By Kubiak H.B. No. 2602
74R4992 DLF-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the establishment of a state cooperative and private
1-3 cooperatives for the purchase of insurance for certain fire
1-4 departments.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Chapter 419, Government Code, is amended by
1-7 adding Subchapter F to read as follows:
1-8 SUBCHAPTER F. INSURANCE COOPERATIVES
1-9 Sec. 419.101. DEFINITIONS. In this subchapter:
1-10 (1) "Board of directors" means the board of directors
1-11 elected by a private cooperative.
1-12 (2) "Board of trustees" means the board of trustees of
1-13 the state cooperative.
1-14 (3) "Cooperative" means the state cooperative or a
1-15 private cooperative.
1-16 (4) "Fire department" means:
1-17 (A) a department of a municipality, county, or
1-18 special district or authority that is organized to prevent or
1-19 suppress fires; or
1-20 (B) a volunteer fire department organized to
1-21 prevent or suppress fires without compensation.
1-22 (5) "Private cooperative" means a private purchasing
1-23 cooperative established under this subchapter.
1-24 (6) "State cooperative" means the Texas fire
2-1 department insurance purchasing cooperative established under this
2-2 subchapter.
2-3 Sec. 419.102. TEXAS FIRE DEPARTMENT INSURANCE PURCHASING
2-4 COOPERATIVE. (a) The Texas fire department insurance purchasing
2-5 cooperative is a nonprofit organization established to make
2-6 property and casualty and errors and omissions insurance available
2-7 to fire departments.
2-8 (b) The state cooperative is administered by a six-member
2-9 board of trustees appointed by the governor with the advice and
2-10 consent of the senate. The members of the board of trustees must
2-11 represent fire departments in this state. The director of the
2-12 Texas Forest Service shall serve as an ex officio member of the
2-13 board of trustees.
2-14 (c) The appointed members of the board of trustees serve
2-15 staggered six-year terms, with the terms of two members expiring
2-16 February 1 of each odd-numbered year.
2-17 (d) A member of the board of trustees may not be compensated
2-18 for serving on the board of trustees but is entitled to
2-19 reimbursement for actual expenses incurred in performing functions
2-20 as a member of the board of trustees as provided by the General
2-21 Appropriations Act.
2-22 (e) The board of trustees shall employ an executive
2-23 director. The executive director may hire other employees as
2-24 necessary.
2-25 (f) The board of trustees may develop regional subdivisions
2-26 of the state cooperative and may authorize each subdivision to
2-27 separately exercise the powers and duties of a cooperative.
3-1 (g) Salaries for employees of the state cooperative and
3-2 related costs may be paid from administrative fees collected from
3-3 employers and carriers or other sources of funding arranged by the
3-4 state cooperative.
3-5 (h) A member of the board of trustees, the executive
3-6 director, and an employee or agent of the state cooperative is not
3-7 liable for an act performed in good faith in the execution of
3-8 duties in connection with the state cooperative.
3-9 (i) The state cooperative may not use money appropriated by
3-10 the state to pay or otherwise subsidize any portion of the premium
3-11 for a fire department insured through the cooperative.
3-12 Sec. 419.103. PRIVATE PURCHASING COOPERATIVE. (a) Two or
3-13 more fire departments may form a cooperative to purchase insurance
3-14 for its members under this subchapter. A private cooperative must
3-15 be organized as a nonprofit corporation and has the rights and
3-16 duties provided by the Texas Non-Profit Corporation Act (Article
3-17 1396-1.01 et seq., Vernon's Texas Civil Statutes).
3-18 (b) The board of directors shall file annually with the
3-19 director of the Texas Forest Service a statement of all amounts
3-20 collected and expenses incurred for each of the preceding three
3-21 years.
3-22 Sec. 419.104. SCOPE OF COVERAGE PROVIDED. (a) A
3-23 cooperative may provide only:
3-24 (1) property and casualty coverage for fire
3-25 departments; and
3-26 (2) errors or omissions coverage to indemnify a member
3-27 of the governing body, official, employee, or volunteer of a fire
4-1 department for an error or omission arising from the performance of
4-2 the duties of the member of the governing body, official, employee,
4-3 or volunteer.
4-4 (b) A cooperative may not provide:
4-5 (1) insurance that provides health benefits to fire
4-6 department employees;
4-7 (2) life insurance for fire department employees; or
4-8 (3) workers' compensation insurance for fire
4-9 departments.
4-10 Sec. 419.105. POWERS AND DUTIES OF COOPERATIVE. (a) A
4-11 cooperative may:
4-12 (1) arrange for property and casualty or errors and
4-13 omissions coverage for fire departments that participate in the
4-14 cooperative by contracting with one or more insurance companies;
4-15 (2) collect premiums to cover the cost of:
4-16 (A) insurance coverage purchased through the
4-17 cooperative; and
4-18 (B) the cooperative's administrative expenses;
4-19 (3) contract with agents to market coverage issued
4-20 through the cooperative;
4-21 (4) establish administrative and accounting procedures
4-22 for the operation of the cooperative;
4-23 (5) establish criteria governing the eligibility of
4-24 insurance companies to provide coverage through the cooperative;
4-25 (6) establish criteria governing the eligibility of
4-26 fire departments to participate in coverage issued through the
4-27 cooperative, including criteria governing equipment and safety
5-1 standards for the vehicles, vessels, aircraft, or buildings to be
5-2 covered;
5-3 (7) establish procedures under which a fire department
5-4 that applies for or participates in coverage issued through the
5-5 cooperative may have a grievance reviewed by an impartial person;
5-6 (8) contract with an insurance company or
5-7 administrator to provide administrative services to the
5-8 cooperative;
5-9 (9) contract with an insurance company to provide
5-10 services to fire departments covered through the cooperative,
5-11 including risk management and loss control services;
5-12 (10) publicize the cooperative to fire departments;
5-13 and
5-14 (11) negotiate the premiums paid by its members.
5-15 (b) A cooperative may not provide coverage under this
5-16 subchapter through self-insurance.
5-17 Sec. 419.106. COOPERATIVE NOT INSURER. (a) A cooperative
5-18 is not an insurer and the employees of the cooperative are not
5-19 required to be licensed under Subchapter A, Chapter 21, Insurance
5-20 Code.
5-21 (b) An agent or administrator used and compensated by the
5-22 cooperative must be licensed as required by Subchapter A, Chapter
5-23 21, Insurance Code.
5-24 SECTION 2. In making the initial appointments to the board
5-25 of trustees of the Texas fire department insurance purchasing
5-26 cooperative established under Subchapter F, Chapter 419, Government
5-27 Code, as added by this Act, the governor shall appoint two members
6-1 for terms expiring February 1, 1997, two members for terms expiring
6-2 February 1, 1999, and two members for terms expiring February 1,
6-3 2001.
6-4 SECTION 3. The importance of this legislation and the
6-5 crowded condition of the calendars in both houses create an
6-6 emergency and an imperative public necessity that the
6-7 constitutional rule requiring bills to be read on three several
6-8 days in each house be suspended, and this rule is hereby suspended,
6-9 and that this Act take effect and be in force from and after its
6-10 passage, and it is so enacted.