By Sibley S.B. No. 1637
74R9304 PB-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the approval and use of certain life, health, and
1-3 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
1-24 to any society, company or other insurer whose activities are by
2-1 statute exempt from the control of the department <State Board of
2-2 Insurance> and which is entitled by statute to an exemption
2-3 certificate from the department <said Board> in evidence of its
2-4 exempt status; provided, further, that this Act shall not be
2-5 construed to enlarge the powers of any of the insurers subject to
2-6 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 by Subsection
2-11 <in Paragraph> (a) of this Article shall be delivered, issued or
2-12 used in this state by any insurer described by Subsection <in
2-13 Paragraph> (a) of this Article unless the form of said application,
2-14 rider or endorsement has been filed with the department <State
2-15 Board of Insurance> as provided by Subsections <in Paragraph> (c)
2-16 and (d) of this Article. Each individual accident and sickness
2-17 policy application form, which is required to be or is attached to
2-18 the policy, shall comply with the rules and regulations of the
2-19 commissioner adopted under <Board promulgated pursuant to>
2-20 Subchapter G of this chapter. Provided, however, that this Article
2-21 shall not apply to riders or endorsements which relate to the
2-22 manner of distribution of benefits or to the reservation of rights
2-23 and benefits under such policies, contracts and certificates, and
2-24 which are used at the request of the holder of the policy, contract
2-25 or certificate.
2-26 (c) Each <(1) Every such> filing <hereby> required under
2-27 Subsection (a) or (b) of this Article shall be made prior to any
3-1 such issuance, delivery or use of such form, contract or policy.
3-2 On that filing, the <The> insurer may immediately issue, deliver
3-3 and use such form, contract or policy, provided such filing shall
3-4 be accompanied by a certification on behalf of the filing insurer,
3-5 signed by either an attorney licensed to practice law in this
3-6 state, an actuary familiar with the requirements of this Code and
3-7 the applicable rules and regulations adopted pursuant thereto, or
3-8 the chief executive officer of such filing insurer or a person
3-9 designated by that officer. Such certification must affirm that it
3-10 is on behalf of the insurer, that the insurer is bound thereby,
3-11 that the person certifying has reviewed the filing, and that, based
3-12 upon that person's best knowledge, information, and belief, such
3-13 filed form, contract, or policy complies in all respects with the
3-14 provisions of this Code and the adopted rules and regulations that
3-15 are applicable to such policy, contract, certificate, application,
3-16 rider, endorsement, or other form being filed. At the expiration
3-17 of 60 <sixty> days after receipt of such filed form, contract or
3-18 policy by the department, <State Board of Insurance> such form,
3-19 contract or policy shall be deemed approved by the department
3-20 <State Board of Insurance> unless prior thereto it has been
3-21 affirmatively either approved or disapproved by the written order
3-22 of the commissioner <Board>, or the insurer has requested in
3-23 writing that the approval period <deemer> be extended for an
3-24 additional period <of time,> not to exceed 30 <sixty> days. The
3-25 request for extension shall be considered granted upon being
3-26 received by the department <State Board of Insurance>. Only one
3-27 extension may be granted. On the expiration of the extension, the
4-1 form is considered approved unless the commissioner has taken
4-2 affirmative action to either approve or disapprove the form before
4-3 the expiration of the extension. If such policy, contract or form
4-4 is affirmatively disapproved by the commissioner <Board>, the
4-5 insurer, upon receiving written notice thereof, shall immediately
4-6 cease issuing or using such policy, contract or form. If any such
4-7 filed contract, policy or form is used, issued, or delivered prior
4-8 to either affirmative or statutory deemer approval, and if
4-9 corrections are required to be made before the commissioner will
4-10 approve the contract, policy, or form <approval in order> to bring
4-11 the contract, policy or form into complete compliance with the
4-12 provisions of this Code and the applicable rules of the
4-13 commissioner <State Board of Insurance>, the commissioner
4-14 <Commissioner, at his discretion,> may order the insurer either to
4-15 reissue a corrected contract, policy or form to replace the one
4-16 previously issued, delivered, or used, or to amend and correct it
4-17 by endorsement or rider. If a contract, policy or form is
4-18 disapproved or approval is withdrawn under the provisions of
4-19 Section (j) <(f)> of this Article, the commissioner <Commissioner>
4-20 may<, at his discretion,> order a similar replacement or amendment
4-21 to correct the original contract, policy or form. In the event it
4-22 is determined after notice and opportunity for hearing that Texas
4-23 insureds have been financially damaged by the use of a contract,
4-24 policy or form filed and used under this subsection but that has
4-25 not been approved as provided by this subsection and that does not
4-26 comply with this Code and legally adopted applicable rules of the
4-27 commissioner <State Board of Insurance>, and the commissioner
5-1 determines that the insurer intentionally used and issued that
5-2 contract, policy, or form with the knowledge that it did not comply
5-3 with this Code or those applicable rules, the commissioner
5-4 <Commissioner of Insurance> may order the insurer to make complete
5-5 restitution to those financially damaged insureds in such form and
5-6 amount and within such time period as determined by the
5-7 commissioner <Commissioner>. This section shall not be construed
5-8 to be in derogation or to in any way limit the applicability of any
5-9 otherwise applicable statute, but the commissioner may not impose
5-10 other sanctions or penalties on an insurer for the issuance of a
5-11 form, policy, or contract filed under this subsection except as
5-12 specifically provided by this subsection.
5-13 (d) <(2)> In lieu of and as an alternative to such filing
5-14 being accompanied by such certification as required by Subsection
5-15 (c) of this Article <in Paragraph (1) above>, any such filing
5-16 required hereby shall be made not less than 60 <sixty> days in
5-17 advance of any such issuance, delivery, or use of such form, and at
5-18 the expiration of 60 <sixty> days the form so filed shall be deemed
5-19 approved by the commissioner <State Board of Insurance> unless
5-20 prior thereto it has been affirmatively approved or disapproved by
5-21 the written order of the commissioner <said Board>. Approval of
5-22 any such form by the commissioner <such Board> shall constitute a
5-23 waiver of any unexpired portion of the waiting period, or periods,
5-24 herein provided.
5-25 (e) <(3)> Those filed policies, contracts or forms which are
5-26 subject to either Section 11, Article 3.28, or Section 9, Article
5-27 3.44a, of this Code, may be filed and used in accordance with
6-1 Subsection (c) of this Article <Paragraph (1) above>, but such
6-2 filed policies, contracts or forms shall not be deemed to be
6-3 approved by the expiration of the 60 <sixty> days provided by
6-4 Subsection (c) or Subsection (d) of this Article <for in either
6-5 Paragraph (1) or (2) hereof>, and such policies, contracts or forms
6-6 must be either affirmatively approved or disapproved by the
6-7 commissioner <Board> under this Article within such 60 <sixty>
6-8 days. The insurer may request once in writing that the 60-day
6-9 <such sixty-day> period be extended for an additional 30 <sixty>
6-10 days, which request shall be considered granted upon being received
6-11 by the department <State Board of Insurance>. On the expiration of
6-12 that extension, the filed policy, contract, or form is considered
6-13 approved unless the commissioner has taken affirmative action to
6-14 either approve or disapprove the policy, contract, or form before
6-15 the expiration of the extension.
6-16 (f) <(4)> The department <State Board of Insurance> shall
6-17 charge and receive the following fees in an amount to be determined
6-18 by the commissioner <Board> not to exceed the following:
6-19 (1) <(i)> for a filing of policy forms, amendments,
6-20 endorsements, and riders filed for review under this Article,
6-21 unless exempted pursuant to Section (i) <(e)> of this Article, $100
6-22 <$200.00>; and
6-23 (2) <(ii)> for a filing of policy forms, amendments,
6-24 endorsements, and riders, exempted from review pursuant to Section
6-25 (i) <(e)> of this Article, $50 <$100.00>.
6-26 (g) The commissioner <Board> shall, within the limits fixed
6-27 by Subsection (f) of this Article <this subsection>, prescribe the
7-1 fees to be charged under Subsection (f) of this Article <this
7-2 subsection>. Fees collected under that <this> subsection shall be
7-3 deposited in the State Treasury <to the credit of the State Board
7-4 of Insurance operating fund>.
7-5 (h) <(d)> The order of the commissioner <State Board of
7-6 Insurance> disapproving any such form or withdrawing a previous
7-7 approval must <shall> state the grounds for such disapproval or
7-8 withdrawal, and must describe in adequate detail the changes
7-9 necessary to obtain approval. The insurer is entitled to 30 days
7-10 after the date of the order to make the changes required to correct
7-11 the deficiencies noted in the order. On the expiration of that
7-12 period, the commissioner has 30 days to approve or disapprove the
7-13 form or the form is considered approved for purposes of this
7-14 Article.
7-15 (i) <(e)> The commissioner <State Board of Insurance> may,
7-16 by written order, exempt from the requirements of this Article for
7-17 so long as the commissioner considers <it deems> proper, any
7-18 insurance document or form specified in such order, to which in the
7-19 commissioner's <its> opinion <either (i)> this Article may not
7-20 practically be applied, <(ii)> the form's preparation, use, and
7-21 meaning have become routine or commonplace, or <(iii)> the filing
7-22 and approval of such form or document are, in the commissioner's
7-23 <its> opinion, not desirable, appropriate, required, or necessary
7-24 for the protection of the public. Additionally, the commissioner
7-25 <State Board of Insurance> may, after notice and hearing, adopt
7-26 reasonable rules and amendments to rules that are necessary for the
7-27 commissioner <it> to establish guidelines, procedures, methods,
8-1 standards, and criteria by which the various and different types of
8-2 forms and documents submitted to the department <Board> are to be
8-3 reviewed and approved by the commissioner <Board> as <being> in
8-4 compliance with this article or exempted under this subsection, and
8-5 to provide those guidelines, procedures, methods, standards, and
8-6 criteria by which a summary review and approval may be given to
8-7 those particular types of forms and documents designated by the
8-8 commissioner <Board> that, in the commissioner's <its> opinion,
8-9 will expedite the review and approval process of those forms and
8-10 documents.
8-11 (j) <(f)> The commissioner <State Board of Insurance> may
8-12 disapprove any such form, or, after notice and hearing, may
8-13 withdraw any previous approval thereto if the form:<, and only if,>
8-14 (1) violates <It is in any respect in violation of> or
8-15 does not comply with this Code or any valid rule relating thereto
8-16 duly adopted by the commissioner <State Board of Insurance>, or is
8-17 otherwise contrary to law; or
8-18 (2) <It> contains provisions or has any titles or
8-19 headings which are unjust, encourage misrepresentation or are
8-20 deceptive.
8-21 (k) If a form subject to Subsection (j) of this Article has
8-22 been on file with the department for at least 180 days and has been
8-23 previously affirmatively approved by the commissioner, considered
8-24 approved under the operation of this Article, or exempted from the
8-25 approval requirements as provided by this Article, the commissioner
8-26 may withdraw the previous approval or the exemption from the
8-27 approval requirements only if the form violates or does not comply
9-1 with specific requirements under this Code or a rule adopted under
9-2 this Code and may not impose a sanction or penalty on the insurer
9-3 for the use of the form during the period before the withdrawal of
9-4 approval.
9-5 (l) <(g)(1)> The commissioner <Board> may, after notice and
9-6 hearing, withdraw any previous approval of an individual accident
9-7 and sickness insurance policy form if, after consideration of all
9-8 relevant facts, the commissioner <Board> finds that the benefits
9-9 provided under such policy form are unreasonable in relation to the
9-10 premium charged, or the reserve required by Article 6.01 of this
9-11 code is not maintained by the insurer on the policies issued upon
9-12 such policy form. The commissioner <Board> shall from time to time
9-13 as conditions warrant, and after notice and hearing, promulgate
9-14 such reasonable rules and regulations and amendments thereto as are
9-15 necessary to establish the standard or standards by which any
9-16 previous approval of a policy form may be withdrawn. Any such rule
9-17 or regulation shall be promulgated in accordance with Section 10,
9-18 Chapter 397, Acts of the 54th Legislature, 1955 (Article 3.70-10,
9-19 Vernon's Texas Insurance Code). Nothing in this section shall be
9-20 construed as granting the commissioner <State Board of Insurance>
9-21 any power or authority to determine, fix, prescribe, approve, or
9-22 promulgate the rates to be charged for any individual accident and
9-23 sickness insurance policy or policies.
9-24 (m) If a form subject to Subsection (l) of this Article has
9-25 been on file with the department for at least 360 days and has been
9-26 previously affirmatively approved by the commissioner, considered
9-27 approved under the operation of this Article, or exempted from the
10-1 approval requirements as provided by this Article, the commissioner
10-2 may withdraw the previous approval or the exemption from the
10-3 approval requirements only if the form violates or does not comply
10-4 with specific requirements under this Code or a rule adopted under
10-5 this Code and may not impose a sanction or penalty on the insurer
10-6 for the use of the form during the period before the withdrawal of
10-7 approval.
10-8 (n) <(2)> The commissioner <Board> shall require the filing
10-9 of all rates to be charged for individual accident and sickness
10-10 policies and may adopt necessary forms to be filed by insurers in
10-11 conjunction with the annual statement required under Articles 3.07
10-12 and 3.20-1 <3.20> of this code for reporting the experience on all
10-13 individual accident and sickness insurance policy forms issued by
10-14 the insurer so as to determine compliance with Subsection (m) <(1)>
10-15 of this Article <section>.
10-16 (o) <(h)> Appeals from any order of the commissioner <State
10-17 Board of Insurance> issued under this Article may be taken to the
10-18 District Court of Travis County, Texas, in accordance with Article
10-19 1.04 <21.80> of this code, or any amendments thereof.
10-20 (p) <(i)> No policy, contract, or certificate filed pursuant
10-21 to this article that contains a coordination of benefits provision
10-22 may be approved for use in this state unless it also provides the
10-23 order of benefit determination for insured dependent children. An
10-24 order of benefits determination provision may not be approved
10-25 unless it complies with the standards specified in Subsection (j)
10-26 <Section (f)> of this article. The commissioner <State Board of
10-27 Insurance> is authorized to promulgate and may order such provision
11-1 as is necessary in the accomplishment of the purpose of this
11-2 subsection <section>.
11-3 (q) <(j)> The commissioner <State Board of Insurance> is
11-4 hereby authorized to adopt such reasonable rules and regulations as
11-5 are necessary to implement and accomplish the specific provisions
11-6 of this Article and are within the standards and purposes of this
11-7 Article. The commissioner shall adopt rules under this Article in
11-8 compliance with Chapter 2001, Government Code. A rule adopted
11-9 under this Article may not be repealed or amended until the first
11-10 anniversary of the adoption of the rule unless the commissioner
11-11 finds in a public hearing after notice that there is a compelling
11-12 public need for the amendment or repeal of the rule or part of the
11-13 rule.
11-14 <(k) The department shall develop and implement rules to
11-15 improve procedures for approval of policy forms under this
11-16 article.>
11-17 SECTION 2. This Act takes effect September 1, 1995, and
11-18 applies only to an insurance policy, contract, or form that is
11-19 delivered, issued for delivery, or renewed on or after January 1,
11-20 1996. A policy, contract, or form that is delivered, issued for
11-21 delivery, or renewed before January 1, 1996, is governed by the law
11-22 as it existed immediately before the effective date of this Act,
11-23 and that law is continued in effect for that purpose.
11-24 SECTION 3. The importance of this legislation and the
11-25 crowded condition of the calendars in both houses create an
11-26 emergency and an imperative public necessity that the
11-27 constitutional rule requiring bills to be read on three several
12-1 days in each house be suspended, and this rule is hereby suspended.