1-1 AN ACT
1-2 relating to the examination of certain insurance companies.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Article 9.22, Insurance Code, is amended to read
1-5 as follows:
1-6 Art. 9.22. ANNUAL STATEMENT OF TITLE INSURANCE COMPANIES;
1-7 EXAMINATION. (a) Every title insurance company, domestic and
1-8 foreign, operating under the provisions of this Act shall, on or
1-9 before the first of March every year, file with the commissioner
1-10 [Board] a verified statement, in such form as the commissioner
1-11 [Board] may require, setting forth the statement of the business
1-12 done by it during the preceding year, and the condition of its
1-13 affairs as of December 31st preceding.
1-14 (b) Each title insurance company is subject to Articles 1.15
1-15 and 1.16 of this code. [It shall be the duty of the Board,
1-16 biennially, or oftener if it shall be deemed advisable, in person
1-17 or through a duly appointed representative, to make a thorough
1-18 examination of the company's books and affairs and the transactions
1-19 in which it is engaged at the expense of said company, for which
1-20 purpose the Board or its representatives shall have access to the
1-21 books and records of the said company, and shall have the right to
1-22 interrogate and require answer under oath from any officer, agent
1-23 or employee of the said company concerning any matters pertaining
1-24 to the business thereof.]
2-1 SECTION 2. Article 10.33, Insurance Code, is amended to read
2-2 as follows:
2-3 Art. 10.33. EXAMINATION OF DOMESTIC SOCIETIES. (a) Each
2-4 domestic society is subject to Articles 1.15 and 1.16 of this code.
2-5 (b) [The Board of Insurance Commissioners or any person it
2-6 may appoint, shall have the power of visitation and examination
2-7 into the affairs of any domestic society. It may employ assistants
2-8 for the purpose of such examination, and it, or any person it may
2-9 appoint, shall have free access to all the books, papers and
2-10 documents that relate to the business of the society, and may
2-11 summon and qualify as witnesses under oath and examine its
2-12 officers, agents and employees or other persons in relation to the
2-13 affairs, transactions and conditions of the society. The expense
2-14 of such examination shall be paid by the society examined, upon
2-15 statement furnished by the Board of Insurance Commissioners, and
2-16 the examination shall be made at least once in three (3) years.]
2-17 Whenever after examination the commissioner [Board] is satisfied
2-18 that any domestic society has failed to comply with any provisions
2-19 of this chapter, or is exceeding its powers, or is not carrying out
2-20 its contracts in good faith, or is transacting business
2-21 fraudulently; or whenever any domestic society, after the
2-22 existence of one (1) year or more, shall have a membership of less
2-23 than four hundred (400), or shall determine to discontinue
2-24 business, the commissioner [said Board] may present the facts
2-25 relating thereto to the Attorney General, who shall, if he deem the
2-26 circumstances warrant, commence an action in quo warranto in a
2-27 court of competent jurisdiction, and if it shall then appear upon
3-1 the trial that such society should be closed, said society shall be
3-2 enjoined from carrying on any further business and some person
3-3 shall be appointed receiver of such society and shall proceed at
3-4 once to take possession of the books, papers, moneys and other
3-5 assets of the society, and shall forthwith, under the direction of
3-6 the court, proceed to close the affairs of the society, and to
3-7 distribute its funds to those entitled thereto.
3-8 SECTION 3. Article 10.35, Insurance Code, is amended to read
3-9 as follows:
3-10 Art. 10.35. EXAMINATION OF FOREIGN SOCIETIES. The
3-11 commissioner [Board of Insurance Commissioners], or any person
3-12 appointed by the commissioner [whom it may appoint], may examine
3-13 any foreign society transacting or applying for admission to
3-14 transact business in this State. The commissioner [said Board] may
3-15 employ assistants, and the commissioner [it,] or the
3-16 commissioner's appointee [any person it may appoint,] shall have
3-17 free access to all the books, papers and documents that relate to
3-18 the business of the society, and may summon and qualify as
3-19 witnesses under oath and examine its officers, agents and employees
3-20 and other persons in relation to the affairs, transactions and
3-21 conditions of the society. The commissioner [It] may[, in its
3-22 discretion,] accept in lieu of such examination the examination of
3-23 the Insurance Department of the state, territory, district,
3-24 province or country where such society is organized. [The actual
3-25 expense of examiners making such examination shall be paid by the
3-26 society, upon statements furnished by the Board.] If any such
3-27 society or its officers refuse to permit such examination or to
4-1 comply with the provisions of the law relative thereto, the
4-2 authority of such society to write new business in this State shall
4-3 be suspended, or license refused, until satisfactory evidence is
4-4 furnished to the commissioner [the Board of Insurance
4-5 Commissioners] relating to the condition and affairs of the
4-6 society, and during suspension the society shall not write any new
4-7 business in this State. Each foreign society is subject to the
4-8 provisions of Articles 1.15 and 1.16 of this code that are
4-9 applicable to insurance carriers that are not organized under the
4-10 laws of this State but are authorized to transact business in this
4-11 State.
4-12 SECTION 4. Article 13.09, Insurance Code, is amended to read
4-13 as follows:
4-14 Art. 13.09. EXCEPTIONS AND EXEMPTIONS; EXAMINATIONS.
4-15 (a) This chapter shall in no wise affect or apply to companies
4-16 operating as local mutual aids, as fraternal benefit societies,
4-17 reciprocal exchanges, or to foreign assessment companies operating
4-18 under any other law in this State, or any other form of insurance
4-19 other than those corporations carrying on in this State the
4-20 statewide business of mutually protecting or insuring the lives of
4-21 their members by assessments made upon their members. Except as
4-22 expressly provided in this chapter and in Chapter 14 of this code,
4-23 no insurance law of this State shall apply to any corporation
4-24 operating under this chapter, and no law hereafter enacted shall
4-25 apply to them unless they be expressly designated therein.
4-26 (b) Articles 1.15 and 1.16 of this code apply to
4-27 corporations and associations regulated under this chapter.
5-1 SECTION 5. Article 14.16, Insurance Code, is amended to read
5-2 as follows:
5-3 Art. 14.16. EXAMINATION. Articles 1.15 and 1.16 of this code
5-4 apply to corporations and associations regulated under this
5-5 chapter. [In addition to the annual report required by this
5-6 chapter, the State Board of Insurance shall, once in every two (2)
5-7 years or oftener if it deems it advisable, require the books,
5-8 records, accounts, and affairs of any corporation or association
5-9 qualifying and acting under this chapter to be examined and audited
5-10 by an accountant or accountants or examiner designated and
5-11 commissioned by the Board. For the purpose of any examination, the
5-12 Board and the auditors and examiners shall have free access to all
5-13 books, records, papers, and accounts of the corporation; and the
5-14 cost for the time required in making such examination and audit and
5-15 all necessary expenses in connection therewith shall be paid by the
5-16 corporation upon presentation of a bill showing the charges made by
5-17 the Board, which shall include the salaries, traveling expenses,
5-18 hotel bills, and other expenses of such auditors and/or examiners,
5-19 together with all other expenses in connection with such
5-20 examination. Each corporation or association shall be charged with
5-21 the salary of the auditors and examiners for the time required in
5-22 making such examination and the time required in connection with
5-23 going to and coming from the place or places necessary in
5-24 connection with such examination, together with all expenses
5-25 incurred by such auditors and/or examiners, and in addition thereto
5-26 such corporation or association shall be charged by the Board with
5-27 an amount equal to the salaries of the actuaries, examination clerk
6-1 or clerks, stenographers, and all other employees employed in
6-2 connection with the examination work in the Board for the time said
6-3 employees are performing duties in connection with the examination
6-4 of each corporation so examined.]
6-5 [The amounts so collected shall be paid into the State
6-6 Treasury to the credit of the State Board of Insurance operating
6-7 fund and shall be spent as authorized by legislative appropriation
6-8 only on warrants issued by the comptroller of public accounts
6-9 pursuant to duly certified requisitions of the State Board of
6-10 Insurance.]
6-11 [The Commissioner of Insurance or any deputy or examiner
6-12 shall have the right to require any officer, agent, or employee of
6-13 any company or association operating under this law, or any other
6-14 person, to be sworn and to answer under oath any questions
6-15 regarding the affairs or activities of said association or company,
6-16 and said Commissioner deputy, examiner, or auditor is hereby
6-17 authorized to administer such oath.]
6-18 SECTION 6. Article 17.22(a), Insurance Code, is amended to
6-19 read as follows:
6-20 (a) County mutual insurance companies shall be exempt from
6-21 the operation of all insurance laws of this state, except such laws
6-22 as are made applicable by their specific terms or as in this
6-23 Chapter specifically provided. In addition to such other Articles
6-24 as may be made to apply by other Articles of this Code, county
6-25 mutual insurance companies shall be subject to:
6-26 (1) Subdivision 7 of Article 1.10 of this Code; and
6-27 (2) Articles 1.15, 1.15A, 1.16, 1.24, 2.04, 2.05,
7-1 2.08, 2.10, 4.10, 5.12, 5.37, 5.38, 5.39, 5.40, 5.49, 21.21, and
7-2 21.49 of this Code[; and]
7-3 [(3) Article 7064, Revised Statutes].
7-4 SECTION 7. Article 20.21, Insurance Code, is amended to read
7-5 as follows:
7-6 Art. 20.21. [EXAMINATION OF] BOOKS AND RECORDS; EXAMINATION.
7-7 (a) Every such corporation shall keep complete books and records[,
7-8 showing all funds collected and disbursed, and all books and
7-9 records shall be subject to examination by the Board of Insurance
7-10 Commissioners annually, the expense of such examination to be borne
7-11 by said corporation].
7-12 (b) Articles 1.15 and 1.16 of this code apply to
7-13 corporations regulated under this article.
7-14 SECTION 8. Section 5B(a), Article 21.49, Insurance Code, is
7-15 amended to read as follows:
7-16 (a) The association is subject to Articles 1.15 and 1.16 of
7-17 this code [Board shall, once in each two-year period, or more
7-18 often if the Board considers it necessary, examine the financial
7-19 condition of the Association and its abilities to meet its
7-20 liabilities, as well as its compliance with the law of this state
7-21 affecting the conduct of its business. The examination shall be
7-22 made by the Board, one or more examiners, or commission of an
7-23 independent certified public accountant. The Board or its
7-24 commissioned examiners are entitled to free access to all the books
7-25 and records of the Association or agents writing business in the
7-26 Association and may summon and examine under oath officers,
7-27 employees, agents, and any other persons in the state relative to
8-1 the affairs of the Association].
8-2 SECTION 9. Section 10, Article 21.49-3, Insurance Code, is
8-3 amended to read as follows:
8-4 Sec. 10. EXAMINATIONS. The association is subject to
8-5 Articles 1.15 and 1.16 of this code [board shall make an
8-6 examination into the affairs of the association at least annually.
8-7 Such examination shall be conducted, the report thereon filed, and
8-8 expenses borne and paid for, in the manner prescribed in Articles
8-9 1.15 and 1.16 of the Insurance Code].
8-10 SECTION 10. The following laws are repealed:
8-11 (1) Article 17.18, Insurance Code; and
8-12 (2) Section 5B(c), Article 21.49, Insurance Code.
8-13 SECTION 11. This Act takes effect September 1, 1997, and
8-14 applies only to an examination conducted by the Texas Department of
8-15 Insurance on or after that date.
8-16 SECTION 12. The importance of this legislation and the
8-17 crowded condition of the calendars in both houses create an
8-18 emergency and an imperative public necessity that the
8-19 constitutional rule requiring bills to be read on three several
8-20 days in each house be suspended, and this rule is hereby suspended.
_______________________________ _______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 1975 was passed by the House on April
17, 1997, by a non-record vote; that the House refused to concur in
Senate amendments to H.B. No. 1975 on May 12, 1997, and requested
the appointment of a conference committee to consider the
differences between the two houses; and that the House adopted the
conference committee report on H.B. No. 1975 on May 23, 1997, by a
non-record vote.
_______________________________
Chief Clerk of the House
I certify that H.B. No. 1975 was passed by the Senate, with
amendments, on May 6, 1997, by a viva-voce vote; at the request of
the House, the Senate appointed a conference committee to consider
the differences between the two houses; and that the Senate adopted
the conference committee report on H.B. No. 1975 on May 22, 1997,
by a viva-voce vote.
_______________________________
Secretary of the Senate
APPROVED: _____________________
Date
_____________________
Governor