By Ellis S.B. No. 468
74R5082 MWV-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the regulation of premium finance companies.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Article 24.03, Insurance Code, is amended to read
1-5 as follows:
1-6 Art. 24.03. LICENSE APPLICATION; FEES; LICENSE RENEWAL;
1-7 ACTION BY BOARD. (a) Each application for a license to engage in
1-8 the business of insurance premium financing must be in writing and
1-9 in the form prescribed by the board. It must be accompanied by an
1-10 investigation fee in an amount not to exceed $400 as determined by
1-11 the board.
1-12 (b) Within 90 days after receipt of an application, the
1-13 board shall notify the applicant that:
1-14 (1) the application has been approved and a license
1-15 will be issued on payment of the appropriate license fee; or
1-16 (2) the application has been denied.
1-17 (c) The board may refuse to issue a license if it finds
1-18 that:
1-19 (1) the financial responsibility, experience,
1-20 character, or general fitness of the applicant or any person
1-21 associated with the applicant does not command the confidence of
1-22 the community and does not warrant the belief that the business
1-23 will be conducted honestly, fairly, and efficiently; or
1-24 (2) the applicant does not have available for the
2-1 operation for the business net assets of at least $25,000.
2-2 (d) After approval and on receipt of the license fee, the
2-3 board shall execute the license to engage in the business of a
2-4 premium finance company at the location specified in the
2-5 application and shall transmit the license to the applicant.
2-6 (e) The refusal of the board to issue a license does not
2-7 entitle the applicant to a return of any part of the investigation
2-8 fee that accompanied the application.
2-9 (f) The fee for each original license may be in an amount
2-10 not to exceed $200 as determined by the board and shall be paid to
2-11 the board.
2-12 (g) Each <Except as may be provided by a staggered renewal
2-13 system adopted under Section (j) of this article, each> license
2-14 shall be issued for two years from the date of issuance or
2-15 renewal <the calendar year> and shall remain in force <until
2-16 December 31 of each year,> unless suspended, revoked, or
2-17 surrendered in accordance with Article 24.05 of this chapter. The
2-18 license renewal <If a license is granted after June 30 of any year,
2-19 the> fee shall be set by the board in an amount that is reasonable
2-20 and necessary to cover the costs of implementing this chapter <may
2-21 be in an amount not to exceed $100 as determined by the board for
2-22 that year>.
2-23 (h) <(g)> Any person holding a license under Chapter 3,
2-24 Title 79, Revised Civil Statutes of Texas, 1925, as amended
2-25 (Article 5069-3.01 et seq., Vernon's Texas Civil Statutes), on the
2-26 effective date of this chapter is required only to pay the license
2-27 fee required under this article and is not required to pay the
3-1 investigation fee required by Section (a) of this article.
3-2 <(h) Fees collected under this article shall be deposited in
3-3 the State Treasury to the credit of the State Board of Insurance
3-4 operating fund. Article 1.31A of this code applies to fees
3-5 collected under this article.>
3-6 (i) An unexpired license may be renewed by paying the
3-7 required renewal fee to the board before the expiration date of the
3-8 license. If a license has been expired for not longer than 90
3-9 days, the license may be renewed by paying to the board the
3-10 required renewal fee and a fee that is one-half of the original
3-11 license fee. If a license has been expired for longer than 90 days
3-12 but less than two years, the license may be renewed by paying to
3-13 the board all unpaid renewal fees and a fee that is equal to the
3-14 original license fee. If a license has been expired for two years
3-15 or longer, the license may not be renewed. A new license may be
3-16 obtained by complying with the requirements and procedures for
3-17 obtaining an original license. At least 30 days before the
3-18 expiration of a license, the commissioner of insurance shall send
3-19 written notice of the impending license expiration to the licensee
3-20 at his last known address. This section may not be construed to
3-21 prevent the board from denying or refusing to renew a license under
3-22 applicable law or rules of the State Board of Insurance.
3-23 (j) <The board by rule may adopt a system under which
3-24 licenses expire on various dates during the year. For the year in
3-25 which the license expiration date is less than one year from the
3-26 issuance or anniversary date, the license fee shall be prorated on
3-27 a monthly basis so that each licensee shall pay only that portion
4-1 of the license fee that is allocable to the number of months during
4-2 which the license is valid. On each subsequent renewal of the
4-3 license, the total license renewal fee is payable.>
4-4 <(k)> The board may waive any license requirement for an
4-5 applicant with a valid license from another state having license
4-6 requirements substantially equivalent to those of this state.
4-7 SECTION 2. Article 24.15, Insurance Code, is amended to read
4-8 as follows:
4-9 Art. 24.15. <SERVICES CHARGES;> LIMITATION OF CHARGES;
4-10 COMPUTATION. (a) A premium finance company may assess <not take
4-11 or receive from> an insured a finance <greater rate or> charge as
4-12 authorized under <than is provided by> Chapters 3 and 4, Title 79,
4-13 Revised Civil Statutes of Texas, 1925, as amended (Article
4-14 5069-3.01 et seq. and Article 5069-4.01 et seq., Vernon's Texas
4-15 Civil Statutes), except that the rate of interest of the finance
4-16 charge may not exceed 18 percent per year.
4-17 (b) The finance charge may not <Those charges> begin before
4-18 <on> the date from which the insurance company requires payment of
4-19 the premium and payment was made to the insurance company for the
4-20 financed policy or on the effective date of the policy, whichever
4-21 is earlier. The finance charge shall be computed on the balance of
4-22 the premiums due after subtracting the down payment made by the
4-23 insured in accordance with the premium finance agreement.
4-24 (c) On insurance premium finance agreements made under this
4-25 chapter, no insurance charges or any other charge or fee, except
4-26 those authorized by this chapter, are permitted.
4-27 SECTION 3. Article 24.17(f), Insurance Code, is amended to
5-1 read as follows:
5-2 (f) Whenever a financed insurance contract is cancelled, and
5-3 the premium finance agreement contains an assignment or power of
5-4 attorney for the benefit of the premium finance company, the
5-5 insurer shall return whatever unearned premiums are due under the
5-6 insurance contract directly to the premium finance company within
5-7 15 <60> days after the policy cancellation date. The insurer,
5-8 however, may deduct from the unearned premium returned to the
5-9 premium finance company the amount of unearned commission due from
5-10 the agent or agency writing the insurance if the insurer notifies
5-11 such agent or agency that such unearned commission should be
5-12 returned to the premium finance company. The insurer shall remit
5-13 the unearned commission to the premium finance company within
5-14 30 <120> days of the policy cancellation date if the agent has not
5-15 returned the same to the premium finance company within 15 <90>
5-16 days after the policy cancellation date.
5-17 Provided, however, agents or agencies shall be liable for the
5-18 return of unearned commissions on policies written through the
5-19 Texas Catastrophe Property Insurance Association, the Texas
5-20 Automobile Insurance Plan, and the Texas Medical Liability
5-21 Insurance Underwriting Association. Agents or agencies placing
5-22 business through these plans shall return the unearned commissions
5-23 to the premium finance company within 15 <60> days after the agent
5-24 or agency has been notified of the cancellation.
5-25 The insurer, except the Texas Catastrophe Property Insurance
5-26 Association, the Texas Automobile Insurance Plan, and the Texas
5-27 Medical Liability Insurance Underwriting Association, may return
6-1 the unearned premiums to the producing agent or agency; however,
6-2 the insurer shall remain liable and remit to the premium finance
6-3 company within 30 <120> days of the policy cancellation date if the
6-4 producing agent or agency does not return the unearned premiums to
6-5 the premium finance company within 15 <90> days after the policy
6-6 cancellation date, provided the premium finance company complied
6-7 with the provisions of Article 24.22 herein. In the event the
6-8 premium finance company fails to comply with the provisions in
6-9 Article 24.22 herein, the insurer, including the Texas Catastrophe
6-10 Property Insurance Association, the Texas Automobile Insurance
6-11 Plan, and the Texas Medical Liability Insurance Underwriting
6-12 Association, may satisfy any legal obligations it has to return the
6-13 unearned premiums due under the insurance contract to the insurance
6-14 premium finance company or returning said unearned premiums to the
6-15 producing agent or agency.
6-16 SECTION 4. (a) This Act applies only to a premium finance
6-17 contract entered on or after September 1, 1995. A premium finance
6-18 contract entered before that date is governed by the law in effect
6-19 on the date that the contract was entered, and the former law is
6-20 continued in effect for that purpose.
6-21 (b) Article 24.03, Insurance Code, as amended by this Act,
6-22 applies only to a license to engage in insurance premium financing
6-23 that is renewed on or after September 1, 1995. A license renewed
6-24 before that date is governed by the law in effect on the date that
6-25 the license was renewed, and the former law is continued in effect
6-26 for that purpose.
6-27 SECTION 5. This Act takes effect September 1, 1995.
7-1 SECTION 6. The importance of this legislation and the
7-2 crowded condition of the calendars in both houses create an
7-3 emergency and an imperative public necessity that the
7-4 constitutional rule requiring bills to be read on three several
7-5 days in each house be suspended, and this rule is hereby suspended.