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