By Duncan H.B. No. 2915
Substitute the following for H.B. No. 2915:
By Duncan C.S.H.B. No. 2915
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 to amend Article 3.42, Texas Insurance Code, relating to approval
1-3 and use of life, health and accident insurance policy forms.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Article 3.42, Insurance Code, is amended to read
1-6 as follows:
1-7 Art. 3.42. Policy Form Approval. (a) No policy, contract
1-8 or certificate of life, term or endowment insurance, group life or
1-9 term insurance, industrial life insurance, accident or health
1-10 insurance, group accident or health insurance, hospitalization
1-11 insurance, group hospitalization insurance, medical or surgical
1-12 insurance, group medical or surgical insurance, or fraternal
1-13 benefit insurance, and no annuity or pure endowment contract or
1-14 group annuity contract, shall be delivered, issued or used in this
1-15 state by a life, accident, health or casualty insurance company, a
1-16 mutual life insurance company, mutual insurance company other than
1-17 life, mutual or natural premium life insurance company, general
1-18 casualty company, Lloyds, reciprocal or interinsurance exchange,
1-19 fraternal benefit society, group hospitalization service or any
1-20 other insurer, unless the form of said policy, contract or
1-21 certificate has been filed with the department <State Board of
1-22 Insurance> as provided by Subsections <in Paragraph> (c) and (d) of
1-23 this Article. Provided, however, that this Article shall not apply
2-1 to any society, company or other insurer whose activities are by
2-2 statute exempt from the control of the department <State Board of
2-3 Insurance> and which is entitled by statute to an exemption
2-4 certificate from the department <said Board> in evidence of its
2-5 exempt status; provided, further, that this Act shall not be
2-6 construed to enlarge the powers of any of the insurers subject to
2-7 this Article.
2-8 (b) No application form which is required to be or is
2-9 attached to the policy, contract or certificate, and no rider or
2-10 endorsement to be attached to, printed upon or used in connection
2-11 with any policy, contract or certificate described by Subsection
2-12 <in Paragraph> (a) of this Article shall be delivered, issued or
2-13 used in this state by any insurer described by Subsection <in
2-14 Paragraph> (a) of this Article unless the form of said application,
2-15 rider or endorsement has been filed with the department <State
2-16 Board of Insurance> as provided by Subsections <in Paragraph> (c)
2-17 and (d) of this Article. Each individual accident and sickness
2-18 policy application form, which is required to be or is attached to
2-19 the policy, shall comply with the rules and regulations of the
2-20 commissioner adopted under <Board promulgated pursuant to>
2-21 Subchapter G of this chapter. Provided, however, that this Article
2-22 shall not apply to riders or endorsements which relate to the
2-23 manner of distribution of benefits or to the reservation of rights
2-24 and benefits under such policies, contracts and certificates, and
2-25 which are used at the request of the holder of the policy, contract
3-1 or certificate.
3-2 (c) Each <(1) Every such> filing <hereby> required under
3-3 Subsection (a) or (b) of this Article shall be made prior to any
3-4 such issuance, delivery or use of such form, contract or policy.
3-5 On that filing, the <The> insurer may immediately issue, deliver
3-6 and use such form, contract or policy, provided such filing shall
3-7 be accompanied by a certification on behalf of the filing insurer,
3-8 signed by either an attorney licensed to practice law in this
3-9 state, an actuary familiar with the requirements of this Code and
3-10 the applicable rules and regulations adopted pursuant thereto, or
3-11 the chief executive officer of such filing insurer or a person
3-12 designated by that officer. Such certification must affirm that it
3-13 is on behalf of the insurer, that the insurer is bound thereby,
3-14 that the person certifying has reviewed the filing, and that, based
3-15 upon that person's best knowledge, information, and belief, such
3-16 filed form, contract, or policy complies in all respects with the
3-17 provisions of this Code and the adopted rules and regulations that
3-18 are applicable to such policy, contract, certificate, application,
3-19 rider, endorsement, or other form being filed. At the expiration
3-20 of 60 <sixty> days after receipt of such filed form, contract or
3-21 policy by the department <State Board of Insurance>, such form,
3-22 contract or policy shall be deemed approved by the department
3-23 <State Board of Insurance> unless prior thereto it has been
3-24 affirmatively either approved or disapproved by the written order
3-25 of the commissioner <Board>, or the insurer has requested in
4-1 writing that the approval period <deemer> be extended for an
4-2 additional period <of time,> not to exceed 45 <sixty> days. The
4-3 request for extension shall be considered granted upon being
4-4 received by the department <State Board of Insurance>. Only one
4-5 extension may be granted. On the expiration of the extension, the
4-6 form is considered approved unless the commissioner has taken
4-7 affirmative action to either approve or disapprove the form before
4-8 the expiration of the extension. If such policy, contract or form
4-9 is affirmatively disapproved by the commissioner <Board>, the
4-10 insurer, upon receiving written notice thereof, shall immediately
4-11 cease issuing or using such policy, contract or form. If any such
4-12 filed contract, policy or form is used, issued, or delivered prior
4-13 to either affirmative or statutory deemer approval, and if
4-14 corrections are required to be made before the commissioner will
4-15 approve the contract, policy, or form <approval in order> to bring
4-16 the contract, policy or form into complete compliance with the
4-17 provisions of this Code and the applicable rules of the
4-18 commissioner <State Board of Insurance>, the commissioner
4-19 <Commissioner, at his discretion,> may order the insurer either to
4-20 reissue a corrected contract, policy or form to replace the one
4-21 previously issued, delivered, or used, or to amend and correct it
4-22 by endorsement or rider. If a contract, policy or form is
4-23 disapproved or approval is withdrawn under the provisions of
4-24 Section (i) <(f)> of this Article, the commissioner <Commissioner>
4-25 may<, at his discretion,> order a similar replacement or amendment
5-1 to correct the original contract, policy or form. In the event it
5-2 is determined after notice and opportunity for hearing that Texas
5-3 insureds have been financially damaged by the use of a contract,
5-4 policy or form filed and used under this subsection but that has
5-5 not been approved as provided by this subsection and that does not
5-6 comply with this Code and legally adopted applicable rules of the
5-7 commissioner <State Board of Insurance>, and the commissioner
5-8 determines that the insurer intentionally used and issued that
5-9 contract, policy, or form with the knowledge that it did not comply
5-10 with this Code or those applicable rules, the commissioner
5-11 <Commissioner of Insurance> may order the insurer to make complete
5-12 restitution to those financially damaged insureds in such form and
5-13 amount and within such time period as determined by the
5-14 commissioner <Commissioner>. This section shall not be construed
5-15 to be in derogation or to in any way limit the applicability of any
5-16 otherwise applicable statute, but the commissioner may not impose
5-17 other sanctions or penalties on an insurer for the issuance of a
5-18 form, policy or contract filed under this subsection except as
5-19 specifically provided in this subsection.
5-20 (d) <(2)> In lieu of an as and alternative to such filing
5-21 being accompanied by such certification as required by Subsection
5-22 (c) of this Article <in paragraph (1) above>, any such filing
5-23 required hereby shall be made no less than 60 <sixty> days in
5-24 advance of any such issuance, delivery, or use of such form, and at
5-25 the expiration of 60 <sixty> days the form so filed shall be deemed
6-1 approved by the commissioner <State Board of Insurance> unless
6-2 prior thereto it has been affirmatively approved or disapproved by
6-3 the written order of the commissioner <said Board>. Approval of
6-4 any such form by the commissioner <such Board> shall constitute a
6-5 waiver of any unexpired portion of the waiting period, or periods,
6-6 herein provided.
6-7 <(3) Those filed policies, contracts or forms which
6-8 are subject to either Section 11, Article 3.28, or Section 9,
6-9 Article 3.44a of this Code, may be filed and used in accordance
6-10 with paragraph (1) above, but such filed policies, contracts or
6-11 forms shall not be deemed to be approved by the expiration of the
6-12 sixty days provided for in either paragraph (1) or (2) hereof, and
6-13 such policies, contracts or forms must be either affirmatively
6-14 approved or disapproved by the Board under this Article within such
6-15 sixty days. The insurer may request once in writing that such
6-16 sixty-day period be extended for an additional sixty days, which
6-17 request shall be considered granted upon being received by the
6-18 State Board of Insurance.>
6-19 (e) <(4)> The department <State Board of Insurance> shall
6-20 charge and receive the following fees in an amount to be determined
6-21 by the commissioner <Board> not to exceed the following:
6-22 (1) <(i)> for a filing of policy forms, amendments,
6-23 endorsements, and riders filed for review under this Article,
6-24 unless exempted pursuant to Section (i) <(e)> of this Article, $100
6-25 <$200.00>; and
7-1 (2) <(ii)> for a filing of policy forms, amendments,
7-2 endorsements, and riders, exempted from review pursuant to Section
7-3 (i) <(e)> of this Article, $50 <$100.00>.
7-4 (f) The commissioner <Board> shall, within the limits fixed
7-5 by Subsection (f) of this Article <this subsection>, prescribe the
7-6 fees to be charged under Subsection (f) of this Article <this
7-7 subsection>. Fees collected under that <this> subsection shall be
7-8 deposited in the State Treasury <to the credit of the State Board
7-9 of Insurance operating fund>.
7-10 (g) <(d)> The order of the commissioner <State Board of
7-11 Insurance> disapproving any such form or withdrawing a previous
7-12 approval must <shall> state the grounds for such disapproval or
7-13 withdrawal, and must describe in adequate detail the changes
7-14 necessary to obtain approval. The insurer is entitled to 45 days
7-15 after the date of the order to make the changes required to correct
7-16 the deficiencies noted in the order. The commissioner has 45 days
7-17 to approve or disapprove the form filed for reconsideration or the
7-18 form is considered approved for purposes of this Article.
7-19 (h) <(e)> The commissioner <State Board of Insurance> may,
7-20 by written order, exempt from the requirements of this Article for
7-21 so long as the commissioner considers <it deems> proper, any
7-22 insurance document or form specified in such order, to which in the
7-23 commissioner's <its> opinion <either (i)> this Article may not
7-24 practically be applied, <(ii)> the form's preparation, use, and
7-25 meaning have become routine or commonplace, or <(iii)> the filing
8-1 and approval of such form or document are, in the commissioner's
8-2 <its> opinion, not desirable, appropriate, required, or necessary
8-3 for the protection of the public. Additionally, the commissioner
8-4 <State Board of Insurance> may, after notice and hearing, adopt
8-5 reasonable rules and amendments to rules that are necessary for the
8-6 commissioner <it> to establish guidelines, procedures, methods,
8-7 standards, and criteria by which the various and different types of
8-8 forms and documents submitted to the department <Board> are to be
8-9 reviewed and approved by the commissioner <Board> as <being> in
8-10 compliance with this article or exempted under this subsection, and
8-11 to provide those guidelines, procedures, methods, standards, and
8-12 criteria by which a summary review and approval may be given to
8-13 those particular types of forms and documents designated by the
8-14 commissioner <Board> that, in the commissioner's <its> opinion,
8-15 will expedite the review and approval process of those forms and
8-16 documents.
8-17 (i) <(f)> The commissioner <State Board of Insurance> may
8-18 disapprove any such form, or, after notice and hearing, may
8-19 withdraw any previous approval thereto if the form:<, and only if,>
8-20 (1) violates <It is in any respect in violation of> or
8-21 does not comply with this Code or any valid rule relating thereto
8-22 duly adopted by the commissioner <State Board of Insurance>, or is
8-23 otherwise contrary to law; or
8-24 (2) <It> contains provisions or has any titles or
8-25 headings which are unjust, encourage misrepresentation or are
9-1 deceptive.
9-2 (j) If a form subject to Subsection (i) of this Article has
9-3 been on file with the department for at least 180 days and has been
9-4 previously affirmatively approved by the commissioner, considered
9-5 approved under the operation of this Article, or exempted from the
9-6 approval requirements as provided by this Article, the commissioner
9-7 may withdraw the previous approval or the exemption from the
9-8 approval requirements only if the form violates or does not comply
9-9 with specific requirements under this Code or a rule adopted under
9-10 the Code unless the commissioner finds proof of gross
9-11 misrepresentation or fraud to the policyholder.
9-12 (k) <(g)(1)> The commissioner <Board> may, after notice and
9-13 hearing, withdraw any previous approval of an individual accident
9-14 and sickness insurance policy form if, after consideration of all
9-15 relevant facts, the commissioner <Board> finds that the benefits
9-16 provided under such policy form are unreasonable in relation to the
9-17 premium charged, or the reserve required by Article 6.01 of this
9-18 code is not maintained by the insurer on the policies issued upon
9-19 such policy form. The commissioner <Board> shall from time to time
9-20 as conditions warrant, and after notice and hearing, promulgate
9-21 such reasonable rules and regulations and amendments thereto as are
9-22 necessary to establish the standard or standards by which any
9-23 previous approval of such <a> policy form may be withdrawn. Any
9-24 such rule or regulation shall be promulgated in accordance with
9-25 Section 10, Chapter 397, Acts of the 54th Legislature, 1955
10-1 (Article 3.70-10, Vernon's Texas Insurance Code). Nothing in this
10-2 section shall be construed as granting the commissioner <State
10-3 Board of Insurance> any power or authority to determine, fix,
10-4 prescribe, or promulgate the rates to be charged for any individual
10-5 accident and sickness insurance policy or policies.
10-6 (l) If a form subject to Subsection (k) of this Article has
10-7 been on file with the department for at least 360 days and has been
10-8 previously affirmatively approved by the commissioner, considered
10-9 approved under the operation of this Article, or exempted from the
10-10 approval requirements as provided by this Article, the commissioner
10-11 may withdraw the previous approval or the exemption from the
10-12 approval requirements only if the form violates or does not comply
10-13 with specific requirements under this Code or a rule adopted under
10-14 this Code unless the commissioner finds proof of gross
10-15 misrepresentation or fraud to the policyholder.
10-16 (m) <(2)> The commissioner <Board> shall require the filing
10-17 of all rates to be charged for individual accident and sickness
10-18 policies and may adopt necessary forms to be filed by insurers in
10-19 conjunction with the annual statement required under Articles 3.07
10-20 and 3.20-1 <3.20> of this code for reporting the experience on all
10-21 individual accident and sickness insurance policy forms issued by
10-22 the insurer so as to determine compliance with Subsection (l) <(1)>
10-23 of this Article <section>.
10-24 (n) <(h)> Appeals from any order of the commissioner <State
10-25 Board of Insurance> issued under this Article may be taken into the
11-1 District Court of Travis County, Texas, in accordance with Article
11-2 1.04 <21.80> of this code, or any amendment thereof.
11-3 (o) <(i)> No policy, contract, or certificate filed pursuant
11-4 to this article that contains a coordination of benefits provision
11-5 may be approved for use in this state unless it also provides the
11-6 order of benefit determination for insured dependent children. An
11-7 order of benefits determination provision may not be approved
11-8 unless it complies with the standards specified in Subsection (i)
11-9 <Section (f)> of this article. The commissioner <State Board of
11-10 Insurance> is authorized to promulgate and may order such provision
11-11 as is necessary in the accomplishment of the purpose of this
11-12 subsection <section>.
11-13 (p) <(j)> The commissioner <State Board of Insurance> is
11-14 hereby authorized to adopt such reasonable rules and regulations as
11-15 are necessary to implement and accomplish the specific provisions
11-16 of this Article and are within the standards and purposes of this
11-17 Article. The commissioner shall adopt rules under this Article in
11-18 compliance with Chapter 2001, Government Code. A rule adopted
11-19 under this Article may not be repealed or amended until the first
11-20 anniversary of the adoption of the rule unless the commissioner
11-21 finds in a public hearing after notice that there is a compelling
11-22 public need for the amendment or repeal of the rule or part of the
11-23 rule.
11-24 <(k) The department shall develop and implement rules to
11-25 improve procedures for approval of policy forms under this
12-1 article.>
12-2 SECTION 3. This Act takes effect September 1, 1995, and
12-3 applies only to an insurance policy, contract, or form that is
12-4 delivered, issued for delivery, or renewed on or after January 1,
12-5 1996. A policy, contract, or form that is delivered, issued for
12-6 delivery, or renewed before January 1, 1996, is governed by the law
12-7 as it existed immediately before the effective date of this Act,
12-8 and that law is continued in effect for that purpose.
12-9 SECTION 3. The importance of this legislation and the
12-10 crowded condition of the calendars in both houses create an
12-11 emergency and an imperative public necessity that the
12-12 constitutional rule requiring bills to be read on three several
12-13 days in each house be suspended, and this rule is hereby suspended.