1-1 AN ACT
1-2 relating to the Texas Property and Casualty Insurance Guaranty
1-3 Association.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 5(8), Article 21.28-C, Insurance Code, is
1-6 amended to read as follows:
1-7 (8) "Covered claim" means an unpaid claim of an
1-8 insured or third-party liability claimant that arises out of and is
1-9 within the coverage and not in excess of the applicable limits of
1-10 an insurance policy to which this Act applies, issued or assumed
1-11 (whereby an assumption certificate is issued to the insured) by an
1-12 insurer licensed to do business in this state, if that insurer
1-13 becomes an impaired insurer and the third-party claimant or
1-14 liability claimant or insured is a resident of this state at the
1-15 time of the insured event, or the claim is a first-party claim for
1-16 damage to property that is permanently located in this state.
1-17 "Covered claim" shall also include [75 percent of] unearned
1-18 premiums, but in no event shall a covered claim for unearned
1-19 premiums exceed $25,000 [$1,000]. Individual covered claims
1-20 (including any and all derivative claims by more than one person
1-21 which arise from the same occurrence, which shall be considered
1-22 collectively as a single claim under this Act) shall be limited to
1-23 $300,000 [$100,000], except that the association shall pay the full
1-24 amount of any covered claim arising out of a workers' compensation
2-1 claim made under a workers' compensation policy. "Covered claim"
2-2 shall not include any amount sought as a return of premium under a
2-3 retrospective rating plan or any amount due any reinsurer, insurer,
2-4 insurance pool, or underwriting association, as subrogation
2-5 recoveries, reinsurance recoveries, contribution, indemnification,
2-6 or otherwise, and the insured of an impaired insurer is not liable,
2-7 and the insurer is not entitled to sue or continue a suit against
2-8 that insured, for any subrogation recovery, reinsurance recovery,
2-9 contribution, or indemnity asserted by a reinsurer, insurer,
2-10 insurance pool, or underwriting association to the extent of the
2-11 applicable liability limits of the policy written and issued to the
2-12 insured by the insolvent insurer. "Covered claim" shall not
2-13 include supplementary payment obligations, including adjustment
2-14 fees and expenses, attorney's fees and expenses, court costs,
2-15 interest and penalties, and interest and bond premiums incurred
2-16 prior to the determination that an insurer is an impaired insurer
2-17 under this Act. "Covered claim" shall not include any prejudgment
2-18 or postjudgment interest that accrues subsequent to the
2-19 determination that an insurer is an impaired insurer under this
2-20 Act. "Covered claim" shall not include any claim for recovery of
2-21 punitive, exemplary, extracontractual, or bad-faith damages,
2-22 whether sought as a recovery against the insured, insurer, guaranty
2-23 association, receiver, special deputy receiver, or commissioner,
2-24 awarded in a court judgment against an insured or insurer.
2-25 "Covered claim" shall not include, and the association shall not
2-26 have any liability to an insured or third-party liability claimant,
2-27 for its failure to settle a liability claim within the limits of a
3-1 covered claim under this Act. With respect to a covered claim for
3-2 unearned premiums, both persons who were residents of this state at
3-3 the time the policy was issued and persons who are residents of
3-4 this state at the time the company is found to be an impaired
3-5 insurer shall be considered to have covered claims under this Act.
3-6 If the impaired insurer has insufficient assets to pay the expenses
3-7 of administering the receivership or conservatorship estate, that
3-8 portion of the expenses of administration incurred in the
3-9 processing and payment of claims against the estate shall also be a
3-10 covered claim under this Act.
3-11 SECTION 2. This Act shall take effect on September 1, 1997,
3-12 and shall apply to claims against insurers which are impaired under
3-13 Article 21.28-C, Insurance Code, on or after such date.
3-14 SECTION 3. The importance of this legislation and the
3-15 crowded condition of the calendars in both houses create an
3-16 emergency and an imperative public necessity that the
3-17 constitutional rule requiring bills to be read on three several
3-18 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. 2437 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. 2437 on May 29, 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. 2437 on June 1, 1997, by a
non-record vote.
_______________________________
Chief Clerk of the House
I certify that H.B. No. 2437 was passed by the Senate, with
amendments, on May 26, 1997, by the following vote: Yeas 31, Nays
0; 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.
2437 on June 1, 1997, by a viva-voce vote.
_______________________________
Secretary of the Senate
APPROVED: _____________________
Date
_____________________
Governor