-67 furtherance of a program providing health care services to
115-68 enrollees;
115-69 (3) the furnishing of or arranging for medical care
115-70 services only through physicians or groups of physicians who have
116-1 independent contracts with the health maintenance organizations;
116-2 the furnishing of or arranging for the delivery of health care
116-3 services only through providers or groups of providers who are
116-4 under contract with or employed by the health maintenance
116-5 organization or through physicians or providers who have contracted
116-6 for health care services with those physicians or providers, except
116-7 for the furnishing of or authorization for emergency services,
116-8 services by referral, and services to be provided outside of the
116-9 service area as approved by the commissioner; provided, however,
116-10 that a health maintenance organization is not authorized to employ
116-11 or contract with physicians or providers in any manner which is
116-12 prohibited by any licensing law of this state under which such
116-13 physicians or providers are licensed;
116-14 (4) the contracting with any person for the
116-15 performance on its behalf of certain functions such as marketing,
116-16 enrollment, and administration;
116-17 (5) the contracting with an insurance company licensed
116-18 in this state, or with a group hospital service corporation
116-19 authorized to do business in the state, for the provision of
116-20 insurance, reinsurance, indemnity, or reimbursement against the
116-21 cost of health care and medical care services provided by the
116-22 health maintenance organization;
116-23 (6) the offering of:
116-24 (A) indemnity benefits covering out-of-area
116-25 emergency services; and
116-26 (B) indemnity benefits in addition to those
116-27 relating to out-of-area and emergency services, provided through
116-28 insurers or group hospital service corporations;
116-29 (7) receiving and accepting from government or private
116-30 agencies payments covering all or part of the cost of the services
116-31 provided or arranged for by the organization;
116-32 (8) all powers given to corporations (including
116-33 professional corporations and associations), partnerships, and
116-34 associations pursuant to their organizational documents which are
116-35 not in conflict with provisions of this Act, or other applicable
116-36 law.
116-37 SECTION 13.05. Article 5.75-1(b), Insurance Code, is amended
116-38 to read as follows:
116-39 (b) Credit for reinsurance shall be allowed a ceding insurer
116-40 as either an asset or a deduction from liability on account of
116-41 reinsurance ceded only when:
116-42 (1) the reinsurance is ceded to an assuming insurer
116-43 which is licensed to transact insurance or reinsurance in this
116-44 state; or
116-45 (2) the reinsurance is ceded to an assuming insurer
116-46 which is accredited as a reinsurer in this state. An accredited
116-47 reinsurer is one which: submits to this state's jurisdiction;
116-48 submits to this state's authority to examine its books and records;
116-49 is domiciled and licensed to transact insurance or reinsurance in
116-50 at least one state, or in the case of a United States branch of an
116-51 alien assuming insurer is entered through and licensed to transact
116-52 insurance or reinsurance in at least one state; files annually a
116-53 copy of its annual statement, filed with the insurance department
116-54 of its state of domicile, with the State Board of Insurance; and
116-55 maintains a surplus as regards policyholders in an amount not less
116-56 than $20 million; or
116-57 (3) the reinsurance is ceded to an assuming insurer
116-58 which maintains a trust fund in a qualified United States financial
116-59 institution, as defined in Subsection (e)(2), for the payment of
116-60 the valid claims of its United States policyholders and ceding
116-61 insurers, their assigns, and successors in interest. The trusteed
116-62 assuming insurer shall report annually not later than March 1 to
116-63 the State Board of Insurance information substantially the same as
116-64 that required to be reported on the NAIC Annual Statement form by
116-65 licensed insurers to enable the State Board of Insurance to
116-66 determine the sufficiency of the trust fund. In the case of a
116-67 single assuming insurer, the trust shall consist of a trusteed
116-68 account representing the assuming insurer's liabilities
116-69 attributable to business written in the United States and, in
116-70 addition, include a trusteed surplus of not less than $20 million.
117-1 In the case of a group of insurers, which group includes
117-2 unincorporated individual insurers <individual unincorporated
117-3 underwriters>, the trust shall consist of a trusteed account
117-4 representing the group's liabilities attributable to business
117-5 written in the United States and, in addition, include a trusteed
117-6 surplus of not less than $100 million; and the group shall make
117-7 available to the State Board of Insurance an annual certification
117-8 by the group's domiciliary regulator and its independent public
117-9 accountants of the solvency of each underwriter. In the case of a
117-10 group of incorporated insurers under common administration which
117-11 has continuously transacted an insurance business for at least
117-12 three years, which is under the supervision of the Department of
117-13 Trade and Industry of the United Kingdom, and which has aggregate
117-14 policyholder's surplus of $10 billion, the trust shall consist of a
117-15 trusteed account representing the group's several liabilities
117-16 attributable to business written in the United States pursuant to
117-17 reinsurance contracts issued in the name of the group and, in
117-18 addition, include a trusteed surplus of not less than $100 million
117-19 which shall be held jointly for the benefit of United States
117-20 insurers ceding business to any member of the group, and each
117-21 member of the group shall make available to the State Board of
117-22 Insurance an annual certification by the member's domiciliary
117-23 regulator and its independent public accountants of the solvency of
117-24 each member. Such trust shall be established in a form approved by
117-25 the State Board of Insurance. The trust instrument shall provide
117-26 that contested claims shall be valid and enforceable upon the final
117-27 order of any court of competent jurisdiction in the United States.
117-28 The trust shall vest legal title to its assets in the trustees of
117-29 the trust for its United States policyholders and ceding insurers,
117-30 their assigns, and successors in interest. The trust and the
117-31 assuming insurer shall be subject to examination as determined by
117-32 the State Board of Insurance. The trust described herein must
117-33 remain in effect for as long as the assuming insurer shall have
117-34 outstanding obligations due under the reinsurance agreements
117-35 subject to the trust. Not later than February 28 of each year the
117-36 trustees of the trust shall report to the State Board of Insurance
117-37 in writing setting forth the balance of the trust and listing the
117-38 trust's investments at the preceding year end and shall certify the
117-39 date of termination of the trust, if so planned, or certify that
117-40 the trust shall not expire prior to the next following December 31;
117-41 or
117-42 (4) the reinsurance is ceded to an assuming insurer
117-43 not meeting the requirements of Subdivision (1), (2), or (3), but
117-44 only with respect to the insurance of risks located in a
117-45 jurisdiction where such reinsurance is required by applicable law
117-46 or regulation of that jurisdiction to be ceded to an assuming
117-47 insurer that does not meet the requirements of Subdivision (1),
117-48 (2), or (3) of this subsection.
117-49 SECTION 13.06. Article 3.10(b), Insurance Code, is amended
117-50 to read as follows:
117-51 (b) Credit for reinsurance shall be allowed a ceding insurer
117-52 as either an asset or a deduction from liability on account of
117-53 reinsurance ceded only when:
117-54 (1) the reinsurance is ceded to an assuming insurer
117-55 which is licensed to transact insurance or reinsurance in this
117-56 state; or
117-57 (2) the reinsurance is ceded to an assuming insurer
117-58 which is accredited as a reinsurer in this state. An accredited
117-59 reinsurer is one which: submits to this state's jurisdiction;
117-60 submits to this state's authority to examine its books and records;
117-61 is domiciled and licensed to transact insurance or reinsurance in
117-62 at least one state, or in the case of a United States branch of an
117-63 alien assuming insurer is entered through and licensed to transact
117-64 insurance or reinsurance in at least one state; files annually a
117-65 copy of its annual statement, filed with the insurance department
117-66 of its state of domicile, with the State Board of Insurance; and
117-67 maintains a surplus as regards policy holders in an amount not less
117-68 than $20 million; or
117-69 (3) the reinsurance is ceded to an assuming insurer
117-70 which maintains a trust fund in a qualified United States financial
118-1 institution, as defined in Subsection (e)(2), for the payment of
118-2 the valid claims of its United States policy holders and ceding
118-3 insurers, their assigns, and successors in interest. The trusteed
118-4 assuming insurer shall report annually not later than March 1 to
118-5 the State Board of Insurance information substantially the same as
118-6 that required to be reported on the NAIC Annual Statement form by
118-7 licensed insurers to enable the State Board of Insurance to
118-8 determine the sufficiency of the trust fund. In the case of a
118-9 single assuming insurer, the trust shall consist of a trusteed
118-10 account representing the assuming insurer's liabilities
118-11 attributable to business written in the United States and, in
118-12 addition, include a trusteed surplus of not less than $20 million.
118-13 In the case of a group of insurers, which group includes
118-14 unincorporated individual insurers <individual unincorporated
118-15 underwriters>, the trust shall consist of a trusteed account
118-16 representing the group's liabilities attributable to business
118-17 written in the United States and, in addition, include a trusteed
118-18 surplus of not less than $100 million and the group shall make
118-19 available to the State Board of Insurance an annual certification
118-20 by the group's domiciliary regulator and its independent public
118-21 accountants of the solvency of each underwriter. Such trust shall
118-22 be established in a form approved by the State Board of Insurance.
118-23 The trust instrument shall provide that contested claims shall be
118-24 valid and enforceable upon the final order of any court of
118-25 competent jurisdiction in the United States. The trust shall vest
118-26 legal title to its assets in the trustees of the trust for its
118-27 United States policy holders and ceding insurers, their assigns,
118-28 and successors in interest. The trust and the assuming insurer
118-29 shall be subject to examination as determined by the State Board of
118-30 Insurance. The trust described herein must remain in effect for as
118-31 long as the assuming insurer shall have outstanding obligations due
118-32 under the reinsurance agreements subject to the trust. Not later
118-33 than February 28 of each year the trustees of the trust shall
118-34 report to the State Board of Insurance in writing setting forth the
118-35 balance of the trust and listing the trust's investments at the
118-36 preceding year end and shall certify the date of termination of the
118-37 trust, if so planned, or certify that the trust shall not expire
118-38 prior to the next following December 31; or
118-39 (4) the reinsurance is ceded to an assuming insurer
118-40 not meeting the requirements of Subdivision (1), (2), or (3), but
118-41 only with respect to the insurance of risks located in a
118-42 jurisdiction where such reinsurance is required by applicable law
118-43 or regulation of that jurisdiction to be ceded to an assuming
118-44 insurer that does not meet the requirements of Subdivision (1),
118-45 (2), or (3) of this subsection.
118-46 ARTICLE 14. MOTOR VEHICLE INSURANCE
118-47 SECTION 14.01. Section 1B, Texas Motor Vehicle
118-48 Safety-Responsibility Act (Article 6701h, Vernon's Texas Civil
118-49 Statutes), is amended by amending Subsection (a) and adding
118-50 Subsection (d) to read as follows:
118-51 (a) As a condition of operating a motor vehicle in this
118-52 state, the operator of the motor vehicle shall furnish, on request
118-53 of a peace officer or a person involved in an accident with the
118-54 operator:
118-55 (1) a liability insurance policy in at least the
118-56 minimum amounts required by this Act, or a photocopy of that
118-57 policy, that covers the vehicle;
118-58 (2) a standard proof of liability insurance form
118-59 promulgated by the Texas Department of Insurance and issued by a
118-60 liability insurer that:
118-61 (A) includes the name of the insurer;
118-62 (B) includes the insurance policy number;
118-63 (C) includes the policy period;
118-64 (D) includes the name and address of each
118-65 insured;
118-66 (E) includes the policy limits or a statement
118-67 that the coverage of the policy complies with at least the minimum
118-68 amounts of liability insurance required by this Act; and
118-69 (F) includes the make and model of each covered
118-70 vehicle;
119-1 (3) an insurance binder that confirms that the
119-2 operator is in compliance with this Act;
119-3 (4) a certificate or copy of a certificate issued by
119-4 the department that shows the vehicle is covered by self-insurance;
119-5 (5) a certificate issued by the state treasurer that
119-6 shows that the owner of the vehicle has on deposit with the
119-7 treasurer money or securities in at least the amount required by
119-8 Section 25 of this Act;
119-9 (6) a certificate issued by the department that shows
119-10 that the vehicle is a vehicle for which a bond is on file with the
119-11 department as provided by Section 24 of this Act; or
119-12 (7) a copy of a certificate issued by the county judge
119-13 of a county in which the vehicle is registered that shows that the
119-14 owner of the vehicle has on deposit with the county judge cash or a
119-15 cashier's check in at least the amount required by Section 1A(b)(6)
119-16 of this Act.
119-17 (d) A standard proof of liability insurance form described
119-18 in Subsection (A)(2) of this section, or a document that is an
119-19 unauthorized version of the form, is a governmental record for
119-20 purposes of Chapter 37, Penal Code. A standard proof of liability
119-21 insurance form is unauthorized for purposes of this subsection if
119-22 it is not issued by an insurer authorized to transact motor vehicle
119-23 liability insurance in this state.
119-24 SECTION 14.02. Section 19, Texas Motor Vehicle
119-25 Safety-Responsibility Act (Article 6701h, Vernon's Texas Civil
119-26 Statutes), is amended by adding Subsection (c) to read as follows:
119-27 (c) A certificate described in Subsection (a) of this
119-28 section, or a document that is an unauthorized version of the
119-29 certificate, is a governmental record for purposes of Chapter 37,
119-30 Penal Code. A certificate is unauthorized for purposes of this
119-31 subsection if it is not issued by an insurer authorized to transact
119-32 motor vehicle liability insurance in this state.
119-33 SECTION 14.03. Subchapter F, Chapter 21, Insurance Code, is
119-34 amended by adding Article 21.81 to read as follows:
119-35 Art. 21.81. TEXAS AUTOMOBILE INSURANCE PLAN ASSOCIATION
119-36 Sec. 1. DEFINITIONS. In this article:
119-37 (1) "Association" means the Texas Automobile Insurance
119-38 Plan Association established under this article.
119-39 (2) "Authorized insurer" means any insurer authorized
119-40 by the Texas Department of Insurance to write motor vehicle
119-41 liability coverage under the provisions of Chapter 5 of this code.
119-42 The term does not include an insurer organized under Chapter 17 of
119-43 this code.
119-44 (3) "Insurance" means an insurance policy that meets
119-45 the requirements of the Texas Motor Vehicle Safety-Responsibility
119-46 Act (Article 6701h, Vernon's Texas Civil Statutes).
119-47 (4) "Plan of operation" means the plan for operating
119-48 the association to provide a means by which insurance may be
119-49 assigned to an eligible person who is required by law to show proof
119-50 of financial responsibility for the future.
119-51 Sec. 2. CREATION OF THE ASSOCIATION. (a) The Texas
119-52 Automobile Insurance Plan Association is established. The
119-53 association is a nonprofit corporate body composed of all
119-54 authorized insurers. Each authorized insurer shall be a member of
119-55 the association and shall remain a member of the association so
119-56 long as the association is in existence as a condition of its
119-57 authority to write motor vehicle liability insurance in this state.
119-58 (b) The association shall be administered by a governing
119-59 committee composed of fifteen members selected as follows:
119-60 (1) eight members who represent the interests of
119-61 insurers, elected by the members of the association according to a
119-62 method determined by such members;
119-63 (2) five public members nominated by the Office of
119-64 Public Insurance Counsel and selected by the commissioner; and
119-65 (3) two members who are licensed local recording
119-66 agents, as defined by the plan of operation.
119-67 (c) To be eligible to serve on the governing committee as a
119-68 representative of insurers, a person must be a full-time employee
119-69 of an authorized insurer.
119-70 (d) A person may not serve on the governing committee as a
120-1 public member if that person, an individual related to that person
120-2 within the second degree of consanguinity or affinity, or an
120-3 individual residing in the same household with that person is:
120-4 (1) required to be registered or licensed under this
120-5 code or another insurance law of this state;
120-6 (2) employed by or acts as a consultant to a person
120-7 required to be registered or licensed under this code or another
120-8 insurance law of this state;
120-9 (3) the owner of, has a financial interest in, or
120-10 participates in the management of an organization required to be
120-11 registered or licensed under this code or another insurance law of
120-12 this state;
120-13 (4) an officer, employer, or consultant of an
120-14 association in the field of insurance; or
120-15 (5) required to register as a lobbyist under Chapter
120-16 305, Government Code.
120-17 Sec. 3. AUTHORITY OF THE ASSOCIATION; PLAN OF OPERATION.
120-18 (a) The governing committee has the responsibility for the
120-19 administration of the association through the plan of operation.
120-20 The association may collect funds from the member companies to
120-21 provide for the operation of the association. Assessments must be
120-22 made upon member companies in proportion to their writings of motor
120-23 vehicle liability insurance in this state. If an assessment made
120-24 upon a member insurer is not paid within a reasonable time, the
120-25 association may bring an action to collect the assessment. In
120-26 addition, the association may report the failure to pay to the
120-27 commissioner, who may institute a disciplinary action under Article
120-28 1.10 of this code. The association has the powers granted to
120-29 nonprofit corporations under the Texas Non-Profit Corporation Act
120-30 (Article 1396-1.01 et seq., Vernon's Texas Civil Statutes).
120-31 (b) The plan of operation of the association must provide
120-32 for the efficient, economical, fair, and nondiscriminatory
120-33 administration of the association.
120-34 (c) Subject to the approval of the commissioner, the
120-35 governing committee may make and amend the plan of operation.
120-36 (d) If the commissioner at any time believes that any part
120-37 of the plan of operation is not in keeping with the purposes of the
120-38 Texas Motor Vehicle Safety-Responsibility Act (Article 6701h,
120-39 Vernon's Texas Civil Statutes), the commissioner shall notify the
120-40 governing committee in writing so that the governing committee may
120-41 take corrective action.
120-42 (e) Among other provisions, the plan of operation must
120-43 contain incentive programs to encourage members to write insurance
120-44 on a voluntary basis and to minimize the use of the association as
120-45 a means to obtain insurance. The incentive programs are effective
120-46 on approval of the commissioner. One of these programs shall
120-47 target underserved geographic areas which shall be determined and
120-48 designated by the commissioner by rule. In determining which areas
120-49 will be designated as underserved, the commissioner shall consider
120-50 the availability of insurance, the number of uninsured drivers, the
120-51 number of drivers insured through the association, and any other
120-52 relevant factor.
120-53 (f) The plan of operation must include a voluntary,
120-54 competitive limited assignment distribution plan that allows
120-55 members to contract directly with a servicing carrier to accept
120-56 assignments to that member by the association. A servicing company
120-57 must be an insurance company licensed to write automobile insurance
120-58 in this state and is qualified if it has written automobile
120-59 liability insurance in Texas for at least five years or is
120-60 currently engaged as a servicing carrier for assigned risk
120-61 automobile business in at least one other state. After notice and
120-62 hearing, the commissioner may prohibit an insurer from acting as a
120-63 servicing carrier. The terms of the contract between the servicing
120-64 carrier and the insurer, including the buy-out fee, shall be
120-65 determined by negotiation between the parties. The governing
120-66 committee may adopt reasonable rules for the conduct of business
120-67 under the contract and may establish reasonable standards of
120-68 eligibility for servicing carriers.
120-69 Sec. 4. DUTIES AND FUNCTIONS OF THE ASSOCIATION. (a) The
120-70 association shall provide a means by which insurance may be
121-1 assigned to an authorized insurance company for a person required
121-2 by the Texas Motor Vehicle Safety-Responsibility Act (Article
121-3 6701h, Vernon's Texas Civil Statutes) to show proof of financial
121-4 responsibility for the future.
121-5 (b) An applicant is not eligible for insurance through the
121-6 association unless the applicant and the servicing agent certify as
121-7 part of the application to the association that the applicant has
121-8 been rejected for insurance by at least two insurers licensed to do
121-9 business in this state and actually writing automobile insurance in
121-10 this state, including insurers that are not rate regulated.
121-11 (c) A person who obtains, from any source, excess private
121-12 passenger auto liability insurance coverage over the minimum auto
121-13 liability coverage required by law shall be ineligible for
121-14 insurance through the association. The coverage for the excess and
121-15 basic limits policies is not affected by a violation of this
121-16 section unless the insurer shows that the insured had actual
121-17 knowledge that they were ineligible for coverage through the
121-18 association. An agent may not knowingly write excess private
121-19 passenger auto liability insurance coverage if the minimum auto
121-20 liability coverage required by law is provided through the
121-21 association. If an agent violates this section, the agent, after
121-22 notice and hearing, is subject to the penalties provided by Section
121-23 7, Article 1.10, of this code.
121-24 Sec. 5. RATES FOR INSURANCE. (a) At least annually, the
121-25 commissioner shall conduct a hearing for the purpose of determining
121-26 appropriate rates to be charged for insurance provided through the
121-27 association. The association may appear as a matter of right,
121-28 shall be admitted as a party to present testimony at the hearing,
121-29 and may file information for consideration by the rate board. The
121-30 rate board shall determine and prescribe rates that are just,
121-31 reasonable, adequate, not excessive, not confiscatory, and not
121-32 unfairly discriminatory for the risks to which they apply. Rates
121-33 shall be set in an amount sufficient to carry all claims to
121-34 maturity and to meet the expenses incurred in the writing and
121-35 servicing of the business. In making its determination, the
121-36 commissioner shall consider the reports of aggregated premiums
121-37 earned and losses and expenses incurred in the writing of motor
121-38 vehicle insurance through the plan collected under the statistical
121-39 plan provided for by Subsection (b) of this section.
121-40 (b) The commissioner shall promulgate reasonable rules and
121-41 statistical plans to be used by each insurer in the recording and
121-42 reporting of its premium, loss, and expense experience which must
121-43 be reported separately for business assigned to it and other data
121-44 required by the board.
121-45 Sec. 6. IMMUNITY FROM LIABILITY. (a) The association, a
121-46 member of the governing committee, and any employee of the
121-47 association is not personally liable for any act performed in good
121-48 faith within the scope of the person's authority as determined
121-49 under this article or the plan of operation or for damages
121-50 occasioned by his or her official acts or omissions except for an
121-51 act or omission that is corrupt or malicious. The association
121-52 shall provide counsel to defend any action brought against a member
121-53 of the governing committee or an employee by reason of the person's
121-54 official act or omission whether or not at the time of the
121-55 institution of the action the defendant has terminated service with
121-56 the association.
121-57 (b) This section is cumulative with and does not affect or
121-58 modify any common law or statutory privilege or immunity.
121-59 SECTION 14.04. Article 5.06, Insurance Code, is amended by
121-60 adding Subsections (9) and (10) to read as follows:
121-61 (9) An insurance policy or other document evidencing proof
121-62 of purchase of a personal automobile insurance policy written for a
121-63 term of less than 30 days may not be used to obtain an original or
121-64 renewal driver's license, an automobile registration or license
121-65 plates, or a motor vehicle inspection certificate and must contain
121-66 a statement as follows:
121-67 "TEXAS LAW PROHIBITS USE OF THIS DOCUMENT TO OBTAIN A MOTOR
121-68 VEHICLE INSPECTION CERTIFICATE, AN ORIGINAL OR RENEWAL DRIVER'S
121-69 LICENSE, OR AN AUTOMOBILE REGISTRATION OR LICENSE PLATES."
121-70 (10) Before accepting any premium or fee for a personal
122-1 automobile insurance policy or binder for a term of less than 30
122-2 days, an agent or insurer must make the following written
122-3 disclosure to the applicant or insured:
122-4 "TEXAS LAW PROHIBITS USE OF THIS POLICY OR BINDER TO OBTAIN A
122-5 MOTOR VEHICLE INSPECTION CERTIFICATE, AN ORIGINAL OR RENEWAL
122-6 DRIVER'S LICENSE, OR AN AUTOMOBILE REGISTRATION OR LICENSE PLATES."
122-7 SECTION 14.05. Section 6(c), Chapter 173, Acts of the 47th
122-8 Legislature, Regular Session, 1941 (Article 6687b, Vernon's Texas
122-9 Civil Statutes), is amended to read as follows:
122-10 (c) An application for an original or renewal driver's
122-11 license must be accompanied by evidence of financial responsibility
122-12 or a statement that the applicant does not own a motor vehicle for
122-13 which maintenance of financial responsibility is required under the
122-14 Texas Motor Vehicle Safety-Responsibility Act (Article 6701h,
122-15 Vernon's Texas Civil Statutes). Evidence of financial
122-16 responsibility presented under this subsection must be in at least
122-17 the minimum amounts required by Subdivision 10, Section 1, Texas
122-18 Motor Vehicle Safety-Responsibility Act (Article 6701h, Vernon's
122-19 Texas Civil Statutes), must cover each motor vehicle that the
122-20 applicant owns and for which the applicant is required to maintain
122-21 financial responsibility, and may be shown in the manner specified
122-22 under Section 1B(a)<(b)> of that Act. A personal automobile
122-23 insurance policy used as evidence of financial responsibility under
122-24 this subsection must be written for a term of 30 days or more as
122-25 required by Article 5.06, Insurance Code. A statement that the
122-26 applicant does not own an applicable motor vehicle must be sworn to
122-27 and signed by the applicant.
122-28 SECTION 14.06. Subsection (a), Section 2a, Chapter 88,
122-29 General Laws, Acts of the 41st Legislature, 2nd Called Session,
122-30 1929 (Article 6675a-2a, Vernon's Texas Civil Statutes), is amended
122-31 to read as follows:
122-32 (a) The owner of a motor vehicle covered by Section 1A,
122-33 Texas Motor Vehicle Safety-Responsibility Act (Article 6701h,
122-34 Vernon's Texas Civil Statutes), shall submit with the application
122-35 for registration under Section 3 of this Act evidence of financial
122-36 responsibility that is <currently> valid. A personal automobile
122-37 insurance policy used as evidence of financial responsibility under
122-38 this subsection must be written for a term of 30 days or more as
122-39 required by Article 5.06, Insurance Code.
122-40 SECTION 14.07. Section 140(a), Uniform Act Regulating
122-41 Traffic on Highways (Article 6701d, Vernon's Texas Civil Statutes),
122-42 is amended to read as follows:
122-43 (a) Every motor vehicle, trailer, semitrailer, pole trailer,
122-44 or mobile home, registered in this state and operated on the
122-45 highways of this state, shall have the tires, brake system
122-46 (including power brake unit), lighting equipment, horns and warning
122-47 devices, mirrors, windshield wipers, front seat belts in vehicles
122-48 where seat belt anchorages were part of the manufacturer's original
122-49 equipment on the vehicle, steering system (including power
122-50 steering), wheel assembly, safety guards or flaps if required by
122-51 Section 139A of this Act, tax decal if required by Section 141(d)
122-52 of this Act, sunscreening devices unless the vehicle is exempt from
122-53 sunscreen device restrictions under Section 134C(k) or (l) of this
122-54 Act, exhaust system, and exhaust emission system inspected at
122-55 state-appointed inspection stations or by State Inspectors as
122-56 hereinafter provided. Provisions relating to the inspection of
122-57 trailers, semitrailers, pole trailers, or mobile homes shall not
122-58 apply when the registered or gross weight of such vehicles and the
122-59 load carried thereon is four thousand five hundred (4,500) pounds
122-60 or less. Only the mechanism and equipment designated in this
122-61 section may be inspected, and the owner shall not be required to
122-62 have any other equipment or part of his motor vehicle inspected as
122-63 a prerequisite for the issuance of an inspection certificate. At
122-64 the time of inspection the owner or operator shall furnish evidence
122-65 of financial responsibility. The evidence of financial
122-66 responsibility may be shown in the manner specified under Section
122-67 1B(a)<(b)>, Texas Motor Vehicle Safety-Responsibility Act (Article
122-68 6701h, Vernon's Texas Civil Statutes). A personal automobile
122-69 insurance policy used as evidence of financial responsibility under
122-70 this subsection must be written for a term of 30 days or more as
123-1 required by Article 5.06, Insurance Code. An inspection
123-2 certificate may not be issued for a vehicle for which the owner or
123-3 operator fails to furnish the required evidence of financial
123-4 responsibility. An inspection facility or station is not liable to
123-5 any person, including a third party, for issuing an inspection
123-6 certificate in reliance on evidence of financial responsibility
123-7 submitted to the facility or station. If the inspection facility
123-8 or station is the seller of a motor vehicle, the inspection
123-9 facility or station may rely on an oral insurance binder.
123-10 SECTION 14.08. Section 35, Texas Motor Vehicle
123-11 Safety-Responsibility Act (Article 6701h, Vernon's Texas Civil
123-12 Statutes), is repealed.
123-13 SECTION 14.09. (a) Not later than December 31, 1993, the
123-14 plan of operation for the Texas Automobile Insurance Plan
123-15 Association established under Article 21.81, Insurance Code, as
123-16 added by this Act, shall include the limited assignment
123-17 distribution plan required by Section 3(f) of that article.
123-18 (b) The administrative agency created under Section 35,
123-19 Texas Motor Vehicle Safety-Responsibility Act (Article 6701h,
123-20 Vernon's Texas Civil Statutes), shall continue to operate in
123-21 accordance with that section as it existed immediately before the
123-22 effective date of this Act until a governing committee is selected
123-23 and a plan of operation for the Texas Automobile Insurance Plan
123-24 Association is adopted and approved under Article 21.81, Insurance
123-25 Code, as added by this Act. On the effective date of the plan of
123-26 operation, the administrative agency shall transfer all of its
123-27 assets and obligations to the Texas Automobile Insurance Plan
123-28 Association. On and after the effective date of the plan of
123-29 operation, the administrative agency established under Section 35,
123-30 Texas Motor Vehicle Safety-Responsibility Act (Article 6701h,
123-31 Vernon's Texas Civil Statutes), is abolished.
123-32 ARTICLE 15. WORKERS' COMPENSATION INSURANCE
123-33 SECTION 15.01. Section 4.06(d), Article 5.76-2, Insurance
123-34 Code, is amended to read as follows:
123-35 (d) A policyholder in the facility who is insured under the
123-36 rejected risk fund shall obtain a safety consultation if the
123-37 employer:
123-38 (1) has a Texas <an> experience modifier greater than
123-39 1.25;
123-40 (2) has a national experience modifier greater than
123-41 1.25 and estimated premium allocable to Texas of $2,500 or more;
123-42 (3) <(2)> does not have an experience modifier but has
123-43 had a loss ratio greater than 0.70 in at least two of the three
123-44 most recent policy years for which information is available; or
123-45 (4) <(3)> has not been in business three years and
123-46 meets criteria established by the commission, which may include the
123-47 number and classification of employees, the policyholder's
123-48 industry, and previous workers' compensation experience in this
123-49 state or another jurisdiction.
123-50 SECTION 15.02. Section 10(c), Article 5.76-3, Insurance
123-51 Code, is amended to read as follows:
123-52 (c) A policyholder in the fund who is insured under Article
123-53 5.76-4 of this code shall obtain a safety consultation if the
123-54 policyholder:
123-55 (1) has a Texas <an> experience modifier greater than
123-56 1.25; <or>
123-57 (2) has a national experience modifier greater than
123-58 1.25 and estimated premium allocable to Texas of $2,500 or more; or
123-59 (3) does not have an experience modifier but has had a
123-60 loss ratio greater than 0.70 in at least two of the three most
123-61 recent policy years for which information is available.
123-62 SECTION 15.03. Article 5.76-4(d), Insurance Code, is amended
123-63 to read as follows:
123-64 (d) The fund shall decline to insure any risk if insuring
123-65 that risk would cause the fund to exceed the premium-to-surplus
123-66 ratios established by Article 5.76-3 of this code or if the risk is
123-67 not in good faith entitled to insurance through the fund. For
123-68 purposes of this subsection only, "good faith" means honesty in
123-69 fact in any conduct or transaction.
123-70 SECTION 15.04. Section 1.02(b), Texas Workers' Compensation
124-1 Act (Article 8308-1.02, Vernon's Texas Civil Statutes), is amended
124-2 to read as follows:
124-3 (b) The Texas Workers' Compensation Commission and the Texas
124-4 Workers' Compensation Research Center are subject to Chapter 325,
124-5 Government Code (Texas Sunset Act). Unless continued in existence
124-6 as provided by that chapter, the commission is abolished September
124-7 1, 1995, and the research center is <and the legislative oversight
124-8 committee are> abolished September 1, 1995.
124-9 SECTION 15.05. The heading to Article 2, Texas Workers'
124-10 Compensation Act (Article 8308-1.01, et seq., Vernon's Texas Civil
124-11 Statutes) is amended to read as follows:
124-12 ARTICLE 2. TEXAS WORKERS' COMPENSATION COMMISSION<;
124-13 LEGISLATIVE OVERSIGHT COMMITTEE>
124-14 SECTION 15.06. Chapter D, Article 2, Texas Workers'
124-15 Compensation Act (Article 8308-2.01, et seq., Vernon's Texas Civil
124-16 Statutes) is repealed.
124-17 ARTICLE 16. TITLE INSURANCE
124-18 SECTION 16.01. Articles 9.02(a) and (i), Insurance Code,
124-19 are amended to read as follows:
124-20 (a) "Title Insurance" means insuring, guaranteeing or
124-21 indemnifying owners of real property or others interested therein
124-22 against loss or damage suffered by reason of liens, encumbrances
124-23 upon, or defects in the title to said property, and the invalidity
124-24 or impairment of liens thereon, or doing any business in substance
124-25 equivalent to any of the foregoing in a manner designed to evade
124-26 the provisions of this Act.
124-27 (i) "Abstract plant" as used herein shall mean a
124-28 geographical abstract plant such as is defined by the Board <from
124-29 time to time> and the Board, in defining an abstract plant, shall
124-30 require a geographically arranged plant, currently kept to date,
124-31 that is found by the Board to be adequate for use in insuring
124-32 titles, so as to provide for the safety and protection of the
124-33 policyholders.
124-34 SECTION 16.02. Articles 9.03 and 9.07, Insurance Code, are
124-35 amended to read as follows:
124-36 Art. 9.03. May Incorporate. (a) Private corporations may
124-37 be created and licensed under this chapter to <for the following
124-38 named purposes:>
124-39 <(1) To> compile and own or lease, or to acquire and
124-40 own or lease, records or abstracts of title to lands and interests
124-41 in land<;> and to insure titles to lands or interests therein, both
124-42 in Texas and other jurisdictions <states of the United States>, and
124-43 indemnify the owners of such lands, or the holders of interests in
124-44 or liens on such lands, against loss or damage on account of
124-45 incumbrances upon or defects in the title to such lands or
124-46 interests therein; and in transactions in which title insurance is
124-47 to be or is being issued, to supervise or approve the signing of
124-48 legal instruments (but not the preparation of such instruments)
124-49 affecting land titles, disbursement of funds, prorations, delivery
124-50 of legal instruments, closing of deals, issuance of commitments for
124-51 title insurance specifying the requirements for title insurance and
124-52 the defects in title necessary to be cured or corrected. Nothing<;
124-53 provided, however, that nothing> herein contained shall authorize
124-54 such corporation to practice law, as that term is defined by the
124-55 courts of this state, and in the event of any conflict herein, this
124-56 clause shall be controlling.
124-57 (b) A corporation described by Subsection (a) of this
124-58 article <Such corporations> may also exercise the following powers
124-59 by including same in the charter when filed originally, or by
124-60 amendment:
124-61 (1) <(2)> To make and sell abstracts of title in any
124-62 counties of Texas or other states;
124-63 (2) <(3)> To accumulate and lend money, to purchase,
124-64 sell or deal in notes, bonds, and securities, but without banking
124-65 privileges;
124-66 (3) <(4)> To act as trustee under any lawful trust
124-67 committed to it by contract or will, appointment by any court
124-68 having jurisdiction of the subject matter as trustee, receiver or
124-69 guardian and as executor or guardian under the terms of any will
124-70 and as any administrator of the estates of decedents under the
125-1 appointment of the court.
125-2 Art. 9.07. Policy Forms and Premiums. (a) Corporations
125-3 organized under this Chapter, as well as foreign corporations and
125-4 those created under Subdivision 57, Article 1302, of the Revised
125-5 Civil Statutes of 1925 before the repeal of that statute, or under
125-6 Chapter 8 of this Code, or any other law insofar as the business of
125-7 either may be the business of title insurance, shall operate in
125-8 Texas under the control and supervision and under such uniform
125-9 rules and regulations as to forms of policies and underwriting
125-10 contracts and premiums therefor, and such underwriting standards
125-11 and practices as may be <from time to time> prescribed by the
125-12 Board; and no Texas or foreign corporation, whether incorporated
125-13 under this Chapter or any other law of the State of Texas, shall be
125-14 permitted to issue any title policy of any character, or
125-15 underwriting contract, to delete any policy exclusion or to
125-16 reinsure any portion of the risk assumed by any title policy, on
125-17 Texas real property other than under this Chapter and under such
125-18 rules and regulations. No policy of title insurance, title
125-19 insurance coverage, reinsurance of any risk assumed under any
125-20 policy of title insurance, or any guarantee of any character made
125-21 when insuring <on> Texas titles shall be issued or valid unless
125-22 written by a corporation complying with the provisions of and
125-23 authorized or qualified under this Chapter, except as is provided
125-24 in Article 9.19D. Before any premium rate provided for herein
125-25 shall be fixed or charged, reasonable notice shall issue, and a
125-26 hearing afforded to the title insurance companies and title
125-27 insurance agents authorized or qualified under this Chapter and the
125-28 public. Under no circumstances may any title insurance company or
125-29 title insurance agent use any form which is required under the
125-30 provisions of this Chapter 9 to be promulgated or approved until
125-31 the same shall have been so promulgated or approved by the Board.
125-32 (b) The Board shall have the duty to fix and promulgate the
125-33 premium rates to be charged by title insurance companies and title
125-34 insurance agents created or operating under this Chapter for
125-35 policies of title insurance or other promulgated or approved forms,
125-36 and the premiums therefor shall be paid in the due and ordinary
125-37 course of business. Premium rates for reinsurance as between title
125-38 insurance companies qualified under this Chapter shall not be fixed
125-39 or promulgated by the Board, and title insurance companies may set
125-40 such premium rates for reinsurance as such title insurance
125-41 companies shall agree upon. Under no circumstance shall any
125-42 premium be charged for any policy of title insurance or other
125-43 promulgated or approved forms different from those fixed and
125-44 promulgated by the Board, except for premiums charged for
125-45 reinsurance. The premium rates fixed by the Board shall be
125-46 reasonable to the public and nonconfiscatory as to the title
125-47 insurance companies and title insurance agents. For the purpose
125-48 of collecting data on which to determine the proper rates to be
125-49 fixed, the Board shall require all title insurance companies and
125-50 all title insurance agents operating in Texas to submit such
125-51 information in such form as it may deem proper, all information as
125-52 to loss experience, expense of operation, and other material matter
125-53 for the Board's consideration.
125-54 (c) The Board shall hold a biennial <an annual> hearing not
125-55 earlier than October 1 or later than December 15 of each
125-56 even-numbered calendar year, to consider adoption of premium rates
125-57 and such other matters and subjects relative to the regulation of
125-58 the business of title insurance as may be requested by any title
125-59 insurance company, any title insurance agent, any member of the
125-60 public, or as the Board may determine necessary to consider.
125-61 Proper notice of such public hearing and the items to be considered
125-62 shall be made to the public and shall be sent direct to all title
125-63 insurance companies and title insurance agents qualified or
125-64 authorized to do business under this Chapter for at least four (4)
125-65 weeks in advance of such hearing.
125-66 (d) Premium rates when once fixed shall not be changed until
125-67 after a public hearing shall be had by the Board, after proper
125-68 notice sent direct to all title insurance companies and title
125-69 insurance agents qualified or authorized to do business under this
125-70 Chapter, and after public notice in such manner as to give fair
126-1 publicity thereto for at least four (4) weeks in advance. The
126-2 Board must call such additional hearings to consider premium rate
126-3 changes at the request of a title insurance company or the office
126-4 of public insurance counsel.
126-5 (e) The Board may, on its own motion, following notice as
126-6 required for the biennial <annual> hearing hold at any time a
126-7 public hearing to consider adoption of premium rates and such other
126-8 matters and subjects relative to the regulation of the business of
126-9 title insurance as the Board shall determine necessary or proper.
126-10 (f) Any title insurance company, any title insurance agent,
126-11 or other person or association of persons interested, feeling
126-12 injured by any action of the Board or the Commissioner with regard
126-13 to premium rates or other action taken by the Board or the
126-14 Commissioner, shall have the right to appeal in accordance with
126-15 Article 1.04 of this code <file a suit in the District Court of
126-16 Travis County, within thirty (30) days after the Board has made
126-17 such order, to review the action. Such cases shall be tried de
126-18 novo in the District Court in accordance with the provisions of
126-19 Article 21.80 of the Insurance Code and shall be governed by the
126-20 same rules of evidence and procedure as other civil cases in said
126-21 court; in which suit the court may enter a judgment setting aside
126-22 the Board's order, or affirming, the action of the Board>.
126-23 SECTION 16.03. Chapter 9, Insurance Code, is amended by
126-24 adding Article 9.07B to read as follows:
126-25 Art. 9.07B. ABSTRACT OF TITLE; COMMITMENT FOR TITLE
126-26 INSURANCE DISTINGUISHED. (a) An abstract of title prepared from
126-27 an abstract plant for a chain of title of real property described
126-28 in the abstract of title is not title insurance, a commitment for
126-29 title insurance, or any other title insurance form.
126-30 (b) The Board may not adopt regulations relating to
126-31 abstracts of title.
126-32 (c) A "commitment for title insurance" means a title
126-33 insurance form that offers to issue a title policy subject to
126-34 stated exceptions, requirements, and terms. The term includes a
126-35 mortgagee title policy binder on an interim construction loan. The
126-36 commitment, binder, title policy, or other insurance form is not an
126-37 abstract of title. The commitment or binder constitutes a
126-38 statement of the terms and conditions on which the title insurance
126-39 company is willing to issue its policy. The title insurance policy
126-40 or other insurance form constitutes a statement of the terms and
126-41 conditions of the indemnity under the title insurance policy or
126-42 other form.
126-43 SECTION 16.04. Article 9.09, Insurance Code, is amended to
126-44 read as follows:
126-45 Art. 9.09. Prohibiting Transacting of Other Kinds of
126-46 Insurance by Title Insurance Companies or the Transacting of Title
126-47 Insurance by Other Types of Insurance Companies. Corporations,
126-48 domestic or foreign, operating under this Chapter shall not
126-49 transact, underwrite or issue any kind of insurance other than
126-50 title insurance on real property; nor shall title insurance be
126-51 transacted, underwritten or issued by any company transacting any
126-52 other kinds of insurance<; provided, however, that the above
126-53 prohibitions shall not apply as to any corporation, domestic or
126-54 foreign, which on October 1, 1967 was transacting, underwriting and
126-55 issuing within the State of Texas title insurance and any other
126-56 kind of insurance. Any corporation now organized and doing
126-57 business under the provisions of Chapter 8 and actively writing
126-58 title insurance shall be subject to all the provisions of this
126-59 Chapter except Article 9.18 relating to investments>.
126-60 SECTION 16.05. Chapter 9, Insurance Code, is amended by
126-61 adding Article 9.09A to read as follows:
126-62 Art. 9.09A. PROHIBITING UNMARKETABILITY OF TITLE INSURANCE.
126-63 An insurance company may not insure against loss or damage by
126-64 reason of unmarketability of title. The commissioner may not
126-65 promulgate rules or forms providing for that coverage.
126-66 SECTION 16.06. Article 9.17(a), Insurance Code, is amended
126-67 to read as follows:
126-68 (a) All title insurance companies operating under the
126-69 provisions of this Act shall at all times establish and maintain,
126-70 in addition to other reserves, a reserve against (1) unpaid losses,
127-1 and (2) loss expense for costs of defense of the insured and other
127-2 costs expected to be paid to other parties in the defense,
127-3 settlement, or processing of the claim under the terms of the title
127-4 insurance policy, and shall calculate such reserves by making a
127-5 careful estimate in each case of the loss and loss expense likely
127-6 to be incurred, by reason of every claim presented, pursuant to
127-7 notice from or on behalf of the insured, of a title defect in or
127-8 lien or adverse claim against the title insured, that may result in
127-9 a loss or cause expense to be incurred for the proper disposition
127-10 of the claim. The sums of items so estimated for payment of loss
127-11 and costs of defense of the insured and other costs expected to be
127-12 paid to other parties in the defense, settlement, or processing
127-13 under the terms of the title insurance policy shall be the total
127-14 expenses of such title insurance company.
127-15 SECTION 16.07. Articles 9.18 and 9.21, Insurance Code, are
127-16 amended to read as follows:
127-17 Art. 9.18. Admissible Investments for Title Insurance
127-18 Companies. Investments of all title insurance companies operating
127-19 under the provisions of this Act shall be held in cash or may be
127-20 invested in the following:
127-21 (a) Any corporation organized under this Act having the
127-22 right to do a title insurance business may invest as much as 50
127-23 <fifty (50%)> percent of its capital stock in an abstract plant or
127-24 plants, provided that the valuation to be placed upon such plant or
127-25 plants shall be approved by the Board; provided, however, that if
127-26 such corporation maintains with the Board the deposit of One
127-27 Hundred Thousand Dollars ($100,000) in securities as provided in
127-28 Article 9.12 of this Act, such of its capital in excess of 50
127-29 <fifty (50%)> percent, as deemed necessary to its business by its
127-30 board of directors may be invested in abstract plants; and provided
127-31 further, that a corporation created or operating under the
127-32 provisions of this Act may own or acquire more than one abstract
127-33 plant in any one county but only one abstract plant in any one
127-34 county is admissible as an investment.
127-35 (b) Those securities set forth in Article 3.39, Insurance
127-36 Code, <as authorized investments for life insurance companies> and
127-37 in authorized investments for title insurance companies under the
127-38 laws of any other state in which the affected company may be
127-39 authorized to do business from time to time.
127-40 (c) Real estate or any interest therein which may be:
127-41 (1) required for its convenient accommodation in the
127-42 transaction of its business with reasonable regard to future needs;
127-43 (2) acquired in connection with a claim under a policy
127-44 of title insurance;
127-45 (3) acquired in satisfaction or on account of loans,
127-46 mortgages, liens, judgments or decrees, previously owing to it in
127-47 the course of its business;
127-48 (4) acquired in part payment of the consideration of
127-49 the sale of real property owned by it if the transaction shall
127-50 result in a net reduction in the company's investment in real
127-51 estate;
127-52 (5) reasonably necessary for the purpose of
127-53 maintaining or enhancing the sale value of real property previously
127-54 acquired or held by it under Subparagraphs (1), (2), (3) or (4) of
127-55 this Section; provided, however, that no title insurance company
127-56 shall hold any real estate acquired under Subparagraphs (2), (3) or
127-57 (4) for more than ten (10) years without written approval of the
127-58 Board.
127-59 (d) First mortgage notes secured by:
127-60 (1) abstract plants and connected personalty within or
127-61 without the State of Texas;
127-62 (2) stock of title insurance agents within or without
127-63 the State of Texas;
127-64 (3) construction contract or contracts for the purpose
127-65 of building an abstract plant and connected personalty;
127-66 (4) any combination of two or more of items (1), (2),
127-67 and (3).
127-68 In no event shall the amount of any first mortgage note
127-69 exceed 80 <eighty (80%)> percent of the appraised value of the
127-70 security for such note as set out above.
128-1 (e) The shares of any federal home loan bank in the amount
128-2 necessary to qualify for membership and any additional amounts
128-3 approved by the Commissioner.
128-4 (f) Investments in foreign securities that are substantially
128-5 of the same kinds, classes, and investment-grade as those eligible
128-6 for investment under other provisions of this Article. Unless the
128-7 investment is also authorized under Subsection (b) of this Article
128-8 the aggregate amount of foreign investments made under this Section
128-9 may not exceed:
128-10 (1) five percent of the insurer's admitted assets at
128-11 the last year end;
128-12 (2) two percent of the insurer's admitted assets at
128-13 the last year end invested in the securities of all entities
128-14 domiciled in any one foreign country; and
128-15 (3) one-half of one percent of the insurer's admitted
128-16 assets at the last year end invested in the securities of any one
128-17 individual entity domiciled in a foreign country.
128-18 Any investments which do not <now> qualify under this Article
128-19 <the provisions of Subsections (a), (b), (c), or (d) above> and
128-20 which were owned by the title insurance company on October 1, 1967,
128-21 <are owned as of the effective date of this Act shall> continue to
128-22 qualify.
128-23 If any otherwise valid investment which qualifies under the
128-24 provisions of this Article shall exceed in amount any of the
128-25 limitations on investment contained in this Article, it shall be
128-26 inadmissible only to the extent that it exceeds such limitation.
128-27 Art. 9.21. Authority of Board of Insurance of the State of
128-28 Texas. (a) If any company operating under the provisions of this
128-29 Act shall engage in the characters of business described in
128-30 Subdivisions (1) and (2) <and (3)> of Article 9.03 of this Act, in
128-31 such manner as might bring it within the provision of any other
128-32 regulatory statute now or hereafter to be in force within the State
128-33 of Texas, all examination and regulation shall be exercised by the
128-34 Board rather than any other state agency which may be named in such
128-35 other laws, so long as such corporation engages in the title
128-36 guaranty or insurance business.
128-37 (b) The Board is hereby vested with power and authority
128-38 under this Act to promulgate and enforce rules and regulations
128-39 prescribing underwriting standards and practices upon which title
128-40 insurance contracts are to be issued, and is hereby further vested
128-41 with the power and authority to define risks which may not be
128-42 assumed under title insurance contracts, including risks that may
128-43 not be assumed because of the insolvency of the parties to the
128-44 transaction. In addition, the Board is hereby vested with power
128-45 and authority to promulgate and enforce all other such rules and
128-46 regulations which in the discretion of the Board are deemed
128-47 necessary to accomplish the purposes of this Act.
128-48 SECTION 16.08. Article 9.49, Insurance Code, is amended to
128-49 read as follows:
128-50 Art. 9.49. Insured Closing. (a) Title insurance companies
128-51 operating under the provisions of this chapter are hereby expressly
128-52 authorized and empowered to issue upon request on real property
128-53 transactions in this state at no charge whatever insured closing
128-54 and settlement letters, in the form prescribed by the board, in
128-55 connection with the closing and settlement of loans <made> by a
128-56 title insurance agent or direct operation <agents> for any title
128-57 insurance company operating under the provisions of this chapter.
128-58 Only <After January 1, 1976, only> the form prescribed by the board
128-59 shall be used <thereafter> in issuing such insured closing and
128-60 settlement letters. The liability of the title insurance company
128-61 under a policy of title insurance that is issued shall not be
128-62 changed or altered by the failure of the title insurance company to
128-63 issue such insured closing and settlement letters <as authorized by
128-64 this Article 9.49>.
128-65 (b) When an owner policy of title insurance is to be issued
128-66 in connection with a real property transaction involving real
128-67 property located in this state, only the title insurance company
128-68 issuing that owner policy is hereby expressly authorized and
128-69 empowered, at or before closing, to issue, upon written request, to
128-70 the buyer or seller of the real property in connection with such
129-1 closing and settlement by a title insurance agent or direct
129-2 operation an insured closing and settlement letter, provided that
129-3 the sale price of the real property exceeds the guaranty amount
129-4 specified in Article 9.48 of this Insurance Code. Only the form of
129-5 letter and the manner of issuance prescribed by the board shall be
129-6 used in issuing such buyer's or seller's insured closing and
129-7 settlement letters. The liability of the title insurance company
129-8 under any issued policy of title insurance shall not be changed or
129-9 altered by the failure of the title insurance company to issue the
129-10 authorized buyer's or seller's insured closing and settlement
129-11 letters. The board may promulgate a charge, if any, to be made in
129-12 the form and manner prescribed by the board for the issuance of
129-13 each insured closing and settlement letter.
129-14 SECTION 16.09. This article applies only to a policy or
129-15 contract of title insurance that is delivered, issued for delivery,
129-16 or renewed on or after January 1, 1994. A policy or contract
129-17 delivered, issued for delivery, or renewed before January 1, 1994,
129-18 is governed by the law that existed immediately before the
129-19 effective date of this Act, and that law is continued in effect for
129-20 that purpose.
129-21 ARTICLE 17. TEXAS CATASTROPHE PROPERTY INSURANCE POOL
129-22 SECTION 17.01. Section 3(d), Article 21.49, Insurance Code,
129-23 is amended to read as follows:
129-24 (d) "Texas Windstorm and Hail Insurance" means deductible
129-25 insurance against direct loss, and indirect losses resulting from a
129-26 direct loss, to insurable property as a result of windstorm or
129-27 hail, as such terms shall be defined and limited in policies and
129-28 forms approved by the State Board of Insurance.
129-29 SECTION 17.02. Article 21.49, Insurance Code, is amended by
129-30 adding Section 6B to read as follows:
129-31 Sec. 6B. ASSESSMENT FOR INSPECTIONS. (a) The board shall
129-32 assess each insurer who provides property insurance in a first tier
129-33 coastal county in accordance with this section.
129-34 (b) The total assessment under this section must be in the
129-35 amount the board estimates is necessary to cover the cost of
129-36 administration of the windstorm inspection program in the first
129-37 tier coastal counties under Section 6A of this article in the state
129-38 fiscal year in which the assessment is made, reduced by the total
129-39 amount of fees the board estimates will be collected for that year
129-40 under Section 6A(c) of this article.
129-41 (c) The assessment must be based on each insurer's
129-42 proportionate share of the total extended coverage and other allied
129-43 lines premium received by all insurers for property insurance in
129-44 the first tier coastal counties in the calendar year preceding the
129-45 year in which the assessment is made. The board shall adopt rules
129-46 to implement the assessment of insurers under this section.
129-47 (d) For purposes of this section, "property insurance" means
129-48 any commercial or residential policy promulgated or approved by the
129-49 board that provides coverage for the perils of windstorm and hail,
129-50 including a Texas Windstorm and Hail Insurance Policy.
129-51 SECTION 17.03. Sections 5(e), (h), and (l), Article 21.49,
129-52 Insurance Code, are amended to read as follows:
129-53 (e) The Board may <shall> develop programs to improve the
129-54 efficient operation of the Association, including a program
129-55 designed to create incentives for insurers to write windstorm and
129-56 hail insurance voluntarily to cover property located in a
129-57 catastrophe area, especially property located on the barrier
129-58 islands. <The Board shall implement the incentive program not
129-59 later than April 1, 1992. The program shall be designed in a way
129-60 that reduces the number of policies that are not written in the
129-61 voluntary market in catastrophe areas by not less than 10 percent
129-62 by January 1, 1993, not less than 25 percent by January 1, 1994,
129-63 and not less than 40 percent by January 1, 1995, based on the
129-64 number of risks underwritten by the Association on January 1, 1991.
129-65 The Board shall report its results to the legislature on March 1 of
129-66 each year beginning in 1993.>
129-67 (h) Members of the board of directors of the Association
129-68 serve three-year staggered terms, with the terms of three members
129-69 expiring on the third Tuesday of March of each year. A person may
129-70 hold a seat on the board of directors for not more than three
130-1 consecutive full terms, not to exceed nine years <If an insurer
130-2 member has been elected and served two full terms, such insurer
130-3 shall provide for a reasonable rotation of persons designated by it
130-4 to serve on the board>.
130-5 (l) If an occurrence or series of occurrences within the
130-6 defined catastrophe area results in insured losses that result in
130-7 tax credits under Section 19(4) of this article <in excess of $100
130-8 million> in a single calendar year, the Association shall
130-9 immediately notify the Board of that fact. The Board on receiving
130-10 notice shall immediately notify the Governor and appropriate
130-11 committees of each house of the Legislature of the amount of
130-12 insured losses eligible for tax credits under Section 19(4) of this
130-13 article <in excess of $100 million>.
130-14 SECTION 17.04. Sections 8(h) and (i), Article 21.49,
130-15 Insurance Code, are amended to read as follows:
130-16 (h) Each extended coverage benchmark rate, flexibility band,
130-17 and promulgated rate established by the Board in accordance with
130-18 Chapter 5, Insurance Code, must be uniform throughout the first
130-19 tier of coastal counties.
130-20 The rates for noncommercial windstorm and hail insurance
130-21 written by the association before December 31, 1995, shall be 90
130-22 percent of the modified extended coverage rates. For purposes of
130-23 this section, the modified extended coverage rate is the greater of
130-24 the upper flexibility band for extended coverage established by the
130-25 board under Article 5.101 of this code or 25 percent above the
130-26 extended coverage benchmark rate established by the board under
130-27 that article.
130-28 The rates for noncommercial windstorm and hail insurance
130-29 written by the association after December 31, 1995, shall be 90
130-30 percent of <Rates, including extended coverage rates covering risks
130-31 or classes of risks written by the Association before December 31,
130-32 1995, may not exceed the benchmark rates promulgated by the Board
130-33 under Subchapter M, Chapter 5, Insurance Code, for noncommercial
130-34 lines of insurance. Rates for noncommercial lines of insurance
130-35 written by the Association on or after December 31, 1995, may not
130-36 exceed> the manual rate for monoline extended coverage promulgated
130-37 by the Board for noncommercial risks under Subchapter C, Chapter 5,
130-38 Insurance Code. Notwithstanding Article 5.13-2, Insurance Code,
130-39 the Board shall promulgate a manual rate for commercial risks and
130-40 classes of risks written by the Association in accordance with
130-41 Subchapter C, Chapter 5, Insurance Code. Article 5.13-2, Insurance
130-42 Code, does not apply to the rates of insurance written by the
130-43 Association. The rates for commercial windstorm and hail insurance
130-44 written by the Association shall be 90 percent of the manual rates
130-45 for extended coverage promulgated by the Board for commercial risks
130-46 under Subchapter C, Chapter 5, Insurance Code.
130-47 If valid flood or rising water insurance coverage exists and
130-48 is maintained on any risk being insured in the pool the State Board
130-49 of Insurance may provide for a rate and reduction in rate of
130-50 premium as may be appropriate.
130-51 The catastrophe element of extended coverage rates
130-52 promulgated by the Board under this Act applicable to commercial
130-53 risks written by the Association shall be uniform throughout the
130-54 seacoast territory and shall be based on all monoline extended
130-55 coverage loss experience of all regulated insurers authorized to do
130-56 business in this state, including the Association, for property
130-57 located in the seacoast territory, using the most recent 30 years'
130-58 experience available. Surcharges collected in the past and used in
130-59 the development of current manual rates may not be excluded from
130-60 future rate development as long as those surcharges were collected
130-61 during the experience period used by the Board.
130-62 The association shall either establish a reinsurance program
130-63 or enter into a contract as provided in Subsection (i) of this
130-64 section. The Texas Department of Insurance may approve any
130-65 reinsurance program. <The State Board of Insurance shall make
130-66 provision by rule and regulation requiring catastrophe reserves as
130-67 part of the premium received on risks or classes of risks located
130-68 in a catastrophe area and shall approve a catastrophe reinsurance
130-69 pool or program that is funded through the excess of premiums over
130-70 losses in a calendar year and may approve a catastrophe reinsurance
131-1 pool funded through assessments of members of the Association. The
131-2 amount required to be reserved for catastrophes (as such
131-3 catastrophes are defined by the Board) shall be that portion of the
131-4 pure premium as is actuarially made attributable, as ascertained by
131-5 the Board, to prospective catastrophic loss. The portion of the
131-6 pure premium attributable to prospective catastrophic loss shall
131-7 not be income and shall be unearned until the occurrence of an
131-8 applicable catastrophe as defined and shall be held in trust by the
131-9 pool or trustee of the pool until losses are paid therefrom under
131-10 such reasonable rules and regulations as the State Board of
131-11 Insurance shall prescribe or approve.>
131-12 (i) The association may enter into a written agreement with
131-13 the Texas Department of Insurance under which the association
131-14 members relinquish their net equity pursuant to the written
131-15 agreement on an annual basis by making payments to a fund known as
131-16 the catastrophe reserve trust fund to be held by the Texas
131-17 Department of Insurance outside the state treasury to protect
131-18 policyholders of the association and to reduce the potential for
131-19 payments by members of the association giving rise to tax credits
131-20 in the event of loss or losses.
131-21 The catastrophe reserve trust fund shall be kept and
131-22 maintained by the Texas Department of Insurance pursuant to the
131-23 written agreement between the association, the Texas Department of
131-24 Insurance, the state treasurer, and the comptroller. Legal title
131-25 to money and investments in the fund is in the Texas Department of
131-26 Insurance unless or until paid out as provided by the written
131-27 agreement. The state treasurer, as custodian, shall administer the
131-28 funds strictly and solely as provided by the agreement and the
131-29 state may not take any action with respect to the fund other than
131-30 as specified by this act and the agreement.
131-31 On the effective date of an agreement, all funds held on
131-32 behalf of or paid to the association under one or more reinsurance
131-33 plans or programs may be immediately paid to the catastrophe
131-34 reserve trust fund. Thereafter, at the end of either each calendar
131-35 year or policy year, the association may pay the net equity of a
131-36 member, including all premium and other revenue of the association
131-37 in excess of incurred losses and operating expenses to the
131-38 catastrophe reserve trust fund or a reinsurance program approved by
131-39 the Commissioner of Insurance.
131-40 The written agreement shall establish the procedure relating
131-41 to the disbursement of funds from the catastrophe reserve trust
131-42 fund to policyholders in the event of an occurrence or series of
131-43 occurrences within the defined catastrophe area that results in
131-44 insured losses and operating expenses of the association greater
131-45 than $100 million <The Board annually shall promulgate extended
131-46 coverage rates based on sound actuarial principles. Rates for
131-47 windstorm and hail insurance shall be 90 percent of the extended
131-48 coverage rates. Extended coverage rates shall be uniform
131-49 throughout the first tier coastal counties. The catastrophe
131-50 element of extended coverage rates shall be uniform throughout the
131-51 seacoast territory and shall be based on all monoline extended
131-52 coverage loss experience of all regulated insurers authorized to do
131-53 business in this state, including the Association, for property
131-54 located in the seacoast territory, using the most recent 30 years'
131-55 experience available. Surcharges collected in the past and used in
131-56 the development of current manual rates may not be excluded from
131-57 future rate development as long as those surcharges were collected
131-58 during the experience period used by the Board>.
131-59 SECTION 17.05. Article 21.49, Insurance Code, is amended by
131-60 adding Section 8B to read as follows:
131-61 Sec. 8B. INDIRECT LOSSES; PERSONAL LINES. (a) Except as
131-62 provided by Subsections (b) and (c) of this section, a policy of
131-63 windstorm and hail insurance issued by the association for a
131-64 dwelling, as that term is defined by the Texas Department of
131-65 Insurance or their successors, must include coverage for
131-66 wind-driven rain damage, regardless of whether an opening is made
131-67 by the wind, loss of use, and consequential losses, according to
131-68 forms approved by the board and for a premium paid by the insured
131-69 based on rates established by rule adopted by the commissioner. A
131-70 policy of windstorm and hail insurance issued by the association
132-1 for tenant contents of a dwelling or other residential building
132-2 must include coverage for loss of use and consequential losses,
132-3 according to forms approved by the board and for a premium paid by
132-4 the insured based on rates established by rule adopted by the
132-5 commissioner. The association shall provide coverage under this
132-6 section as directed by rule of the commissioner.
132-7 (b) The association is not required to offer coverage for
132-8 indirect losses as provided by Subsection (a) of this section
132-9 unless that coverage was excluded from a companion policy in the
132-10 voluntary market.
132-11 (c) The association is not required to provide coverage for
132-12 (1) "loss of use" if such "loss of use" is loss of rents or loss of
132-13 rental value; or (2) "additional living expenses" when the property
132-14 insured is a secondary or a non-primary residence.
132-15 SECTION 17.06. Sections 10, 12A, and 19, Article 21.49,
132-16 Insurance Code, are amended to read as follows:
132-17 Sec. 10. Immunity From Liability. There shall be no
132-18 liability on the part of and no cause of action of any nature shall
132-19 arise against a director of the association, the Board or any of
132-20 its staff, the Association or its agents or employees, or against
132-21 any participating insurer or its agents or employees, for any
132-22 inspections made under the plan of operation or any statements made
132-23 in good faith by them in any reports or communications concerning
132-24 risks submitted to the Association, or at any administrative
132-25 hearings conducted in connection therewith under the provisions of
132-26 this Act.
132-27 Sec. 12A. Legal counsel. The association shall establish a
132-28 plan in its plan of operation under which the association's legal
132-29 representation before the State Board of Insurance, the Texas
132-30 Department of Insurance, and the Texas legislature is without
132-31 conflict of interest or the appearance of a conflict of interest as
132-32 defined in the Texas Disciplinary Rules of Professional Conduct.
132-33 The association shall also adopt separate and distinct procedures
132-34 for legal counsel in the handling of disputes involving
132-35 policyholder claims against the association <is a state agency for
132-36 purposes of employing or authorizing legal representation and shall
132-37 be represented by the attorney general in the manner provided by
132-38 general law for representation of any other state agency by the
132-39 attorney general>.
132-40 Sec. 19. Payment of Losses <Exceeding $100 Million in Year>;
132-41 Premium Tax Credit. (a) If, in any calendar year, an occurrence
132-42 or series of occurrences within the defined catastrophe area
132-43 results in insured losses and operating expenses of the association
132-44 in excess of premium and other revenue of the association, any
132-45 excess losses shall be paid as follows:
132-46 (1) $100 million shall be assessed to the members of
132-47 the association with the proportion of the loss allocable to each
132-48 insurer determined in the same manner as its participation in the
132-49 association has been determined for the year under Section 5(c) of
132-50 this Act;
132-51 (2) any losses in excess of $100 million shall be paid
132-52 from either the catastrophe reserve trust fund established under
132-53 Section 8(i) of this Act or any reinsurance program established by
132-54 the association;
132-55 (3) for losses in excess of those paid under
132-56 Subdivisions (1) and (2) of this subsection, an additional $200
132-57 million shall be assessed to the members of the association with
132-58 the proportion of the loss allocable to each insurer determined in
132-59 the same manner as its participation in the association has been
132-60 determined for the year under Section 5(c) of this Act; or
132-61 (4) any losses in excess of those paid under
132-62 Subdivisions (1), (2), and (3) of this subsection shall be assessed
132-63 against members of the association, with the proportion of the
132-64 total loss allocable to each insurer determined in the same manner
132-65 as its participation in the association has been determined for the
132-66 year under Section 5(c) of this Act.
132-67 (b) An insurer may credit any amount paid in accordance with
132-68 Subsection (a)(4) of this section in a calendar year against its
132-69 premium tax under Article 4.10 of this code <In the event any
132-70 occurrence or series of occurrences within the defined catastrophe
133-1 area results in insured losses of the association totaling in
133-2 excess of $100 million within a single calendar year, the
133-3 proportion of the total loss allocable to each insurer shall be
133-4 determined in the same manner as its participation in the
133-5 association has been determined for the year under Subsection (c)
133-6 of Section 5 of the Texas Catastrophe Insurance Pool Act, as
133-7 amended, and any insurer which has paid its share of total losses
133-8 exceeding $100 million in a calendar year shall be entitled to
133-9 credit the amount of that excess share against its premium tax
133-10 under Article 7064, Revised Civil Statutes of Texas, 1925, as
133-11 amended>. The tax credit herein authorized shall be allowed at a
133-12 rate not to exceed 20 percent per year for five or more successive
133-13 years following the year of payment of the claims. The balance of
133-14 payments paid by the insurer and not claimed as such tax credit may
133-15 be reflected in the books and records of the insurer as an admitted
133-16 asset of the insurer for all purposes, including exhibition in
133-17 annual statements pursuant to Article 6.12 of this code <Insurance
133-18 Code>.
133-19 SECTION 17.07. Section 8E, Article 21.49, Insurance Code, is
133-20 repealed.
133-21 SECTION 17.08. (a) Except as provided by Subsection (c) of
133-22 this section, this article takes effect September 1, 1993.
133-23 (b) The change in law made to Article 21.49, Insurance Code,
133-24 by this article applies only to an insurance policy that is
133-25 delivered, issued for delivery, or renewed on or after October 1,
133-26 1993. An insurance policy that is delivered, issued for delivery,
133-27 or renewed before October 1, 1993, is governed by the law as it
133-28 existed immediately before the effective date of this article, and
133-29 that law is continued in effect for that purpose.
133-30 (c) Section 17.02 of this article takes effect immediately.
133-31 The State Board of Insurance may not make the first assessment
133-32 under Section 6B, Article 21.49, Insurance Code, as added by this
133-33 article, for windstorm and hail inspections before August 31, 1993.
133-34 The first assessment must be in the amount the board estimates is
133-35 necessary to cover the cost of administration of the windstorm
133-36 inspection program in the first tier coastal counties under Article
133-37 21.49, Insurance Code, in the period beginning September 1, 1993,
133-38 and ending August 31, 1994, reduced by the total amount of fees the
133-39 board estimates will be collected for that period under Section
133-40 6A(c), Article 21.49, Insurance Code.
133-41 ARTICLE 18
133-42 ADMISSION OF INSURERS ORGANIZED UNDER THE LAWS OF ANOTHER STATE
133-43 OR ORGANIZED UNDER THE LAWS OF A FOREIGN COUNTRY USING TEXAS AS
133-44 A STATE OF ENTRY INTO THE UNITED STATES
133-45 SECTION 18.01. Section 6, Article 3.01, Insurance Code, is
133-46 amended to read as follows:
133-47 Sec. 6. The term "foreign company" means any life, accident
133-48 or health insurance company organized under the laws of any other
133-49 state or territory of the United States <or foreign country>.
133-50 SECTION 18.02. Article 3.01, Insurance Code, is amended by
133-51 adding Sections 7A and 13 to read as follows:
133-52 Sec. 7A. The term "alien company" means any life, accident,
133-53 or health insurance company organized under the laws of any foreign
133-54 country.
133-55 Sec. 13. The "United States branch" means:
133-56 (a) the business unit through which business is
133-57 transacted within the United States by an alien insurer;
133-58 (b) the assets and liabilities of the insurer within
133-59 the United States pertaining to such business;
133-60 (c) the management powers pertaining to such business
133-61 and to the assets and liabilities; or
133-62 (d) any combination of the foregoing.
133-63 SECTION 18.03. Subchapter B, Chapter 3, Insurance Code, is
133-64 amended to read as follows:
133-65 SUBCHAPTER B. FOREIGN OR ALIEN COMPANIES
133-66 Art. 3.20. SCOPE. This subchapter applies to any life
133-67 insurance company, or accident insurance company, or life and
133-68 accident, or health and accident, or life, health and accident
133-69 insurance company, incorporated under the laws of any other state,
133-70 territory or country, desiring to transact the business of such
134-1 insurance in this State.
134-2 Art. 3.20-1. Statement to be Filed. (a) Any foreign or
134-3 alien life insurance company, or accident insurance company, or
134-4 life and accident, health and accident, or life, health and
134-5 accident insurance company, incorporated under the laws of any
134-6 other state, territory or country, desiring to transact the
134-7 business of such insurance in this State, shall furnish the Texas
134-8 Department of Insurance <said Board of Insurance Commissioners>
134-9 with a written or printed statement under oath of the president or
134-10 vice president, or treasurer and secretary of such company which
134-11 statement shall show:
134-12 1. The name and locality of the company.
134-13 2. The amount of its capital stock.
134-14 3. The amount of its capital stock paid up.
134-15 4. The assets of the company, including: first, the
134-16 amount of cash on hand and in the hands of other persons, naming
134-17 such persons and their residence; second, real estate unincumbered,
134-18 where situated and its value; third, the bonds owned by the company
134-19 and how they are secured, with the rate of interest thereon;
134-20 fourth, debts due the company secured by mortgage, describing the
134-21 property mortgaged and its market value; fifth, debts otherwise
134-22 secured, stating how secured; sixth, debts for premiums; seventh,
134-23 all other moneys and securities.
134-24 5. Amount of liabilities of the company, stating the
134-25 name of the person or corporation to whom liable.
134-26 6. Losses adjusted and due.
134-27 7. Losses adjusted and not due.
134-28 8. Losses adjusted.
134-29 9. Losses in suspense and for what cause.
134-30 10. All other claims against the company, describing
134-31 the same.
134-32 The Department <Board of Insurance Commissioners> may require
134-33 any additional facts to be shown by such annual statement.
134-34 (b) Each foreign <such> company shall be required to file a
134-35 similar statement not later than March 1 of each year.
134-36 (c) Each alien company shall be required to file a financial
134-37 statement as provided in Article 3.27-2 of this subchapter.
134-38 Art. 3.21. Articles of Incorporation to be Filed. Any such
134-39 foreign or alien insurance company shall accompany the statement
134-40 required in the foregoing article with a certified copy of its acts
134-41 or articles of incorporation, and all amendments thereto, and a
134-42 copy of its by-laws, together with the name and residence of each
134-43 of its officers and directors. The same shall be certified under
134-44 the hand of the president or secretary of such company.
134-45 Art. 3.22. Capital Stock and Surplus Requirements. No
134-46 <such> foreign or alien stock insurance company shall be licensed
134-47 by the Department <Board of Insurance Commissioners> or shall
134-48 transact any such business of insurance in this State unless such
134-49 company is possessed of not less than the minimum capital and
134-50 surplus required by this chapter of a similar domestic company in
134-51 similar circumstances, including the same character of investments
134-52 for its minimum capital and surplus. No such foreign or alien
134-53 mutual insurance company shall be licensed by the Department <Board
134-54 of Insurance Commissioners> or shall transact any such business of
134-55 insurance in this State unless such company is possessed of not
134-56 less than the minimum free surplus required by Chapter 11 of this
134-57 Code of a similar domestic company in similar circumstances
134-58 including the same character of investments for its minimum free
134-59 surplus.
134-60 Art. 3.23. ALIEN <FOREIGN> COMPANIES TO DEPOSIT. (a) No
134-61 alien <such foreign> insurance company <incorporated by or
134-62 organized under the laws of any foreign government,> shall transact
134-63 business in this State, unless it shall first deposit and keep
134-64 deposited with the Treasurer of this State, for the benefit of the
134-65 policyholders of such company, citizens or residents of the United
134-66 States, bonds or securities of the United States or the State of
134-67 Texas in an <to the> amount at least equal to the minimum capital
134-68 required to be maintained by a domestic stock insurer licensed to
134-69 transact the same kind of insurance, or at least equal to one-half
134-70 the minimum free surplus required to be maintained by a domestic
135-1 mutual insurer licensed to transact the same kind of insurance <of
135-2 One Hundred Thousand ($100,000.00) Dollars>.
135-3 (b) Upon approval of the commissioner in accordance with
135-4 Article 3.27-1 of this subchapter, a licensed alien insurer may be
135-5 permitted to deposit assets with a trustee or trustees for the
135-6 security of its policyholders in the United States in lieu of
135-7 making the deposit with the Treasurer of this State so long as such
135-8 assets are composed of securities or bonds of the United States or
135-9 this State and are maintained in accordance with provisions of
135-10 Article 3.27-1 of this code.
135-11 Art. 3.24. DEPOSIT LIABLE FOR JUDGMENT; DURATION. The
135-12 deposit required by the preceding article shall be held liable to
135-13 pay the judgments of policyholders of the insurer in the United
135-14 States <in such company>, and may be so decreed by the court
135-15 adjudicating the same. It shall be maintained so long as any
135-16 liability of the insurer arising out of its insurance transactions
135-17 in the United States remains outstanding.
135-18 Art. 3.24-1. Certificate of Authority. When a foreign or
135-19 alien company has complied with the requirements of this Subchapter
135-20 and all other requirements imposed on such company by law and has
135-21 paid any deposit imposed by law, and the operational history of the
135-22 company when reviewed in conjunction with its loss experience, the
135-23 kinds and nature of risks insured, the financial condition of the
135-24 company and its ownership, its proposed method of operation, its
135-25 affiliations, its investments, any contracts leading to contingent
135-26 liability or agreements in respect to guaranty and surety, other
135-27 than insurance, and the ratio of total annual premium and net
135-28 investment income to commission expenses, general insurance
135-29 expenses, policy benefits paid and required policy reserve
135-30 increases, indicates a condition such that the expanded operation
135-31 of the company in this State or its operations outside this State
135-32 will not create a condition which might be hazardous to its
135-33 policyholders, creditors or the general public, the Commissioner
135-34 shall file in the office the documents delivered to him and shall
135-35 issue to the company a certificate of authority to transact in this
135-36 State the kind or kinds of business specified therein. Such
135-37 certificate shall continue in full force and effect upon the
135-38 condition that the company shall continue to comply with the laws
135-39 of this State.
135-40 Art. 3.25. Law Deemed Accepted. Each life insurance company
135-41 not organized under the laws of this State, hereafter granted a
135-42 certificate of authority to transact business in this State, shall
135-43 be deemed to have accepted such certificate and to transact such
135-44 business hereunder subject to the conditions and requirements that,
135-45 after it shall cease to transact new business in this State under a
135-46 certificate of authority, and so long as it shall continue to
135-47 collect renewal premiums from citizens of this State, it shall be
135-48 subject to the payment of the same occupation tax in proportion to
135-49 its gross premiums during any year, from citizens of this State, as
135-50 is or may be imposed by law on such companies transacting new
135-51 business within this State, under certificates of authority during
135-52 such year. The rate of such tax to be so paid by any such company
135-53 shall never exceed the rate imposed by law upon insurance companies
135-54 transacting business in this State. Each such company shall make
135-55 the same reports of its gross premium receipts for each such year
135-56 and within the same period as is or may be required of such
135-57 companies holding certificates of authority and shall at all times
135-58 be subject to examination by the Board of Insurance Commissioners
135-59 or some one selected by it for that purpose, in the same way and to
135-60 the same extent as is or may be required of companies transacting
135-61 new business under certificates of authority in this State, the
135-62 expenses of such examination to be paid by the company examined.
135-63 The respective duties of the Board in certifying to the amount of
135-64 such taxes and of the State Treasurer and Attorney General in their
135-65 collection shall be the same as are or may be prescribed respecting
135-66 taxes due from companies authorized to transact new business within
135-67 this State.
135-68 Art. 3.26. WHEN ALIEN <FOREIGN> COMPANIES NEED NOT DEPOSIT.
135-69 If the deposit required by Article 3.23 of this code has been made
135-70 in any State of the United States, under the laws of such State, in
136-1 such manner as to secure equally all the policyholders of such
136-2 Company who are citizens and residents of the United States, then
136-3 no deposit shall be required in this State; but a certificate of
136-4 such deposit under the hand and seal of the officer of such other
136-5 State with whom the same has been made shall be filed with the
136-6 Department <Board of Insurance Commissioners>.
136-7 Art. 3.27. Companies Desiring to Loan Money. Any life
136-8 insurance company not desiring to engage in the business of writing
136-9 life insurance in this State, but desiring to loan its funds in
136-10 this State, may obtain a permit to do so from the Secretary of
136-11 State by complying with the laws of this State relating to foreign
136-12 corporations engaged in loaning money in this State, without being
136-13 required to secure a certificate of authority to write life
136-14 insurance in this State.
136-15 Art. 3.27-1. TRUSTEED ASSETS OF AN ALIEN INSURER. (a)
136-16 Assets which any authorized alien insurer is required or permitted
136-17 by this subchapter to deposit with a trustee or trustees for the
136-18 security of its policyholders in the United States shall be known
136-19 as "trusteed assets". All trusteed assets shall be continuously
136-20 kept within the United States, and the trusteed assets of an alien
136-21 insurer entering the United States through this State shall be kept
136-22 continuously in this State.
136-23 (b) The deed of trust and all amendments to the deed of
136-24 trust of such insurer shall be authenticated in such form and
136-25 manner as prescribed by the commissioner, and shall not be
136-26 effective unless approved by the commissioner.
136-27 (c) The commissioner shall give approval to a deed of trust
136-28 if the commissioner finds:
136-29 (1) the deed of trust or its amendments are sufficient
136-30 in form and are in conformity with applicable law;
136-31 (2) the trustee or trustees are eligible as such; and
136-32 (3) the deed of trust is adequate to protect the
136-33 interests of the beneficiaries of the trust.
136-34 (d) If after notice and hearing the commissioner finds that
136-35 the requisites for approval of the deed of trust no longer exist,
136-36 the commissioner may withdraw approval.
136-37 (e) The commissioner may from time to time approve
136-38 modifications of, or variations in any deed of trust, which in the
136-39 commissioner's judgment are in the best interests of the
136-40 policyholders of the alien insurer within the United States.
136-41 (f) The deed of trust shall contain provisions which:
136-42 (1) vest legal title to trusteed assets in the trustee
136-43 or trustees and successors lawfully appointed, in trust for the
136-44 security of all policyholders of the alien insurer within the
136-45 United States;
136-46 (2) provide for substitution of a new trustee or
136-47 trustees in the event of vacancy by death, resignation, or other
136-48 incapacity, subject to the approval of the commissioner; and
136-49 (3) require that the trustee or trustees shall
136-50 continuously maintain a record at all times sufficient to identify
136-51 the assets of the trust fund.
136-52 (g) The deed of trust may provide that income, earnings,
136-53 dividends, or interest accumulations of the assets of the fund may
136-54 be paid over to the United States manager of the alien insurer,
136-55 upon request.
136-56 (h) The deed of trust shall provide that no withdrawal of
136-57 assets, other than income as specified in Subsection (g) of this
136-58 article, shall be made or permitted by the trustee or trustees
136-59 without prior written approval of the commissioner, except:
136-60 (1) to make deposits required by law in any state for
136-61 the security or benefit of all policyholders of the alien insurer
136-62 in the United States;
136-63 (2) to substitute other assets permitted by law and at
136-64 least equal in value to those withdrawn upon the specific written
136-65 direction of the United States manager or an assistant United
136-66 States manager when duly empowered and acting pursuant to either
136-67 general or specific written authority previously given or delegated
136-68 by the board of directors; or
136-69 (3) to transfer such assets to an official liquidator
136-70 or rehabilitator pursuant to an order of a court of competent
137-1 jurisdiction.
137-2 (i) Upon withdrawal of trusteed assets deposited in another
137-3 state in which the insurer is authorized to do business, the deed
137-4 of trust may require similar written approval of the insurance
137-5 supervising official of that state in lieu of approval of the
137-6 commissioner as provided in Subsection (h) of this article. In all
137-7 such instances, the alien insurer shall notify the commissioner in
137-8 writing of the nature and extent of the withdrawal.
137-9 Art. 3.27-2. TRUSTEED SURPLUS OF ALIEN INSURERS. (a) Every
137-10 authorized alien insurer shall file with the Department a financial
137-11 statement not later than March 1 of each year on a form prescribed
137-12 by the commissioner showing at last year end the following:
137-13 (1) all its general deposits of assets within the
137-14 United States deposited with officers of any state in trust for the
137-15 exclusive benefit, security, and protection of its policyholders
137-16 within the United States;
137-17 (2) all its special deposits of assets within the
137-18 United States deposited with officers of any state in trust for the
137-19 exclusive benefit, security, and protection of its policyholders
137-20 within a particular state;
137-21 (3) all its trusteed assets within the United States
137-22 held by a trustee or trustees for the exclusive benefit, security,
137-23 and protection of all its policyholders within the United States;
137-24 (4) the amount of its policy loans to policyholders
137-25 within the United States, not exceeding the amount of the legal
137-26 reserve required on each such policy;
137-27 (5) all its reserves and other liabilities arising out
137-28 of policies or obligations issued, assumed or incurred in the
137-29 United States; and
137-30 (6) such further information as determined necessary
137-31 to implement provisions of this article.
137-32 (b) In determining the net amount of an alien insurer's
137-33 liabilities in the United States, a deduction may be made for the
137-34 following:
137-35 (1) reinsurance on losses with insurers qualifying for
137-36 credit, less unpaid reinsurance premiums, with a schedule showing
137-37 by company the amount deducted; and
137-38 (2) unearned premiums on agents' balances or
137-39 uncollected premiums not more than 90 days past due. Any liability
137-40 on an asset not considered in the statement may be applied against
137-41 such asset.
137-42 (c) No credit shall be allowed in the statement for any
137-43 special state deposit held for the exclusive benefit of
137-44 policyholders of any particular state except as an offset against
137-45 the liabilities of the alien insurer in that state.
137-46 (d) The accrued interest at the date of the statement on
137-47 assets deposited with states and trustees shall be allowed in the
137-48 statement where the interest is collected by the states or
137-49 trustees.
137-50 (e) The aggregate value of the insurer's general state
137-51 deposits and trusteed assets less the aggregate net amount of all
137-52 its liabilities and reserves in the United States as determined in
137-53 accordance with this section shall be known as its "trusteed"
137-54 surplus in the United States. Whenever it appears to the
137-55 commissioner from any such statement or any report that an alien
137-56 insurer's trusteed surplus is reduced below the greater of minimum
137-57 capital required of, or the minimum surplus required to be
137-58 maintained by, a domestic insurer licensed to transact the same
137-59 kinds of insurance, the commissioner shall determine the amount of
137-60 the impairment and order the insurer, through its United States
137-61 manager or attorney, to eliminate the impairment within such period
137-62 as the commissioner designates, not more than 90 days from service
137-63 of the order. The commissioner may also by order revoke or suspend
137-64 the insurer's license or prohibit it from issuing new policies in
137-65 the United States while the impairment exists. If at the
137-66 expiration of the designated period has not satisfied the
137-67 commissioner that the impairment has been eliminated, the
137-68 commissioner may proceed against such insurer pursuant to the
137-69 provisions of Article 21.28-A of this code as an insurers whose
137-70 further transaction of the business of insurance in the United
138-1 States will be hazardous to its policyholders in the United States.
138-2 (f) The trusteed surplus statement shall be signed and
138-3 verified by the United States manager, attorney-in-fact, or a duly
138-4 empowered assistant United States manager of the alien insurer.
138-5 The items of securities and other property held under trust deeds
138-6 shall be certified to by the United States trustee or trustees.
138-7 The commissioner may at any time and for any time period determined
138-8 necessary require further statements of the same kind.
138-9 Art. 3.27-3. EXAMINATION OF ALIEN INSURERS. (a) The books,
138-10 records, accounting, and verification pertaining to the trusteed
138-11 assets of any authorized alien insurer are subject to examination
138-12 by the Department or its duly appointed representative at the
138-13 United States branch office of such insurer, in the same manner and
138-14 to the same extent that applies under Articles 1.15 and 1.16 of
138-15 this code to domestic and foreign insurers licensed to transact the
138-16 same kind of insurance.
138-17 (b) The books, records, and accounting for trusteed assets
138-18 shall be kept and maintained, in English, in the Texas branch
138-19 office of any alien insurer entering the United States through this
138-20 State.
138-21 SECTION 18.04. Article 21.43, Insurance Code, is amended to
138-22 read as follows:
138-23 Art. 21.43. FOREIGN OR ALIEN INSURANCE CORPORATIONS
138-24 Sec. 1. DEFINITIONS. In this article:
138-25 (a) The term "foreign insurance corporation" means any
138-26 insurance company other than one subject to provisions of
138-27 Subchapter B, Chapter 3, of this code organized under the laws of
138-28 any other state or territory of the United States.
138-29 (b) The term "alien insurance corporation" means an
138-30 insurance company other than one subject to provisions of
138-31 Subchapter B, Chapter 3, of this code organized under the laws of
138-32 any foreign country.
138-33 (c) The term "United States branch" means:
138-34 (1) the business unit through which business is
138-35 transacted within the United States by an alien insurer;
138-36 (2) the assets and liabilities of the insurer
138-37 within the United States pertaining to such business;
138-38 (3) the management powers pertaining to such
138-39 business and to the assets and liabilities; or
138-40 (4) any combination of the foregoing.
138-41 Sec. 2. SCOPE. This article applies to any insurance
138-42 corporation other than one subject to Subchapter B, Chapter 3, of
138-43 this code incorporated under the laws of any other state,
138-44 territory, or country desiring to transact the business of
138-45 insurance in this State.
138-46 Sec. 3. CERTIFICATE OF AUTHORITY REQUIRED. (a) It shall be
138-47 unlawful, except as provided in Articles 1.14-1 and 1.14-2 of this
138-48 code, for any foreign insurance corporation or alien insurance
138-49 corporation of the type provided for in any chapter of this code to
138-50 engage in the business of insuring others against losses which may
138-51 be insured against under the laws of this state without initially
138-52 procuring a certificate of authority from the commissioner of
138-53 insurance permitting it to engage in those business activities.
138-54 (b) This article does not prohibit a foreign insurer from
138-55 reinsuring a domestic insurer or prohibit the location in Texas of
138-56 a company that does not directly insure either persons domiciled or
138-57 other risks located in this state.
138-58 Sec. 4. ANNUAL FINANCIAL STATEMENT TO BE FILED. (a) Any
138-59 foreign or alien insurance corporation desiring to transact the
138-60 business of insurance in this state shall furnish the Texas
138-61 Department of Insurance with copies of its annual financial
138-62 statements for the two most recent years, certified by the
138-63 commissioner or other insurance supervising official of the state
138-64 or country in which the insurer is organized and incorporated. The
138-65 Department may require any additional facts to be shown by such
138-66 annual statement.
138-67 (b) Each foreign insurance corporation shall be required to
138-68 file a statement similar to that required in Subsection (a) not
138-69 later than March 1 of each year.
138-70 (c) Each alien insurance corporation shall be required to
139-1 file a financial statement as provided in Section 11 of this
139-2 article.
139-3 Sec. 5. ARTICLES OF INCORPORATION TO BE FILED. Any foreign
139-4 or alien insurance corporation shall accompany the statement
139-5 required in Section 4 of this article with a certified copy of its
139-6 acts or articles of incorporation, and all amendments thereto, and
139-7 a copy of its by-laws, together with the name and residence of each
139-8 of its officers and directors. These documents shall be certified
139-9 under the hand of the president or secretary of such company.
139-10 Sec. 6. EXAMINATION REQUIRED. Before issuing a certificate
139-11 of authority to a foreign or alien insurance corporation to do
139-12 business in this state, the commissioner shall either make an
139-13 examination of the insurer at the expense of such insurer at its
139-14 principal office within the United States or accept a report of an
139-15 examination made by the insurance department or other insurance
139-16 supervisory official of any other state or of any government of a
139-17 foreign country.
139-18 Sec. 7. ALIEN CORPORATIONS TO DEPOSIT. (a) No alien
139-19 insurance corporation shall transact business in this State, unless
139-20 it shall first deposit and keep deposited with the Treasurer of
139-21 this State, for the benefit of the policyholders of such company,
139-22 citizens, or residents of the United States, bonds or securities of
139-23 the United States or the State of Texas in an amount at least equal
139-24 to the minimum capital required to be maintained by a domestic
139-25 stock insurer licensed to transact the same kind of insurance, or
139-26 at least equal to one-half the minimum free surplus required to be
139-27 maintained by a domestic mutual insurer licensed to transact the
139-28 same kind of insurance.
139-29 (b) Upon approval of the commissioner in accordance with
139-30 Section 10 of this article, a licensed alien insurer may be
139-31 permitted to deposit assets with a trustee or trustees for the
139-32 security of its policyholders in the United States in lieu of
139-33 making the deposit with the Treasurer of this State so long as such
139-34 assets are composed of securities or bonds of the United States or
139-35 this State and are maintained in accordance with provisions of
139-36 Section 10 of this article.
139-37 (c) If the deposit required by Subsection (a) of this
139-38 section has been made in any State of the United States, under the
139-39 laws of such State, in such manner as to secure equally all the
139-40 policyholders of such Company who are citizens and residents of
139-41 the United States, then no deposit shall be required in this State;
139-42 but a certificate of such deposit under the hand and seal of the
139-43 officer of such other State with whom the same has been made shall
139-44 be filed with the Department.
139-45 Sec. 8. PURPOSE AND DURATION OF DEPOSIT. The deposit
139-46 required by Section 7 of this article shall be for the exclusive
139-47 benefit, security, and protection of policyholders of the insurer
139-48 in the United States. It shall be maintained so long as any
139-49 liability of the insurer arising out of its insurance transactions
139-50 in the United States remains outstanding.
139-51 Sec. 9. TEXAS LAW DEEMED ACCEPTED. The provisions of this
139-52 code are conditions on which foreign or alien insurance
139-53 corporations are permitted to do the business of insurance in this
139-54 state, and any of the foreign or alien corporations engaged in
139-55 issuing contracts or policies in this state are deemed to have
139-56 agreed to fully comply with these provisions as a prerequisite to
139-57 the right to engage in business in this state.
139-58 Sec. 10. TRUSTEED ASSETS OF ALIEN INSURANCE CORPORATIONS.
139-59 (a) Assets which any authorized alien insurer is required or
139-60 permitted by this article to deposit with a trustee or trustees for
139-61 the security of its policyholders in the United States shall be
139-62 known as "trusteed assets." All trusteed assets shall be
139-63 continuously kept within the United States, and the trusteed assets
139-64 of an alien insurer entering the United States through this State
139-65 shall be kept continuously in this State.
139-66 (b) The deed of trust and all amendments to the deed of
139-67 trust of such insurer shall be authenticated in such form and
139-68 manner as prescribed by the commissioner and shall not be effective
139-69 unless approved by the commissioner.
139-70 (c) The commissioner shall give approval to a deed of trust
140-1 if the commissioner finds:
140-2 (1) the deed of trust or its amendments are sufficient
140-3 in form and are in conformity with applicable law;
140-4 (2) the trustee or trustees are eligible as such; and
140-5 (3) the deed of trust is adequate to protect the
140-6 interests of the beneficiaries of the trust.
140-7 (d) If after notice and hearing the commissioner finds that
140-8 the requisites for approval of the deed of trust no longer exist,
140-9 the commissioner may withdraw approval.
140-10 (e) The commissioner may from time to time approve
140-11 modifications of, or variations in any deed of trust, which in the
140-12 commissioner's judgment are in the best interests of the state.
140-13 (f) The deed of trust shall contain provisions which:
140-14 (1) vest legal title to trusteed assets in the trustee
140-15 or trustees and successors lawfully appointed, in trust for the
140-16 security of all policyholders of the alien insurer within the
140-17 United States;
140-18 (2) provide for substitution of a new trustee or
140-19 trustees in the event of vacancy by death, resignation, or other
140-20 incapacity, subject to the approval of the commissioner; and
140-21 (3) require that the trustee or trustees shall
140-22 continuously maintain a record at all times sufficient to identify
140-23 the assets of the trust fund.
140-24 (g) The deed of trust may provide that income, earnings,
140-25 dividends, or interest accumulations of the assets of the fund may
140-26 be paid over to the United States manager of the alien insurer,
140-27 upon request.
140-28 (h) The deed of trust shall provide that no withdrawal of
140-29 assets, other than income as specified in Subsection (g) of this
140-30 section, shall be made or permitted by the trustee or trustees
140-31 without prior written approval of the commissioner, except:
140-32 (1) to make deposits required by law in any state for
140-33 the security or benefit of all policyholders of the alien insurer
140-34 in the United States;
140-35 (2) to substitute other assets permitted by law and at
140-36 least equal in value to those withdrawn, upon the specific written
140-37 direction of the United States manager or an assistant United
140-38 States manager when duly empowered and acting pursuant to either
140-39 general or specific written authority previously given or delegated
140-40 by the board of directors; or
140-41 (3) to transfer such assets to an official liquidator
140-42 or rehabilitator pursuant to an order of a court of competent
140-43 jurisdiction.
140-44 (i) Upon withdrawal of trusteed assets deposited in another
140-45 state in which the insurer is authorized to do business, the deed
140-46 of trust may require similar written approval of the insurance
140-47 supervising official of that state in lieu of approval of the
140-48 commissioner as provided in Subsection (h) of this section. In all
140-49 such instances, the alien insurer shall notify the commissioner in
140-50 writing of the nature and extent of the withdrawal.
140-51 Sec. 11. TRUSTEED SURPLUS OF ALIEN INSURANCE CORPORATIONS.
140-52 (a) Every authorized alien insurer shall file with the Department
140-53 a financial statement not later than March 1 of each year on a form
140-54 prescribed by the commissioner showing at last year end the
140-55 following:
140-56 (1) all its general deposits of assets within the
140-57 United States deposited with officers of any state in trust for
140-58 the exclusive benefit, security, and protection of its
140-59 policyholders within the United States;
140-60 (2) all its special deposits of assets within the
140-61 United States deposited with officers of any state in trust for
140-62 the exclusive benefit, security, and protection of its
140-63 policyholders within a particular state;
140-64 (3) all its trusteed assets within the United States
140-65 held by a trustee or trustees for the exclusive benefit, security,
140-66 and protection of all its policyholders within the United States;
140-67 (4) all its reserves and other liabilities arising out
140-68 of policies or obligations issued, assumed, or incurred in the
140-69 United States; and
140-70 (5) such further information as determined necessary
141-1 to implement provisions of this section.
141-2 (b) In determining the net amount of an alien insurer's
141-3 liabilities in the United States, a deduction may be made for the
141-4 following:
141-5 (1) reinsurance on losses with insurers qualifying for
141-6 credit, less unpaid reinsurance premiums, with a schedule showing
141-7 by company the amount deducted; and
141-8 (2) unearned premiums on agents' balances or
141-9 uncollected premiums not more than 90 days past due. Any liability
141-10 on an asset not considered in the statement may be applied against
141-11 such asset.
141-12 (c) No credit shall be allowed in the statement for any
141-13 special state deposit held for the exclusive benefit of
141-14 policyholders of any particular state except as an offset against
141-15 the liabilities of the alien insurer in that state.
141-16 (d) The accrued interest at the date of the statement on
141-17 assets deposited with states and trustees shall be allowed in the
141-18 statement where the interest is collected by the states or
141-19 trustees.
141-20 (e) The aggregate value of the insurer's general state
141-21 deposits and trusteed assets less the aggregate net amount of all
141-22 its liabilities and reserves in the United States as determined in
141-23 accordance with this section shall be known as its "trusteed"
141-24 surplus in the United States. Whenever it appears to the
141-25 commissioner from any such statement or any report that an alien
141-26 insurer's trusteed surplus is reduced below the greater of minimum
141-27 capital required of, or the minimum surplus required to be
141-28 maintained by, a domestic insurer licensed to transact the same
141-29 kinds of insurance, the commissioner shall determine the amount of
141-30 the impairment and order the insurer, through its United States
141-31 manager or attorney, to eliminate the impairment within such period
141-32 as the commissioner designates, not more than 90 days from service
141-33 of the order. The commissioner may also by order revoke or suspend
141-34 the insurer's license or prohibit it from issuing new policies in
141-35 the United States while the impairment exists. If at the
141-36 expiration of the designated period has not satisfied the
141-37 commissioner that the impairment has been eliminated, the
141-38 commissioner may proceed against such insurer pursuant to the
141-39 provisions of Article 21.28-A of this code as an insurer whose
141-40 further transaction of the business of insurance in the United
141-41 States will be hazardous to its policyholders in the United States.
141-42 (f) The trusteed surplus statement shall be signed and
141-43 verified by the United States manager, attorney-in-fact, or a duly
141-44 empowered assistant United States manager of the alien insurer.
141-45 The items of securities and other property held under trust deeds
141-46 shall be certified to by the United States trustee or trustees.
141-47 The commissioner may at any time and for any time period determined
141-48 necessary require further statements of the same kind.
141-49 Sec. 12. EXAMINATION OF ALIEN INSURANCE CORPORATIONS.
141-50 (a) The books, records, accounting, and verification pertaining to
141-51 the trusteed assets of any authorized alien insurer are subject to
141-52 examination by the Department or its duly appointed representative
141-53 at the United States branch office of such insurer in the same
141-54 manner and to the same extent that applies under Articles 1.15 and
141-55 1.16 of this code to domestic and foreign insurers licensed to
141-56 transact the same kind of insurance.
141-57 (b) The books, records, and accounting for trusteed assets
141-58 shall be kept and maintained, in English, in the Texas branch
141-59 office of any alien insurer entering the United States through this
141-60 State.
141-61 Sec. 13. MISCELLANEOUS PROVISIONS. (a) <It shall be
141-62 unlawful, except as is provided for surplus lines in Articles
141-63 1.14-1 and 1.14-2 of this code, for any foreign insurance
141-64 corporation of the type provided for in any chapter of this code to
141-65 engage in the business of insuring others against losses which may
141-66 be insured against under the laws of this state without initially
141-67 procuring a certificate of authority from the commissioner of
141-68 insurance permitting it to engage in those business activities.>
141-69 <(b) This article does not prohibit a foreign insurer from
141-70 reinsuring a domestic insurer or prohibit the location in Texas of
142-1 a company that does not directly insure either persons domiciled or
142-2 other risks located in this state.>
142-3 <(c) The provisions of this code are conditions on which the
142-4 foreign insurance corporations are permitted to do business in this
142-5 state, and any of the foreign corporations engaged in issuing
142-6 contracts or policies in this state are deemed to have agreed to
142-7 these conditions as a prerequisite to the right to engage in
142-8 business in this state.>
142-9 <(d)> A foreign or alien insurance corporation may not be
142-10 denied permission to do business in this state on the ground that
142-11 all of its authorized capital stock has not been fully subscribed
142-12 and paid for if:
142-13 (1) at least the minimum dollar amount of capital
142-14 stock of the corporation required by the laws of this state (which
142-15 may be less than all of its authorized capital stock) has been
142-16 subscribed and paid for;
142-17 (2) it has at least the minimum dollar amount of
142-18 surplus required by the laws of this state for the kinds of
142-19 business the corporation seeks to write; and
142-20 (3) the corporation has fully complied with the laws
142-21 of its domiciliary state or country relating to authorization and
142-22 issuance of capital stock.
142-23 (b) <(e)> A foreign casualty insurer may not be required to
142-24 make or maintain the deposit required of domestic casualty insurers
142-25 by Article 8.05 of this code if a similar deposit has been made in
142-26 any state of the United States, under the laws of that state, in a
142-27 manner that secures equally all the policyholders of the company
142-28 who are citizens and residents of the United States. A certificate
142-29 of the deposit under the signature and seal of the officer of the
142-30 other state with whom the deposit is made must be filed with the
142-31 department <board>.
142-32 (c) <(f)> A foreign or alien insurance corporation subject
142-33 to this code may not be denied permission to do business in this
142-34 state because the name of the corporation is the same as, or
142-35 deceptively similar to, the name of any domestic corporation
142-36 existing under the laws of this state or of any foreign or alien
142-37 corporation authorized to transact business in this state if the
142-38 foreign or alien insurance corporation:
142-39 (1) files an assumed name certificate setting forth a
142-40 name permitted under the laws of this state with the Texas
142-41 Department <State Board> of Insurance and with any county clerks as
142-42 provided by Section 36.10 or 36.11, Business & Commerce Code; and
142-43 (2) does not transact or conduct any business in this
142-44 state except under the assumed name.
142-45 (d) <(g)> No action on or involving any contract entered
142-46 into in this state between an insurance corporation and a resident
142-47 of this state shall be commenced in or transferred to a court in
142-48 another state without the consent of the resident of this state.
142-49 SECTION 18.05. Article 21.44, Insurance Code, is amended to
142-50 read as follows:
142-51 Art. 21.44. CAPITAL AND SURPLUS REQUIREMENTS FOR FOREIGN OR
142-52 ALIEN INSURANCE COMPANIES OTHER THAN LIFE. No foreign or alien
142-53 insurance company subject to the provisions of Article 21.43 of
142-54 this code <other than one doing a life insurance business> shall be
142-55 permitted to do business within this State unless it shall have and
142-56 maintain the minimum requirements of this Code as to capital or
142-57 surplus or both, applicable to companies organized under this Code
142-58 doing the same kind or kinds of business.
142-59 ARTICLE 19. HEALTH CARE PROVIDERS
142-60 SECTION 19.01. Subsection (B), Section 2, Chapter 397, Acts
142-61 of the 54th Legislature, 1955 (Article 3.70-2, Vernon's Texas
142-62 Insurance Code), is amended to read as follows:
142-63 (B) No policy of accident and sickness insurance shall make
142-64 benefits contingent upon treatment or examination by a particular
142-65 practitioner or by particular practitioners of the healing arts
142-66 hereinafter designated unless such policy contains a provision
142-67 designating the practitioner or practitioners who will be
142-68 recognized by the insurer and those who will not be recognized by
142-69 the insurer. Such provision may be located in the "Exceptions" or
142-70 "Exceptions and Reductions" provisions, or elsewhere in the policy,
143-1 or by endorsement attached to the policy, at the insurer's option.
143-2 In designating the practitioners who will and will not be
143-3 recognized, such provision shall use the following terms: Doctor
143-4 of Medicine, Doctor of Osteopathy, Doctor of Dentistry, Doctor of
143-5 Chiropractic, Doctor of Optometry, Doctor of Podiatry, Licensed
143-6 Audiologist, Licensed Speech-language Pathologist, Doctor in
143-7 Psychology, Certified Social Worker--Advanced Clinical
143-8 Practitioner, Licensed Dietitian, Licensed Professional Counselor,
143-9 <and> Licensed Marriage and Family Therapist, and Licensed Hearing
143-10 Aid Fitter and Dispenser.
143-11 For purposes of this Act, such designations shall have the
143-12 following meanings:
143-13 Doctor of Medicine: One licensed by the Texas State Board of
143-14 Medical Examiners on the basis of the degree "Doctor of Medicine";
143-15 Doctor of Osteopathy: One licensed by the Texas State Board
143-16 of Medical Examiners on the basis of the degree of "Doctor of
143-17 Osteopathy";
143-18 Doctor of Dentistry: One licensed by the State Board of
143-19 Dental Examiners;
143-20 Doctor of Chiropractic: One licensed by the Texas Board of
143-21 Chiropractic Examiners;
143-22 Doctor of Optometry: One licensed by the Texas Optometry
143-23 Board;
143-24 Doctor of Podiatry: One licensed by the State Board of
143-25 Podiatry Examiners;
143-26 Licensed Audiologist: One with a master's or doctorate
143-27 degree in audiology from an accredited college or university and
143-28 who is licensed as an audiologist by the State Committee of
143-29 Examiners for Speech-Language Pathology and Audiology <certified by
143-30 the American Speech-language and Hearing Association>;
143-31 Licensed Speech-language Pathologist: One with a master's or
143-32 doctorate degree in speech pathology or speech-language pathology
143-33 from an accredited college or university and who is licensed as a
143-34 speech-language pathologist by the State Committee of Examiners for
143-35 Speech-Language Pathology and Audiology <certified by the American
143-36 Speech-language and Hearing Association>;
143-37 Doctor in Psychology: One licensed by the Texas State Board
143-38 of Examiners of Psychologists and certified as a Health Service
143-39 Provider;
143-40 Certified Social Worker--Advanced Clinical Practitioner: One
143-41 certified by the Texas Department of Human Services as a Certified
143-42 Social Worker with the order of recognition of Advanced Clinical
143-43 Practitioner;
143-44 Licensed Dietitian: One licensed by the Texas State Board of
143-45 Examiners of Dietitians;
143-46 Licensed Professional Counselor: One licensed by the Texas
143-47 State Board of Examiners of Professional Counselors; <and>
143-48 Licensed Marriage and Family Therapist: One licensed by the
143-49 Texas State Board of Examiners of Marriage and Family Therapists;
143-50 and
143-51 Licensed Hearing Aid Fitter and Dispenser: One licensed by
143-52 the Texas Board of Examiners in the Fitting and Dispensing of
143-53 Hearing Aids.
143-54 SECTION 19.02. Sections 1 and 3, Article 21.52, Insurance
143-55 Code, as amended by Chapters 242 and 824, Acts of the 72nd
143-56 Legislature, Regular Session, 1991, are reenacted and amended to
143-57 read as follows:
143-58 Sec. 1. DEFINITIONS. As used in this article:
143-59 (a) "health insurance policy" means any individual,
143-60 group, blanket, or franchise insurance policy, insurance agreement,
143-61 or group hospital service contract, providing benefits for medical
143-62 or surgical expenses incurred as a result of an accident or
143-63 sickness;
143-64 (b) "doctor of podiatric medicine" includes D.P.M.,
143-65 podiatrist, doctor of surgical chiropody, D.S.C. and chiropodist;
143-66 (c) "doctor of optometry" includes optometrist, doctor
143-67 of optometry, and O.D.;
143-68 (d) "doctor of chiropractic" means a person who is
143-69 licensed by the Texas Board of Chiropractic Examiners to practice
143-70 chiropractic;
144-1 (e) "licensed dentist" means a person who is licensed
144-2 to practice dentistry by the State Board of Dental Examiners;
144-3 (f) "licensed audiologist" means a person who has
144-4 received a master's or doctorate degree in audiology from an
144-5 accredited college or university and is licensed as an audiologist
144-6 by the State Committee of Examiners for Speech-Language Pathology
144-7 and Audiology <certified by the American Speech-language and
144-8 Hearing Association>;
144-9 (g) "licensed speech-language pathologist" means a
144-10 person who has received a master's or doctorate degree in
144-11 speech-language pathology from an accredited college or university
144-12 and is licensed as a speech-language pathologist by the State
144-13 Committee of Examiners for Speech-Language Pathology and Audiology
144-14 <certified by the American Speech-language and Hearing Association
144-15 to restore speech loss or correct a speech impairment>;
144-16 (h) "certified social worker--advanced clinical
144-17 practitioner" means a person who is certified by the Texas
144-18 Department of Human Services as a certified social worker with the
144-19 order of recognition of advanced clinical practitioner;
144-20 (i) "licensed dietitian" means a person who is
144-21 licensed by the Texas State Board of Examiners of Dietitians;
144-22 (j) "licensed professional counselor" means a person
144-23 who is licensed by the Texas State Board of Examiners of
144-24 Professional Counselors; <and>
144-25 (k) "psychologist" means a person licensed to practice
144-26 psychology by the Texas State Board of Examiners of Psychologists;
144-27 (l) <(k)> "licensed marriage and family therapist"
144-28 means a person who is licensed by the Texas State Board of
144-29 Examiners of Marriage and Family Therapists; and
144-30 (m) "licensed hearing aid fitter and dispenser" means
144-31 a person who is licensed by the Texas Board of Examiners in the
144-32 Fitting and Dispensing of Hearing Aids.
144-33 Sec. 3. SELECTION OF PRACTITIONERS. Any person who is
144-34 issued, who is a party to, or who is a beneficiary under any health
144-35 insurance policy delivered, renewed, or issued for delivery in this
144-36 state by any insurance company, association, or organization to
144-37 which this article applies may select a licensed doctor of
144-38 podiatric medicine, a licensed dentist, or a doctor of chiropractic
144-39 to perform the medical or surgical services or procedures scheduled
144-40 in the policy which fall within the scope of the license of that
144-41 practitioner, a licensed doctor of optometry to perform the
144-42 services or procedures scheduled in the policy which fall within
144-43 the scope of the license of that doctor of optometry, a licensed
144-44 <an> audiologist to measure hearing for the purpose of determining
144-45 the presence or extent of a hearing loss and to provide aural
144-46 rehabilitation services to a person with a hearing loss if those
144-47 services or procedures are scheduled in the policy, a licensed
144-48 speech-language pathologist to evaluate speech and language and to
144-49 provide habilitative and rehabilitative services to restore speech
144-50 or language loss or to correct a speech or language impairment if
144-51 those services or procedures are scheduled in the policy, a
144-52 certified social worker--advanced clinical practitioner to provide
144-53 the services that fall within the scope of the license of such
144-54 certified practitioner and which are specified as services within
144-55 the terms of the policy of insurance, including the provision of
144-56 direct, diagnostic, preventive, or clinical services to
144-57 individuals, families, and groups whose functioning is threatened
144-58 or affected by social or psychological stress or health impairment,
144-59 if those services or procedures are scheduled in the policy, a
144-60 licensed dietitian including a provisional licensed dietitian under
144-61 a licensed dietitian's supervision to provide the services that
144-62 fall within the scope of the license of that dietitian if those
144-63 services are scheduled in the policy, a licensed professional
144-64 counselor to provide the services that fall within the scope of the
144-65 license of that professional if those services are scheduled in the
144-66 policy, <or> a licensed marriage and family therapist to provide
144-67 the services that fall within the scope of the license of that
144-68 professional if those services are scheduled in the policy, <or> a
144-69 psychologist to perform the services or procedures scheduled in the
144-70 policy that fall within the scope of the license of that
145-1 psychologist, or a licensed hearing aid fitter and dispenser to
145-2 provide the services or procedures scheduled in the policy that
145-3 fall within the scope of the license of that practitioner. The
145-4 services of a certified social worker--advanced clinical
145-5 practitioner, licensed professional counselor, or licensed marriage
145-6 and family therapist that are included in this Act may require a
145-7 professional recommendation by a doctor of medicine or doctor of
145-8 osteopathy unless the health insurance policy terms do not require
145-9 such a recommendation. The payment or reimbursement by the
145-10 insurance company, association, or organization for those services
145-11 or procedures in accordance with the payment schedule or the
145-12 payment provisions in the policy shall not be denied because the
145-13 same were performed by a licensed doctor of podiatric medicine, a
145-14 licensed doctor of optometry, a licensed doctor of chiropractic, a
145-15 licensed dentist, a licensed <an> audiologist, a licensed
145-16 speech-language pathologist, a certified social worker--advanced
145-17 clinical practitioner, a licensed dietitian, a licensed
145-18 professional counselor, <or> a licensed marriage and family
145-19 therapist, <or> a psychologist, or a licensed hearing aid fitter
145-20 and dispenser. There shall not be any classification,
145-21 differentiation, or other discrimination in the payment schedule or
145-22 the payment provisions in a health insurance policy, nor in the
145-23 amount or manner of payment or reimbursement thereunder, between
145-24 scheduled services or procedures when performed by a doctor of
145-25 podiatric medicine, a doctor of optometry, a doctor of
145-26 chiropractic, a licensed dentist, a licensed <an> audiologist, a
145-27 licensed speech-language pathologist, a certified social
145-28 worker--advanced clinical practitioner, a licensed dietitian, a
145-29 licensed professional counselor, <or> a licensed marriage and
145-30 family therapist, <or> a psychologist, or a licensed hearing aid
145-31 fitter and dispenser which fall within the scope of his license or
145-32 certification and the same services or procedures when performed by
145-33 any other practitioner of the healing arts whose services or
145-34 procedures are covered by the policy. Any provision in a health
145-35 insurance policy contrary to or in conflict with the provisions of
145-36 this article shall, to the extent of the conflict, be void, but
145-37 such invalidity shall not affect the validity of the other
145-38 provisions of this policy. Any presently approved policy form
145-39 containing any provision in conflict with the requirements of this
145-40 Act shall be brought into compliance with this Act by the use of
145-41 riders and endorsements which have been approved by the State Board
145-42 of Insurance or by the filing of new or revised policy forms for
145-43 approval by the State Board of Insurance.
145-44 SECTION 19.03. The Texas Health Maintenance Organization Act
145-45 (Chapter 20A, Vernon's Texas Insurance Code) is amended by adding
145-46 Section 6A to read as follows:
145-47 Sec. 6A. GROUP MODEL HEALTH MAINTENANCE ORGANIZATIONS. (a)
145-48 Unless this section and the powers specified in Section 6(a) of
145-49 this Act are specifically amended by law, a law, whether enacted
145-50 before or after this enactment of this section, may not be
145-51 construed to prohibit or restrict a group model health maintenance
145-52 organization from:
145-53 (1) selectively contracting with or declining to
145-54 contract with any or all providers as the health maintenance
145-55 organization considers necessary;
145-56 (2) contracting for or declining to contract for an
145-57 individual health care service or full range of health care
145-58 services as the health maintenance organization considers
145-59 necessary, if the service or services may be legally provided by
145-60 the contracting provider; or
145-61 (3) requiring enrolled members of the health
145-62 maintenance organization who wish to obtain the services covered by
145-63 the health maintenance organization to use the providers specified
145-64 by the health maintenance organization.
145-65 (b) For purposes of this section "group model health
145-66 maintenance organization" means a health maintenance organization
145-67 that provides the majority of its professional services through a
145-68 single group medical practice that is formally affiliated with the
145-69 medical school component of a Texas, state-supported, public
145-70 college or university.
146-1 SECTION 19.04. Article 21.52, Insurance Code, is amended by
146-2 adding Section 4 to read as follows:
146-3 Sec. 4. PROVIDER CONTRACTORS. Each person who arranges
146-4 contracts with providers on behalf of a health maintenance
146-5 organization or health insurer shall comply with laws relating to
146-6 the duties of the health maintenance organization or health insurer
146-7 to notify and consider providers for those contracts. A violation
146-8 of this section constitutes restraint of trade and is an unlawful
146-9 practice under Section 15.05, Business & Commerce Code.
146-10 SECTION 19.05. (a) Section 6, Article 21.52B, Insurance
146-11 Code, is repealed.
146-12 (b) This section takes effect August 30, 1993.
146-13 SECTION 19.06. (a) The Legislature hereby creates an
146-14 interim select committee to study the impact of requiring a health
146-15 insurance policy or health maintenance organization to allow any
146-16 qualified provider who is a physician, physician's assistant,
146-17 advanced nurse practitioner, or any class of provider enumerated in
146-18 Articles 21.52 and 21.52B, Insurance Code, to participate as a
146-19 contracting provider for such policy or plan.
146-20 (b) The committee is composed of:
146-21 (1) three members of the senate, appointed by the
146-22 lieutenant governor; and
146-23 (2) three members of the house of representatives,
146-24 appointed by the speaker of the house of representatives.
146-25 (c) Not later than December 1, 1994, the committee shall
146-26 report its findings and any recommendations for changes in the law
146-27 to the 74th Legislature.
146-28 SECTION 19.07. Sections 20.01 and 20.02 of this article
146-29 apply only to an insurance policy that is delivered, issued for
146-30 delivery, or renewed on or after January 1, 1994. An insurance
146-31 policy that is delivered, issued for delivery, or renewed before
146-32 January 1, 1994, is governed by the law as it existed immediately
146-33 before the effective date of this Act, and that law is continued in
146-34 effect for that purpose.
146-35 ARTICLE 20. PARTICULAR FUNCTIONS OF THE STATE BOARD OF INSURANCE
146-36 SECTION 20.01. Subchapter B, Chapter 21, Insurance Code, is
146-37 amended by adding Article 21.20-1 to read as follows:
146-38 Art. 21.20-1. RULES RESTRICTING COMPETITIVE BIDDING OR
146-39 ADVERTISING. The commissioner may not adopt rules restricting
146-40 competitive bidding or advertising by a person regulated by the
146-41 department except to prohibit false, misleading, or deceptive
146-42 practices by the person.
146-43 SECTION 20.02. Section 2, Article 1.10D, Insurance Code, is
146-44 amended by adding Subsection (d-1) to read as follows:
146-45 (d-1) An authorized governmental agency and any state
146-46 licensing agency shall furnish any materials, documents, reports,
146-47 complaints, or other evidence to the insurance fraud unit on the
146-48 request of the unit. Compliance with this subsection by an
146-49 authorized governmental agency or state licensing agency does not
146-50 constitute waiver of any privilege or requirement of
146-51 confidentiality otherwise applicable. Notwithstanding Section 5(a)
146-52 of this article, the commissioner may not release evidence obtained
146-53 under this subsection for public inspection if release of the
146-54 evidence would violate a privilege held by or a requirement of
146-55 confidentiality imposed on the agency from which the evidence was
146-56 obtained.
146-57 SECTION 20.03. Sections 1(a) and (c), Article 1.28,
146-58 Insurance Code, are amended to read as follows:
146-59 (a) On giving written notice of intent to the commissioner
146-60 of insurance, and if the commissioner of insurance does not
146-61 disapprove within 30 days after that notice is given, a domestic
146-62 insurance company, including a life, health, and accident insurance
146-63 company, fire and marine insurance company, surety and trust
146-64 company, general casualty company, title insurance company,
146-65 fraternal benefit society, mutual life insurance company, local
146-66 mutual aid association, statewide mutual assessment company, mutual
146-67 insurance company other than life, farm mutual insurance company,
146-68 county mutual insurance company, Lloyds plan, reciprocal exchange,
146-69 group hospital service corporation, health maintenance
146-70 organization, stipulated premium insurance company, nonprofit legal
147-1 services corporation, or any other entity licensed under the
147-2 Insurance Code or chartered or organized under the laws of this
147-3 state that is an affiliated member of an insurance holding company
147-4 system, as defined by Article 21.49-1 <21.49>, Insurance Code, as
147-5 added by Chapter 356, Acts of the 62nd Legislature, Regular
147-6 Session, 1971 (Article 21.49-1, Vernon's Texas Insurance Code), may
147-7 locate and maintain all or any portion of its books, records, and
147-8 accounts and its principal offices outside this state at a location
147-9 within the United States if the company meets the requirements of
147-10 this section. This article does not apply to or prohibit the
147-11 location and maintenance of the normal books, records, and accounts
147-12 of either a branch office or agency office of a domestic insurance
147-13 company at the branch office or agency office, if that office is
147-14 located in the United States.
147-15 (c) The ultimate controlling person of the insurance holding
147-16 company system, the immediate controlling person of the domestic
147-17 insurance company, or an intermediate controlling person of the
147-18 domestic insurance company must be legally domiciled, licensed, or
147-19 admitted to transact business in a jurisdiction within the United
147-20 States.
147-21 SECTION 20.04. Article 16.01(b), Insurance Code, is amended
147-22 to read as follows:
147-23 (b) Farm mutual insurance companies may insure rural and
147-24 urban dwellings and attendant outhouses and yard buildings, and all
147-25 their contents for home and personal use, musical instruments and
147-26 libraries, barns and ranch buildings of every description together
147-27 with vehicles and implements used thereon, and<;> agricultural
147-28 products produced or kept on farms and ranches <but not including
147-29 growing crops>. No building, or its contents, with more than 40
147-30 per cent of its floor space or more than 500 square feet of floor
147-31 space, whichever is the lesser amount, used for business purposes
147-32 may be insured by a farm mutual insurance company except church
147-33 buildings, fraternal lodge halls, private and church schools, and
147-34 non-industrial use buildings owned by non-profit organizations may
147-35 be insured, wherever situated. Farm mutual insurance companies
147-36 shall not insure any type of commercial or private passenger motor
147-37 vehicle except trailers and mobile homes. A farm mutual insurance
147-38 company may not insure growing crops unless that insurance is
147-39 reinsured by:
147-40 (1) the Federal Crop Insurance Corporation under
147-41 Section 508, Federal Crop Insurance Act (7 U.S.C. Section 1508); or
147-42 (2) a property and casualty insurance company licensed
147-43 to write insurance in this state that has a rating by the A.M. Best
147-44 Company of A- or better.
147-45 SECTION 20.05. Section 10, Chapter 273, Acts of the 71st
147-46 Legislature, Regular Session, 1989, as amended by Section 13.29,
147-47 Chapter 242, Acts of the 72nd Legislature, Regular Session, 1991,
147-48 is amended to read as follows:
147-49 Sec. 10. A farm mutual that was engaged in the business of
147-50 insuring commercial or private passenger motor vehicles on January
147-51 1, 1989, may continue to insure motor vehicles until January 1,
147-52 1996; provided, however, this authorization shall terminate
147-53 immediately if the company ceases insuring motor vehicles, or if
147-54 there is a change of control of the company as defined in Article
147-55 21.49-1, Insurance Code. A company insuring motor vehicles under
147-56 this provision shall not use more than 33 <25> percent of its gross
147-57 income for expenses unless otherwise approved by the commissioner
147-58 of insurance.
147-59 A farm mutual that on January 1, 1989, was operated under or
147-60 controlled by a plan or method other than that provided in Section
147-61 (c) or Section (d) of Article 16.01, Insurance Code, may continue
147-62 under such plan or operation or method of control, as the case may
147-63 be, but shall be required to comply with Sections (c) and (d) of
147-64 Article 16.01 and all other provisions of Chapter 16, Insurance
147-65 Code, including Section (g) of Article 16.08, on or before January
147-66 1, 1996, or immediately on any change of control as defined in
147-67 Article 21.49-1, Insurance Code.
147-68 SECTION 20.06. Section 2, Article 21.49-1, Insurance Code,
147-69 is amended to read as follows:
147-70 Sec. 2. Definitions. As used in this article, the following
148-1 terms shall have the respective meanings hereinafter set forth,
148-2 unless the context shall otherwise require:
148-3 (a) Affiliate. An "affiliate" of, or person
148-4 "affiliated" with, a specific person, is a person that directly, or
148-5 indirectly through one or more intermediaries, controls, or is
148-6 controlled by, or is under common control with, the person
148-7 specified.
148-8 (b) Commercially Domiciled Insurer. The term
148-9 "commercially domiciled insurer" means a foreign or alien insurer
148-10 authorized to do business in this state that during its three
148-11 preceding fiscal years taken together, or any lesser period if it
148-12 has been licensed to transact business in this state only for that
148-13 lesser period, has written an average of more gross premiums in
148-14 this state than it has written in its state of domicile during the
148-15 same period, with those gross premiums constituting 20 percent or
148-16 more of its total gross premiums everywhere in the United States
148-17 for that three-year or lesser period, as reported in its three most
148-18 recent annual statements.
148-19 (c) Commissioner. The term "Commissioner" shall mean
148-20 the Commissioner of Insurance, the commissioner's deputies, or the
148-21 State Board of Insurance, as appropriate.
148-22 (d) <(c)> Control. The term "control," including the
148-23 terms "controlling," "controlled by," and "under common control
148-24 with," means the possession, direct or indirect, of the power to
148-25 direct or cause the direction of the management and policies of a
148-26 person, whether through the ownership of voting securities, by
148-27 contract other than a commercial contract for goods or
148-28 non-management services, or otherwise, unless the power is the
148-29 result of an official position with or corporate office held by the
148-30 person. Control shall be presumed to exist if any person, directly
148-31 or indirectly, or with members of the person's immediate family,
148-32 owns, controls, or holds with the power to vote, or if any person
148-33 other than a corporate officer or director of a person holds
148-34 proxies representing, 10 percent or more of the voting securities
148-35 or authority of any other person, or if any person by contract or
148-36 <contractor> agreement is designated as an attorney-in-fact for a
148-37 Lloyd's Plan insurer under Article 18.02 of this code or for a
148-38 reciprocal or interinsurance exchange under Articles 19.02 and
148-39 19.10 of this code. This presumption may be rebutted by a showing
148-40 made in the manner provided by Section 3(j) that control does not
148-41 exist in fact and that the person rebutting the presumption is in
148-42 compliance with Sections 5(a) through (c) of this article. The
148-43 commissioner may determine, after furnishing all persons in
148-44 interest notice and opportunity to be heard and making specific
148-45 findings of fact to support such determination, that control exists
148-46 in fact, notwithstanding the absence of a presumption to that
148-47 effect, where a person exercises directly or indirectly either
148-48 alone or pursuant to an agreement with one or more other persons
148-49 such a controlling influence over the management or policies of an
148-50 authorized insurer as to make it necessary or appropriate in the
148-51 public interest or for the protection of the policyholders of the
148-52 insurer that the person be deemed to control the insurer.
148-53 (e) <(d)> Holding Company. The term "holding company"
148-54 means any person who directly or indirectly controls any insurer.
148-55 (f) <(e)> Controlled Insurer. The term "controlled
148-56 insurer" means an insurer controlled directly or indirectly by a
148-57 holding company.
148-58 (g) <(f)> Controlled Person. The term "controlled
148-59 person" means any person, other than a controlled insurer who is
148-60 controlled directly or indirectly by a holding company.
148-61 (h) Domestic Insurer. The term "domestic insurer"
148-62 includes a commercially domiciled insurer.
148-63 (i) <(g)> Insurance Holding Company System. The term
148-64 "insurance holding company system" consists of two or more
148-65 affiliated persons, one or more of which is an insurer.
148-66 (j) <(h)> Insurer. The term "insurer" shall include
148-67 all insurance companies organized or chartered under the laws of
148-68 this State, commercially domiciled insurers, or insurers licensed
148-69 to do business in this State, including capital stock companies,
148-70 mutual companies, farm mutual insurance companies, title insurance
149-1 companies, fraternal benefit societies, local mutual aid
149-2 associations, Statewide mutual assessment companies, county mutual
149-3 insurance companies, Lloyds' Plan companies, reciprocal or
149-4 interinsurance exchanges, stipulated premium insurance companies,
149-5 and group hospital service companies, except that it shall not
149-6 include agencies, authorities, or instrumentalities of the United
149-7 States, its possessions and territories, the Commonwealth of Puerto
149-8 Rico, the District of Columbia, or a state or political subdivision
149-9 of a state.
149-10 (k) <(i)> Person. A "person" is an individual, a
149-11 corporation, a partnership, an association, a joint stock company,
149-12 a trust, an unincorporated organization, any similar entity or any
149-13 combination of the foregoing acting in concert, but shall not
149-14 include any securities broker performing no more than the usual and
149-15 customary broker's function.
149-16 (l) <(j)> Securityholder. A "securityholder" of a
149-17 specified person is one who owns any security of such person,
149-18 including common stock, preferred stock, debt obligations, and any
149-19 other security convertible into or evidencing the right to acquire
149-20 any of the foregoing.
149-21 (m) <(k)> Subsidiary. A "subsidiary" of a specified
149-22 person is an affiliate controlled by such person directly or
149-23 indirectly through one or more intermediaries.
149-24 (n) <(l)> Voting Security. The term "voting security"
149-25 means any security or other instrument which has the power to vote
149-26 at a meeting of shareholders of a person for or against the
149-27 election of directors or any other matter involving the direction
149-28 of the management and policies of such person, or any other
149-29 security or instrument which the State Board of Insurance deems to
149-30 be of similar nature and considers necessary or appropriate, by
149-31 which such rules and regulations as it may prescribe in the public
149-32 interest deems to treat as a voting security.
149-33 (o) <(m)> Notwithstanding any other provision of this
149-34 article, the following shall not be deemed holding companies: the
149-35 United States, a state or any political subdivision, agency, or
149-36 instrumentality thereof, or any corporation which is wholly owned
149-37 directly or indirectly by one or more of the foregoing.
149-38 (p) <(n)> Immediate Family. The term "immediate
149-39 family" means a person's spouse, father, mother, children,
149-40 brothers, sisters, and grandchildren, the father, mother, brothers,
149-41 and sisters of the person's spouse, and the spouse of the person's
149-42 child, brother or sister, mother, father, or grandparent.
149-43 (q) <(o)> Ultimate Controlling Person. The term
149-44 "ultimate controlling person" means that person who is not
149-45 controlled by another person.
149-46 (r) <(p)> Notwithstanding any other provision of this
149-47 article, this article shall not be applicable to any insurance
149-48 holding company system in which the insurer, the holding company,
149-49 if any, the subsidiaries, if any, the affiliates, if any, and each
149-50 and every other member thereof, if any, is privately owned by not
149-51 more than five (5) securityholders, each of whom is and must be an
149-52 individual or a natural person, and the commissioner has found that
149-53 it is not necessary that such holding company system be regulated
149-54 under this article or certain provisions of this article and has
149-55 issued a total or partial exemption certificate to such holding
149-56 company which shall effect the exemption until revoked by the
149-57 commissioner.
149-58 (s) The commissioner may exempt from the provisions of
149-59 this article any commercially domiciled insurer if the commissioner
149-60 determines that the insurer has assets physically located in this
149-61 state or an asset to liability ratio sufficient to justify the
149-62 conclusion that there is no reasonable danger that the operations
149-63 or conduct of the business of the insurer could present a danger of
149-64 loss to the policyholders of this state.
149-65 SECTION 20.07. Sections 3(a) and (j), Article 21.49-1,
149-66 Insurance Code, are amended to read as follows:
149-67 (a) Registration. Every insurer which is authorized to do
149-68 business in this State and which is a member of an insurance
149-69 holding company system shall register with the commissioner, except
149-70 a foreign or non-domestic insurer subject to disclosure
150-1 requirements and standards adopted by statute or regulation in the
150-2 jurisdiction of its domicile which are substantially similar to
150-3 those contained in this article. The exemption from registration
150-4 for a foreign insurer does not apply to a commercially domiciled
150-5 insurer doing business in this state. Any insurer which is subject
150-6 to registration under this section shall register within 15 days
150-7 after it becomes subject to registration unless the commissioner
150-8 for good cause shown extends the time for registration, and then
150-9 within such extended time. The commissioner may require any
150-10 authorized insurer which is a member of an insurance holding
150-11 company system which is not subject to registration under this
150-12 section to furnish a copy of the registration statement or other
150-13 information filed by such insurance company with the insurance
150-14 regulatory authority of its domiciliary jurisdiction.
150-15 (j) Disclaimer. Any person may file with the commissioner a
150-16 disclaimer of affiliation with any authorized insurer or such a
150-17 disclaimer may be filed by such insurer or any member of an
150-18 insurance holding company system. The disclaimer shall fully
150-19 disclose all material relationships and bases for affiliation
150-20 between such person and such insurer as well as the basis for
150-21 disclaiming such affiliation. After a disclaimer has been filed,
150-22 the insurer shall be relieved of any duty to register or report
150-23 under this section which may arise out of the insurer's
150-24 relationship with such person unless and until the commissioner
150-25 disallows such a disclaimer. Unless disallowed by the
150-26 commissioner, a <A> disclaimer filed under this subsection relieves
150-27 <does not relieve> a person of the duty to comply with the
150-28 requirements of Sections 5(a) through (c) of this article. The
150-29 commissioner shall disallow such a disclaimer only after furnishing
150-30 all parties in interest with notice and opportunity to be heard and
150-31 after making specific findings of fact to support such
150-32 disallowance.
150-33 SECTION 20.08. Section 5(e), Article 21.49-1, Insurance
150-34 Code, is amended to read as follows:
150-35 (e) Exemptions. The provisions of this section shall not
150-36 apply to:
150-37 (1) any acquisition by a person who is a broker-dealer
150-38 under state or federal securities laws of any voting security
150-39 which, immediately prior to consummation of such acquisition, was
150-40 not issued and outstanding and which acquisition is solely for
150-41 resale under a plan approved by the commissioner that will not
150-42 reasonably result in an acquisition of control on resale and where
150-43 during the period prior to resale no actual positive act of control
150-44 by virtue of those shares is committed;
150-45 (2) any transaction which is subject to the provisions
150-46 of: (i) Article 21.25, Sections 1 through 5, of this code, dealing
150-47 with the merger or consolidation of two or more insurers and
150-48 complying with the terms of such article until the plan of merger
150-49 or consolidation has been filed by the domestic insurer with the
150-50 Commissioner of Insurance in accordance with such Article 21.25.
150-51 After the filing of such plan of merger or consolidation the
150-52 transaction shall be subject to the approval provisions of
150-53 Subsection (c) of Section 5 of this article, but the Commissioner
150-54 may exempt such transaction from any or all of the other provisions
150-55 and requirements of Section 5 of this article if the commissioner
150-56 finds that the notice, proxy statement, and other materials
150-57 furnished to shareholders and security holders in connection with
150-58 such merger or consolidation contained reasonable and adequate
150-59 factual and financial disclosure, material and information relating
150-60 to such transaction, (ii) Article 11.20 of this code, (iii) Article
150-61 11.21 of this code, (iv) Article 14.13 of this code, (v) Article
150-62 14.61 of this code, (vi) Article 14.63 of this code, (vii) Article
150-63 21.26 of this code, provided that the requirements of said article
150-64 are fully complied with, <and> (viii) Article 22.15 of this code,
150-65 provided that the requirements of said article are fully complied
150-66 with, and (ix) Article 22.19 of this code, provided that the
150-67 reinsurance is a total direct reinsurance agreement;
150-68 (3) any offer, request, invitation, agreement, or
150-69 acquisition which the commissioner by order shall exempt therefrom
150-70 as (i) not having been made or entered into for the purpose and not
151-1 having the effect of changing or influencing the control of a
151-2 domestic insurer, or (ii) as otherwise not comprehended within the
151-3 purposes of this section;
151-4 (4) any acquisition of a voting security of a domestic
151-5 insurer by a person in control of such domestic insurer if, after
151-6 such acquisition, such person, directly or indirectly, owns or
151-7 controls less than 50 percent of the then issued and outstanding
151-8 voting securities of such domestic insurer;
151-9 (5) any acquisition of a voting security of a domestic
151-10 insurer by a person that, directly or indirectly, owns or controls
151-11 as much as 10 percent but less than 50 percent of the then issued
151-12 and outstanding voting securities of such domestic insurer, and
151-13 such person would, after such acquisition, directly or indirectly,
151-14 own or control 50 percent or more of the then issued and
151-15 outstanding voting securities of such domestic insurer, provided
151-16 such person has made written application for such exemption and the
151-17 commissioner by order has determined that such acquisition will not
151-18 jeopardize the financial stability of the domestic insurer,
151-19 prejudice the interests of its policyholders, or adversely affect
151-20 the public interest; or
151-21 (6) any acquisition of a voting security of a domestic
151-22 insurer by a person that, prior thereto, directly or indirectly,
151-23 owns or controls more than 50 percent of the then issued and
151-24 outstanding voting securities of such domestic insurer.
151-25 SECTION 20.09. Article 21.49-2A(b), Insurance Code, is
151-26 amended to read as follows:
151-27 (b) Except as provided by Section (c) of this article, an
151-28 insurer may not cancel:
151-29 (1) a policy of liability insurance that is a renewal
151-30 or continuation policy; or
151-31 (2) a policy of liability insurance that is in its
151-32 initial policy period after the 60th day following the date on
151-33 which the policy was issued.
151-34 SECTION 20.10. Section 7(d), Article 21.49-2B, Insurance
151-35 Code, is amended to read as follows:
151-36 (d) An insurer may <shall> notify an insured who has filed
151-37 two claims in a period of less than three years that the insurer
151-38 may decline to renew the policy if the insured files a third claim
151-39 during the three-year period. If the insurer does not notify the
151-40 insured in accordance with this subsection, the insurer may not
151-41 refuse to renew the policy because of losses. The notice form must
151-42 list the policyholder's claims and contain the sentence: "Another
151-43 non-weather related loss could cause us to refuse to renew your
151-44 policy." <The notice must be in a form approved by the board.>
151-45 SECTION 20.11. Section 2(g), Article 22.13, Insurance Code,
151-46 is amended to read as follows:
151-47 (g) If a stipulated premium company ceases to write new
151-48 health, accident, sickness, or hospitalization policies, or any
151-49 combination of those policies, in an amount in excess of $10,000
151-50 for any one risk, and so notifies the commissioner, the
151-51 requirements imposed under Subsection (d) of this section relating
151-52 to increase of minimum capital shall be suspended until the date on
151-53 which the stipulated premium company resumes writing those health,
151-54 accident, sickness, or hospitalization policies, and upon such
151-55 resumption of writing of such policies, the stipulated premium
151-56 company shall be required to increase its capital to the amount
151-57 required by Subsection (d) as of the date of such resumption of
151-58 such policy writings. For purposes of this subsection, renewal of
151-59 a policy is not the writing of a new health, accident, sickness, or
151-60 hospitalization policy.
151-61 SECTION 20.12. Article 23.01, Insurance Code, is amended to
151-62 read as follows:
151-63 Art. 23.01. Incorporation; Definitions. (a) Any seven or
151-64 more persons on application to the secretary of state for a
151-65 corporate charter under the Texas Non-Profit Corporation Act as a
151-66 nonmembership corporation may be incorporated for the sole purpose
151-67 of establishing, maintaining, and operating non-profit legal
151-68 service plans, whereby legal services may be provided by such
151-69 corporation through contracting attorneys as is hereinafter
151-70 provided.
152-1 (b) As used in this chapter, the following words, unless the
152-2 context of their use clearly indicates otherwise, shall have the
152-3 following meanings:
152-4 (1) "Attorney" means a person <currently> licensed
152-5 <by the Supreme Court of Texas> to practice law in the jurisdiction
152-6 in which the legal services are to be provided.
152-7 (2) "Applicant" means a person applying for a legal
152-8 services contract for performance of legal services through a
152-9 corporation qualified under this chapter.
152-10 (3) "Benefit certificate" means a writing setting
152-11 forth the benefits and other required matters issued to a
152-12 participant under a group contract for legal services and also an
152-13 individual contract for legal services issued to a participant.
152-14 (4) "Contracting attorney" means an attorney who has
152-15 entered into the contract provided by Article 23.11 of this code.
152-16 (5) "Participant" means the person entitled to
152-17 performance of legal services under contract with a corporation
152-18 qualified under this chapter.
152-19 (6) "State Board of Insurance" means all of the
152-20 insurance regulatory officials whose duties and functions are
152-21 designated by the Insurance Code of Texas as such now exists or may
152-22 be amended in the future. Any duty stated by this chapter to be
152-23 performed by or to be placed on the State Board of Insurance is
152-24 placed upon and is to be performed by the insurance regulatory
152-25 official or group of officials on whom similar duties are placed or
152-26 to be performed for insurers or the business of insurance by the
152-27 Insurance Code. The multimember insurance regulatory body
152-28 designated by the Insurance Code as the uniform insurance
152-29 rule-making authority is authorized to enact rules designating the
152-30 proper insurance regulatory official to perform any duty placed by
152-31 this chapter on the insurance regulatory officials where such duty
152-32 is not similar to duties otherwise performed by a specific official
152-33 or group of such officials.
152-34 SECTION 20.13. Article 23.22, Insurance Code, is amended to
152-35 read as follows:
152-36 Art. 23.22. Complaints. The State Board of Insurance shall
152-37 refer a complaint <any complaints> received by it concerning the
152-38 performance of an <any> attorney licensed in this state who is
152-39 connected with a <any> corporation complying with this chapter to
152-40 the Supreme Court of the State of Texas or to any person designated
152-41 by the Supreme Court to receive attorney grievances from the
152-42 public. The board shall refer a complaint regarding an attorney
152-43 licensed in another jurisdiction who is connected with a
152-44 corporation complying with this chapter to the appropriate
152-45 licensing agency of the other jurisdiction.
152-46 SECTION 20.14. Article 1.24, Insurance Code, is amended to
152-47 read as follows:
152-48 Art. 1.24. To Make Inquiries. The Board is authorized to
152-49 address any reasonable inquiries to any insurance company or
152-50 insurance agent, or to the holder of any permit, certificate of
152-51 registration, or other authorization issued or existing under the
152-52 authority or authorization of this code, in relation to the
152-53 company's, agent's, or holder's business condition, or any matter
152-54 connected with its transactions which the Board may deem necessary
152-55 for the public good or for a proper discharge of its duties. It
152-56 shall be the duty of the addressee to <promptly> answer such
152-57 inquiries in writing not later than the 10th day after the date the
152-58 request is received. A response made under this article that is
152-59 otherwise privileged or confidential by law remains privileged or
152-60 confidential unless and until introduced into evidence at an
152-61 administrative hearing or in a court of competent jurisdiction.
152-62 The addressee may appeal the request in accordance with Article
152-63 1.04 of this code and the inquiry shall be stayed pending
152-64 resolution of the appeal.
152-65 SECTION 20.15. Section 1(a), Article 21.21, Insurance Code,
152-66 is amended to read as follows:
152-67 (a) The purpose of this Act is to regulate trade practices
152-68 in the business of insurance <in accordance with the intent of
152-69 Congress as expressed in the Act of Congress of March 9, 1945
152-70 (Public Law 15, 79th Congress),> by defining, or providing for the
153-1 determination of, all such practices in this state which constitute
153-2 unfair methods of competition or unfair or deceptive acts or
153-3 practices and by prohibiting the trade practices so defined or
153-4 determined.
153-5 SECTION 20.16. Sections 1A(b), (c), and (k), Article 21.50,
153-6 Insurance Code, are amended to read as follows:
153-7 (b) All policy forms, related forms, classifications, and
153-8 rules used by a mortgage guaranty insurer in this state shall be
153-9 exempt from approval by the board, but all such policy forms,
153-10 related forms, classifications, and rules which are to be used in
153-11 this state, except those filed under Subsection (k), shall be filed
153-12 with the board at least 15 days before they are to become
153-13 effective. The board may, after a hearing held on not less than 20
153-14 days' notice, specifying the matters to be considered at such
153-15 hearing, to every insurer which made such filing, and upon finding
153-16 that such filing is no longer in the best interest of the public of
153-17 this state, issue an order suspending such exemption as to any or
153-18 all insurers which made such filings and ordering such insurers to
153-19 cease and desist from the use of such policy forms, related forms,
153-20 classifications, and rules as the board may specify in its order.
153-21 <A mortgage guaranty insurer shall not issue or use policy forms
153-22 or related forms in this state until such forms are filed and
153-23 approved by the board. As soon as reasonably possible after the
153-24 filing has been made, the board shall approve or disapprove the
153-25 same; provided, however, that any filing shall be deemed approved
153-26 unless disapproved within 30 days; provided further, that the board
153-27 may by official order postpone action for such further time not
153-28 exceeding 30 days as it deems necessary for proper consideration.
153-29 The board shall approve uniform policy forms, related forms,
153-30 classifications, and rules for all lines and types of insurance
153-31 applicable to the various risks under this article except as
153-32 provided in Subsection (k) hereof.>
153-33 (c) No policy of mortgage guaranty insurance shall contain a
153-34 provision which allows subrogation rights against the borrower for
153-35 a deficiency arising from a foreclosure sale of a single-family
153-36 dwelling occupied by the borrower as the principal residence of the
153-37 borrower at the time of default on the mortgage. <The board shall
153-38 disapprove any such form if:>
153-39 <(1) It is in any respect in violation of or does not
153-40 comply with this code.>
153-41 <(2) It contains provisions which encourage
153-42 misrepresentation or are unjust, unfair, inequitable, misleading,
153-43 deceptive, or contrary to law or to the public policy of this
153-44 state.>
153-45 (k) Policies providing coverage for a pool or group of loans
153-46 in connection with the issuance of mortgage-backed securities or
153-47 bonds shall be exempt from approval by the board under Subsection
153-48 (b) of this section, but all such policy forms, related forms,
153-49 classifications, and rules which are to be used in this state shall
153-50 be filed with the board at least 15 days after <before> they are to
153-51 become effective. Mortgage guaranty insurers are prohibited from
153-52 discrimination in the issuance or extension of mortgage guaranty
153-53 insurance on the basis of the applicant's sex, marital status,
153-54 race, color, creed, national origin, disability, age, or solely on
153-55 the geographic location of the property unless (1) the
153-56 discrimination related to geographic location of the property is
153-57 for a business purpose that is not a mere pretext for unfair
153-58 discrimination; or (2) the refusal, cancellation, or limitation is
153-59 required by law or regulatory mandate. <The board may, after a
153-60 hearing held on not less than 20 days' notice, specifying the
153-61 matters to be considered at such hearing, to every insurer which
153-62 made such filing, and upon finding that such filing is no longer in
153-63 the best interest of the public of this state, issue an order
153-64 suspending such exemption as to any or all insurers which made such
153-65 filings and ordering such insurers to cease and desist from the use
153-66 of such policy forms, related forms, classifications, and rules as
153-67 the board may specify in its order.>
153-68 SECTION 20.17. The heading to Article 21.22, Insurance Code,
153-69 is amended to read as follows:
153-70 Art. 21.22. UNLIMITED EXEMPTION OF INSURANCE BENEFITS AND
154-1 CERTAIN ANNUITY PROCEEDS FROM SEIZURE UNDER PROCESS
154-2 SECTION 20.18. Article 21.22, Insurance Code, is amended by
154-3 amending Sections 1, 4, and 5 and adding Section 6 to read as
154-4 follows:
154-5 Sec. 1. Notwithstanding any provision of this code other
154-6 than this article, all money or benefits of any kind, including
154-7 policy proceeds and cash values, to be paid or rendered to the
154-8 insured or any beneficiary under any policy of insurance or annuity
154-9 contract issued by a life, health or accident insurance company,
154-10 including mutual and fraternal insurance, or under any plan or
154-11 program of annuities and benefits in use by any employer or
154-12 individual, shall:
154-13 (1) inure exclusively to the benefit of the person for
154-14 whose use and benefit the insurance or annuity is designated in the
154-15 policy or contract;
154-16 (2) be fully exempt from execution, attachment,
154-17 garnishment or other process;
154-18 (3) be fully exempt from being seized, taken or
154-19 appropriated or applied by any legal or equitable process or
154-20 operation of law to pay any debt or liability of the insured or of
154-21 any beneficiary, either before or after said money or benefits is
154-22 or are paid or rendered; and
154-23 (4) be fully exempt from all demands in any bankruptcy
154-24 proceeding of the insured or beneficiary.
154-25 Sec. 4. This article does not prevent the proper assignment
154-26 of any money or benefits to be paid or rendered under an insurance
154-27 policy or annuity contract to which this article applies, or any
154-28 rights under the policy or contract, by the insured, <or> owner, or
154-29 annuitant in accordance with the terms of the policy or contract.
154-30 Sec. 5. Wherever any policy of insurance, annuity contract,
154-31 or plan or program of annuities and benefits mentioned in Section 1
154-32 of this article shall contain a provision against assignment or
154-33 commutation by any beneficiary thereunder of the money or benefits
154-34 to be paid or rendered thereunder, or any rights therein, any
154-35 assignment or commutation or any attempted assignment or
154-36 commutation by such beneficiary of such money or benefits or rights
154-37 in violation of such provision shall be wholly void.
154-38 Sec. 6. For purposes of regulation under this code, an
154-39 annuity contract issued by a life, health, or accident insurance
154-40 company, including a mutual company or fraternal company, or under
154-41 any plan or program of annuities or benefits in use by an employer
154-42 or individual, shall be considered a policy or contract of
154-43 insurance.
154-44 SECTION 20.19. Subchapter G, Chapter 3, Insurance Code, is
154-45 amended by adding Article 3.70-13 to read as follows:
154-46 Art. 3.70-13. CERTAIN POLICIES CONTINUOUS. A guaranteed
154-47 renewable policy or a noncancellable policy shall be deemed to be a
154-48 continuous policy, subject only to the terms and conditions
154-49 thereof, including payment of policy premiums, and such policies
154-50 shall be considered to be continued in force by the payment of the
154-51 policy premium in accordance with the policy terms and conditions,
154-52 and such policies shall not be deemed or treated as renewed
154-53 policies by the payment of such contracted policy premiums. This
154-54 article does not apply to a health benefit plan adopted in
154-55 accordance with Chapter 26 of this code, as added by H.B. No. 2055,
154-56 Acts of the 73rd Legislature, Regular Session, 1993.
154-57 SECTION 20.20. Article 1.33, Insurance Code, is amended by
154-58 adding Section (e) to read as follows:
154-59 (e) Without limiting the authority granted by the other
154-60 sections of this article, the commissioner may, upon written
154-61 agreement or stipulation of all parties and any intervenor, in the
154-62 commissioner's sole discretion: (i) waive or modify the
154-63 publication of notice required by Articles 2.01, 2.03, 3.04, 3.05,
154-64 22.03, and 22.04 of this code, and (ii) informally dispose of any
154-65 contested case as provided by Section 13(e), Administrative
154-66 Procedure and Texas Register Act (Article 6252-13a, Vernon's Texas
154-67 Civil Statutes), or any subsequent amendment thereto,
154-68 notwithstanding any provision of this code which would otherwise
154-69 require a hearing before the commissioner.
154-70 SECTION 20.21. Subchapter C, Chapter 5, Insurance Code, is
155-1 amended by adding Article 5.35-2 to read as follows:
155-2 Art. 5.35-2. COVERAGE FOR REAL PROPERTY FOUNDATIONS. The
155-3 commissioner shall adopt an endorsement form that excludes coverage
155-4 for damage to foundations or slabs of the insured dwelling, other
155-5 than loss caused by fire, lightning, smoke, windstorm, hurricane,
155-6 hail, explosion, aircraft, vehicles, vandalism, malicious mischief,
155-7 riot, civil commotion, and falling objects, from a homeowner's,
155-8 farm and ranch owner's, or fire insurance policy promulgated under
155-9 Article 5.35 of this code. An insurer may attach this endorsement
155-10 only if the insured dwelling is more than 10 years old.
155-11 SECTION 20.22. Article 21.46, Insurance Code, is amended to
155-12 read as follows:
155-13 Art. 21.46. A. Whenever by the laws of any other state or
155-14 territory of the United States any taxes, including income and
155-15 corporate franchise, licenses, fees, fines, penalties, deposit
155-16 requirements or other obligations, prohibitions or restrictions are
155-17 imposed upon any insurance company organized in this State and
155-18 licensed and actually doing business in such other state or
155-19 territory which, in the aggregate are in excess of the aggregate of
155-20 the taxes, including income and corporate franchise, licenses,
155-21 fees, fines, penalties, deposit requirements or other obligations,
155-22 prohibitions or restrictions directly imposed upon a similar
155-23 insurance company of such other state or territory doing business
155-24 in this State, the State Board of Insurance shall impose upon any
155-25 similar company of such state or territory in the same manner and
155-26 for the same purpose, the same taxes, licenses, fees, fines,
155-27 penalties, deposit requirements or other obligations, prohibitions
155-28 or restrictions; provided, however, the aggregate of taxes,
155-29 licenses, fees, fines, penalties or other obligations imposed by
155-30 this State pursuant to this Article on an insurance company of
155-31 another state or territory shall not exceed the aggregate of such
155-32 charges imposed by such other state or territory on a similar
155-33 insurance company of this State actually licensed and doing
155-34 business therein; provided, further, that wherever under any law of
155-35 this State the basic rate of taxation of any insurance company of
155-36 another state or territory is reduced if any such insurance company
155-37 has made investments in Texas securities then in computing the
155-38 aggregate Texas premium tax burdens of any such insurance company
155-39 of any other state or territory each shall for purposes of
155-40 comparison with the premium tax laws of its home state be
155-41 considered to have assumed and paid an aggregate premium tax burden
155-42 equal to the basic rate; provided, further, that for the purpose of
155-43 this Section, an alien insurer shall be deemed a company of the
155-44 State designated by it wherein it has
155-45 (a) established its principal office or agency in the
155-46 United States, or
155-47 (b) maintains the largest amount of its assets held in
155-48 trust or on deposit for the security of its policyholders or
155-49 policyholders and creditors in the United States, or
155-50 (c) in which it was admitted to do business in the
155-51 United States.
155-52 Licenses and fees collected by the State Board of Insurance
155-53 under this Article shall be deposited in the State Treasury to the
155-54 credit of the general revenue fund.
155-55 The provisions of this Section shall not apply to ad valorem
155-56 taxes on real or personal property or to personal income taxes.
155-57 The provisions of this Act shall not apply to a company of
155-58 any other state doing business in this State if fifteen per cent
155-59 (15%) or more of the voting stock of said company is owned by a
155-60 corporation organized under the laws of this State, and domiciled
155-61 in this State; however, the prior provisions of this Act shall
155-62 apply without exception to any and all person or persons, company
155-63 or companies, firm or firms, association or associations, group or
155-64 groups, corporation or corporations, or any insurance organization
155-65 or organizations of any kind, which did not qualify as a matter of
155-66 fact, under the exception of this paragraph, on or before January
155-67 29, 1957.
155-68 B. Should the insurance department, commissioner, director,
155-69 or other similar insurance regulatory official of any other state
155-70 or territory of the United States impose any sanctions, fines,
156-1 penalties, financial or deposit requirements, prohibitions,
156-2 restrictions, regulatory requirements, or other obligations of any
156-3 kind upon any insurance company organized or chartered in this
156-4 state and licensed to transact business in such other state or
156-5 territory, because of the failure of the Texas Department of
156-6 Insurance to obtain, maintain, or receive certification or any
156-7 similar form of approval, compliance, or acceptance from, by, or as
156-8 a member of the National Association of Insurance Commissioners, or
156-9 any committee, task force, working group, or advisory committee
156-10 thereof, or because of the failure of the Texas Department of
156-11 Insurance to comply with any directive, financial annual statement
156-12 requirement, model act or regulation, market conduct or financial
156-13 examination report or requirement, or any report of any kind of the
156-14 National Association of Insurance Commissioners, or any committee,
156-15 task force, working group, or advisory committee thereof, the Texas
156-16 Department of Insurance shall, without exception or exclusion,
156-17 impose upon any and all insurance companies organized or chartered
156-18 in such other state or territory and licensed to do business in
156-19 this state the same sanctions, fines, penalties, deposit
156-20 requirements, prohibitions, restrictions, or other obligations
156-21 imposed upon the insurance company of this state.
156-22 SECTION 20.23. (a) The changes in law made to Articles
156-23 23.01 and 23.22, Insurance Code, by this article apply only to a
156-24 contract entered into or renewed by a nonprofit legal services
156-25 corporation on or after January 1, 1994. A contract that is
156-26 entered into or renewed before January 1, 1994, is governed by the
156-27 law as it existed immediately before the effective date of this
156-28 Act, and that law is continued in effect for that purpose.
156-29 (b) This article applies only to an insurance policy that is
156-30 delivered, issued for delivery, or renewed on or after January 1,
156-31 1994. A policy that is delivered, issued for delivery, or renewed
156-32 before January 1, 1994, is governed by the law as it existed
156-33 immediately before the effective date of this Act, and that law is
156-34 continued in effect for that purpose.
156-35 (c) The change in law made by this Act to Article 21.22,
156-36 Insurance Code, applies to money or benefits to be paid or rendered
156-37 to an insured or a beneficiary under an insurance policy or annuity
156-38 contract issued by a life, health, or accident insurance company
156-39 without regard to whether the policy or contract was issued or
156-40 entered into before, on, or after the effective date of this Act.
156-41 ARTICLE 21. CONTINUATION AND FUNCTIONS OF
156-42 OFFICE OF PUBLIC INSURANCE COUNSEL
156-43 SECTION 21.01. Article 1.35A, Insurance Code, is amended to
156-44 read as follows:
156-45 Art. 1.35A. Office of Public Insurance Counsel<.>
156-46 Sec. 1. CREATION; PURPOSE. <(a)> The independent office of
156-47 public insurance counsel is created to represent the interests of
156-48 insurance consumers in Texas.
156-49 Sec. 2. APPOINTMENT, QUALIFICATIONS, AND REMOVAL OF PUBLIC
156-50 COUNSEL. (a) <(b)> The governor with the advice and consent of
156-51 the senate shall appoint a public counsel who shall serve as the
156-52 executive director of the office of public insurance counsel.
156-53 (b) <(c)> To be eligible to serve as public counsel for the
156-54 office of public insurance counsel, a person must be a resident of
156-55 Texas and be licensed <eligible> to practice law in Texas. The
156-56 public counsel shall be a person who has demonstrated a strong
156-57 commitment and involvement in efforts to safeguard the rights of
156-58 the public and who possesses the knowledge and experience necessary
156-59 to practice effectively in insurance proceedings.
156-60 (c) A person is not eligible for appointment as public
156-61 counsel if the person or the person's spouse:
156-62 (1) is employed by or participates in the management
156-63 of a business entity or other organization regulated by the
156-64 department or receiving funds from the department;
156-65 (2) owns or controls, directly or indirectly, more
156-66 than a 10 percent interest in a business entity or other
156-67 organization regulated by the department or receiving funds from
156-68 the department or the office of public insurance counsel; or
156-69 (3) uses or receives a substantial amount of tangible
156-70 goods, services, or funds from the department or the office of
157-1 public insurance counsel, other than compensation or reimbursement
157-2 authorized by law for department or office of public insurance
157-3 counsel membership, attendance, or expenses.
157-4 (d) Appointment of the public counsel shall be made without
157-5 regard to the race, color, handicap, sex, religion, age, or
157-6 national origin of the appointee.
157-7 (e) <(d)> The public counsel shall serve for a term of two
157-8 years expiring on February 1 of each odd-numbered year.
157-9 (f) It is a ground for removal from office if the public
157-10 counsel:
157-11 (1) does not have at the time of appointment the
157-12 qualifications required by Subsection (b) of this section;
157-13 (2) does not maintain during service as public counsel
157-14 the qualifications required by Subsection (b) of this section;
157-15 (3) violates a prohibition established by Subsection
157-16 (c) of this section or Section 4 of this article; or
157-17 (4) cannot discharge the public counsel's duties for a
157-18 substantial part of the term for which the public counsel is
157-19 appointed because of illness or disability.
157-20 (g) The validity of an action of the office of public
157-21 insurance counsel is not affected by the fact that it is taken when
157-22 a ground for removal of the public counsel exists.
157-23 Sec. 3. ADMINISTRATION. (a) <(e)> The public counsel, as
157-24 executive director of the office of public insurance counsel, shall
157-25 be charged with the responsibility of administering, enforcing, and
157-26 carrying out the provisions of this article, including preparation
157-27 and submission to the legislature of a budget for the office,
157-28 employing all necessary professional, technical, and other
157-29 employees to carry out the provisions of this article, approval of
157-30 expenditures for professional services, travel, per diem, and other
157-31 actual and necessary expenses incurred in administering the office.
157-32 Expenses for the office shall be paid from the assessment imposed
157-33 in Article 1.35B of this chapter. The compensation for employees
157-34 of the office of public insurance counsel shall be fixed by the
157-35 legislature as provided by the General Appropriations Act.
157-36 (b) The office of public insurance counsel shall file
157-37 annually with the governor and the presiding officer of each house
157-38 of the legislature a complete and detailed written report
157-39 accounting for all funds received and disbursed by the office of
157-40 public insurance counsel during the preceding fiscal year. The
157-41 annual report must be in the form and reported in the time provided
157-42 by the General Appropriations Act.
157-43 (c) All money paid to the office of public insurance counsel
157-44 under this article shall be deposited in the state treasury.
157-45 (d) The public counsel or the public counsel's designee
157-46 shall prepare and maintain a written policy statement to ensure
157-47 implementation of a program of equal employment opportunity under
157-48 which all personnel transactions are made without regard to race,
157-49 color, disability, sex, religion, age, or national origin. The
157-50 policy statement must include:
157-51 (1) personnel policies, including policies relating to
157-52 recruitment, evaluation, selection, appointment, training, and
157-53 promotion of personnel that are in compliance with the Texas
157-54 Commission on Human Rights Act (Article 5221k, Vernon's Texas Civil
157-55 Statutes) and its subsequent amendments;
157-56 (2) a comprehensive analysis of the office of public
157-57 insurance counsel work force that meets federal and state
157-58 guidelines;
157-59 (3) procedures by which a determination can be made of
157-60 significant underuse in the office of public insurance counsel work
157-61 force of all persons for whom federal or state guidelines encourage
157-62 a more equitable balance; and
157-63 (4) reasonable methods to appropriately address those
157-64 areas of significant underuse.
157-65 (e) A policy statement prepared under Subsection (d) of this
157-66 section must cover an annual period, be updated at least annually
157-67 and reviewed by the Commission on Human Rights for compliance with
157-68 Subsection (d)(1) of this section, and be filed with the governor's
157-69 office.
157-70 (f) The governor's office shall deliver a biennial report to
158-1 the legislature based on the information received under Subsection
158-2 (e) of this section. The report may be made separately or as a
158-3 part of other biennial reports made to the legislature.
158-4 (g) The public counsel or the public counsel's designee
158-5 shall develop an intra-agency career ladder program. The program
158-6 shall require intra-agency posting of all nonentry level positions
158-7 concurrently with any public posting.
158-8 (h) The public counsel or the public counsel's designee
158-9 shall develop a system of annual performance evaluations. All
158-10 merit pay for office of public insurance counsel employees must be
158-11 based on the system established under this subsection.
158-12 (i) The office of public insurance counsel shall provide to
158-13 its public counsel and employees, as often as necessary,
158-14 information regarding their qualification for office or employment
158-15 under this article and their responsibilities under applicable laws
158-16 relating to standards of conduct for state officers or employees.
158-17 Sec. 4. CONFLICT OF INTEREST. (a) A person may not serve
158-18 as the public counsel or act as the general counsel for the office
158-19 of public insurance counsel if the person is required to register
158-20 as a lobbyist under Chapter 305, Government Code, because of the
158-21 person's activities for compensation related to the operation of
158-22 the department or the office of public insurance counsel.
158-23 (b) <(f)> A person serving as the public counsel may not,
158-24 for a period of two years after the date the person ceases to be
158-25 public counsel, represent any person in a proceeding before the
158-26 board or receive compensation for services rendered on behalf of
158-27 any person regarding a case pending before the rate board,
158-28 commissioner, or department <board>.
158-29 (c) An officer, employee, or paid consultant of a trade
158-30 association in the field of insurance may not serve as the public
158-31 counsel or be an employee of the office of public insurance counsel
158-32 who is exempt from the state's position classification plan or is
158-33 compensated at or above the amount prescribed by the General
158-34 Appropriations Act for step 1, salary group 17, of the position
158-35 classification salary schedule.
158-36 (d) A person who is the spouse of an officer, manager, or
158-37 paid consultant of a trade association in the field of insurance
158-38 may not serve as the public counsel and may not be an office of
158-39 public insurance counsel employee who is exempt from the state's
158-40 position classification plan or is compensated at or above the
158-41 amount prescribed by the General Appropriations Act for step 1,
158-42 salary group 17, of the position classification salary schedule.
158-43 (e) For purposes of this section, a trade association is a
158-44 nonprofit, cooperative, and voluntarily joined association of
158-45 business or professional competitors designed to assist its members
158-46 and its industry or profession in dealing with mutual business or
158-47 professional problems and in promoting their common interest.
158-48 Sec. 5. POWERS AND DUTIES. (a) <(g)> The office of public
158-49 insurance counsel may assess the impact of insurance rates, rules,
158-50 and forms on insurance consumers in Texas and, in its own name,
158-51 shall appear and act only in public hearings before the
158-52 commissioner or department as an advocate of positions that are
158-53 most advantageous to a substantial number of insurance consumers as
158-54 determined by the public counsel for the office only on those items
158-55 set forth in Subsection (b) of this section.
158-56 (b) <(h)> The public counsel:
158-57 (1) may appear or intervene as a matter of right
158-58 before the commissioner or department <State Board of Insurance> as
158-59 a party or otherwise on behalf of insurance consumers as a class
158-60 in:
158-61 (A) matters involving rates, rules, and forms
158-62 affecting property and casualty insurance;
158-63 (B) matters involving rates, rules, and forms
158-64 affecting title insurance;
158-65 (C) matters involving rules affecting life,
158-66 health, and accident insurance;
158-67 (D) matters involving rates, rules, and forms
158-68 affecting credit life, and credit accident and health insurance;
158-69 (E) matters involving rates, rules, and forms
158-70 affecting all other lines of insurance for which the commissioner
159-1 or department <State Board of Insurance> promulgates, sets, or
159-2 approves rates, rules, and/or forms; and
159-3 (F) matters involving withdrawal of approval of
159-4 policy forms only as initiated by the department under Article
159-5 3.42(f) and 3.42(g) of this code if the public counsel determines
159-6 that such forms do not comply with this code or any valid rule
159-7 relating thereto duly adopted by the commissioner <State Board of
159-8 Insurance> or is otherwise contrary to law;
159-9 (2) may initiate or intervene as a matter of right or
159-10 otherwise appear in a judicial proceeding involving or arising out
159-11 of any action taken by an administrative agency in a proceeding in
159-12 which the public counsel previously appeared under the authority
159-13 granted by this article;
159-14 (3) is entitled to access to any records of the
159-15 department that are available to any party other than the board's
159-16 staff in a proceeding before the board under the authority granted
159-17 by this article;
159-18 (4) is entitled to obtain discovery under the
159-19 Administrative Procedure and Texas Register Act (Article 6252-13a,
159-20 Vernon's Texas Civil Statutes) of any nonprivileged matter that is
159-21 relevant to the subject matter involved in a <any> proceeding or
159-22 submission before the commissioner or department as authorized by
159-23 this article <State Board of Insurance>;
159-24 (5) may recommend legislation to the legislature that,
159-25 in the judgment of the public counsel, would affect positively the
159-26 interests of insurance consumers;
159-27 (6) may appear or intervene as a matter of right as a
159-28 party or otherwise on behalf of insurance consumers as a class in
159-29 all proceedings in which the public counsel determines that
159-30 insurance consumers need representation, except that the public
159-31 counsel may not intervene in any enforcement or parens patriae
159-32 proceeding brought by the attorney general; <and>
159-33 (7) may appear or intervene before the commissioner or
159-34 department as a party or otherwise on behalf of small commercial
159-35 insurance consumers, as a class, in matters involving rates, rules,
159-36 and forms affecting commercial insurance consumers, as a class, in
159-37 all proceedings where it is deemed by the counsel that small
159-38 commercial consumers are in need of representation; and
159-39 (8) shall submit to the department for adoption a
159-40 consumer bill of rights appropriate to each personal line of
159-41 insurance regulated by the board to be distributed upon the
159-42 issuance of a policy by insurers to each policyholder under rules
159-43 adopted by the department.
159-44 (c) <(i)> The public counsel may not intervene or appear in
159-45 any proceedings or hearings before the <board or> commissioner or
159-46 department, or other proceedings, or make any public or private
159-47 statements, that relate to approval or consideration of individual
159-48 charters, licenses, acquisitions, mergers, <or> examinations,
159-49 proceedings concerning the solvency of individual insurers <after a
159-50 receiver is appointed>, financial issues, policy forms,
159-51 advertising, regulatory issues, or other matters affecting
159-52 individual insurers <insurer> or agents <agent licenses>. The
159-53 confidentiality requirements applicable to examination reports
159-54 under Article 1.18 of this code and to the commissioner under
159-55 Section 3A, Article 21.28, of this code shall apply to the public
159-56 counsel.
159-57 (d) <(j)> Any order of the commissioner <board> which
159-58 determines, approves, or sets a rate under this code and is
159-59 appealed shall be and remain in effect during the pendency of an
159-60 appeal. During the pendency of the appeal, an insurer shall use
159-61 the rate provided in the order being appealed. Such rate shall be
159-62 lawful and valid during such appeal, and an insurer shall not be
159-63 required to make any refund therefrom after a decision on the
159-64 appeal. If a decision on appeal shall vacate the order, the rate
159-65 established by the commissioner <board> prior to the rendition of
159-66 the vacated order shall be in effect from and after the date of
159-67 remand and until the commissioner <board> shall make a further
159-68 determination; however, the commissioner <board> shall consider the
159-69 order of the court in setting future rates.
159-70 Sec. 6. PUBLIC ACCESS AND INFORMATION. (a) The office of
160-1 public insurance counsel shall prepare information of public
160-2 interest describing the functions of the office. The office of
160-3 public insurance counsel shall make the information available to
160-4 the public and appropriate state agencies.
160-5 (b) The office of public insurance counsel shall prepare and
160-6 maintain a written plan that describes how a person who does not
160-7 speak English can be provided reasonable access to the office of
160-8 public insurance counsel's programs. The office of public
160-9 insurance counsel shall also comply with federal and state laws for
160-10 program and facility accessibility.
160-11 Sec. 7. APPLICABILITY OF SUNSET ACT. <(k)> The office of
160-12 public insurance counsel is subject to Chapter 325, Government Code
160-13 (Texas Sunset Act). Unless continued in existence as provided by
160-14 that chapter, the office is abolished September 1, 2005 <1993>.
160-15 ARTICLE 22. REDESIGNATION OF PROVISIONS WITH
160-16 DUPLICATE DESIGNATIONS; CONFORMING AMENDMENTS
160-17 SECTION 22.01. Article 3.77, Insurance Code, as added by
160-18 Chapter 800, Acts of the 71st Legislature, Regular Session, 1989,
160-19 is reenacted and redesignated as Article 3.78, Insurance Code, to
160-20 read as follows:
160-21 Art. 3.78 <3.77>. Eligibility for Benefits for Alzheimer's
160-22 Disease. If an individual or group policy, contract, or
160-23 certificate, or evidence of coverage providing coverage for
160-24 Alzheimer's disease is delivered or issued for delivery in this
160-25 state by an insurer, including a group hospital service corporation
160-26 under Chapter 20 of this code, and the policy, contract,
160-27 certificate, or evidence requires demonstrable proof of organic
160-28 disease or other proof before the insurer will authorize payment of
160-29 benefits for Alzheimer's disease, a clinical diagnosis of
160-30 Alzheimer's disease by a physician licensed in this state,
160-31 including history and physical, neurological, psychological and/or
160-32 psychiatric evaluations, and laboratory studies, shall satisfy the
160-33 requirement for demonstrable proof of organic disease or other
160-34 proof under the coverage.
160-35 SECTION 22.02. Subsection (e), Section 2, Article 21.48A,
160-36 Insurance Code, as added by Section 2, Chapter 327, Acts of the
160-37 72nd Legislature, Regular Session, 1991, is reenacted and
160-38 redesignated as Subsection (f) to read as follows:
160-39 (f) <(e)> A Lender that requires a Borrower to secure
160-40 insurance coverage before the Lender will provide a residential
160-41 mortgage loan shall accept an insurance binder as evidence of the
160-42 required insurance if:
160-43 (1) the insurance binder is issued by a licensed local
160-44 recording agent as that term is defined by Article 21.14 of this
160-45 code and, if requested to do so, the agent shall furnish
160-46 appropriate evidence to the Lender;
160-47 (2) the local recording agent is appointed to
160-48 represent the insurance company whose name appears on the binder
160-49 and is authorized to issue binders and, if requested to do so, the
160-50 agent shall furnish appropriate evidence to the Lender;
160-51 (3) the insurance binder is accompanied by evidence of
160-52 payment of the required premium; and
160-53 (4) the insurance binder will be replaced by an
160-54 original insurance policy for the required coverage within 30 days
160-55 of the date of the issuance of the insurance binder.
160-56 If the foregoing conditions are met, a Lender may not require
160-57 a Borrower to provide an original insurance policy in lieu of the
160-58 insurance binder.
160-59 SECTION 22.03. Article 21.49-14, Insurance Code, as added by
160-60 Section 5.08, Chapter 1, Acts of the 70th Legislature, 1st Called
160-61 Session, 1987, is reenacted and redesignated as Article 21.49-13,
160-62 Insurance Code, to read as follows:
160-63 Art. 21.49-13 <21.49-14>. Excess Liability Pools
160-64 Sec. 1. Definitions. In this article:
160-65 (1) "Pool" means an excess liability pool created
160-66 under this article.
160-67 (2) "Fund" means an excess liability fund.
160-68 (3) "Board" means the board of trustees of a pool.
160-69 (4) "County" means a county in this state.
160-70 (5) "School district" means a public school district
161-1 created under the laws of this state.
161-2 (6) "Junior college district" means a junior college
161-3 district organized under the laws of this state.
161-4 (7) "Entity" means a county, school district, or
161-5 junior college district.
161-6 Sec. 2. Creation of pools. (a) Separate excess liability
161-7 pools may be created for counties, school districts, and junior
161-8 college districts as provided by this article.
161-9 (b) An excess liability pool may be created:
161-10 (1) for counties, on written agreement to create the
161-11 pool by the county judges of not fewer than five counties in this
161-12 state;
161-13 (2) for school districts, on written agreement to
161-14 create the pool by the presidents of the boards of trustees, acting
161-15 on behalf of their boards, of not fewer than five school districts
161-16 in this state; or
161-17 (3) for junior college districts, on written agreement
161-18 to create the pool by the presiding officers of the boards of
161-19 trustees, acting on behalf of their boards, of not fewer than five
161-20 junior college districts in this state.
161-21 (c) An excess liability pool is created to provide excess
161-22 liability insurance coverage as provided by this article and the
161-23 plan.
161-24 (d) An entity may participate only in a pool created for
161-25 that type of entity. There may not be more than one county excess
161-26 liability pool, one school district excess liability pool, and one
161-27 junior college district excess liability pool.
161-28 Sec. 3. Scope of coverage. (a) A pool shall insure an
161-29 entity and its officers and employees against liability for acts
161-30 and omissions under the laws governing that entity and its officers
161-31 and employees in their official or employment capacities.
161-32 (b) Under excess liability insurance coverage, a pool shall
161-33 pay that portion of a claim against an entity and its officers and
161-34 employees that is finally determined or settled or is included in a
161-35 final judgment of a court and that is in excess of $500,000, but
161-36 the amount paid by the pool may not be in excess of the amount
161-37 determined by the board to be actuarially sound for the pool.
161-38 (c) Under the insurance coverage, the pool may participate
161-39 in the evaluation, settlement, or defense of any claim.
161-40 Sec. 4. Participation in pool. An entity is entitled to
161-41 coverage from the pool on:
161-42 (1) submitting a complete application;
161-43 (2) providing any other information required by the
161-44 pool;
161-45 (3) meeting the underwriting standards established by
161-46 the pool; and
161-47 (4) paying the premiums required for the coverage.
161-48 Sec. 5. Payment of contributions and premiums. An entity
161-49 purchasing excess liability insurance coverage from the pool may
161-50 use funds of the entity to pay any contributions or premiums
161-51 required by the pool for the coverage.
161-52 Sec. 6. Plan of operation. (a) At the time the written
161-53 agreement is executed under Section 2 of this article, the creators
161-54 shall select nine persons to serve as a temporary board to draft
161-55 the plan of operation for a pool.
161-56 (b) Within 30 days after selection, the members of a
161-57 temporary board shall meet to prepare a detailed plan of operation
161-58 for the pool.
161-59 (c) The plan of operation may include any matters relating
161-60 to the organization and operation of the pool and the pool's
161-61 finances. The plan must include:
161-62 (1) the organizational structure of the pool,
161-63 including the method of selection of the board, the method of
161-64 procedure and operation of the board, and a summary of the method
161-65 for managing and operating the pool;
161-66 (2) a description of the contributions and other
161-67 financial arrangements necessary to cover the initial expenses of
161-68 the pool and estimates supported by statistical data of the amounts
161-69 of those contributions or other financial arrangements;
161-70 (3) underwriting standards and procedures for the
162-1 evaluation of risks;
162-2 (4) procedures for purchase of reinsurance;
162-3 (5) methods, procedures, and guidelines for
162-4 establishing rates for premiums for and maximum limits of excess
162-5 coverage available from the pool;
162-6 (6) procedures for the processing and payment of
162-7 claims;
162-8 (7) methods and procedures for defraying any losses
162-9 and expenses of the pool;
162-10 (8) methods, procedures, and guidelines for the
162-11 management and investment of the fund;
162-12 (9) guidelines for nonrenewal of coverage;
162-13 (10) minimum limits of capital and surplus to be
162-14 maintained by the pool; and
162-15 (11) minimum standards for reserve requirements for
162-16 the pool.
162-17 (d) The temporary board shall complete and adopt the plan of
162-18 operation within 90 days after the date of the appointment of the
162-19 temporary board.
162-20 (e) Within 15 days following the day on which the plan of
162-21 operation is adopted, the first board must be selected as provided
162-22 by the plan of operation. The members of the first board shall
162-23 take office not later than the 30th day following the date of the
162-24 adoption of the plan of operation.
162-25 Sec. 7. Board of trustees. (a) A pool is governed by a
162-26 board of nine trustees selected as provided by the plan of
162-27 operation.
162-28 (b) Members of the board serve for terms of two years with
162-29 the terms expiring at the time provided by the plan of operation.
162-30 (c) A vacancy on the board shall be filled as provided by
162-31 the plan of operation.
162-32 (d) A person serving on the board who is an officer or
162-33 employee of an entity covered by the pool performs duties on the
162-34 board as additional duties required of his original office or
162-35 employment.
162-36 (e) Each member of the board shall execute a bond in the
162-37 amount required by the plan of operation payable to the pool and
162-38 conditioned on the faithful performance of his duties. The pool
162-39 shall pay the cost of the bond.
162-40 (f) Members of the board are not entitled to compensation
162-41 for their service on the board.
162-42 (g) The board shall select from its membership persons to
162-43 serve as chairman, vice-chairman, and secretary. The persons
162-44 selected serve for terms of one year that expire as provided by the
162-45 plan of operation.
162-46 (h) The board shall hold meetings at the call of the
162-47 chairman and at times established by its rules.
162-48 (i) A majority of the members of the board constitutes a
162-49 quorum.
162-50 (j) In addition to other duties provided by this article and
162-51 the plan of operation, the board shall:
162-52 (1) approve contracts other than excess liability
162-53 insurance contracts issued to entities by the pool;
162-54 (2) consider and adopt premium rate schedules for the
162-55 pool;
162-56 (3) consider and adopt policy forms for the pool;
162-57 (4) receive service of summons on behalf of the pool;
162-58 and
162-59 (5) appoint and supervise the activities of the pool
162-60 manager.
162-61 (k) In addition to other authority provided by this article,
162-62 the board may:
162-63 (1) adopt necessary rules;
162-64 (2) delegate specific responsibilities to the pool
162-65 manager; and
162-66 (3) amend the plan of operation to assure the orderly
162-67 management and operation of the pool.
162-68 (l) A member of the board is not liable with respect to a
162-69 claim or judgment for which coverage is provided by the pool or for
162-70 a claim or judgment against an entity covered by the pool against
163-1 whom a claim is made.
163-2 Sec. 8. Pool Manager. (a) The board shall appoint a pool
163-3 manager who shall serve at the pleasure of the board.
163-4 (b) The pool manager is entitled to receive the compensation
163-5 authorized by the board.
163-6 (c) The pool manager shall execute a bond in the amount
163-7 determined by the board, payable to the pool, conditioned on the
163-8 faithful performance of his duties. The pool shall pay the cost of
163-9 the bond.
163-10 (d) The pool manager shall manage and conduct the affairs of
163-11 the pool under the general supervision of the board and shall
163-12 perform any other duties directed by the board.
163-13 (e) In addition to any other duties provided by this article
163-14 or by the board, the pool manager shall:
163-15 (1) receive and pass on applications from entities for
163-16 excess liability coverage from the pool;
163-17 (2) negotiate contracts for the pool;
163-18 (3) prepare premium rate schedules for the approval of
163-19 the board;
163-20 (4) collect and compile statistical data relating to
163-21 the excess liability coverage provided by the pool, including
163-22 relevant loss, expense, and premium data, and make that information
163-23 available to the board and to the public; and
163-24 (5) prepare and submit to the board for approval
163-25 proposed policy forms for pool coverage.
163-26 (f) The pool manager may refuse to renew the coverage of any
163-27 entity insured by the pool based on the guidelines provided by the
163-28 plan of operation.
163-29 Sec. 9. Employees and other personnel. (a) The pool
163-30 manager shall employ or contract with persons necessary to assist
163-31 the board and pool manager in carrying out the powers and duties of
163-32 the pool.
163-33 (b) The board shall approve compensation paid to employees
163-34 of the pool and contracts made with other persons under this
163-35 section.
163-36 (c) The board may require any employee or person with whom
163-37 it contracts under this section to execute a bond in an amount
163-38 determined by the board, payable to the board, and conditioned on
163-39 the faithful performance of the employee's or person's duties or
163-40 responsibilities to the pool.
163-41 (d) An employee or person with whom the pool has contracted
163-42 under this section is not liable with respect to any claim or
163-43 judgment for which coverage is provided by the pool or for any
163-44 claim or judgment against any entity covered by the pool against
163-45 whom a claim is made.
163-46 Sec. 10. Office. (a) A pool shall maintain its principal
163-47 office in Austin, Texas.
163-48 (b) The records, files, and other documents and information
163-49 relating to the pool must be maintained in the pool's principal
163-50 office.
163-51 Sec. 11. Rules. The board may adopt and amend rules to
163-52 carry out this article.
163-53 Sec. 12. General powers and duties. (a) A pool shall:
163-54 (1) issue excess liability coverage to each entity
163-55 entitled to coverage under this article;
163-56 (2) collect premiums for coverage issued or renewed by
163-57 the pool;
163-58 (3) process and pay valid claims; and
163-59 (4) maintain detailed data regarding the pool.
163-60 (b) The pool may:
163-61 (1) enter into contracts;
163-62 (2) purchase reinsurance;
163-63 (3) cancel or refuse to renew coverage; and
163-64 (4) perform any other acts necessary to carry out this
163-65 article, the plan of operation, and the rules adopted by the board.
163-66 Sec. 13. Excess liability fund. (a) On creation of a pool,
163-67 the first board shall create an excess liability fund.
163-68 (b) The fund is composed of:
163-69 (1) premiums paid by entities for coverage by the
163-70 pool;
164-1 (2) contributions and other money received by the pool
164-2 to cover the initial expenses of the fund;
164-3 (3) investments and money earned from investments of
164-4 the fund; and
164-5 (4) any other money received by the pool.
164-6 (c) The pool manager shall manage the fund under the general
164-7 supervision of the board.
164-8 (d) Administrative expenses of the pool may be paid from the
164-9 fund, but payments for this purpose during any fiscal year of the
164-10 pool may not exceed the amount established by the board.
164-11 (e) Money in the fund may not be used to pay punitive
164-12 damages, fines or penalties for violation of a civil or criminal
164-13 statute, or fines or penalties imposed for violation of an
164-14 administrative rule or regulation, or an order, rule, or ordinance.
164-15 (f) Money for a claim may not be paid from the fund under
164-16 excess liability insurance coverage unless and until all benefits
164-17 payable under any other underlying policy of liability insurance
164-18 covering the claim or judgment are exhausted.
164-19 (g) The board may select one or more banks to serve as
164-20 depository for money of the fund. Before the pool manager deposits
164-21 fund money in a depository bank in an amount that exceeds the
164-22 maximum amount secured by the Federal Deposit Insurance
164-23 Corporation, the bank must execute a bond or provide other security
164-24 in an amount sufficient to secure from loss the fund money that
164-25 exceeds the amount secured by the Federal Deposit Insurance
164-26 Corporation.
164-27 (h) Each year as provided by the plan of operation, the
164-28 board shall have an actuary who is a member of the American Academy
164-29 of Actuaries audit the capital, surplus, and reserves of the pool
164-30 and prepare for the pool and its members a formal report.
164-31 Sec. 14. Investments. (a) The fund manager, under the
164-32 general supervision of the board, shall manage and invest the money
164-33 in the fund in the manner provided by the plan of operation.
164-34 (b) Money earned by investment of money in the fund must be
164-35 deposited in the fund or reinvested for the fund.
164-36 Sec. 15. Contributions. The board shall determine the
164-37 amount of any contributions necessary to meet initial expenses of
164-38 the pool. The board shall make this determination based on the
164-39 data provided in the plan of operation.
164-40 Sec. 16. Premium rates; limits of coverage. (a) The board
164-41 shall determine the rates for premiums that will be charged and the
164-42 maximum limits of coverage provided to assure that the pool is
164-43 actuarially sound.
164-44 (b) The pool manager shall prepare the statistical data and
164-45 other information and the proposed rate schedules and maximum
164-46 limits of coverage for consideration of the board.
164-47 (c) The board shall periodically reexamine the rate
164-48 schedules and the maximum limits of coverage as conditions change.
164-49 Sec. 17. Coverage period. (a) On accepting coverage from
164-50 the pool, an entity shall maintain that coverage for a period not
164-51 less than 36 calendar months following the month the coverage is
164-52 issued.
164-53 (b) An entity that voluntarily discontinues coverage in the
164-54 pool may not again obtain coverage from the pool for at least 36
164-55 calendar months following the month in which the coverage was
164-56 discontinued.
164-57 Sec. 18. Coverage. Excess liability coverage provided by
164-58 the pool may be provided on a claims-made or an occurrence basis.
164-59 Sec. 19. Nonrenewal. (a) Except as provided by Subsection
164-60 (b) of this section, the pool may refuse to renew the coverage of
164-61 any entity that fails to comply with the pool's underwriting
164-62 standards.
164-63 (b) The pool may not refuse to renew the coverage of an
164-64 entity for the first 36 calendar months following the month in
164-65 which the entity was first insured by the pool.
164-66 (c) Section 17(b) of this article does not apply to
164-67 discontinuance of an entity's coverage if the pool refuses renewal
164-68 under this section. An entity whose coverage is not renewed is not
164-69 eligible to apply for new coverage during the 12 calendar months
164-70 beginning after the month in which the pool gave written notice
165-1 that it would not renew the coverage.
165-2 Sec. 20. Shortage of available money. (a) If money in the
165-3 fund will be exhausted by payment of all final and settled claims
165-4 and final judgments during the fiscal year, the amount paid by the
165-5 pool to each person having a claim or judgment shall be prorated,
165-6 with each person receiving an amount that is equal to the
165-7 percentage the amount owed to him by the pool bears to the total
165-8 amount owed, outstanding, and payable by the pool.
165-9 (b) The remaining amount that is due and unpaid to a person
165-10 who receives prorated payment under Subsection (a) of this section
165-11 must be paid in the immediately following fiscal year.
165-12 Sec. 21. Commissions. A pool may pay commissions from the
165-13 fund on approval of the board.
165-14 Sec. 22. Application of other laws. (a) Except as provided
165-15 by Subsection (b) of this section, the pool is not considered
165-16 insurance under the Insurance Code and other laws of this state,
165-17 and the State Board of Insurance has no jurisdiction over the pool.
165-18 (b) The pool shall collect the necessary data, information,
165-19 and statements and shall file with the State Board of Insurance the
165-20 reports and statements required by Articles 1.24A and 1.24B and is
165-21 subject to 21.21 of this code.
165-22 SECTION 22.04. Section 5, Article 17.25, Insurance Code, is
165-23 amended to read as follows:
165-24 Sec. 5. Policy Forms Prescribed. Each county mutual
165-25 insurance company shall be subject to the provisions of Article
165-26 5.06 and <of> Article 5.35 <and of Article 5.36> of this Code. The
165-27 Board of Insurance Commissioners pursuant to Article 5.35 may in
165-28 its discretion make, promulgate and establish uniform policies for
165-29 county mutual insurance companies different from the uniform
165-30 policies made, promulgated and established for use by companies
165-31 other than county mutual insurance companies, and shall prescribe
165-32 the conditions under which such policies may be adopted and used by
165-33 county mutual insurance companies, and the conditions under which
165-34 such companies shall adopt and use the same forms and no others as
165-35 are prescribed for other companies.
165-36 SECTION 22.05. Article 8.24(i), Insurance Code, is amended
165-37 to read as follows:
165-38 (i) The department shall have authority to suspend or revoke
165-39 the certificate of authority of any insurance carrier authorized to
165-40 do business in Texas under this Article, if the State Board of
165-41 Insurance, after notice and opportunity for hearing, shall find
165-42 that such carrier has systematically, with neglect and with willful
165-43 disregard, failed to comply with its obligations derived from the
165-44 contracts of insurance, and the laws applicable thereto, as
165-45 contained in policies issued in the State of Texas.
165-46 Any carrier aggrieved by an order of the State Board of
165-47 Insurance hereunder shall be entitled to appeal therefrom pursuant
165-48 to the provisions of Article 1.04 <1.04(f)> of this code <the
165-49 Insurance Code>.
165-50 SECTION 22.06. Section 9, Article 21.49, Insurance Code, is
165-51 amended to read as follows:
165-52 Sec. 9. Appeals. Any person insured pursuant to this Act,
165-53 or his duly authorized representative, or any affected insurer who
165-54 may be aggrieved by an act, ruling or decision of the Association,
165-55 may, within 30 days after such act, ruling or decision, appeal to
165-56 the commissioner. In the event the Association is aggrieved by the
165-57 action of the commissioner with respect to any ruling, order, or
165-58 determination of the commissioner, it may, within 30 days after
165-59 such action, make a written request to the commissioner, for a
165-60 hearing thereon. The commissioner shall hear the Association, or
165-61 the appeal from an act, ruling or decision of the Association,
165-62 within 30 days after receipt of such request or appeal and shall
165-63 give not less than 10 days' written notice of the time and place of
165-64 hearing to the Association making such request or the person, or
165-65 his duly authorized representative, appealing from the act, ruling
165-66 or decision of the Association. A hearing on an act, ruling or
165-67 decision of the Association relating to the payment of, the amount
165-68 of, or the denial of a particular claim shall be held, at the
165-69 request of the claimant, in either the county in which the covered
165-70 property is located or Travis County. Within 30 days after the
166-1 hearing, the commissioner shall affirm, reverse or modify its
166-2 previous action or the act, ruling or decision appealed to the
166-3 commissioner. Pending such hearing and decision thereon, the
166-4 commissioner may suspend or postpone the effective date of its
166-5 previous rule or of the act, ruling or decision appealed to the
166-6 commissioner. The Association, or the person aggrieved by any
166-7 order or decision of the commissioner, may thereafter appeal to
166-8 either a District Court of Travis County, Texas, or a District
166-9 Court in the county in which the covered property is located. An
166-10 action brought under this section is subject to the procedures
166-11 established under Article 1.04 <1.04(f)> of this code.
166-12 SECTION 22.07. Section 7(b), Article 21.49-3, Insurance
166-13 Code, is amended to read as follows:
166-14 (b) In the event any person insured or applying for
166-15 insurance is aggrieved by the final action of the board of
166-16 directors of the association, the aggrieved party may, within 30
166-17 days after such action, make a written request to the commissioner
166-18 for a hearing thereon. The commissioner shall hear the appeal from
166-19 an act, ruling, or decision of the association, within 30 days
166-20 after receipt of such request or appeal and shall give not less
166-21 than 10 days' written notice of the time and place of hearing to
166-22 the person, or his duly authorized representative, appealing from
166-23 the act, ruling, or decision of the board of directors of the
166-24 association. Within 30 days after such hearing, the commissioner
166-25 shall affirm, reverse, or modify the act, ruling, or decision
166-26 appealed to the commissioner. Pending such hearing and decision
166-27 thereon, the commissioner may suspend or postpone the effective
166-28 date of the rule or of the act, ruling, or decision appealed. The
166-29 association, or the person aggrieved by any order or decision of
166-30 the commissioner, may thereafter appeal in accordance with Article
166-31 1.04 <1.04(f)> of this code.
166-32 ARTICLE 23. CONSOLIDATION OF FUNDS
166-33 SECTION 23.01. The application of Sections 403.094 and
166-34 403.095, Government Code, to a fund or the permissible uses of
166-35 revenue or fund balances is not affected by this Act.
166-36 ARTICLE 24. EFFECTIVE DATE; EMERGENCY
166-37 SECTION 24.01. Except as otherwise provided by this Act,
166-38 this Act takes effect September 1, 1993.
166-39 SECTION 24.02. Section 20.16 of this Act shall only apply
166-40 to policies and certificates of insurance issued on or after
166-41 September 1, 1993.
166-42 SECTION 24.03. The importance of this legislation and the
166-43 crowded condition of the calendars in both houses create an
166-44 emergency and an imperative public necessity that the
166-45 constitutional rule requiring bills to be read on three several
166-46 days in each house be suspended, and this rule is hereby suspended,
166-47 and that this Act take effect and be in force according to its
166-48 terms, and it is so enacted.
166-49 * * * * *
166-50 Austin,
166-51 Texas
166-52 May 22, 1993
166-53 Hon. Bob Bullock
166-54 President of the Senate
166-55 Sir:
166-56 We, your Committee on Economic Development to which was referred
166-57 H.B. No. 1461, have had the same under consideration, and I am
166-58 instructed to report it back to the Senate with the recommendation
166-59 that it do not pass, but that the Committee Substitute adopted in
166-60 lieu thereof do pass and be printed.
166-61 Parker,
166-62 Chairman
166-63 * * * * *
166-64 WITNESSES
166-65 FOR AGAINST ON
166-66 ___________________________________________________________________
166-67 Name: Ann Richards x
166-68 Representing:
166-69 City: Austin
166-70 -------------------------------------------------------------------
167-1 Name: Allene Evans x
167-2 Representing: State Board of Insurance
167-3 City: Austin
167-4 -------------------------------------------------------------------
167-5 Name: Fred B. Werkenthin x
167-6 Representing: Farmers Insurance Group
167-7 City: Austin
167-8 -------------------------------------------------------------------
167-9 Name: Burnie Burnie x
167-10 Representing: Various Clients
167-11 City: Austin
167-12 -------------------------------------------------------------------
167-13 Name: Bob Wilsford x
167-14 Representing: Fireman's Fund Ins. Co.
167-15 City: Dallas
167-16 -------------------------------------------------------------------
167-17 Name: Joe Walraven x
167-18 Representing: Sunset Advisory Commission
167-19 City: Austin
167-20 -------------------------------------------------------------------
167-21 Name: Danny Mize x
167-22 Representing: General Accident Ins. Co.
167-23 City: Houston
167-24 -------------------------------------------------------------------
167-25 Name: Bob Huxel x
167-26 Representing: IIAT
167-27 City: Austin
167-28 -------------------------------------------------------------------
167-29 Name: James K. Presnal x
167-30 Representing: State Farm Insurance Co.
167-31 City: Austin
167-32 -------------------------------------------------------------------
167-33 Name: Jay Thompson x
167-34 Representing: AFACT
167-35 City: Austin
167-36 -------------------------------------------------------------------
167-37 Name: Wade Spilman x
167-38 Representing: Exxon Corporation
167-39 City: Austin
167-40 -------------------------------------------------------------------
167-41 Name: Chet Brooks x
167-42 Representing: Various Clients
167-43 City: Austin
167-44 -------------------------------------------------------------------
167-45 FOR AGAINST ON
167-46 ___________________________________________________________________
167-47 Name: Paul F. Davis x
167-48 Representing: Texas Pharmaceutical Assn.
167-49 City: Austin
167-50 -------------------------------------------------------------------
167-51 Name: Will D. Davis x
167-52 Representing: TLROA
167-53 City: Austin
167-54 -------------------------------------------------------------------
167-55 Name: Leticia Van de Putt x
167-56 Representing: Self
167-57 City: San Antonio
167-58 -------------------------------------------------------------------
167-59 Name: Richard Gieger x
167-60 Representing: AFACT
167-61 City: Dallas
167-62 -------------------------------------------------------------------
167-63 Name: Mary Ann Raesener x
167-64 Representing: Tx HMO Assn.
167-65 City: Austin
167-66 -------------------------------------------------------------------
167-67 Name: Kim Yelkin x
167-68 Representing: Tx Surplus Lines Assn.
167-69 City: Austin
167-70 -------------------------------------------------------------------
168-1 Name: Jon M. Livers x
168-2 Representing: Gulf Insurance Group
168-3 City: Trophy Club, Tx
168-4 -------------------------------------------------------------------
168-5 Name: Pamela Brown x
168-6 Representing: Consumers Union
168-7 City: Austin
168-8 -------------------------------------------------------------------
168-9 Name: Tom Bond x
168-10 Representing: Tx HMO Assn, NAII, Others
168-11 City: Austin
168-12 -------------------------------------------------------------------
168-13 Name: John Vasquez x
168-14 Representing: Self
168-15 City: Austin
168-16 -------------------------------------------------------------------
168-17 Name: Wally Goodman x
168-18 Representing: Ind. Insurance Agents of Tx
168-19 City: Corpus Christi
168-20 -------------------------------------------------------------------
168-21 Name: Bob Duke x
168-22 Representing: Ins. Premium Finance Co.
168-23 City: Austin
168-24 -------------------------------------------------------------------
168-25 Name: Joseph C. Boggins x
168-26 Representing: Mid-American Indemnity Ins. Co
168-27 City: Austin
168-28 -------------------------------------------------------------------
168-29 Name: Robert C. Sneed x
168-30 Representing: Tx Assn. Life Ins. Officials
168-31 City: Austin
168-32 -------------------------------------------------------------------
168-33 Name: Kenneth Tooley x
168-34 Representing: Tx Assn. of Life Underwriters
168-35 City: Austin
168-36 -------------------------------------------------------------------
168-37 Name: Charlotte Flynn x
168-38 Representing: Gray Panthers
168-39 City: Austin
168-40 -------------------------------------------------------------------
168-41 Name: Don B. Mauro x
168-42 Representing: Fields Financial Services, Inc
168-43 City: Austin
168-44 -------------------------------------------------------------------
168-45 FOR AGAINST ON
168-46 ___________________________________________________________________
168-47 Name: Jan Ferguson x
168-48 Representing: Prop. & Casualty Guaranty Assn
168-49 City: Austin
168-50 -------------------------------------------------------------------
168-51 Name: Edwin Benjamin x
168-52 Representing: People's Insurance Adjustor
168-53 City: Austin
168-54 -------------------------------------------------------------------
168-55 Name: Roy Ray x
168-56 Representing: AARP
168-57 City: Austin
168-58 -------------------------------------------------------------------
168-59 Name: Linda Garner x
168-60 Representing: Accident Ins. Services, Inc.
168-61 City: Houston
168-62 -------------------------------------------------------------------
168-63 Name: Dane Harris x
168-64 Representing: Tx Assn. of Business
168-65 City: Austin
168-66 -------------------------------------------------------------------
168-67 Name: Brian Davis x
168-68 Representing: T.E. Moor & Co./Tembico, Inc.
168-69 City: Austin
168-70 -------------------------------------------------------------------
169-1 Name: C. Dean Davis x
169-2 Representing: Tx Pharmaceutical Assn.
169-3 City: Austin
169-4 -------------------------------------------------------------------
169-5 Name: Robert W. Blevins x
169-6 Representing: Tx Life Ins. Assn.
169-7 City: Dallas
169-8 -------------------------------------------------------------------
169-9 Name: Harold G. Duble x
169-10 Representing: Highlands Insurance Co.
169-11 City: Houston
169-12 -------------------------------------------------------------------
169-13 Name: William C. Marcoux x
169-14 Representing: Lloyds of London
169-15 City: Washington, DC
169-16 -------------------------------------------------------------------
169-17 Name: Terri Wyne x
169-18 Representing: Property Loss Claim Service
169-19 City: Cedar Park
169-20 -------------------------------------------------------------------
169-21 Name: Pam Beachley x
169-22 Representing: Business Ins. Consumers Assn.
169-23 City: Austin
169-24 -------------------------------------------------------------------
169-25 Name: Ken Wendler x
169-26 Representing: TP&CGA
169-27 City: Austin
169-28 -------------------------------------------------------------------