Bill not drafted by TLC or Senate E&E.
Line and page numbers may not match official copy.
By Bonnen H.B. No. 2437
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the Texas Property and Casualty Guaranty Association.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Article 21.28-C, Section 5, Insurance Code, is
1-5 amended to read as follows:
1-6 Sec. 5. (8) "Covered claim" means an unpaid claim of an
1-7 insured or third-party liability claimant that arises out of and is
1-8 within the coverage and not in excess of the applicable limits of
1-9 an insurance policy to which this Act applies, issued or assumed
1-10 (whereby an assumption certificate is issued to the insured) by an
1-11 insurer licensed to do business in this state, if that insurer
1-12 becomes an impaired insurer and the third-party claimant or
1-13 liability claimant or insured is a resident of this state at the
1-14 time of the insured event, or the claim is a first-party claim for
1-15 damage to property that is permanently located in this state.
1-16 "Covered claim" shall also include [75 percent of] unearned
1-17 premiums, but in no event shall a covered claim for unearned
1-18 premiums exceed $25,000 [$1,000]. Individual covered claims
1-19 (including any and all derivative claims by more than one person
1-20 which arise from the same occurrence, which shall be considered
1-21 collectively as a single claim under this Act) shall be limited to
1-22 $300,000 [$100,000], except that the association shall pay the full
1-23 amount of any covered claim arising out of a workers' compensation
1-24 claim made under a workers' compensation policy. "Covered claim"
2-1 shall not include any amount sought as a return of premium under a
2-2 retrospective rating plan or any amount due any reinsurer, insurer,
2-3 insurance pool, or underwriting association, as subrogation
2-4 recoveries, reinsurance recoveries, contribution, indemnification,
2-5 or otherwise, and the insured of an impaired insurer is not liable,
2-6 and the insurer is not entitled to use or continue a suit against
2-7 that insured, for any subrogation recovery, reinsurance recovery,
2-8 contribution, or indemnity asserted by a reinsurer, insurer,
2-9 insurance pool, or underwriting association to the extent of the
2-10 applicable liability limits of the policy written and issued to the
2-11 insured by the insolvent insurer. "Covered claim" shall not
2-12 include supplementary payment obligations, including adjustment
2-13 fees and expenses, attorney's fees and expenses, court costs,
2-14 interest and penalties, and interest and bond premiums incurred
2-15 prior to the determination that an insurer is an impaired insurer
2-16 under this Act. "Covered claim" shall not include any prejudgment
2-17 or postjudgment interest that accrues subsequent to the
2-18 determination that an insurer is an impaired insurer under this
2-19 Act. "Covered claim" shall not include any claim for recovery of
2-20 punitive, exemplary, extracontractual, or bad-faith damages,
2-21 whether sought as a recovery against the insured, insurer, guaranty
2-22 association, receiver, special deputy receiver, or commissioner,
2-23 awarded in a court judgment against an insured or insurer.
2-24 "Covered claim" shall not include, and the association shall not
2-25 have any liability to an insured or third-party liability claimant,
2-26 for its failure to settle a liability claim within the limits of a
2-27 covered claim under this Act. With respect to a covered claim for
2-28 unearned premiums, both persons who were residents of this state at
2-29 the time the policy was issued and persons who are residents of
2-30 this state at the time the company is found to be an impaired
3-1 insurer shall be considered to have covered claims under this Act.
3-2 If the impaired insurer has insufficient assets to pay the expenses
3-3 of administering the receivership or conservatorship estate, that
3-4 portion of the expenses of administration incurred in the
3-5 processing and payment of claims against the estate shall also be a
3-6 covered claim under this Act.
3-7 SECTION 2. This Act shall take effect on September 1, 1997,
3-8 and shall apply to claims against insurers which are impaired under
3-9 Article 21.28-C, Insurance Code, on or after such date.
3-10 SECTION 3. The importance of this legislation and the
3-11 crowded condition of the calendars in both houses create an
3-12 emergency and an imperative public necessity that the
3-13 constitutional rule requiring bills to be read on three several
3-14 days in each house be suspended, and this rule is hereby suspended.