By Ellis S.B. No. 142
74R2771 MWV-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to fair access to certain insurance coverage.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Article 1.24D, Insurance Code, is amended to read
1-5 as follows:
1-6 Art. 1.24D. <CONFIDENTIALITY OF> UNDERWRITING GUIDELINES;
1-7 OPEN RECORDS. <(a)> The department or the office of public
1-8 insurance counsel may require reporting <request and receive
1-9 copies> of an insurer's underwriting guidelines. An insurer's
1-10 underwriting <Underwriting> guidelines are open records under
1-11 Chapter 552, Government Code <confidential and the department or
1-12 the office of public insurance counsel may not make the guidelines
1-13 available to the public, provided, however, that the department or
1-14 the office of public insurance counsel may disclose a summary of
1-15 the underwriting guidelines in a manner that does not directly or
1-16 indirectly identify the insurer who provided the guidelines.>
1-17 <(b) This law does not preclude the use of underwriting
1-18 guidelines as evidence to prosecute a violation of this code. If
1-19 guidelines are used to prosecute a violation of the law, all copies
1-20 of those guidelines shall be presumed confidential and subject to a
1-21 protective order until all appeals on the case have been exhausted.
1-22 After the exhaustion of all appeals, if an insurer is found to have
1-23 violated this code, the copies of the underwriting guidelines that
1-24 were used as evidence of the violation shall no longer be presumed
2-1 confidential.>
2-2 <(c) When such guidelines are furnished to the department or
2-3 the office of public insurance counsel, only those persons within
2-4 the department or the office of public insurance counsel with a
2-5 need to know will have access to such guidelines. The department
2-6 and the office of public insurance counsel shall establish internal
2-7 control systems to limit such access and keep a record thereof.>
2-8 <(d) Violations of the provisions of this article shall be
2-9 considered as violation of the open records law, Chapter 424, Acts
2-10 of the 63rd Legislature, Regular Session, 1973 (Article 6252-17a,
2-11 Vernon's Texas Civil Statutes)>.
2-12 SECTION 2. Section 1, Article 5.76-3, Insurance Code, is
2-13 amended by adding Subdivisions (5) and (6) to read as follows:
2-14 (5) "Small premium general liability insurance policy"
2-15 means a general liability insurance policy issued under the
2-16 authority of the Texas workers' compensation insurance fund to a
2-17 business in this state for which the annual premium is less than
2-18 $5,000.
2-19 (6) "Small premium commercial property insurance
2-20 policy" means a commercial property insurance policy issued under
2-21 the authority of the Texas workers' compensation insurance fund to
2-22 a business in this state for which the annual premium is less than
2-23 $5,000.
2-24 SECTION 3. Section 4, Article 5.76-3, Insurance Code, is
2-25 amended to read as follows:
2-26 Sec. 4. Authority and purpose. (a) According to this
2-27 article and the plan of operation, the board shall, on behalf of
3-1 the fund:
3-2 (1) provide for the acceptance of applications and
3-3 delivery or issuance for delivery in this state of workers'
3-4 compensation insurance and for the transaction of workers'
3-5 compensation insurance business to the same extent as any other
3-6 insurance carrier transacting workers' compensation insurance
3-7 business in this state;
3-8 (2) provide for the acceptance of applications and
3-9 delivery or issuance for delivery in this state of small premium
3-10 general liability and small premium commercial property insurance
3-11 and for the transaction of small premium general liability and
3-12 small premium commercial property insurance to the same extent as
3-13 any other insurance carrier transacting general liability and
3-14 commercial property insurance in this state;
3-15 (3) <(2)> enter into and approve contracts;
3-16 (4) <(3)> propose rates for workers' compensation
3-17 insurance issued by the fund;
3-18 (5) <(4)> appoint and supervise the activities of the
3-19 president of the fund and other officers and employees;
3-20 (6) <(5)> adopt necessary bylaws and rules for the
3-21 operation of the fund;
3-22 (7) <(6)> delegate specific responsibilities to the
3-23 president of the fund;
3-24 (8) <(7)> develop a general plan of operation, in
3-25 accordance with Section 5 of this article, to assure the orderly
3-26 management and operation of the fund; and
3-27 (9) <(8)> exercise any other authority necessary to
4-1 conduct a workers' compensation insurance business for the fund.
4-2 (b) The fund may not have affiliates, interlocking boards of
4-3 directors, spinoffs, or subsidiaries that write lines of insurance
4-4 other than workers' compensation, general liability, or commercial
4-5 property insurance.
4-6 SECTION 4. Sections 6(d) and (e), Article 5.76-3, Insurance
4-7 Code, are amended to read as follows:
4-8 (d) In addition to any other duties provided by this article
4-9 or by the board, the president shall:
4-10 (1) hire employees as necessary to conduct the
4-11 business and carry out the provisions of this article or to perform
4-12 the duties imposed on the president by this article;
4-13 (2) receive and approve applications for workers'
4-14 compensation and small premium general liability and small premium
4-15 commercial property policies of insurance and issue policies to
4-16 applicants who are eligible for workers' compensation and small
4-17 premium general liability and small premium commercial property
4-18 policies of insurance provided by the fund;
4-19 (3) negotiate contracts on behalf of the fund;
4-20 (4) issue renewals of workers' compensation and small
4-21 premium general liability and small premium commercial property
4-22 policies of insurance for those who qualify for renewal;
4-23 (5) process and pay valid claims according to the
4-24 rules of the board and the appropriate workers' compensation and
4-25 general liability and commercial property insurance laws;
4-26 (6) collect premiums for workers' compensation and
4-27 small premium general liability and small premium commercial
5-1 property policies of insurance issued or renewed by the fund; and
5-2 (7) collect and compile statistical information
5-3 relating to the fund and provide this information to the board.
5-4 (e) In addition to any other authority provided by this
5-5 article or by the board, the president shall have full power and
5-6 authority, in the name of the fund, to:
5-7 (1) sue and be sued in all of the courts of the state
5-8 in all actions arising out of any act, deed, matter, or things
5-9 made, omitted, entered into, done, or suffered in connection with
5-10 the fund and its administration, management, or conduct of its
5-11 business and affairs;
5-12 (2) delegate to any officer of the fund, subject to
5-13 any conditions prescribed by the president, any of the powers,
5-14 functions, or duties conferred or imposed on the president under
5-15 this article in connection with the fund, its administration,
5-16 management, and conduct of business or related affairs; an officer
5-17 to whom such a delegation is made may exercise the delegated powers
5-18 with the same force and effect as the president, subject to
5-19 approval by the president;
5-20 (3) inspect and audit employers who apply to the fund
5-21 for issuance of workers' compensation and small premium general
5-22 liability and small premium commercial property policies of
5-23 insurance or who seek renewal of that insurance;
5-24 (4) purchase reinsurance from insurance carriers
5-25 admitted or accredited to reinsure risks in this state;
5-26 (5) cancel or refuse to renew workers' compensation
5-27 and small premium general liability and small premium commercial
6-1 property policies of insurance if a risk does not comply with a
6-2 board-approved plan or any provision of this article;
6-3 (6) with the approval of the board, enter into
6-4 contracts on behalf of the fund;
6-5 (7) draft guidelines for approval of the board
6-6 relating to the settlement of claims against the fund; and
6-7 (8) perform any other acts authorized by the board to
6-8 carry out this article and the rules of the board.
6-9 SECTION 5. Section 7(b), Article 5.76-3, Insurance Code, is
6-10 amended to read as follows:
6-11 (b) The fund shall adopt such rules as required to provide
6-12 for the financing of all or part of the premiums by the fund or a
6-13 person licensed under Chapter 24 of this code. Those rules shall
6-14 require that the fund receive a minimum initial premium sufficient
6-15 to cover the administrative costs of issuing and booking the policy
6-16 in the event of cancellation. Those rules shall not unfairly
6-17 discriminate against applicants based upon the amount of premium to
6-18 be paid by the applicant for workers' compensation, general
6-19 liability, or commercial property coverage. Notwithstanding the
6-20 foregoing, the premium financing rules adopted by the fund may
6-21 provide that premium financing shall not be offered to any
6-22 applicant who appears to present an unacceptable credit risk.
6-23 SECTION 6. Section 9(a), Article 5.76-3, Insurance Code, is
6-24 amended to read as follows:
6-25 (a) Except as otherwise provided by this subsection, the
6-26 board shall have full power and authority to propose rates to be
6-27 charged by the fund for insurance. The board shall engage the
7-1 services of an independent actuary who is a member in good standing
7-2 with the Casualty Actuarial Society or the American Academy of
7-3 Actuaries to develop and recommend actuarially sound rates. The
7-4 fund is subject to the requirements of Articles <Article> 5.55 and
7-5 5.13-2 of this code, as applicable, and shall include the
7-6 recommendations of its independent actuary as part of its filing
7-7 under those articles <that article>.
7-8 SECTION 7. Section 12(c), Article 5.76-3, Insurance Code, is
7-9 amended to read as follows:
7-10 (c) The fund shall pay all other taxes and fees or any
7-11 payments due in lieu of taxes in the same manner as an insurance
7-12 carrier authorized and admitted by the Texas Department of
7-13 Insurance to do insurance business in this state under a
7-14 certificate of authority that includes authorization to write
7-15 workers' compensation, general liability, and commercial property
7-16 insurance.
7-17 SECTION 8. Sections 13(a) and (d), Article 5.76-3, Insurance
7-18 Code, are amended to read as follows:
7-19 (a) Revenues of the fund consist of:
7-20 (1) premiums paid by employers for workers'
7-21 compensation, general liability, and commercial property insurance
7-22 from the fund;
7-23 (2) investments and money earned from investments of
7-24 the fund;
7-25 (3) money received from the issuance and sale of bonds
7-26 under Article 5.76-5 of this code; and
7-27 (4) any other money received by the fund.
8-1 (d) Money in the fund shall be invested, subject to a policy
8-2 approved by the state treasurer, in the types of investments
8-3 authorized by law for an insurer authorized to write workers'
8-4 compensation, general liability, and commercial property insurance
8-5 coverage in this state.
8-6 SECTION 9. Section 17(b), Article 5.76-3, Insurance Code, is
8-7 amended to read as follows:
8-8 (b) The fund shall file with the State Board of Insurance
8-9 and the commission all reports required of other workers'
8-10 compensation, general liability, and commercial property insurers.
8-11 SECTION 10. Section 21, Article 5.76-3, Insurance Code, is
8-12 amended by adding Subsection (d) to read as follows:
8-13 (d) The fund may not insure a person eligible for insurance
8-14 under Article 21.49 of this code.
8-15 SECTION 11. Article 21.21-5, Insurance Code, is amended to
8-16 read as follows:
8-17 Art. 21.21-5. DISCRIMINATION IN AVAILABILITY, RATES, OR
8-18 RENEWAL. (a) This article applies to any insurer, agent, or other
8-19 person authorized to engage in the <do> business of <as an
8-20 insurance company or to provide> insurance in this state,
8-21 including:
8-22 (1) a capital stock company;
8-23 (2) a mutual company;
8-24 (3) a title insurance company;
8-25 (4) a fraternal benefit society;
8-26 (5) a local mutual aid association;
8-27 (6) a statewide mutual assessment company;
9-1 (7) a county mutual insurance company;
9-2 (8) a Lloyd's plan company;
9-3 (9) a reciprocal or interinsurance exchange;
9-4 (10) a stipulated premium insurance company;
9-5 (11) a group hospital service company;
9-6 (12) a health maintenance organization;
9-7 (13) a farm mutual insurance company;
9-8 (14) a risk retention group; and
9-9 (15) a surplus lines carrier.
9-10 (b) An insurer, agent, or other person engaged in the
9-11 business of insurance may not discriminate on the basis of race,
9-12 color, religion, <or> national origin, sexual orientation, or
9-13 familial status and, to the extent not shown by the insurer to be
9-14 justified by sound actuarial principles, on the basis of
9-15 geographical location, disability, sex, or age, in making a
9-16 decision to price, cancel, nonrenew, or refuse to offer a policy or
9-17 certificate of insurance <the setting or use of rates or rating
9-18 manuals and in the nonrenewal of policies>.
9-19 (c) A distinction or discrimination based on a specific
9-20 characteristic of an individual is based on sound actuarial
9-21 principles only if the characteristic is:
9-22 (1) within the control of the individual;
9-23 (2) not based in purpose or effect on the race, color,
9-24 religion, national origin, sexual orientation, or familial status
9-25 of the individual;
9-26 (3) causally related to the risk of the individual;
9-27 and
10-1 (4) shown, all other relevant factors being equal, to
10-2 be statistically significant as an indicator of the risk of the
10-3 individual or the expense of providing service to the individual.
10-4 (d) Use of a surrogate class is not a sound actuarial
10-5 principle and may not be used in making a decision to price,
10-6 cancel, nonrenew, or refuse to offer a policy or certificate of
10-7 insurance.
10-8 (e) In this section, "surrogate class" means a class that is
10-9 not risk-related but captures part of the risk factor.
10-10 (f) A violation of this article is an unfair and deceptive
10-11 practice in the business of insurance under Article 21.21 of this
10-12 code. Compliance with this article does not create an exemption
10-13 from Article 21.49-2B of this code or other requirements.
10-14 SECTION 12. Subchapter E, Chapter 21, Insurance Code, is
10-15 amended by adding Article 21.49A to read as follows:
10-16 Art. 21.49A. TEXAS RESIDENTIAL AND COMMERCIAL INSURANCE PLAN
10-17 ASSOCIATION
10-18 Sec. 1. DEFINITIONS. In this article:
10-19 (1) "Association" means the Texas Residential and
10-20 Commercial Insurance Plan Association established under this
10-21 article.
10-22 (2) "Authorized insurer" means any insurer authorized
10-23 by the Texas Department of Insurance to write coverage under
10-24 Subchapters B and C, Chapter 5, of this code, except that the term
10-25 does not include an insurer organized under Chapter 17 of this
10-26 code.
10-27 (3) "Insurance" means all coverages available on the
11-1 policy applicable to the risk to be insured adopted by the
11-2 commissioner under Article 5.35 of this code for fire and allied
11-3 lines of business and under Section 6 of this article for
11-4 commercial property and casualty insurance.
11-5 (4) "Plan of operation" means the plan for operating
11-6 the association to provide a means by which insurance may be
11-7 assigned to an eligible person.
11-8 Sec. 2. CREATION OF ASSOCIATION. (a) The Texas Residential
11-9 and Commercial Insurance Plan Association is established. The
11-10 association is a nonprofit corporate body composed of all
11-11 authorized insurers. Each authorized insurer shall be a member of
11-12 the association and shall remain a member of the association so
11-13 long as the association is in existence as a condition of its
11-14 authority to write residential and commercial property and casualty
11-15 insurance in this state.
11-16 (b) The association shall be administered by a governing
11-17 committee composed of fifteen members selected as follows:
11-18 (1) eight members who represent the interests of
11-19 insurers, elected by the members of the association according to a
11-20 method determined by the members;
11-21 (2) five public members nominated by the Office of
11-22 Public Insurance Counsel and selected by the commissioner; and
11-23 (3) two members who are licensed local recording
11-24 agents, as defined by the plan of operation.
11-25 (c) To be eligible to serve on the governing committee as a
11-26 representative of insurers, a person must be a full-time employee
11-27 of an authorized insurer.
12-1 (d) A person may not serve on the governing committee as a
12-2 public member if that person, an individual related to that person
12-3 within the second degree of consanguinity or affinity, or an
12-4 individual residing in the same household with that person is:
12-5 (1) required to be registered or licensed under this
12-6 code or another insurance law of this state;
12-7 (2) employed by or acts as a consultant to a person
12-8 required to be registered or licensed under this code or another
12-9 insurance law of this state;
12-10 (3) the owner of, has a financial interest in, or
12-11 participates in the management of an organization required to be
12-12 registered or licensed under this code or another insurance law of
12-13 this state;
12-14 (4) an officer, employer, or consultant of an
12-15 association in the field of insurance; or
12-16 (5) required to register as a lobbyist under Chapter
12-17 305, Government Code.
12-18 Sec. 3. AUTHORITY OF ASSOCIATION; PLAN OF OPERATION.
12-19 (a) The governing committee has the responsibility for the
12-20 administration of the association through the plan of operation.
12-21 The association may collect funds from the member companies to
12-22 provide for the operation of the association. Assessments must be
12-23 made upon member companies in proportion to their writings of
12-24 residential and commercial property and casualty insurance in this
12-25 state. If an assessment made upon a member insurer is not paid
12-26 within a reasonable time, the association may bring an action to
12-27 collect the assessment. In addition, the association may report
13-1 the failure to pay to the commissioner, who may institute a
13-2 disciplinary action under Article 1.10 of this code. The
13-3 association has the powers granted to nonprofit corporations under
13-4 the Texas Non-Profit Corporation Act (Article 1396-1.01 et seq.,
13-5 Vernon's Texas Civil Statutes).
13-6 (b) The plan of operation of the association must provide
13-7 for the efficient, economical, fair, and nondiscriminatory
13-8 administration of the association.
13-9 (c) Subject to the approval of the commissioner, the
13-10 governing committee may make and amend the plan of operation.
13-11 (d) If the commissioner at any time believes that any part
13-12 of the plan of operation is not in keeping with the purpose of
13-13 providing residential and commercial property and casualty
13-14 insurance to persons that otherwise could not obtain insurance
13-15 coverage, the commissioner shall notify the governing committee in
13-16 writing so that the governing committee may take corrective action.
13-17 (e) Among other provisions, the plan of operation must
13-18 contain incentive programs to encourage members to write insurance
13-19 on a voluntary basis and to minimize the use of the association as
13-20 a means to obtain insurance. The incentive programs are effective
13-21 on approval of the commissioner. One of these programs must target
13-22 underserved geographic areas which shall be determined and
13-23 designated by the commissioner by rule. In determining which areas
13-24 will be designated as underserved, the commissioner shall consider
13-25 the availability of insurance, the number of uninsured property
13-26 owners, the number of property owners insured through the
13-27 association, and any other relevant factor.
14-1 (f) The plan of operation must include a voluntary,
14-2 competitive limited assignment distribution plan that allows
14-3 members to contract directly with a servicing carrier to accept
14-4 assignments to that carrier by the association. A servicing
14-5 carrier must be an insurance company licensed to write residential
14-6 and commercial property and casualty insurance in this state and
14-7 is qualified if it has written residential and commercial property
14-8 and casualty insurance in Texas for at least five years or is
14-9 currently engaged as a servicing carrier for assigned risk
14-10 residential and commercial property and casualty business in at
14-11 least one other state. After notice and hearing, the commissioner
14-12 may prohibit an insurer from acting as a servicing carrier. The
14-13 terms of the contract between the servicing carrier and the
14-14 insurer, including the buyout fee, shall be determined by
14-15 negotiation between the parties. The governing committee may adopt
14-16 reasonable rules for the conduct of business under the contract and
14-17 may establish reasonable standards of eligibility for servicing
14-18 carriers.
14-19 Sec. 4. DUTIES AND FUNCTIONS OF ASSOCIATION. (a) The
14-20 association shall provide a means by which insurance may be
14-21 assigned to an authorized insurance company for a person seeking
14-22 residential or commercial property or commercial casualty
14-23 insurance.
14-24 (b) An applicant is not eligible for insurance through the
14-25 association unless the applicant and the servicing agent certify as
14-26 part of the application to the association that the applicant has
14-27 been rejected for insurance by at least two insurers licensed to do
15-1 business in this state and actually writing residential or
15-2 commercial property or casualty insurance in this state, including
15-3 insurers that are not rate regulated.
15-4 Sec. 5. RATES FOR INSURANCE. (a) At least annually, the
15-5 commissioner shall conduct a hearing for the purpose of determining
15-6 appropriate rates to be charged for insurance provided through the
15-7 association. The association may appear as a matter of right,
15-8 shall be admitted as a party to present testimony at the hearing,
15-9 and may file information for consideration by the commissioner.
15-10 The commissioner shall determine and prescribe rates that are just,
15-11 reasonable, adequate, not excessive, not confiscatory, and not
15-12 unfairly discriminatory for the risks to which they apply. Rates
15-13 shall be set in an amount sufficient to carry all claims to
15-14 maturity and to meet the expenses incurred in the writing and
15-15 servicing of the business. In making a determination, the
15-16 commissioner shall consider the reports of aggregated premiums
15-17 earned and losses and expenses incurred in the writing of
15-18 residential and commercial property and casualty insurance through
15-19 the plan collected under the statistical plan provided for by
15-20 Subsection (b) of this section.
15-21 (b) The commissioner shall adopt reasonable rules and
15-22 statistical plans to be used by each insurer in the recording and
15-23 reporting of its premium, loss, and expense experience which must
15-24 be reported separately for business assigned to it and other data
15-25 required by the commissioner.
15-26 Sec. 6. POLICY FORMS. For purposes of this article, the
15-27 commissioner shall adopt policy forms and endorsements for each
16-1 kind of insurance to be sold through the association for which the
16-2 commissioner has not otherwise adopted policy forms and
16-3 endorsements.
16-4 Sec. 7. IMMUNITY FROM LIABILITY. (a) The association, a
16-5 member of the governing committee, and an employee of the
16-6 association is not personally liable for an act performed in good
16-7 faith within the scope of the person's authority under this article
16-8 or the plan of operation or for damages occasioned by the person's
16-9 official acts or omissions except for an act or omission that is
16-10 corrupt or malicious. The association shall provide counsel to
16-11 defend an action brought against a member of the governing
16-12 committee or an employee by reason of the person's official act or
16-13 omission whether or not at the time of the institution of the
16-14 action the defendant has terminated service with the association.
16-15 (b) This section is cumulative with and does not affect or
16-16 modify any common law or statutory privilege or immunity.
16-17 Sec. 8. PERSONS ELIGIBLE FOR COVERAGE THROUGH CATASTROPHE
16-18 PROPERTY INSURANCE POOL. The association may not insure a person
16-19 eligible for insurance under Article 21.49 of this code.
16-20 SECTION 13. The heading of Article 21.49-2B, Insurance Code,
16-21 is amended to read as follows:
16-22 Art. 21.49-2B. AVAILABILITY, CANCELLATION, AND NONRENEWAL OF
16-23 CERTAIN PROPERTY AND CASUALTY POLICIES
16-24 SECTION 14. Article 21.49-2B, Insurance Code, is amended by
16-25 adding Section 4A to read as follows:
16-26 Sec. 4A. GOOD DRIVER; SAFE HOMEOWNER. (a) Except as
16-27 otherwise provided by this article, a motor vehicle insurer may not
17-1 cancel, nonrenew, or refuse to offer a policy of motor vehicle
17-2 insurance to a good driver. An individual is a good driver if:
17-3 (1) the individual has been licensed for at least
17-4 three years to drive the class of motor vehicle to be insured;
17-5 (2) during the previous three years, the individual
17-6 has not:
17-7 (A) been substantially at fault in a motor
17-8 vehicle accident that resulted in bodily injury or property damage;
17-9 (B) been convicted of a violation of a traffic
17-10 safety regulation that involved a moving vehicle; and
17-11 (C) had more than one dismissal of a charge
17-12 under Section 143A, Uniform Act Regulating Traffic on Highways
17-13 (Article 6701d, Vernon's Texas Civil Statutes);
17-14 (3) the individual has never made a fraudulent
17-15 insurance claim; and
17-16 (4) the individual does not drive more than 30,000
17-17 miles annually.
17-18 (b) Except as otherwise provided by this article, a
17-19 residential property insurer may not cancel, nonrenew, refuse to
17-20 offer a policy of residential property insurance, or limit coverage
17-21 to a safe homeowner. An individual is a safe homeowner if:
17-22 (1) the property to be insured is located in an area
17-23 covered by a housing code, building code, or other construction
17-24 requirements adopted by the jurisdiction in which the property is
17-25 located and on the date of the initial or renewal application for
17-26 insurance coverage meets all applicable housing code, building
17-27 code, or other construction code requirements;
18-1 (2) during the three previous years, the individual
18-2 has not made a claim under a residential property insurance policy
18-3 for damages resulting from the individual's negligence;
18-4 (3) within a reasonable time after receiving written
18-5 notice from an insurer, the individual corrects a physical
18-6 condition in the property that is directly related to a paid
18-7 liability claim or that presents a clear risk of a significant loss
18-8 under the liability portion of the policy;
18-9 (4) the property to be insured will not be vacant for
18-10 more than 60 consecutive days during the term of the insurance
18-11 coverage;
18-12 (5) the individual has never made a fraudulent
18-13 insurance claim; and
18-14 (6) the individual has never been convicted of arson.
18-15 (c) A violation of this section is an unfair and deceptive
18-16 practice in the business of insurance under Article 21.21 of this
18-17 code. Compliance with this section does not create an exemption
18-18 from Article 21.21-5 of this code or other requirements.
18-19 (d) In this section, "traffic safety regulation" means a law
18-20 or ordinance of this state or a political subdivision of this state
18-21 relating to the operation of a motor vehicle other than a
18-22 regulation relating to the conduct of a pedestrian or the parking
18-23 of a motor vehicle.
18-24 SECTION 15. Section 9, Article 21.49-2B, Insurance Code, is
18-25 amended to read as follows:
18-26 Sec. 9. Insurer statement. An insurer shall<, at the
18-27 request of an insured or an applicant for insurance,> provide a
19-1 written statement of each <the> reason for a cancellation or
19-2 nonrenewal of or determination not to issue a policy.
19-3 SECTION 16. Section 1(3), Article 21.81, Insurance Code, is
19-4 amended to read as follows:
19-5 (3) "Insurance" means all coverage available on the
19-6 applicable private passenger or commercial automobile standard
19-7 insurance policy adopted under Article 5.06 of this code, including
19-8 bodily injury liability, property damage liability, medical
19-9 payments, personal injury protection, uninsured and underinsured
19-10 motorist, collision, and comprehensive coverage <an insurance
19-11 policy that meets the requirements of the Texas Motor Vehicle
19-12 Safety-Responsibility Act (Article 6701h, Vernon's Texas Civil
19-13 Statutes)>.
19-14 SECTION 17. Section 4(c), Article 21.81, Insurance Code, is
19-15 amended to read as follows:
19-16 (c) A person may purchase through the association providing
19-17 coverage excess liability insurance of not more than $100,000 per
19-18 person, $50,000 of property damage, and an aggregate of $300,000
19-19 per accident <A person who obtains, from any source, excess
19-20 private passenger auto liability insurance coverage over the
19-21 minimum auto liability coverage required by law shall be ineligible
19-22 for insurance through the association. The coverage for the excess
19-23 and basic limits policies is not affected by a violation of this
19-24 section unless the insurer shows that the insured had actual
19-25 knowledge that they were ineligible for coverage through the
19-26 association. An agent may not knowingly write excess private
19-27 passenger auto liability insurance coverage if the minimum auto
20-1 liability coverage required by law is provided through the
20-2 association. If an agent violates this section, the agent, after
20-3 notice and hearing, is subject to the penalties provided by Section
20-4 7, Article 1.10, of this code>.
20-5 SECTION 18. Article 24.15, Insurance Code, is amended to
20-6 read as follows:
20-7 Art. 24.15. Services Charges; Limitation of Charges;
20-8 Computation. A premium finance company may not take or receive
20-9 from an insured a greater rate or charge than is adopted under
20-10 Article 24.23 of this chapter <provided by Chapters 3 and 4, Title
20-11 79, Revised Civil Statutes of Texas, 1925, as amended (Article
20-12 5069-3.01 et seq. and Article 5069-4.01 et seq., Vernon's Texas
20-13 Civil Statutes)>. Those charges begin on the date from which the
20-14 insurance company requires payment of the premium and payment was
20-15 made to the insurance company for the financed policy or on the
20-16 effective date of the policy, whichever is earlier. The finance
20-17 charge shall be computed on the balance of the premiums due after
20-18 subtracting the down payment made by the insured in accordance with
20-19 the premium finance agreement. On insurance premium finance
20-20 agreements made under this chapter, no insurance charges or any
20-21 other charge or fee, except those authorized by this chapter, are
20-22 permitted.
20-23 SECTION 19. Article 24.16, Insurance Code, is amended to
20-24 read as follows:
20-25 Art. 24.16. Prepayment; Refund. Notwithstanding the
20-26 provisions of any premium finance agreement to the contrary, any
20-27 insured may pay it in full at any time before the maturity of the
21-1 final installment of the balance of the agreement, and if the
21-2 insured does so and the agreement included an amount for a charge,
21-3 the insured shall receive for the prepayment either by cash or by
21-4 renewal a refund credit in accordance with the provisions for
21-5 refunds adopted under Article 24.23 of this chapter <contained in
21-6 Section (6), Article 3.15, Title 79, Revised Civil Statutes of
21-7 Texas, 1925, as amended (Article 5069-3.15, Vernon's Texas Civil
21-8 Statutes), and the regulations issued under that article>. Where
21-9 the amount of the credit for anticipation of payments is less than
21-10 $1, no refund need be made.
21-11 SECTION 20. Article 24.17(a), Insurance Code, is amended to
21-12 read as follows:
21-13 (a) A premium finance agreement may provide for the payment
21-14 of a default charge by the insured as provided under Article 24.23
21-15 of this chapter <in Section (5), Article 3.15, Title 79, Revised
21-16 Civil Statutes of Texas, 1925, as amended (Article 5069-3.15,
21-17 Vernon's Texas Civil Statutes), the Insurance Code,> and the
21-18 regulations issued under that article <those statutes>.
21-19 SECTION 21. Chapter 24, Insurance Code, is amended by adding
21-20 Article 24.23 to read as follows:
21-21 Art. 24.23. ADOPTION OF RULES ON RATES, RULES ON REFUND
21-22 CREDITS, AND CHARGES. The commissioner shall adopt rates for
21-23 finance charges on premium finance agreements. The rates may not
21-24 exceed 18 percent a year. In addition, the commissioner shall
21-25 adopt rules on refund credits in the event of prepayment and on the
21-26 maximum amount of default charges.
21-27 SECTION 22. This Act takes effect September 1, 1995.
22-1 SECTION 23. The commissioner of insurance shall adopt rules
22-2 on rates for finance charges, refund credits, and default charges
22-3 for premium finance agreements under Section 24.23, Insurance Code,
22-4 as added by this Act, to be effective January 1, 1996.
22-5 SECTION 24. The change in law made by Sections 18-21 of this
22-6 Act applies only to a premium finance agreement entered into,
22-7 renewed, or modified, including the increase of the principal
22-8 balance in accordance with Section (g), Article 24.11, Insurance
22-9 Code, on or after January 1, 1996 (the effective date of rules on
22-10 finance charges, refund credits, and default charges adopted by the
22-11 commissioner of insurance under Article 24.23, Insurance Code, as
22-12 added by this Act). A premium finance agreement entered into
22-13 before January 1, 1996, and that is not renewed or modified after
22-14 that date, is governed by the law in effect at the time the
22-15 agreement was entered into, and the former law is continued in
22-16 effect for that purpose.
22-17 SECTION 25. Not later than December 31, 1995, the governing
22-18 committee of the Texas Residential and Commercial Insurance Plan
22-19 Association established under Article 21.49A, Insurance Code, as
22-20 added by this Act, shall adopt a plan of operation and have
22-21 submitted the plan to the commissioner of insurance for approval.
22-22 SECTION 26. Not later than December 31, 1995, the board of
22-23 directors of the Texas workers' compensation insurance fund shall
22-24 adopt an amended plan of operation of the Texas workers'
22-25 compensation insurance fund to provide for the amendments made by
22-26 this Act and shall have submitted the plan to the commissioner of
22-27 insurance for approval.
23-1 SECTION 27. Sections 2-17 of this Act apply only to an
23-2 insurance policy delivered, issued for delivery, or renewed after
23-3 March 1, 1996. A policy delivered, issued for delivery, or renewed
23-4 before March 1, 1996, is governed by the law as it existed
23-5 immediately before the effective date of this Act, and that law is
23-6 continued in effect for that purpose.
23-7 SECTION 28. The importance of this legislation and the
23-8 crowded condition of the calendars in both houses create an
23-9 emergency and an imperative public necessity that the
23-10 constitutional rule requiring bills to be read on three several
23-11 days in each house be suspended, and this rule is hereby suspended.