By: Harris of Dallas S.B. No. 1088
A BILL TO BE ENTITLED
AN ACT
1-1 relating to transactions that do not constitute doing an insurance
1-2 business in this state.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Section 2, Article 1.14-1, Insurance Code, is
1-5 amended to read as follows:
1-6 Sec. 2. Insurance Business Defined (a) Any of the
1-7 following acts in this state effected by mail or otherwise is
1-8 defined to be doing an insurance business in this state. The venue
1-9 of an act committed by mail is at the point where the matter
1-10 transmitted by mail is delivered and takes effect. Unless
1-11 otherwise indicated, the term insurer as used in this Article
1-12 includes all corporations, associations, partnerships and
1-13 individuals engaged as principals in the business of insurance and
1-14 also includes interinsurance exchanges, mutual benefit societies,
1-15 and insurance exchanges and syndicates as defined by rules
1-16 promulgated by the State Board of Insurance.
1-17 1. The making of or proposing to make, as an insurer,
1-18 an insurance contract.
1-19 2. The making of or proposing to make, as guarantor,
1-20 or surety, any contract of guaranty or suretyship as a vocation and
1-21 not merely incidental to any other legitimate business or activity
1-22 of the guarantor or surety.
1-23 3. The taking or receiving of any application for
2-1 insurance.
2-2 4. The receiving or collection of any premium,
2-3 commission, membership fees, assessments, dues or other
2-4 consideration for any insurance or any part thereof.
2-5 5. The issuance or delivery of contracts of insurance
2-6 to residents of this state or to persons authorized to do business
2-7 in this state.
2-8 6. Directly or indirectly acting as an agent for or
2-9 otherwise representing or aiding on behalf of another any person or
2-10 insurer in the solicitation, negotiation, procurement or
2-11 effectuation of insurance or renewals thereof or in the
2-12 dissemination of information as to coverage or rates, or forwarding
2-13 of applications, or delivery of policies or contracts or inspection
2-14 of risks, a fixing of rates or investigation or adjustment of
2-15 claims or losses or in the transaction of matters subsequent to
2-16 effectuation of the contract and arising out of it, or in any other
2-17 manner representing or assisting a person or insurer in the
2-18 transaction of insurance with respect to subjects of insurance
2-19 resident, located or to be performed in this state. The provisions
2-20 of this subdivision shall not operate to prohibit full-time
2-21 salaried employees of a corporate insured from acting in the
2-22 capacity of an insurance manager or buyer in placing insurance in
2-23 behalf of such employer.
2-24 7. Contracting to provide indemnification or expense
2-25 reimbursement in this state to persons domiciled in this state or
3-1 for risks located in this state, whether as an insurer, agent,
3-2 administrator, trust, funding mechanism, or by any other method,
3-3 for any type of medical expenses including, but not limited to
3-4 surgical, chiropractic, physical therapy, speech pathology,
3-5 audiology, professional mental health, dental, hospital, or
3-6 optometric expenses, whether this coverage is by direct payment,
3-7 reimbursement, or otherwise. This provision shall not apply to:
3-8 (i) any program otherwise authorized by
3-9 law that is established by any political subdivision of this state
3-10 or under the provisions of The Interlocal Cooperation Act (Article
3-11 4413(32c,) Vernon's Texas Civil Statutes) or by a state agency; or
3-12 (ii) a multiple employer welfare
3-13 arrangement which is fully insured as defined in 29 U.S.C.A.
3-14 Section 1144(b)(6) except that the Commissioner may apply any laws
3-15 that regulate the business of insurance in this state to the extent
3-16 that such laws provide (1) standards requiring the maintenance of
3-17 specified levels of contributions, which any such plan, or any
3-18 trust established under such a plan, must meet in order to be
3-19 considered under such law able to pay benefits in full when due,
3-20 and (2) provisions to enforce such standards.
3-21 8. The doing of any kind of insurance business
3-22 specifically recognized as constituting the doing of an insurance
3-23 business within the meaning of the statutes relating to insurance.
3-24 9. The doing or proposing to do any insurance business
3-25 in substance equivalent to any of the foregoing in a manner
4-1 designed to evade the provisions of the statutes.
4-2 10. Any other transactions of business in this state
4-3 by an insurer.
4-4 11. With respect to policies authorized under Article
4-5 3.74 of this code, the use, creation, publication, mailing, or
4-6 dissemination of an advertisement relating to any of the acts
4-7 defined in this subsection to be doing an insurance business
4-8 unless:
4-9 (i) that advertisement is used, created,
4-10 published, mailed, or disseminated on behalf of a person or insurer
4-11 authorized under this title to engage in the business of insurance
4-12 in this state, who has actual knowledge of the content of the
4-13 advertisement and has authorized the advertisement to be used,
4-14 created, published, mailed, or disseminated on that person's or
4-15 insurer's behalf; and
4-16 (ii) the person or insurer on whose behalf
4-17 the advertisement is used, created, published, mailed, or
4-18 disseminated is, in that advertisement, clearly identified by name
4-19 as the sponsor of the advertisement.
4-20 (b) The provisions of this section do not apply to:
4-21 1. The lawful transaction of surplus lines insurance.
4-22 2. The lawful transaction of reinsurance by insurers.
4-23 3. Transactions in this state involving a policy
4-24 lawfully solicited, written, and delivered outside of this state
4-25 covering only subjects of insurance not resident, located, or
5-1 expressly to be performed in this state at the time of insurance,
5-2 and which transactions are subsequent to the issuance of such
5-3 policy.
5-4 4. Transactions involving contracts of insurance
5-5 independently procured through negotiations occurring entirely
5-6 outside of this state which are reported and on which premium tax
5-7 is paid in accordance with this Article.
5-8 5. Transactions in this state involving group life,
5-9 health or accident insurance (other than credit insurance) and
5-10 group annuities where the master policy of such groups was lawfully
5-11 issued and delivered in a state in which the company was authorized
5-12 to do an insurance business and such transactions are authorized by
5-13 other statutes of this state.
5-14 6. Lawful transactions by servicing companies of the
5-15 Texas workers' compensation employers' rejected risk fund pursuant
5-16 to Section 4.08, Article 5.76-2.
5-17 7. Transactions in this state of an insurance manager
5-18 or buyer as a full-time salaried employee in placing, managing and
5-19 administering insurance and insurance programs on behalf of his or
5-20 her employer, its parent and affiliated companies.
5-21 8. Transactions in this state involving a non-admitted
5-22 captive insurance company.
5-23 9. For purposes of this section only:
5-24 (i) "Captive insurance company" means any
5-25 company that insures solely (1) the risks of its parent and
6-1 affiliated companies and (2) directors' and officers' liability
6-2 insurance for the directors and officers of its parent and
6-3 affiliated companies.
6-4 (ii) "Affiliated company" means any
6-5 company in the same corporate system as a parent by virtue of
6-6 common ownership, control, operation or management.
6-7 (iii) "Parent" means a corporation that
6-8 directly or indirectly owns, controls, or holds the power to vote
6-9 more than 50% of the outstanding voting securities of a captive
6-10 insurance company.
6-11 (c) The State Board of Insurance shall promulgate rules
6-12 defining insurance exchanges and syndicates covered by Subsection
6-13 (a) of this section.
6-14 SECTION 2. The importance of this legislation and the
6-15 crowded condition of the calendars in both houses create an
6-16 emergency and an imperative public necessity that the
6-17 constitutional rule requiring bills to be read on three several
6-18 days in each house be suspended, and this rule is hereby suspended.